Recessions can rattle even battle-hardened executives. But not Archie Black. The longtime CEO of SPS Commerce has seen several boom-and-bust cycles during his tenure, and he’s learned how to ride them out with grace.
One important truth he’s learned: Employees come first, no matter what. It’s part of SPS’ core values to this day.
During his more than two decades at the helm, Black helped usher in a period of remarkably sustainable prosperity for the retail software company. In many ways, the company owes its very survival to his leadership. Business accomplishments aside, colleagues and friends know him as an affable, approachable leader who’s remained true to his principles in good times and bad.
SPS’ stock bears witness to Black’s steady hand; with few exceptions, it’s consistently been on the upswing since the company’s initial public offering in 2010.
The company’s revenue has continued to grow at the same time. In February, SPS reported $122 million in revenue in the fourth quarter of its 2022 fiscal year, up 19% year-over-year. More important: It marked the company’s 88th consecutive quarter of revenue growth. The company says its supply chain management software is now used by more than 115,000 companies in the retail, grocery, distribution, supply, and logistics industries.
SPS’ fate stands in stark contrast to buzzy tech firms on the coasts, which, in recent months, have been laying off workers in droves.
Jim Frome, president and chief operating officer, says the company has been a quiet giant over the years.
“We’re in the top 1% of tech companies on the Nasdaq, so we’re in a pretty rare group of companies,” Frome says. “We’ve outperformed Google, Facebook, Microsoft. … but we haven’t bragged about it or put it up in lights or anything like that.”
Certainly, SPS has come a long way over the last two decades, emerging from near collapse in the early 2000s. “It was hanging on by a thread,” says Phil Soran, who’s served on SPS’ board for years. “Archie totally transformed the strategic plan.” Soran and other observers give a lot of credit to Black for the company’s remarkable comeback story.
In some ways, running a business is in Black’s blood. Raised in Hopkins, he had watched his father and grandfather run AC Black & Son, an appliance distribution company in Northeast Minneapolis. Black’s father would later go on to become a manufacturer’s rep for appliance brand Magic Chef.
His mother was a stay-at-home mom who was active in the local church. “My parents were a huge influence on me,” Black says.
Growing up, Black was a multisport athlete, playing basketball, golf, and tennis, among other sports. He half-hoped he could play professionally someday, though “nobody other than me thought I was going to earn a living playing sports,” he jokes.
Basketballs and other athletic memorabilia still line the shelves of his office on the 10th floor of the SPS Tower in downtown Minneapolis.
But Black was always interested in the business side of sports, so it was no surprise when he chose to study accounting at Marquette University in Milwaukee. “It was not the best economic times, and in accounting, you pretty much had a job,” Black says.
He earned his degree in 1984 and started working as an auditor for Price Waterhouse in Minneapolis. It was a grueling job, but he learned a lot. “It wasn’t uncommon to work 10–12 hours on weekdays and then six to eight hours on weekends,” he recalls.
After three years as an auditor, he became CFO with Investment Advisors in Minneapolis, a job he held for 11 years.
Embracing core values
SPS Commerce operates under 10 values that every employee learns. The first value? Employees come first. “We’ve got our values written down, and we live them,” Black says. Certainly, the company’s mass layoffs in the early 2000s informed Black’s views. That means SPS remains squarely focused on its core business in the retail space.
“I’m not afraid to say that if it’s not within the vision, we’re not doing it,” he says. That’s also a reason that SPS shared its five strategic initiatives with every employee back in November 2022. “You’ve got to have good teammates that are all in the same spot. We’re very focused.”
In 1998, he took a chance on a small company known as St. Paul Software, which would eventually adopt the name SPS. He actually took a pay cut to serve as CFO of the company, which was struggling to keep its head above water.
Founded in 1987, the business was losing money fast, prompting the board to make a series of tough calls. In 2001, board members fired the CEO at the time, as well as about three-quarters of the company staff. They put their trust in Black to revive the company, naming him CEO.
“It wasn’t layoffs to pad corporate bonuses or raise the stock price,” Black says. “It was to make the next payroll.”
Black went on to cut the entire management team except for Frome, who was a marketing executive at the time—tough, but necessary, decisions, in Black’s view.
From there, he rolled out a plan to utterly reshape the company and salvage what was left. One of his first moves was to sell a portion of its software business to a firm in the Netherlands so SPS could focus exclusively on the retail industry. SPS didn’t exit the software business wholesale; instead, the company pivoted to “software as a service,” or SaaS, for retailers. It was a fortuitous decision.
“We became very focused on what our business is and what it isn’t,” Black recalls. “Our vision was to be the world’s largest retail network.”
With a focus on supply chain management products and less baggage, SPS began to chart a more profitable course. In 2010, the company launched an initial public offering on a particularly busy day on Wall Street: Six other companies launched IPOs the same day. But SPS stock was the “obvious hit with investors,” The Wall Street Journal reported at the time. The company’s stock closed at $13.60 cents a share. As of mid-May, SPS stock was trading at $156.37 a share.
“We’re in the top 1% of tech companies on the Nasdaq, so we’re in a pretty rare group.”
—Jim Frome, president and chief operating officer, SPS Commerce
Scott Berg, managing director of equity research enterprise and application software with Minnetonka-based Needham & Co., says the company owes much of its success to Black’s decision-making in the early 2000s. Berg, who’s watched SPS for years as an analyst, says that the decision to sell its software business, “was 100 percent the right decision.”
“I think it was risky at the time, but he did a very good job with that,” Berg says.
More than anything, though, Black says he’s put transparency front and center. Over the years, he’s always taken time to explain to employees what’s happening, and why. These days, every employee must go through distribution center training to get a better understanding of what SPS does on a granular level. “We’re big believers that the more every employee understands the business, the more they can do,” Black says.
In March, SPS announced Black planned to retire. He’s pledged to remain at the helm until a successor is chosen and says he’ll stay on board until the new CEO has fully transitioned into the role. Once a new CEO is found, Black will become executive chair of the board. Berg says that Black is leaving the company “in a fantastic position.”
“Whoever is coming in doesn’t need to make any wholesale changes,” Berg says.
Once Black steps away from SPS, he says he’ll continue his board work, including his service with the University of St. Thomas, Graco, and Proto Labs. He and his wife also will continue devoting time to education and literacy initiatives.
For Black, the ultimate sign of success is SPS’ continued success.
“I want the business to survive and thrive past me,” he says.