Pictured left to right: Avi Levine, Matt Gillman and Rob Meyers.

The following interview is a transcript from SFNet YoPro Committee member Avi Levine  interviewing Rob Meyers, president, CCO & managing member of Republic Business Credit, in April 2020. Rob previously served as chair of SFNet's National Young Professionals Committee and spearheaded the YoPro Annual Leadership Summit, now in its third year. We hope you enjoy getting to know the industry’s young professionals. 

Matt: So tell us, who is Rob Meyers?

Rob: Rob Meyers is a kid that grew up just outside Detroit and was raised in Pittsburgh. When he turned 18, left for Chicago to study Biology and apply all four years of education to go straight into factoring. He was born on his grandfather’s 70^th birthday, who was a judge, lawyer, Captain in WWII and was the Mayor of Fort Wayne, Indiana. He always told me that I couldn’t do any of those things because they all sucked, so he would say, “please, go find something else to do that doesn’t involve politics”. My dad is a steel salesman who has worked for the same company for over 43 years and told me I can’t be in steel sales either. So, my core foundation was a lot of family, golf, a lot of fun, and a lot of drinking around the holidays. But I was kind of always told to chart my own path. So that’s who I am, trying to figure it out in a sea of finance majors.

Avi:  So you majored in Biology, but started your career at Bibby?

Rob:  Well when you're a biology major you spend most of your summers writing very long research papers in a very dark laboratory. I worked for Dr. Alex Rosengart, who was the head of neurosurgery for the University of Chicago hospitals. My senior year I took a course called Economics in Biology, but I then realized I was only in it for the money and I didn't think that was a good enough reason to spend the next 14 years in school. So I worked for Aflac for three weeks selling insurance while I was in school.

Matt: Say that one more time? What company?

Rob:  Aflac!  So I sold insurance for a few months to get something business related on my resume. I went through the interview track process and was looking at a few different healthcare consulting gigs, and then there was a company called Bibby Financial Services. They were hiring for graduate trainee managers and the first six months you could live in London, all expenses paid. I later found out it wasn’t actually London, it was 45 minutes outside of London in a town called Slough. The reason that town might sound familiar is because Ricky Gervais' created a show based on that crappy town, called The Office. Then Steve Carrel went and had a lot more fun with it in the US. And so why did I go into factoring? Because it sounded cool and it was something I didn’t know or apparently need any prior experience to learn. I had some buddies living in Barcelona at the time, so would always be able to find some fun living abroad.  While I was only in London(ish) for about  6 months, I spent nearly 10 years working for Bibby which will I will always say was the best choice I could have made. I had so many opportunities, so many cool experiences, so many changes. Back to Aflac for a moment,  my business partner now, Stewart Chesters, who was the CEO of Bibby at the time, that hired me out of college said I'll never tell your parents, but I didn’t hire you because of your University of Chicago degree, I actually hired you because you sold insurance.

Matt: What type of impact did your father being a salesmen have on you?

Rob: I mean it started when I was 8, 9, 10 years old. I had to go to my parents Christmas and holiday parties and I was forced to talk to people 20, 30, and 40 years older and find something in common that wasn't just baseball. And I think having to be around those kinds of conversations, having a golf club in my hand since I was three years old, and having a grandfather that woke me up every morning saying that you were sleeping the day away at 7:30 in the morning had a big impact. I think all of that helped set the building blocks of who I am today. And, my dad would take me to business meals with him so I had to sit still as well. He would tell me his experiences. He'd leave every Monday and come back every Thursday. And there's some more connectivity to Republic on that. Actually, one of our 40% owners was one of my dad's first customers 40+ years ago.  He sold his business to USG for $88 million in 2006. And we got to know each other at Big Ten tournaments, watching basketball in March. My dad was a Hoosier. My grandfather was, Hoosier.  I was a Maroon or Moron if you didn’t like us…they really need to work on that mascot name, by the way. 

Matt: Go Hoosiers! I went to school at IU Bloomington.

