Steve Greene With FLEETCOR

Intro: [00:00:04] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Atlanta Business Radio brought to you by onpay Atlanta’s new standard in payroll. Now here’s your host.

Lee Kantor: [00:00:24] Lee Kantor here, another episode of Atlanta Business Radio. And this is going to be a good one. But before we get started, it’s important to recognize our sponsor on pay. Without them, we couldn’t be sharing these important stories. Today on the Atlanta Business Radio. We have Steve Greene with FleetCor. Welcome, Steve.

Steve Greene: [00:00:41] Welcome. Hi, Lee. How are you doing?

Lee Kantor: [00:00:43] I am doing great. I’m excited to learn what’s going on over there. But before we get too far into things, just let the listener know about Fleet Corps. How are you serving, folks?

Steve Greene: [00:00:53] Yeah, thank you. So Fleet Corps is a global leader in business payments. We help businesses enable and control what they purchase in the bills that they pay. And we do that across the world. We have over 10,000 employees, over 800,000 clients in the US, in Europe and in Brazil.

Lee Kantor: [00:01:18] Now, obviously you’re one of the largest companies here in Atlanta. What was kind of the genesis of the idea? You didn’t start out as a super large company. What was it like when you were a small company?

Steve Greene: [00:01:31] Yeah, the business was kind of founded in 2000, and it started as a small regional fuel card business that was on the verge of bankruptcy at the time. And slowly over the years, we’ve we’ve grown both organically and through acquisitions. So now, to the extent that the fuel car business that we originally started out as is less than half of our of our revenues and the rest of the business is spread between corporate payment products, which we can talk about lodging solutions, some prepaid solutions we offer businesses and as well as tolls. And we serve originally we serve, obviously, businesses that had fleets in vehicles that they were looking to fuel. And now we serve businesses of all types of all sizes in just about every industry.

Lee Kantor: [00:02:30] Now, are you using technology in these kind of complementary industries that you were using with the fleet business? Or is this like totally different kind of technology?

Steve Greene: [00:02:41] Yes, it varies from business to business. We we technology forms a critical part of all of our businesses. And you can think of our businesses as having a network. So on one side, we have clients, the businesses, and on the other side we have merchants or places where those businesses do go and buy stuff. And so sitting in between the merchants and the clients are I.T. systems. And those I.T. systems do vary a little bit from the fuel card business, which helps manage and control how much fuel is put in the gas tank or what type of fuel is put in to more of a corporate payments app type application where our systems are verifying that a bill is ready to be paid and then it helps execute the payment. So the technologies are in some ways similar, but the actual code is pretty different from business to business.

Lee Kantor: [00:03:41] Now, how does how do you decide which kind of vertical to go into when you decide to kind of expand?

Steve Greene: [00:03:49] Yeah, it’s a it’s a good question. So. We look at things that are related to what we do. And so those would be kind of specialty payment products in those. Businesses typically have pretty similar business model characteristics. So we focus a lot on what kind of products and solutions the business offers and the the the business model characteristics that those businesses have. So we look for things that have other specialty payment applications and solutions, and then we look for things that have, call it, recurring revenues that are network business. They have similar distribution and sales channels that we’re familiar with from the businesses we operate today. We look for things with with high growth and low capital intensity. So those are some of the things that we look for when we start to expand.

Lee Kantor: [00:04:48] And how do you decide whether to kind of build your own rather than buy an existing company in that space?

Steve Greene: [00:04:55] Yeah, it’s a super good question. So we typically buy things for one of three reasons. The first is if we want to enter a new market space or extend an area that we’re in already, in a lot of times buying a business is it’s easier to buy something then start it from scratch. The second thing we do in terms of deciding whether to build organically or buy something is is speed. So we’re in a hurry. We have high growth aspirations and organic growth and starting stuff from scratch can take can take longer in many cases. And so we’ve want to go fast in a certain area we choose to acquire. And then the last thing is we it’s helpful for creating value for our shareholders. And so they’ll be businesses that we look at where we can either have some kind of cost synergy where it’s a similar business that is supporting two finance teams, for example, we only need one or there’s a revenue synergy where maybe a company has a great product, but it hasn’t been able to invest in sales, sales or distribution capability, and those are channels that we would already have. So we take an existing product and we can pump it through our sales channel and help that business grow faster.

Lee Kantor: [00:06:29] So they may not your acquisition target may not be kind of the biggest player in the space, but they might have kind of the bones of something that you can put your secret sauce on that you can you think can accelerate the growth.

