“Your most unhappy customers are your greatest source of learning. ”
When NBC's Today Show profiled Jared Isaacman in 2006, a reporter asked his father to name the biggest obstacle his son had faced in building his nationwide credit-card processing firm. The answer: "His inability to drive."
Isaacman, you see, was all of 16 when he founded United Bank Card Co. and started calling himself CEO. At the time, the staff consisted of just him and a few friends and corporate headquarters was his parents' basement. Assets were limited to $10,000 in stock certificates that he'd received from his grandfather.
But Isaacman wasn't worried. He'd dropped out of high school because he was certain he could transform the credit-card-processing industry. As it turns out, he was right.
Within a few years of UBC's launch, the company started showing up on Inc. magazine's annual list of the country's fastest-growing small businesses. Isaacman himself came in second (behind Facebook's Mark Zuckerberg) in the same magazine's ranking of America's 30 top entrepreneurs under age 30.
Now, a dozen years after its founding, UBC is among the largest payment processors in the U.S. It handles $10 billion in credit-card transactions a year; is adding 1,800 merchant customers per month; and, with more than 250 employees, has long since moved on from the Isaacman family basement to opulent corporate headquarters. Occupying a spacious corner office decorated with Darth Vader masks and a guitar signed by Bruce Springsteen is Isaacman, who at 27 still looks young enough to be the son of many of his employees.
In fact, he is the son of one of them: The office next to his belongs to his father, who joined the firm within weeks of its founding, having recently been laid off from his job as an alarm salesman. Don Isaacman–who has said he was within a year of losing his house when his son started UBC–has credited his offspring with saving the family and giving him a second lease on life.
It's an incredible story, but Isaacman's teenage business success is just part of it, because that apparently wasn't enough to challenge him. So in 2005, at age 22, he took flying lessons–and then he took flying about as far as he has taken his company.
In addition to transporting himself around on business in his own Cessna III (650) and a Beechcraft Baron, he has made two round-the-world trips to raise money for the Make-a-Wish Foundation, the second in record-breaking time. He also became part owner of 26 North Aviation, an aircraft charter, leasing and management firm. And he has bought more than a dozen old military fighter jets, which he's having restored.
As if that weren't enough, he has became an expert at aerobatics and now–only six years after he first piloted an airplane–he raises money for Make-a-Wish by performing in about 75 air-show events per year with an outfit called Heavy Metal Jets. As he told me, he flies in a squadron of six fighter jets at 400 miles an hour–while their wings are a mindboggling 18 inches apart.
"You know what your problem is?" joked broadcaster Steve Adubato, when he interviewed Isaacman in 2010. "You're an underachiever."
Were there indications when you were still in school that your life was going to take unusual directions?
I always wanted to do more of the older, more mature things. I attribute that to the age gap with my two brothers and my sister. When I was 10, they were finishing college and I was looking at the lifestyle they enjoyed–the freedom of it. I've always been a very independent person.
You were already working in the credit-card industry during high school?
Yes, I was doing IT work for a company called Merchant Services Inc.–early e-commerce stuff. And I realized that there was a lot of opportunity for improvement in the industry. The only way I could accomplish what I wanted was to start my own business. So I quit school when I was 15.
Your parents must have been worried.
They were very concerned. My mother wanted me to take my SATs and she still wanted college education to be on the horizon. I think they were very nervous but they certainly didn't prohibit me from doing it.
What exactly was the opportunity you saw?
It was a lot of things. UBC has evolved into the organization we are today not because of any one technology or patent. It was a whole overhaul of the way the industry was doing things. In 1999 and even today, the focus in the industry was on card issuing. There was no focus whatsoever on the technology of processing the credit cards. I was looking at this as a 16-year-old, saying none of this makes any sense. Why, if I'm a pizza shop and I want to sign up to take credit cards, do I have to fill out more paperwork than to get a mortgage and why does it take three weeks? This is a process that should be a lot simpler.
Wasn't there any part of you that thought, "Hey, I'm 16–if the whole industry operates this way, maybe I'm just missing something"?
