CEO Stories: The Virtuous Circle of Capitalism
Doug Clark, Founder, CEO and Chairman of Corcentric, made his way into the worlds of accounting and finance, then truck leasing and later technology. Thirty years into his career he invented a way for companies to get out from under their back office paperwork so that they can spend more time listening to their customers.
Doug’s endeavors have been disruptive in the industry, but his success couldn’t have happened without a fair amount of risk. Listen to the podcast to learn more about Clark’s business innovation. Listen to Doug Clark discuss his many career endeavors as well as the benefits of capitalism.
Solving the “Paper Crisis” Through Disruptive Innovation
Doug Clark saw the future and promise of technology beyond the dot.com crash. He took over Electronic Trading Solutions – where his transportation company had been a client – because he believed businesses would embrace technology that could help them become more efficient once the smoke from the dot.com crash cleared. He knew from his Wall Street days that companies had a “paper crisis” and that they needed help streamlining back office operations.
Listening to the Customer
Corcentric, Clark’s current business, evolved from the recognition that companies need to focus on their primary businesses and be freed from distractions that can more efficiently be outsourced. To Clark, solving customers’ problems is a critical component of capitalism, because you’re meeting an obvious market need while allowing the customer to deploy their capital and other assets most efficiently.
No Silver Bullet
Technology in and of itself isn’t the silver bullet, according to Clark. The solution comes from marrying the capabilities of technology with the needs of the customer; setting appropriate expectations; and preparation, discipline, and vision. For transportation businesses – one of Corcentric’s key markets – that means focusing on trucks, not purchasing or processing invoices and payments. Corcentric helps its client companies grow by giving them the freedom to better serve their own customers.
This Is Capitalism: Doug Clark
RH: This Is Capitalism. I’m Ray Hoffman.
It’s only about a 30-mile drive from where Doug Clark grew up to the Cherry Hill, New Jersey, headquarters of CoreCentric, the company that Doug Clark has been building over the last two decades. CoreCentric’s proprietary technology helps companies optimize their back-office transactions as in the way they purchase, make payments and get paid.
It’s also only about a 30-mile drive from where Doug Clark grew up in a slightly different direction, to Center City Philadelphia where, as young man, he went on the board of directors of the company that eventually became Drexel Burnham. But when you grow up on a farm in Elmer, New Jersey, the way Doug Clark did in the 1950s, making your world into the worlds of accounting and finance, then truck leasing and later technology, isn’t as easy as just pointing your car or your ambitions straight up New Jersey Route 55.
He has been at it now since 1965. It, being this business of capitalism. Doug Clark.
DC: When I created Ameriquest in 1997, it was clear to me that technology was taking a bigger and bigger piece of the process of making companies more efficient. We had a GPO, who was in the transportation, truck leasing arena, and what I decided to do in early…at the foundation of that was become the second customer of a company called Electronic Trading Solutions, which eventually became CoreCentric.
What happened was during the dot-com era, talk a little bit about timing now, when that was exploding and if you had .com at the end of your name you could go public, kind of thing. And as the dot-com era crashed, Electronic Trading Solutions was also in a crash position. Their private equity company said look, “we’re closing the doors, it’s not making money.” I got on a plane, went to visit the offices of the private equity, did a stock swap and owned CoreCentric when I left that office.
RH: How long did that meeting take?
DC: It was probably a couple hours.
RH: And how many, from that transaction, if you could just pull a number off the top of your head, how many customers have benefitted from that transaction?
DC: Wow, we have at this point 2,000 customers doing business with us. But the permeation of that in the marketplace…Because our customers are dealing with their customers, so I couldn’t offer up a number but in the word of a great car dealer in southern Florida, it’s huge. [laughter]
RH: Yes, you can just see the virtuous circle of capitalism. And you obviously took on a fair amount of risk in doing this and your various ventures have involved a fair amount of risk at times.
DC: And the risk was more about coming back to the question of timing. Was the market ready for this kind of innovation. That’s true of most endeavors where you’re trying to be…and a big word used today is disruptive but I think there is a correlation there between disruption and risk.
So I think we were very much a disrupter in the early years of Ameriquest and now CoreCentric because we were in there aggregating purchasing but we weren’t trying to disintermediate the franchise systems that were involved in that whole supply chain. Whereas the early people that were in this aggregation play in the transportation arena, they thought they were going to disintermediate the tire dealers, as an example. And I always said “you know, I haven’t seen a FedEx box big enough to put a truck tire in so I don’t think you’re going to be disintermediating these folks.”