Steve Greene: [00:06:42] Yeah, exactly. So let me give you a couple of examples. So we we acquired a business early last year, which is a company called Roger, who’s based both here and over in Scandinavia. And that was really more of a product acquisition. They had a small business bill pay software application, and it was a relatively new business. They’d only been around for three or four years. And so it had great technology but still hadn’t had time yet to build a big customer base. So we bought that company the beginning of last year and we’re now taking that product. We’ve rebranded it into Corp one and now we’re rolling it out through our existing distribution channels and offering that same software tool back to the businesses that already take some of our products. So that’d be something where the business is earlier stage and we’re super interested in it. And then we did another deal last year. The company called Apex, which was a larger business, it was in the cross-border payment space, but they had tens of thousands of accounts. But it was a complementary geography. It wasn’t in an area that we already were in. And so that was an opportunity for us to buy a more mature, larger business, but was really complementary to what we had. We already had. So it’s a bit of both. I mean, both small businesses are interesting to us in larger, more mature businesses are interesting as well.

Lee Kantor: [00:08:07] Now, how did COVID impact the acquisitions? Was that something where things paused or was that something where you had the foot on the gas?

Steve Greene: [00:08:15] Yeah, it’s the answer is a bit of both. So I think like everyone else probably out there, if you if you ask me that question in March of 2020, I think we we paused. We weren’t sure what was going to happen. We weren’t sure if it was a good idea to spend a bunch of capital and acquisitions or should we hunker down. And as 2020 rolled into 2021, we got more comfortable with with the outlook, with how our clients were doing. And we really chose to to step on the gas. And so 2021 was one of our best years ever in terms of acquisitions. We we closed eight acquisitions, spent over $1,000,000,000. And we really use COVID to focus on some areas of growth that we’re really excited about and try to add to some businesses the footprint and some businesses that we already own. So the answer is kind of a bit of both.

Lee Kantor: [00:09:13] Can you share a little bit about what it was like during that time of crisis when you were all hunkered down and just kind of getting the lay of the land? What were some of the conversations you were having in terms of the trade offs of going in either direction, whether it’s hunkering down or putting your foot on the gas? What can you share a little bit about the thought process and the mood and the like? I’m sure there was spirited conversations and I think a lot of people can learn from a company like yours going through a crisis in that way. What were some of the things you were afraid of? And look, you know, saw opportunity, like just go through kind of what was happening there.

Steve Greene: [00:09:49] Yeah, I know. It’s a good question. So we the first thing we looked at was what’s happening with our clients, the businesses that we serve. Are they is COVID going to be is it going to help them or is it going to hurt them? And particularly for the businesses that we’re going to struggle, what can we do to protect fleet core and at the same time be helping our business companies continue to operate? And so we looked at things like credit lines. Is are we extending the appropriate amount of credit to our clients? Are we in terms of accepting new accounts? Is it the right profile account that we want to accept or do we want to be a little more conservative with what new accounts that we offer? And then I’d say we had a close tracking of of cash flow in those days and payments and people are they staying current? How are they doing, etc.. So that was really I’d say the the very early days of COVID getting our handle around the health of our clients and the types of sales and new accounts we wanted to accept. That was really what happened there. If you flip over to once we decided to move, pivot back into acquisitions that all a lot of those discussions were, what is the impact of COVID on this particular acquisition target? And I have to tell you, it was a little bit of a tale of two cities.

Steve Greene: [00:11:23] And so some businesses were helped by COVID. They were businesses that were had software tools that helped companies pay bills, pay bills, but do so with a remote workforce where people aren’t in the office. So you can digitize invoices in app clerks, can work from home. There are other businesses like we have a lodging business. Those businesses travel was down a lot. And so then we get into the the forecasting business of trying to figure out how long will volumes be down and what’s the rate at which they’ll start to come back. And can we structure a deal so that the buyer core is comfortable with taking some risk on the recovery? But we can also produce an attractive enough offer to the seller so that maybe we share some risk so that we if it does, we offer a little bit of money maybe at closing, and then if it does a little bit better, we give them some more money. And if it kind of meets expectations even more, we give them some more money. So we kind of created structures in those days around the recovery to help match what was going to happen in the future with the ultimate proceeds that the seller would get.

Lee Kantor: [00:12:46] Now, can you talk a little bit about your offering to the small business market?