No. I felt very confident that I understood certain aspects of the industry that others didn't and I think that's still true. Six months in any industry isn't enough time to become a master of it but I learned at MSI how the high level worked.
Were your early potential customers shocked when they walked into a meeting and saw a 16-year-old kid?
Well, I tried to do as much of the selling as possible over the phone. My father did a lot of the face-to-face sales. But when I did do it at that age, I always wore a suit. Now I never do but from probably 16 to 21 I always did. And I never shaved. I did everything I could to give the appearance of being a little older. You could tell, walking into some meetings, that I was going to have an obstacle ahead of me but most of the time by when the meeting ended, it worked out.
Can you give me examples of the innovations that have made your company successful?
We figured that if we could make ourselves the easiest place to work for, sales reps would leave the competition and come work for us. So we built a lot of things no one else had–online reporting systems for the sales reps, faster turnaround time so they got paid quicker. And we introduced the reps to the recurring profitability that we get from every transaction. That revenue had been hidden from them in the industry.
That got us our first surge. Then in 2004, we started giving away the credit-card equipment to get the account. Until then, a credit-card machine was maybe 500 bucks or you leased it. [Giving it away was] not rocket science–you can get a free cell phone with a service plan–but it wasn't done in our industry.
Have your competitors copied this approach?
It was universally copied by 2005. So then we started doing it for wireless credit-card terminals. Then in '06 we lowered the transaction fees that merchants paid by half compared to the competition. That was another surge. In 2008, we did a joint venture with Casio where we built a credit-card processing device within a cash register so instead of being two devices it was one and we gave those away. That was a surge. And then in the beginning of 2011, we introduced our first free touch-screen point-of-sale system, like you'd see at T.G.I. Friday's or Applebee's, and that's driving all our growth now. It's all giving away the box, so to speak, to get the service.
It must be tricky having your father work for you. Sons often work for their fathers but in this case you're the boss.
Oh, it's never like that. Working with my father has been an unbelievable experience. We talk on every issue. In our entire history there's never been a conflict where our opinions differed so much that there had to be an argument. We're both just trying to get to the same point.
I understand you bought him a car for Father's Day as soon as you became successful.
Yeah, my father got a 360 Ferrari and now an F430 [Ferrari]. I mean, he's deserved a lot and certainly much more than what he has now.
Besides giving your father a Ferrari, you donated $24,000 to a homeless shelter early on.
When I was growing up, my parents' favorite vacation spot was in Mexico and I still have memories of kids living in the streets there. So at the Goodwill Rescue Mission, every month we sponsor a big dinner-type event. I know what we send them every month could probably be used over five days instead of one, but every month they have one big feast. It's something that maybe lifts them up.
When did you first fly privately?
In 2005. I never was on a private jet before that because I never had the money. My motivation the first time I climbed on a private jet had nothing to do with any entitlement feelings or a sense that I was too good for the airlines. I wasn't looking forward to the shrimp cocktail or a glass of champagne. It wasn't even the benefits of business efficiency or time savings. My motivation was entirely that I'd been an aviation enthusiast since as long as I could remember, and I just wanted to fly on one of those planes. And it was totally cool.
Was it charter the first time?
Uh-huh. My CTO and I had to go to Tucson, Arizona, and we chartered a Lear 35.
Did you think about trying jet cards or a fractional share at any point?
No, I just chartered. From my analysis of all the programs, that was certainly the most economical. And then I started flying lessons. I bought a 182 Turbo from Cessna. A couple months later, I got a Beech Baron.
What are you flying now?
When I need to take some employees, I usually fly a single-pilot jet. I had a Citation CJ2 for a couple of years that I leased. Prior to that I owned a Citation Mustang. And now I'm leasing a Beech Premier that I'm flying a lot. I own a Citation 650 and that's pretty much dedicated now to the Heavy Metal Jets Team. It goes around as our support plane and carries all the maintenance guys. That's a very cool jet.
How often do your employees fly privately?
The only time they do is if I need to be in the same meeting. If we're going to a sales conference and I want to fly, we've got these six empty seats, so let's make the most efficient use of the jet. Other than that, we do use the airlines.
