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December 23, 2013

WEX's Dubyak reflects on decades of growth

PHOTo / Tim Greenway
PHOTo / Tim Greenway
Michael Dubyak of WEX in his office in South Portland

WEX timeline

1983: Wright Express, a startup created by Maine heating oil company A.R. Wright with a small regional customer base, offers fleet card service at three Portland gas stations. In 1986, it hires Michael Dubyak as vice president of marketing and retools its card for a national market. Dubyak, an Ohio native, had worked in marketing with Pennzoil before coming to Maine.

1993: Records first profitable year after spending $23 million in venture capital.

1996: Hits two milestones: 100,000 gasoline stations accept fleet card and 1 million card holders.

1998: Charters a bank in Salt Lake City, allowing company to issue corporate MasterCard and Visa cards.

2000: Launches corporate payment services division, which offers corporate credit cards. Priceline signs as first customer.

2005: Records first profitable year for corporate payment solutions division, validating diversification.

2005: Goes public on the New York Stock Exchange, ending a series of ownership changes.

2008: Purchases Financial Automation Ltd., a New Zealand-based provider of fuel card processing software, for $9 million. Enters the international fleet card market.

2010: Purchases for $318 million an Australian fuel card company that advances Wright Express's position in the international market.

2012: Changes name from Wright Express to WEX Inc. Purchases Fleet One for $369 million and enters the heavy truck fleet card business. Also enters Latin American market by paying roughly $21.9 million to acquire 51% interest in UNIK, a privately held provider of payroll cards in Brazil. It also buys CorporatePay, a London-based corporate prepaid card company that serves the travel industry, for $27.5 million.

2013: Announces purchase-and-sale agreement to acquire Exxon Mobil's fleet card program in nine countries in Europe, picking up about 1 million cardholders. Deal is expected be completed in late 2014 or early 2015.

True to his formative years in marketing, Michael Dubyak sums up his 28 years at WEX in just four words: "Dream big, think smart."

Hired in January 1986 as vice president of marketing for the fledgling Wright Express — a fleet payment card company that spent $23 million before turning its first profit in 1993 — he rose through the ranks, becoming its president and CEO in 1998.

By any standard, Dubyak's 15-year tenure heading the now-international payment services company has been immensely successful. WEX is projecting to end the year with revenues of between $708 million and $713 million, nearly tripling its revenues in 2005, the year it went public. More than 150,000 gas stations and truck stops accept its fleet card, and the number of card holders has grown from 1 million in 1996 to 6 million in the United States and 7.6 million worldwide in 2013.

On Jan. 1, Dubyak will become executive chairman of WEX's board of directors, turning over his CEO duties to Melissa Smith, who earlier this year replaced him as the company's president.

In an interview at WEX's headquarters in South Portland, Dubyak reflected on his career, acknowledging there were a few bumps. Among them, a close brush with folding in 1990, a fate avoided when Wright Express co-founders Parker Poole III and William Richardson provided $500,000 in additional capital to keep the company going.

The following is an edited transcript:

Mainebiz: Obviously, WEX is a very different company than it was 28 years ago. What were some of the milestones integral to its success and growth?

Michael Dubyak: It's almost like there's a line of demarcation when we went public in 2005. Prior to 2005, you have all of the things that got us to profitability, to being a real company in terms of critical mass. And then, in 2005, we were able to secure our independence after having five owners, or six owners if you include the private equity group. After 2005, we start to go international. We went from being 'acquired' to 'acquiring.' We've had 10 acquisitions since then.

[The year] 2005 is when we really started to control our own destiny. Today we are in five countries, we employ 1,400 people [more than 600 in Maine]. We're not only doing business on the fleet card side but also the corporate payment solutions side. For six years in a row, we've been recognized by Forbes Magazine as one of the top 100 small companies in the United States. Our market cap now is almost $4 billion. And in late November we actually had our stock price reach a high of just north of $100. We went public at $18, so to see that accretion and advancement is something we take solace in. We've done something to create shareholder wealth as well.

MB: When you started out as vice president of marketing, did you have any inkling this could be the company you'd work at for almost three decades?

MD: I think not. I was committed to Maine. I fell in love with the beauty of the state and the people of Maine. I said, 'I'm going to make this my home.'

I had a little bit of luck getting into Wright Express. To find opportunities in Maine, I was just networking. I sent a letter off to a company called A.R. Wright, a family business that sold heating oil, and they basically had founded Wright Express. The guy I sent my letter to threw it into the waste basket.

Later that day, Parker Poole III, the founding principal of Wright Express, came down and said to this gentleman, 'The venture capitalists want me to start building management. I need somebody with petroleum experience, preferably petroleum marketing experience. Do you know anybody?'

He said, 'No, I don't, but I got this letter today' — and luckily it was still in the waste basket.

So I'm grateful for that little bit of luck, because without that we might not be having this conversation.

MB: How did that eight-year stint in marketing prepare you for your expanding leadership roles?

MD: What I had to do initially was the foundation of building our business model — to get site acceptance. We were trying to get oil companies to accept our card. We had to crack the chicken-and-egg problem. That was my job early on. I was involved in setting up the sites, setting up the marketing strategy and helping on the sales side. I even helped establish customer service.

You know, at first you wear a lot of hats in a small company. And I was able to wear those hats.

Once we got enough of the oil companies to say, 'Yes, we'll program your card into our sites to accept it electronically,' then I was working on, 'How do we take this product to the marketplace?' … Today we have 20 oil companies that help us sell our card to their customer base.

MB: Did you have any inkling you were being groomed to eventually become CEO?