Rob: At Indiana University in Bloomington the only thing that exists down there are college kids. But one of my dad’s best moments of Indiana University was Bob Knight’s undefeated season. But for me, I played football at University of Chicago and before that I had the opportunity to meet with Cam Cameron, who at the time was the head coach of Indiana. I was thinking about going to play division one football, I might've been able to walk on at Indiana or Purdue. And they said, you know, Rob, you're a six foot three kid from Western Pennsylvania, I have a bunch of 6’6+ kids that can move faster than you. He goes, you could come here and you're going to spend four years working to get on the squad. You might get a scholarship your fourth year, you're going to red shirt at least one of those years, and your fifth year you might play. And he goes, yes, you're going to get a great MBA from the Kelley School of Business, but is that how you want your next five years to be? And he goes, and if you don't really love football, we'll make you hate it. And after that is when I ultimately decided to play division three football, which was nowhere near high school football. And anyways, the rest is history. It was fun.

Avi: And then you're like, I'm just going to get into factoring instead, very similar to football. Let's fast forward just a little bit because we have an allotted amount of time and the temperature is rising in here and I need to get out of this hot office. So the fact that you got your MBA is interesting because we don't see a lot of people in this business going back to get their MBA because they find themselves advancing in other ways. You were at Bibby for a number of years before you got your MBA, so why’d you go back to school?

Rob: So I was a biology major. And what that means is it teaches you how to think, it teaches you how to analyze, but it doesn't teach you some of the basics of operations or valuation or anything capital markets related which becomes essential as you flip past the employment side to the ownership or the entrepreneurial side. At the time I was an interim managing director at Bibby. I didn't need to go get an MBA to have a very good career at Bibby. But I wanted, I wanted to battle or punch above my educational weight. I loved learning. I didn't get some of the business courses that a lot of people had around the table and I wanted to expand my depth and breadth of business in general. But I really wanted to get into evaluation models and understand the different uses of debt and the different costs of debt and more importantly to understand a balance sheet at a level that I'd never understood before. Not only to help with conversations with our clients, but also will continue to benefit me throughout my future. And I think to your point, a lot of people in banking have MBAs, but not necessarily as many of us factors do. And for me, I was looking to expand my peer group into spheres outside of finance. We spend a lot of time with the SF Net. We spent a lot of time with the TMA and ACG and everyone in that area is plus or minus related to finance. During my MBA, I spent a lot time with someone that was on the board of RR Donnelley's company as it was separating into three companies. I spent a lot of time with people that were building businesses, aiding the global supply chain, solving world problems and including one individual that actually founded his own aircraft company. I mean there's six doctors, several lawyers in the class, all people that when we started talking about a business case had a completely different perspective from my own. And I didn't feel that I was able to get that within the company I worked for at the time. Or more importantly, that I would be able to get it necessarily from your traditional industry events. And so I took the challenge and it was expensive and worth every minute.  I had the opportunity to battle around and understand things or people that I never would have otherwise been exposed. And I immediately applied it to most things I've done. And I know several staff on my team will seek a similar course in the future when they're ready.

Matt: So if you had to look back from your MBA experience, would you do it again before?

Rob: Yes.

Matt: Now, being young and founding your own company, did you have any doubts that you can share? Were any of those doubts suppressed because of MBA coursework?

Rob: Yeah, I think it's a good question. I think an MBA is what you make of it. I would strongly advise people that are young that don't have a lot of career experience, not to go down the MBA path. I believe if you've been in work for two, three, four, five years, you don't get nearly the value out of an MBA that I got. Yes, you can say Kellogg is a premier institution without question, but the average age of the class through an executive MBA was 40 years old. And so people in that room had had work and life experiences for over 15 and 20 years. Right. If you look at everything in my life I've done, I've tried to get more and gain more from those that know more than I do because I know my limitations and I know what I don't know and I try to pride myself on bringing people in those roles. And so for me, I had managed people, I had built teams. I had gone through a tremendous amount of organizational change.  At least I would like to think, I was able to meaningfully add to conversations. If you didn't have those experiences or you'd hadn’t managed people, the concept of leadership and management become more theories than practice. But to answer your other question, MBAs can also go to people's head. I can tell you the number of people that put it at the end of their email signature are probably a good indication of people that believe they're more competent than they are at that point of their career. I don't think an MBA necessarily made me more prepared for it, but at the time and effort and energy I spent, and now the resources I have and the regular quarterly dinners I still have with 10 to 12 folks that I graduated with, we all keep pushing each other. They're so much more successful than you'll ever view me. And for me, I like to surround myself with people like that. Someone said to me at one point, that you are the sum of your five closest relationships. I like to believe I spent my life constantly improving who those five people are. But yes, you have doubts. Someone sent me an email about, Oh my God, isn't it amazing to be an entrepreneur or, this is great, nice job acquisition. And I told him, man, what you don't understand is for every peak that you see in a press release or on Instagram, there's equal and opposite troughs. And often there are more low points than high points.  That might be a bad debt, nasty email from a client or one of your staff that you really counted on telling you they were leaving.