Do you think you'll get to the point where more of your employees use corporate lift?
Very possibly, with international expansion. I'm in the aviation business and I recognize there's real efficiency, especially with some of the new airplanes. I mean, when I was flying the CJ2, if I filled all those seats, I got eight people to Florida cheaper than booking airline tickets.
Is there a business jet you'd like to move up to?
The Citation X and especially the new Citation Ten…whew! It's fast. I also like the new cockpit that's coming out–the Garmin 5000. The CJ4 would be an obvious one because it's gonna have the longest range of any single-pilot jet out there. Right now I fly the Premier because it's the fastest single-pilot jet.
How did your round-the-world flights come about?
I had one of the first Citation Mustangs and it had cockpit capabilities that still rival just about anything coming off the assembly line. So my buddy and I wanted to fly it around the world to break a record. We got held in Japan and India for 11 hours and missed breaking the record by one hour. But a year later, we did it in a Citation CJ2 in under 62 hours, beating the record by 23 hours. Our average on-the-ground time was like 20 minutes. Between the two flights we raised about $110,000 for Make-a-Wish Foundation. And I funded everything, so every dollar we raised went to the charity.
And now you're doing acrobatics with the Heavy Metal Jets Team.
Yeah, it's like a clone of the [U.S. Navy's] Blue Angels or [the Air Force's] Thunderbirds. Myself and one other guy are the only civilians on the team. And we fly tighter than the Blues or the Thunderbirds and do all the same maneuvers. I'm having the time of my life.
How has your typical workday changed since the early years of the company?
I still micromanage. There's nothing that goes on in this organization that could cripple me that I'm not aware of. I keep [an eye] on my two biggest assets–our 3,000 independent sales reps, who can be with us or not in a heartbeat, and our merchant customers.
But a lot of what I'm doing now is strategic planning. In the old days, it could be myself and our CTO typing a security-encryptions manual. Now we're just overseeing it. I'm not working 90 hours a week anymore; I'm probably working 50.
Do you attribute your success mostly to having the right idea at the right time or do you think that if this industry weren't there for you, you would have made it in some other field?
Oh, I think it would be tremendous arrogance for someone who created a startup to think they could do it all over again somewhere else. I was in an industry where I knew a good way to get from point A to point B. But it'd be crazy to think you could just stumble on something else and make that happen.
In building the business, what was your biggest mistake?
In 2005, because we didn't want to raise debt to fund our first free credit-card terminal program, we sold off a portfolio of about 15,000 merchants. We got $44 million in cash, we were debt free, I was 22 and life was good. But in retrospect, we never should have done it.
What do you see for your future?
If I ever got out of the credit-card industry, all I'd be doing is flying. But my business is my life and I love it, so I don't think I'm going to be giving it up anytime soon.
What is it that you love? The winning?
It's definitely not that. I think there's just tremendous satisfaction in taking anything from a concept to a reality. I mean, there were five of us in this office at 2 a.m. doing the late-night Chinese food thing, talking about our free point-of-sale program, drawing it out on a whiteboard and saying how we were going to execute it. To see that go from a concept to a reality and then see it redefining our industry–that is such a rewarding process.
CEO Files Resume
NAME: Jared Isaacman
BIRTHDATE: Feb. 11, 1983
POSITION: Founder and CEO, United Bank Card, Inc.
PREVIOUS POSITION: Part-time job during high school at Merchant Services Inc., a credit-card processing firm.
EDUCATION: Dropped out of high school at 15, earned equivalency diploma the next year.
TRANSPORTATION: Owns Cessna Citation III and Beechcraft Baron. Leases Beechcraft Premier.
FAMILY: Lives in Washington, N.J., with wife Monica, whom he met in junior high and married two weeks after his BJT interview. She was UBC's 12th employee and still works at the company in risk management.
HOBBIES: Flying, especially aerobatics. Owns and is restoring more than a dozen ex-military aircraft, among them four Aero Vodochody L-39s, a MiG-17, a Canadair (Lockheed) T-33, three Douglas A-4 Skyhawks from Vietnam and a Saab J-35 Draken.