Podcast Summary
Embracing Change and Feeling Uncomfortable: To succeed in diverse careers, particularly at the intersection of technology and financial services, one must embrace change and feel uncomfortable.
Key takeaway from this conversation with Jeff Sloan, the former CEO of Global Payments, is the importance of embracing change and feeling uncomfortable in order to succeed in different careers, particularly at the intersection of technology and financial services. Jeff's diverse background as a lawyer, investment banker, and operating executive allowed him to appreciate the commonality of dealing with change and feeling uncomfortable. When he joined Global Payments in 2010 as president, he saw it as an opportunity to be at the forefront of significant industry trends and make bets that moved a large organization. During his tenure, Global Payments grew from $2 billion in revenue to $9 billion and completed a $21 billion merger with TSYS, earning Fortune 500 status. The company is now a $32 billion market cap entity. Jeff's ability to adapt and embrace change allowed him to spot industry trends early and make impactful decisions for Global Payments. This conversation highlights the importance of being open to new experiences and feeling uncomfortable in order to succeed in various industries, especially in the rapidly evolving world of technology and financial services.
Identifying trends and investing in technology: CEOs who spot trends early and invest in technology can gain a competitive edge, leading to significant growth.
Identifying and capitalizing on trends early can be a significant factor in a CEO's success. When the interviewee joined Global Payments in 2010, it was primarily a legacy technology business with limited distribution and sales, especially within the US market. However, during their tenure as president and COO, and later becoming CEO in 2013, they recognized the need to invest in both technology and distribution to take the company to the next level. Fortunately, this period coincided with seismic shifts in technology, such as the cloud's ascendancy and the digitization of payments, which influenced their investment decisions. The fintech industry's evolution further highlighted the importance of technology and innovation in financial services. Essentially, the CEO's ability to spot trends and implement them ahead of competitors contributed significantly to Global Payments' growth.
From payments to software solutions: Embrace bold steps, put many bets on the table, stay close to customers, get instant feedback, and scale quickly or fail fast
In the business world, particularly for technology companies, the focus has shifted from just providing payments services to offering software solutions that come with payments as an added benefit. This trend, which was less obvious a decade ago, is now commonplace with companies like Toast and ServiceTitan leading the way. The speaker, a former executive at Global Payments, shares his early adoption of this perspective and the challenges he faced in implementing it. He emphasizes the importance of being close to customers, getting instant feedback, and scaling quickly or failing fast. Despite facing criticism, he remained confident in his vision and is now glad that it has proven successful. For CEOs looking to scale their companies, the speaker advises taking bold steps and putting many bets on the table, even if they face initial resistance.
Seeking customer feedback is crucial for CEOs to ensure they're on the right path: CEOs should invest in multiple areas and wait 18-24 months for results, while having both a product and distribution advantage is essential for success.
In the technology industry, it's not always immediately clear which investments will be successful. However, seeking feedback from customers about their pain points and problems is crucial for CEOs to ensure they're on the right path. The example given was of a software company that had significant success with professional sports teams and McDonald's, both expressing interest and purchasing the software within a short time frame. This was considered an exception, as it's rare for such quick sales. Instead, the focus should be on putting bets in various areas and waiting for 18-24 months to determine which bet was the right one. Additionally, having both a product advantage and a distribution advantage is essential for company success. Historically, payments were sold through independent sales organizations, but the trend has shifted towards software vendors bundling and integrating payments into their solutions. The ultimate goal is to have thousands of software vendors selling the payment solution, which was starting to happen with Heartland.
Diverse distribution strategy is crucial for business success: Having multiple bets in various areas and being adaptable to changing market conditions are essential for business success
Having a diverse distribution strategy is crucial for business success, especially in the technology industry. The speaker's experience at Global Payments illustrates this point. They sold technology-based solutions through various channels, including mission-critical vertical SaaS, physical sales reps, and partnerships with large software companies. The vision was to have the technology work seamlessly in the background, much like Uber's payments system. However, it's important to note that no one solution works for all time. The market and business environment are constantly evolving, and having multiple bets in various areas is essential. The speaker also mentioned that COVID-19 forced the company to substantially reposition the business, and they had to catch up in some areas where they were late. Overall, the key takeaway is that having a diverse distribution strategy and being adaptable to changing market conditions are crucial for business success.