Avi: With all the doubts and questions, at what point did that shift to where you say, okay, I'm pulling the trigger. I'm going to become an entrepreneur.

Rob: I don't know what disease I was born with, but I always wanted to be an entrepreneur. I always truly believed that if I was going to bet on someone, that might as well be myself. But I think there's a real fine line between arrogance and confidence. From what I see by the famous art of people watching, if they don't have humility, or if they aren't genuine and they don't do it for the right reasons that the earth has a way of falling below their feet eventually. For me, I love the building, I love the engaging, and I am inherently an optimistic person, which helps a lot. And so some mornings I'm able to lie to myself better than others can I guess. Some days when something really goes bad, or not the way I had hoped, I still wake up the next day as if I am shot out of a cannon the next morning. And I mean, before this conversation, I've talked to a lot of people this morning already and I just get energized quicker than your average person. I remember there was one of the largest deals in my sales career. It would've been a $10 million facility. It would have been $8.5-9 million out the door, would have been the largest deal Bibby had ever done, and it died at the very last minute, 15^th inning, just brutal. I had already started counting commission checks in my head and BOOM!! And especially when it happens during your first couple of years doing this, right. And we, the guy had signed a document, a validity guarantee two weeks before and that day said, you know what, I've talked to my lawyer, I'm getting ready to build a fund and don’t want the personal liability. By the way, that fund now has 45 portfolio companies, but this is going to be his first deal. And he said, I want to revisit this document. And at the time my managing director said, no, sign it. Tough sh*t. And he said, okay. And he walked away. For example, my chief executive at the time took three days to recover; for me the next morning after I drank an awful lot of whiskey of course, I was back ready because I knew that there were a certain number of opportunities. I'm a big conversion statistics and data person, and unfortunately that is a lot of luck required and there was nothing I could do at the time to impact whether that deal funded or didn’t fund. But what I can do is control my activities and improve my behaviors, which is how I believe you set yourself for chances at success. If you bleed this into Republic Business Credit, I didn't start the company. It was started by Stewart and Allen in 2011. But when I was looking to exit Bibby, Allen was 68 and wanted to retire at the time. I talked to 10 other firms before coming to Republic, obviously with Stewart Chesters who is my business partner, and hired me out of college. He had a leg up on all the competition. But you never put all your eggs in one basket. With that said, there were several capital parties we had talked to. It wasn't the first ones that came through in the end. Some got really close and failed. You hear about my family and I, my family friend buying out Allen, buying out all the individual investors, Stewart rolling over and now we own 70% of Republic. And then in December of '18, we actually bought out the other 30% and so now the three of us own 100% of the business. You hear about those things, but you don't hear prior to our new sub-debt partner, that there are a lot of suitors, there are a lot of conversations, there are a lot of things that happen in there and they're not all great and sometimes you spend a lot of time with someone and they give you the world's worst term sheet. And I asked him if he was kidding at one point and that didn’t really go over well. I told another group that that was the worst single thing I've ever seen in my entire life. And if they weren't going to change it, that we probably didn't need to continue our conversations. It's not because I was trying to be a jerk. It just fundamental for me, I'm very transparent, I'm genuine, and I'm very upfront and I kind of tend to steer into conflict head on. And I don't want to waste their time and they had wasted enough of ours. But for whatever reason, some people have a habit of trying to show only the best view of themselves. If you have a sit down with someone, ask them their story, you will often find there's a lot of things that have actually happened in their life that didn't go in their favor or according to plan along the way.

Avi:  So that's actually the third time you've answered what the follow-up question was. Cause the next question was, can you talk about the structure of RBC? You obviously didn’t just wake up one day with that kind of cash to buy a business. So you answered that question.

Matt: Now about the recent acquisition, what’s your opinion on buy versus build?

Rob: I don't believe we have enough time to possibly give you a satisfactory answer to that question.

Avi: Give us the elevator pitch scenario of that, in 60 seconds.