Steve Greene: [00:12:51] Yeah, so we do. It’s an exciting time to be in our business. So I mentioned earlier at the top of the show we have things that products that help enable and control what’s purchased. So think of those are like fuel cards or a TD card. And then we have another set of solutions that help businesses enable control the bills that are paid. So think about this as I’m in a home office, the headquarters, and I’m paying app bills that are coming in, what we’re trying to do for small businesses is both. So we’re trying to provide specialized payment tools so that people who are out in the field can buy what they need to buy to do their jobs, fuel or supplies for a construction business and help the small business owner pay the bills as they come to. And we’re putting that on a platform for those businesses that’s kind of a software platform so they can manage all the expenses that they have to manage. Their operation. They can pay all the bills that they have coming in to the central office and wrap that with a nice piece of software. So it’s a it’s an easy way of doing both things. And typically, for most of the small business owners, you had a credit card doing the walkaround stuff and you had QuickBooks or something that kind of managing your app. So we’ve kind of tried to create a solution that helps small businesses do both of those things in one convenient UI.

Lee Kantor: [00:14:21] And is that getting traction?

Steve Greene: [00:14:23] Yeah, the product called Core Pay one. So that’s the thing we bought from Roger I mentioned earlier. We’ve got a few thousand accounts on it today. And the real interesting thing is we can take that product back to the hundreds of thousands of fuel card accounts so we can take that product back to the to the fuel card accounts we have who are just using a fuel card. And we can add on this core pay one solution. So it’s a pretty exciting thing we’re working on now.

Lee Kantor: [00:14:51] Is there anything kind of worth your kind of forward looking a little bit? Are there any areas that you’re not in yet that you’re looking to branch out on to?

Steve Greene: [00:15:00] Yeah, it’s a good question, particularly on the M&A side. So I’d say the answer is we’re continuing to what we’re good at, which is stick with what we know and invest in by businesses that we’re familiar with and fuel and toll and lodging and corporate payments. So we’ll keep doing that. And then I’d say two areas which we’re starting to get into a little bit more are electric vehicles. So the world is transitioning from fossil fuel powered vehicles to electric vehicles over some period of time. And so we want to be there to help our clients manage that transition. So we’ve done we’ve announced a couple of different investments, one with a connected car company and then another with a software tool that helps clients manage fueling at home. And so we’re starting to get more into EV. So that’s the first area. And then the second thing is, is more of a technology, a software tool where our products typically have been point of sale purchases or helping send out and pay bills. There’s a lot of work that a small business will go through before those things happen. So there’s approvals that need to be made. There’s expense reports that need to be filled out. So there’s basically a set of workflows that need to take place. And we think we can attach some software tools that help a business, do those things and marry them up with our payment products to basically help clients do even more things inside their business. So those are two areas and software we’re starting to look pretty closely at and start to make some investments.

Lee Kantor: [00:16:42] And regarding EV, that’s both the fleets and individual, like just a homeowner, like a regular person.

Steve Greene: [00:16:50] Mostly we have it’s mostly the the short answer is mostly for businesses. That’s where we’re really that’s the thing we’re really emphasizing not as much for consumers.

Lee Kantor: [00:16:59] So the business like the people who are using EV with the trucking.

Steve Greene: [00:17:04] Correct it’s more I’d say trucking will probably be interesting in EV. So the transition to EV is going to happen at a different pace for different types of vehicles and in different markets countries. And so I think the last use application will probably be kind of 18 wheelers. That’s a harder thing to solve. The first thing we’re seeing are kind of sedans or small vans. Those those cars are going to go to EV faster than big 18 wheelers. And what we’re already seeing in our businesses in Europe.

Lee Kantor: [00:17:38] So it’s already happening overseas.

Steve Greene: [00:17:40] Yes, absolutely.

Lee Kantor: [00:17:42] Well, exciting times. Is there anything that that you’re seeing here in the United States that we should be paying attention to?

Steve Greene: [00:17:52] Yeah, I’d say there’s there’s I think for 20, 22, there’s three things that that we have a pretty close eye on that will in fact, they’ll impact not only the amount of deals we do in M&A, but also our business, our businesses in general. So what are those things? Number one, we continue to keep an eye on COVID and is COVID really gone or we now have lockdowns. So that’s one thing that that we monitor. And we’re in markets all over the globe. So there’s countries, very different states of of of coming out of the COVID recovery. Number two is is obviously the war in in Ukraine and how much disruption what are the ripple effects of that conflict? Is there going to be an impact on some of our European operations and on some some knock on effects for for for those of us here in the US? And then the third one, which. I think is the biggest one to keep an eye on is inflation and the interest rates. So we’re close to 8% inflation right now. The Fed has already communicated that they’re going to they’re going to take up interest rates. We’ve already started a round of interest rate increases. And I think where interest rates top out and the impact on the economy and can the Fed thread the needle without taming inflation, but not cutting down growth and hurting the economy too much will be a very delicate balance. So that’s something we’re watching very carefully is is how the interest rate progression in the inflation impact, how that kind of plays out throughout 2022.