Adapting to the new normal: Scaling up solutions during the pandemic: Companies had to quickly adapt to the pandemic by scaling up solutions, setting the tone at the top, and establishing an executive steering committee ensured accountability and governance during the integration process.
The COVID-19 pandemic forced companies to quickly adapt and scale up solutions that were previously on the drawing board or only used by a small portion of their business. For instance, small and midsize restaurants had to quickly offer online ordering and delivery integration with services like DoorDash and Uber Eats, while medical software companies had to scale up remote doctor consultations through platforms like Teladoc. Global Payments, specifically, had to pivot and invest heavily in these areas, which were key parts of their business post-pandemic and generated billions of dollars in volume. In such situations, setting the tone at the top and establishing an executive steering committee can help ensure accountability and governance during the integration process, regardless of the deal's size.
Successful mergers and acquisitions require careful planning, integration, and ongoing governance.: To ensure the success of an acquisition or divestiture, focus on meticulous planning, effective integration, and continuous governance. Scale advantages and technology investments are essential in the payments industry for staying competitive and driving growth.
The process of mergers and acquisitions does not end with the signing of the deal. Rather, it is just the beginning of a long and complex integration process. The speaker emphasizes the importance of careful planning, integration, and ongoing governance to ensure the success of an acquisition or divestiture. He also highlights the significant scale advantages and the need for substantial technology investments in the payments industry. In the context of large mergers and acquisitions, the speaker believes that the scale economies and the ability to invest more in technology are crucial factors for maintaining a competitive edge and driving growth.
Expanding from consumer to B2B markets requires flexibility and scale: The B2B payments market, valued at $125 trillion, presents growth opportunities with half still using cash and checks. Tech advancements like generative AI will transform processes, improving margins and creating new services.
Flexibility and scale are crucial for businesses to make necessary investments in various environments, especially when expanding from consumer to business-to-business (B2B) markets. The B2B payments market, estimated at $125 trillion annually, offers significant growth opportunities, with half of it still reliant on cash and checks. Technology advancements, such as generative AI, are expected to significantly impact the financial industry, transforming customer service, underwriting, and other processes, ultimately improving margins and creating new opportunities for value-added services.
Adapting to emerging technologies in finance while addressing challenges: Patience and a long-term perspective are crucial when adapting to emerging technologies in finance, as demonstrated by the Brexit example. New opportunities and risks arise at the intersection of AI and financial services.
The financial industry, including companies like Global Payments, must adapt to emerging technologies like generative AI while also addressing potential fraud and deepfake challenges. This requires a long-term perspective and patience, as demonstrated by the Brexit example. Global Payments CEO TPGatewood shared that the company made hasty decisions to cut investments in the UK following the Brexit vote, which may have negatively impacted their business. Instead, he advises being patient and taking a day-by-day approach when faced with unexpected challenges. The intersection of AI and financial services presents both opportunities and risks, and the development of new products and services to address these challenges is an exciting prospect for the industry.
Consider the long-term perspective and be patient in business: Taking rash decisions in complex business situations can lead to mistakes. Be patient, observe outcomes, and consider potential consequences before making significant moves.
In complex business situations, it's essential to take a long-term perspective and consider the uncertainty of the outcomes. Rash decisions, especially when resources are limited, can lead to mistakes. It's important to remember that resources can be reallocated, and it's better to observe how things unfold before making significant moves. Jeff Sloan, a wise businessman, emphasized this during a conversation on In the Vault podcast. He shared his experience of making hasty decisions and the regret he felt afterward. He advised taking a deep breath and considering the potential consequences before acting. In essence, it's crucial to be patient and thoughtful in business to maximize the potential for success.