Rob:  I won't give you the elevator pitch that I've said to other folks. What I will tell you is for us, our entire business starts with people. And without them, I would argue no one can really differentiate themselves in commercial finance or factoring. Your people differentiate you, how you might make a decision or how you're capitalized could differentiate you, but largely there's all some version of something similar out there. Someone might be faster, someone might be bigger or someone might be cheaper and so we kind of take that approach across our business. And you asked me the difference between build and buy. I'm always doing both. Right? There are, for every acquisition you might hear about, there's 12 we don't proceed with for one reason or another. And for every person we add, we probably interview 50. So I perpetually spend my time doing both. They aren't an either/or or clean answer to the question. Now would I want to go see how many companies you can buy in the same month? No, that would be an integration nightmare. But there's also different versions of buy. For us, we got a great team with Matt, Jason and their people that that added geography and products and experienced people we didn't have, so to me, they are a foundation to keep building. In this case we built it, but we've got a portfolio of performing assets. In the past we've actually bought some pieces of underperforming portfolios without any formal announcements. At the very beginning, we added people in areas that made sense. And if you look at us, we're really strong in the Midwest and the South and now we've lit up the West coast, right? We have 151 clients now. We have clients in 37 different states. We don't have anything in the Northeast. We don't have anything in the Southeast. I don't believe in being average. And so for us, we would never add one BDO in Manhattan. Not that it's not an unbelievable market, but we'll be the 15th best factor there. And I don't believe being average would help us compete. So for us, if we're going to go into California, we're not going to go with one or two people. We're going with a team of 10 like we did. 

Avi:  Right, that makes sense. So I mean, one thing you bring up is diversification. Creating new products. It makes me think there's a lot of new lenders that are here, some that aren't here anymore, that are like, Oh, we got this great new lending product. I’m sure you’re familiar with some of them.  What are your thoughts on some of the newer lenders that in my opinion, try to be something for everyone?

Matt: Now you’re in the hot seat.

Avi:  I mean Rob, they all had MBAs…

Rob:  Yeah. And thankfully our business doesn't have too many of those. What I would say is without speaking of specific firms, a lot of it goes back to discipline and what you want to be. For example, Stewart and I own 60% of the company and most of our livelihood is in this business. So for us, we don't need to have $400 million out the door to have a significant day one day in our lifetime. But in businesses where you own 1% or 2% or you have options based on future value or future revenue growth, your incentives get all screwed up. And I firmly believe that incentives will always drive behaviors. I'm not trying to make a quick buck, right? We decline so many deals that another person might create a product or a reason to fund. For us, at our core, whether that's a factoring loan, whether it's a non-recourse factoring loan or whether it's an ABL loan, it doesn't change who we are and how we service them. The difference with asset based lending is we brought in people that have known it for a long time. Why? Because it's riskier to us. However, our credit criteria for ABL isn't what most people are doing. It's for us to look at more healthy businesses, growing businesses which means it'll be at a lower yield as opposed to our core factoring or non-recourse factoring products where it might serve a different customer.  We also picked up a new small ticket factoring product called Fast A/R that supports smaller customers we might normally be able to help. Why? Because it doesn't make sense to have a ton of people interacting with a $15,000 factoring loan, but now we've got a mostly tech enabled solution where we might be able to help that customer. So when you use the word product, for me we don't sell products. When you talk to an entrepreneur, you don't know if he needs factoring or asset based lending or purchase order financing or merchant cash advance, which is a plenty good product for those people. I can tell you with Republic, we're always going to be in a secured position. We're always going to know what the liquidation value is of what we're lending on. We're only going to work with people that we believe are able to handle the product that they're best suited, right? In factoring, you don't have to be as sophisticated as asset based loan. In asset based lending, we like real equity to be involved in the company. Almost all of our ABL credits are owned by private equity sponsors. While we have some of those in factoring, we know someone's behind it. I know someone can report it and God forbid if something goes wrong, there might be someone else there to help us get through that process.

Avi: And then traditionally it's also about verification, right? How do you still avoid fraud?

Rob: Old school notification and verification. Blocking and tackling if you prefer. Even the deals we might have inventory and equipment on, again, with the exception of a true asset-based loan, all of that is verified and notified. I go to sleep every night tracking every single piece of paper knowing that every debtor is paying in a lockbox that I control directly, knowing that we're in a purchase instrument in a true sale state of Louisiana. I do not have to go to bankruptcy court and to discuss the recourse versus non-recourse argument on factoring. We operate in a true sale state. Texas and Louisiana are the only two in the union like that actually.

Matt: That’s a good transition to our next question. With new technology and innovation, how do you see old school ABL changing? Where’s the innovation going to happen?