MD: We'd had six CEOs before I became CEO. So there were disappointments along the way when I wasn't being tapped. I think a lot of that was because what I was doing was still critical. I had to keep driving the go-to-market strategies of signing up these merchants and trying to put the channels into place.

Finally, in 1998, I was tapped to be CEO.

MB: Can you talk about the company's diversification into travel and health and the other corporate payment services you provide?

MD: You have to start with the fact that we are in the 'business-to-business' market. So we are working corporation-to-corporation.

What we have learned from the very beginning is that partnering is fundamental to our success. We talk metaphorically about sitting on the same side of the table with that partner, instead of sitting across the table and someone wins and someone loses. That doesn't build long-term enduring relationships.

Partnering is a strong part of our DNA and we've carried that not only to our customers and partners, but also to our associates, our families, our board of directors, our community at large. So that is No. 1.

I think when you do that you still have to create a great value proposition. In that element, we always try to find areas of opportunity in payment solutions where we can solve complex problems. So it's all about security and control and in some cases data capturing and data analytics and information solutions for different companies.

Service quality is important, too: To ensure we have high levels of retention, we make sure our customer service people, the people on the phone day in and day out, know the value that they bring. Because if they're satisfied with how the company treats them, we believe fundamentally that's going to carry over to our customers and our partners.

Finally, we're constantly investing in our business. We invest more every year in capital expenditures and in our people and products to keep differentiating us [from competitors].

MB: Many of your top leadership team rose through the ranks just as you had. Does that reflect a corporate philosophy of promoting from within, whenever possible?

MD: Yes. That doesn't mean you can always do it, because if you're competing on a world scale, as we are, you also have to have the most qualified person.

You have to hire well. You bring people in who can hopefully grow easily into what you're asking them to do today, but also grow into the future.

It also involves developing leaders with institutional knowledge, so you broaden their base, making sure they really can be experts in their area, but also getting them into other parts of the business over time. And then showing confidence in them, giving them the opportunity to grow.

MB: An obvious example would be your successor as president and CEO, Melissa Smith?

MD: Yes. From being a chief financial officer, I gave her more and more responsibility. She was basically, for many years, our chief operating officer. She oversaw all of information technology and client services — which is customer service, credit collections and all of that. So she had 75% of the people of WEX reporting to her. And she did a fabulous job.

She stepped into an interim role as head of our international business when we were just getting started. And she did a fabulous job there.

Then, two-and-a-half years ago, I made her president of the Americas, which basically is 85% of our business. The last two years we've had record years of bringing in new fleet business. And if you look at our corporate payment solutions [in health and travel business], prepaid cards have grown exceptionally well, greater than 30% the last couple of years.

She clearly kept stepping up to the plate and, basically, she earned it.

MB: Could you touch on the work you've been doing with Educate Maine and Project>Login?

MD: I'd say that overall we find great talent in Maine, even in those areas we are challenged in — information technology, in particular. The question in some areas is quantity [not quality]. I kicked off this Project>Login by getting other CEOs to buy into how we really could make a difference in this state. We're seeing a couple of things: As you know, recently the community college system got a $13 million STEM grant. Educate Maine helped write part of their business case of why they needed the money and what they were going to do with the money. That was a big win.

We have a big goal to get to about 150 paid internships through Project>Login at the end of four years. Last year we had 40 paid IT internships in the state. That's a big increase over the previous year.

The other part of Project>Login is to build a template that can be used for other disciplines. Then you can pick that template up and [use it for] marketing or legal or whatever. That's what we're hoping to build, if you're talking about the long-term impact of this.

MB: At the recent Doris Kearns Goodwin talk WEX sponsored at the University of Southern Maine, Melissa Smith announced that a scholarship has been created in your name. Was that a surprise?

MD: It was a big surprise. I had no idea whatsoever. It was great. For me, it's symbolic that this scholarship will go toward STEM-related degrees and students at USM. I'm very proud of that and it's nice to know that will be part of my legacy.

We've also now raised for USM over $400,000 for scholarships. And we have actually granted 80 scholarships at USM, primarily in information technology but also in the business school.

MB: Your new title on Jan. 1 will be executive chairman. What is that going to involve?

MD: I'm still somewhat involved in the business but at a very high-level strategic role. So, key mergers and acquisitions — where maybe I have relationships in the market and I can play a role and work with Melissa and her team — I will really make myself available.

If there's major oil companies or major travel companies that I have a key relationship with, I will try to play a role. And clearly I'll be providing my institutional knowledge.

MB: Anything you think you'll miss?

MD: I'll miss the energy of this place. I'll miss the intellectual curiosity. We're a growth company, we're looking to expand into new products and new markets. So that's going to be tough to miss. I'll miss the people, too.

MB: Anything you won't miss?

MD: International business travel. I just came back from being in Europe and it was just straight out morning 'til night. I won't miss that.

I won't miss the acceleration of the intensity of our business. Now we're in five countries. With this ExxonMobil acquisition [announced in early November], we're probably moving into four or five other countries in Europe. I don't think I'll miss the intensity on a day-in and day-out basis.

MB: Is there anything we didn't touch on?

MD: I was asked by Bob Woodward, when he was here [to speak at USM last year], 'What are you most proud of?'

I found an analogy that suits me in terms of how I look at legacy. I told him: 'If you play for the names that are on the front of your jersey, people will remember the name that's on the back of your jersey.' I'm thinking of a Tom Brady or a Big Papi when I make that analogy. That's what I believe it's all about. On the front of my jersey clearly is 'WEX' and 'Maine.' If I'm playing for them, I think the rest will take care of itself.

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