Lee Kantor: [00:19:42] So do you have a gut feeling regarding inflation?

Steve Greene: [00:19:47] I think. I don’t know. Clearly, we can’t be at 8%. I think it’s going to be, unfortunately, a little more stubborn. I mean, who knows whose crystal ball is more accurate? But I think we’re going to have some lingering effects of inflation. So I’d probably be a little bit biased towards more interest rate increases than less. We we haven’t seen really any abatement yet, so least in our businesses. So I’d say I don’t know. I think it’s going to be it’s going to be a tough thing to solve, although I think the Fed’s committed to getting there. And the question is, can they can they keep interest rates low enough without really bringing the economic growth down too much?

Lee Kantor: [00:20:39] Right. It is threading the needle. And but I mean, to everybody, I think is is cautious now. They assume there’s going to be some impact, obviously, and it’s just a matter of how quickly we can work through it.

Steve Greene: [00:20:50] Yeah, I think that’s right.

Lee Kantor: [00:20:52] So what do you need more of? How can we help? Are you looking you’re actively obviously looking for partners to acquire. And are you looking for talent right now? What’s your how do you feel about that? Because I think that’s an unintended consequence of the Ukraine situation. There’s a lot of developers over there that a lot of companies use. So as talent is something that you’re kind of on the hunt for as well.

Steve Greene: [00:21:18] Yeah. Know, we you know, it’s strong strong management really, really obviously makes a difference. We’re it’s kind of a crazy hiring market right now. I’m hiring on my team. The I know that our I.T. folks are continue to hire you know, a growing company needs more folks. And so I think there’s it’s been tough to recruit people. I think the silver lining there, which is something we’re starting to experiment with, is, you know, you used to have folks, you hired them and they went into an office and they were. So when you wanted to hire, it was helpful to have people in in the community where you’re hiring people. And so that’s obviously our preference for a lot of the jobs. But we’re evolving to more of a hybrid approach where we’re going to be flexible with some roles and let people not have to come into the office every single day. And I think that might alleviate some of the bottlenecks in terms of hiring people is to offer some kind of hybrid approach. And like we’re studying pretty carefully like on on sales side know it used to be you’re going to set up a sales force. You need two people in Dallas and two people in New Orleans and two people in LA. I think it’s interesting to think about how the labor markets evolve, that maybe you can have kind of a a zoom based sales force, right. You don’t need everyone in the do you need to hire two people in every single market that you’re in, for example? And so I think that’s kind of an interesting thing that we that we’re studying and taking a look at to get us some relief from some of the labor constraints that we’re seeing in some of the markets. We’re hiring it.

Lee Kantor: [00:22:55] Right, because it’s a lot more affordable to hire them in the middle of the country than on the West Coast specifically.

Steve Greene: [00:23:01] Yeah, it’s cost, but it’s also just we can hire a lot more people. I’d say it’s both of those leagues. It’s certainly cost makes a factor. But if we want to add 50 people, if you could if you’re not geographically constrained. Right. And find 50 people in the same city, I think it’s helpful as well.

Lee Kantor: [00:23:17] Right. Because the world’s your oyster now. Yeah, it’s game on now. You can get the best from anywhere instead of just that one locale, right?

Steve Greene: [00:23:25] Absolutely. Then go with it. You are the talent is the best. You’re not you’re not as constrained like we used to be.

Lee Kantor: [00:23:30] Right. But then you have the challenge of how do I get them as part of the culture and get all that kind of soft stuff right with that remote employee. So.

Steve Greene: [00:23:39] Right.

Lee Kantor: [00:23:40] That has its own challenges.

Steve Greene: [00:23:42] Yeah, you got it.

Lee Kantor: [00:23:43] So now if somebody wants to learn more about Fleet Core, what’s a website?

Steve Greene: [00:23:47] Yeah, it’s WW W dot fleet core fleet class. Talk to you. Learn a little bit about the clients we have, the products that we offer and a little bit more about the company.

Lee Kantor: [00:23:59] Good stuff. Well, Steve, thank you so much for sharing your story today. You’re doing important work and we appreciate you.

Steve Greene: [00:24:05] Thanks, Lee. I appreciate the time. Thank you very much for having me.

Lee Kantor: [00:24:07] All right. This Lee Kantor will you next time on Atlanta Business Radio.