So that was the whole play that we did. We shortened the time frame of adoption by not trying to disintermediate tire dealers. So that’s key.
RH: I need to go back to your start at this point in truck leasing. First of all, how did you get from Pricewaterhouse to being in the truck leasing business?
DC: Well there was another stop in between there. I worked for a company called Drexel Harriman Ripley, which eventually became Drexel Burnham. I was the youngest member of the board of directors of Drexel Harriman Ripley, Drexel Firestone, and then eventually Drexel Burnham. I was not on the board of Drexel Burnham.
I remember being called down to the CEO’s office, I was vice president of operations. So that’s where I got a little bit of my interest in paper flow because I was trying to wade through the paper crisis that was on Wall Street at the time.
RH: What year would this have been?
DC: This would’ve been 1968.
RH: So everything was in paper?
DC: Everything was in paper. Certificates were in paper, paper on invoices, and everything. Paul Miller was a CEO and he asked me to come down. He said, “look, we have this gentleman that’s about to graduate from Wharton and we don’t know what we want to do with him just yet but we think he could be a big help for you in the operations and maybe come up with some great ideas to make it more efficient.” It turned out it was Mike Milken.
RH: I guessed that. [laughter] Let me get a sense of your character and how being a farm boy from Elmer, New Jersey, which is the right turn you make when you’re going from the Delaware Bridge to Cape May is Elmer, New Jersey on Route 40.
RH: How you ended up on the board of directors of a firm in Philadelphia a few years later.
DC: In my later years in business I have always tried to figure that out. We were in a very active Boy Scout troop in a little town called Daretown, New Jersey. And the gentleman that ran that did such an awesome job and afforded me the opportunity to go to leadership school within the Boy Scout organization. And so that was the foundation.
So then the next step was when I went to the University of Miami, my whole approach to college at that point was when I went there, I said what curriculum do I have to take so I don’t take a foreign language? So the only thing that was available at that point in time was the business school. And I majored in accounting and there was a professor, Miss Zukowsky, who everybody said, “avoid taking her classes, she is tough. It’s really hard to get a good grade from her.”
Well, it turned out I couldn’t avoid it and I ended up with Miss Zukowsky, who turned out to be just the most important person in my life at that point in time. At that point in time, Florida had a rule where only I think it was Haskins & Sells could practice in Florida. None of the big eight at that time could come in Florida other than Haskins & Sells and practice due to some grandfather law. She was instrumental in helping me understand accounting and then was instrumental I think in getting me an interview with Pricewaterhouse.
And so that was the next step in the evolution from farm boy to college student to business. And Pricewaterhouse, as we all know, is one of the big eight and I learned a lot and then went to Drexel Harriman Ripley, which was an audit client that I happened to be on. And I was hired at that time to go with Drexel. So that’s how we got there.
RH: Yeah because your path is not as easy coming from Elmer, New Jersey. And Daretown, is that where they have the rodeo?
DC: No that is Woodstown, New Jersey…is the Cow Town Rodeo. But they’re all within a 15-mile circle of each other.
RH: So if you’re in Daretown, you can make it in time for the rodeo everyday?
DC: You can. Yeah, yes absolutely. And probably a lot of the steer came from Daretown. [laughs]
RH: So let’s go back now to the truck leasing business and how it evolve your career.
DC: So really what happened was my career took another turn where I was really running a group of truck leasing, private truck leasing, that were trying to compete with the big guys, Ryder, Penske, all those type of organizations. And it was in the mid-‘90s, where I came to the conclusion when consolidation was rampant that we as a GPO where you took all of the quote “profits” and sent them back to the members that we couldn’t really compete with Ryder and Penske and the big guys because they got a balance sheet that has an equity position in the millions of dollars and we got a balance sheet that’s in the hundreds of dollars.
You can’t compete. You can’t get the good people, you can’t get the technology, and you can’t aggregate the purchasing because you can’t grow big and have a bigger purchasing capability. So it was then that I decided to go to that group and say, “look, I don’t think this model…It’s basically a nonprofit model, to me that’s not capitalism, so I don’t think it’s working, boys.” So in 1997, when we created Ameriquest, it was created with the funding from that group of truck leasing companies.
RH: And how many were there?
DC: There were 60…65.
RH: Sixty-five small operators?