Rob: I wrote an article last night for The Commercial Factor and it is on Porter's five forces, which are the bargaining power of suppliers, the bargaining power of customers, industry rivalry, new entrants, and substitutes. At times like this and with questions like that, I find myself going back to some of the strategic frameworks that I got from Kellogg or that I've gotten from books, Harvard Business Review or MIT’s Sloan Management Review. I spend a ton of time consuming information on leadership, management and strategy. I don't believe what we do today is going to remain as is, do I believe that we will purchase invoices? Yes, it's worked for over 2000 years, but our customer wants it be mobile or fast or quick or responsive, but they also want security and stability. And so there comes a breaking point, right? Do I believe banks will continue to do all the stuff they're doing today? No. I don't believe we'll ever truly be in a world of less regulation, but it will be less enforced from time to time in the banking community. I believe more and more States will require licensing of finance companies. I believe more and more investors will require returns and the only problem with some of the applications in the world of financial technology is that they don't make money. At the end of the day, you must return more dollars to shareholders at some point than you have borrowed, whether that's through an exit or whether that's an ongoing transaction. And as long as that desire of shareholders remains, people will continue changing, tweak and improve finance companies. In my recent article I literally wrote that in 2014, people thought factoring was dead. MCAs we're going to take it all over. Well they did serve a community that needed help, right? And there are some really good merchant cash advance lenders, but there's 2000 of them that are either out of business or on their way out of business because they have not been able to acquire clients profitably and manage their losses effectively. And this has been during one of the best runs of the economy. Do I think block chain may be interesting? Yes. Do I think supply chain finance is interesting? Yes. But even in the world supply chain financing, a lot of times they're purchasing the receivable from Walmart and Target. And so that's why I say our core will remain factoring, but it might not look or feel the same. That'll all change. And at some point, someone may even try to change the word factoring, they just better not change the security and the risk profile of its application.

Matt: That’s an interesting take. Closing in on the end of our interview, we have two important questions we wanted to ask. If you sold your company tomorrow, what would you do? And you can't tell us you're going to start another finance company.

Rob: So I also own a craft brewery and I have a tech investment, but let's assume I sold everything. I'd be a teacher. Without question. I, particularly my wife, has been a teacher for a long time in the Catholic school system in Illinois. And what always amazes me is the number of people that don't understand credit cards, that don't understand saving for a 401K and don't understand balancing budgets. For me, I would spend a lot of time educating people on general finance stuff.

Avi: It's pretty amazing that they don't teach that to kids. Like in high school, it was like, home economics. You learn how to make pancakes and measure flour, but you don't learn how to buy the crap and budget yourself to support a family.

Rob: Think about the time and the money you spend on learning things that you don't necessarily use in education, right? Don't get me wrong, how you think, how you process information...problem-solving is something you only get from good education. But for me, the fact that people aren't equipped with basic cooking skills, people don't understand what produce is good and what produce is bad. People don't understand why you should pay off a credit card every month is one of the things that I would spend some time working on with without question.

Avi: Alright, what recommendations do you have for young professionals that don't want to show up every day working for somebody else and have the same disease you have with being an entrepreneur. What's the advice that you can leave them with?

Rob: A short answer is call five people that have done it. Ask them what's gone well, ask them what sucked. And when you're done with that and make sure you still want to do it, and if you want to do it, it takes a plan. Capital raising is an exhaustive process. But businesses don't work without it. And more importantly, decide what your values are. Decide what you’re willing, and willing not to do. Right. There's been plenty of people that have offered us money, but it's come with strings attached that aren't comfortable for me or my business partner. And so for me, the first thing was to find out how hard it really is and how fun it really is and make sure you have the risk tolerance for it. I've watched people that are employees, the deals they're willing to do, massively changes when they become part of the equity. And if you aren't able to keep your core and you aren't able to build a strategy that matches your risk tolerance. You're have a greater chance of failing. And I think for me, that's one of the things that I worry about people is they think it's easy and they don't hear about the negatives, but more importantly they don't actually have the desire and the appetite for it. And then if you're going to do it, go find someone older, go find someone with some gray hair and go find someone that's lost millions of dollars more than you have, and listen to them, really listen to them. And make sure you have someone in your business that's a giant pain in the ass. That person will be why you're here 20 years from now. And thankfully I have a couple.

Avi: Excellent. We appreciate your time.