DC: Correct. Some of them have gotten quite big over the years and I like to think that it’s partly attributable to the fact that we provided the technology, the good people, and the aggregated purchasing to allow them to save money in the future. But what we did was we raised a million dollars and put together a for-profit company that was known as Ameriquest at that time.
RH: And that basically is CoreCentric today?
RH: CoreCentric’s core reason for existence, right?
DC: That is correct. It was really, if you go back and look at the steps that took place, it was eventually us buying Electronic Trading Solutions from that private equity firm and then continuing to, which I think is another very important part of being successful in capitalism, listening to the customer. Really listening to the customer. What are his issues, what is his pain point? And we would, in those early years, try to understand that that was and we built our solutions based on customers’ vision of what they need, not on the vision of we’ll build it and they will come. Very different. And I think it served us well over the years.
RH: Yeah. I was reading a couple of the case studies on your website. One of them was Daimler Trucks North America, the biggest heavy-duty truck maker, a couple of interesting points in that. Daimler Trucks says by employing your technology, it has been able to sign new customers, which might not have been possible otherwise, and reengage several previously inactive major accounts that were willing to participate in a new industry technology platform.
So in symbolic logic fashion, could you take me through that, point A to point B to point C of how it is that you were able to benefit this major customer?
DC: I think it’s a classic example of a company understanding where their capital should be deployed and understanding where their core competency and focus lies. So if you look at the marketplace over the last five years, and it’s really been the years that we’ve been involved with Daimler, they have spent a lot of their capital on the truck itself, the connected truck, the technology, and all the things that go into keeping that brand and that truck ahead of their competition.
What was happening back seven years ago was that they were not doing the same thing with their paper processing, back office, if we could say that. And in fact, they were losing some customers over that very function because they weren’t doing it that well. And so they went out with an RFP and their internal folks, I believe, convinced them we’re going to make this better, don’t worry about it, so they decided to keep it in house. And they saw no improvement.
Well the reason they saw no improvement wasn’t anything negative about Daimler, it was the fact of life of all companies–the technology capabilities are at the bottom of the barrel when it comes to the back office. The truck is important, the dealer relationships are important and so we’re gonna do everything we can to allocate our capital to technologically advance in those areas. They meant well by saying well we’ll do it internally, it never got to the level of priority where anything was done.
So the next time they went out with the RFP it was “we’re going do it this time.” And fortunately we were able to secure the business. And I think that the reason that it has been so successful is really it’s a true partnership between a customer and a technology company. Technology companies are not silver bullets. I don’t care what…And I’ll probably be shot over this but there’s no silver bullet out there with technology. We’ve seen so many endeavors that go astray because there’s not the proper alignment between the expectations, preparation.
And I have to say that Daimler–we were very frustrated throughout the implementation because it was taking so long to do things and they wanted to do things over again and recheck and calibrate and keep communicating with their dealers–our technology matched with that approach was a home run.
And therefore when we went live on February 18th, 2013, it was flawless. It was probably one of the most flawless executions of a very complicated technological capacity, certainly in my business. And I’ve seen a lot of businesses and seen a lot of failures and a lot of misstarts. So from that point on, they were able to move forward and show their customers what value they were bringing to them in terms of information, accuracy and all these kinds of things.
And so combined with their increase in the marketplace and the market share, not only with new trucks but obviously with parts, the sustainability and scalability of our systems and technology combined with their discipline and preparation and preparing their customers and their dealers, turned out to be a winner.
RH: We talked earlier about the virtuous circle of capitalism, here’s the virtuous circle of innovation.
DC: Absolutely. Very true.
RH: Doug Clark, 30 years into his career he invented a way for companies to get out from under all their back-office paperwork so that they can spend more time listening to their customers.
This is Capitalism. I’m Ray Hoffman.
About the Series: Featured stories from the intersection of the free market and entrepreneurial success. Here we speak with leading CEOs, academics, philanthropists and up and comers on their contributions and perspectives on the American economy.
About Ray Hoffman: Ray Hoffman, a veteran business journalist, is highly-regarded for his news and analysis features and insightful CEO interviews. Representing BusinessWeek on air for twenty-one years, Mr. Hoffman was the morning business news voice on the ABC Radio Networks from 1995 to 2006. Mr. Hoffman also represented The Wall Street Journal, on air, for eleven years. His daily WCBS CEO Radio feature was recognized by the New York Press Club as best radio business news report in both 2012 and 2015. In this podcast, Mr. Hoffman invites some of America’s most dynamic CEOs to share their stories as business builders and perspectives on free enterprise.