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Copart: International Growth Opportunities

Former CEO Middle East, India & Africa at Copart

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Executive Bio

Former CEO Middle East, India & Africa at Copart

This executive was employee number 1 for Copart's Middle East business, joining in 2011. He spent over 8 years at the business and launched several new markets. Prior to this, he spent a total of 15 years across a number of roles at Zurich insurance, including running the life businesses across the Middle East, India and Africa.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Thanks for doing this. Can we just jump right into it? Tell us more about how you came to Copart and what you did there, and we'll explore from there.

Actually, it's a bit left-field because my career history before Copart was all financial services. I'd worked in banking for a while and insurance for many years. I worked for a large multinational company called Zurich, one of the world's largest insurance groups. I think in the States, they're Farmers. I'd worked mainly on the investment side rather than the general insurance side. I was with Zurich; I went for the big job in Asia and didn't get it. I was rather disappointed with that. It was more of a political appointment, so instead of disappearing, they tried to appease me by giving me the role of running the Middle East and Africa, a newly formed region for the Zurich group. Early 2008, there were many intentions and plans to try and plant flags and open new businesses across the region, which excited me because I was very much about creating new markets and launching new things. It's something I've always enjoyed doing.

We didn’t want to leave Asia. We adored living in Hong Kong, but from a career perspective, I had to move, so we went to Dubai. But by the time I started the job in October, the world had pretty much fallen apart with the collapse of various banks and the crisis, so it was more about holding onto the furniture than going out and trying to spend lots of money on new stuff. The role didn't ever develop. I was doing the same role that I had been doing in Asia, and I felt a little bit peeved about that because we very much preferred to live in Asia.

I became a bit, I guess, vulnerable after being an incredibly loyal and longstanding member of staff at Zurich, and I was poached by another Swiss insurer to basically try and copy the Zurich international model. I thought that sounded good; I could do some of that. I employed people worldwide, in South America, Asia, the Middle East, and Europe. Then about a year into that, they got into some capital issues with some underwriting of business in France and had to pull the plug on the investment into this whole new international business. I found myself going back and having to make everybody I've recruited redundant, including myself.

I was then playing a lot of golf and enjoying relaxing with my wife and kids, and basically, I stumbled across a headhunter looking to appoint somebody for Copart. They had a drag racing sponsorship at the time and had won a championship – by their admission – completely by chance. Through this, they got to know a Bahraini individual who was the second son of the head of Bahrain. This chap was good friends with Michael Jackson, he owned a drag racing team, and he found out what Copart did. He said, oh, my God, we need you in the Middle East. They were trying to move into the Middle East via Bahrain as the headquarters, but just at that time, the Arab Spring kicked off, and they realized they were not going to get anybody in Bahrain, which is like a village, really.

This would be in 2011?

Correct, this was around the summertime of 2011. They made a couple of trips out there early in the summer. I said I was happy to go and have a chat with them because, at the time, I didn't know anything really about general insurance. I knew the insurance world and therefore understood its basics, and I had all the connections in the insurance world. I had all the CEOs' numbers, they knew who I was, and they knew it was probably worth answering.

I got to know Vinnie Mitz, who was president of the business and driving the international expansion program, and I became the first employee for the Middle East. The headhunter, Korn Ferry, had said, you're not going to get anybody in Bahrain. However, Dubai is much more international; it's certainly a place where many more expats are keen to live because of all the toys that come with living in Dubai that they've set up. They found me, I found them, and by the end of the first meeting, I was so intrigued with this business that I had no idea even existed in life, let alone how successful and how good it was at what it did.

Next thing, I had a couple of conference calls, and they put me on a plane and flew me to what was Fairfield, north of San Francisco at the time, which was where the head office was. I got on well with Jay and instantly hit it off with the rest of the execs there, and I joined in August 2011. The rest is history. I was employee number one for the Middle East. I started the business. I negotiated licenses, customers, product suppliers, and service suppliers.

At the same time, Vinny was driving expansion into other major markets that seemed very obvious, China and India. India was a basket case, to be honest. I was given India to go over there and work out what the hell was going wrong and why it wasn't working. I was also involved in a lot of the decisions, strategy discussions and capital allocation meetings for European expansion, which is much more of a strong point of Copart's external exploits outside of the US. A big part of what was the capital allocation management group, whenever in the US, in Dallas, I was always involved in the meetings and asked to be involved in decisions on acquisition targets and all these kinds of different discussions. I've been part of the executive team for many aspects outside of my direct sphere of influence in the Middle East.

When you were in the Middle East, how did the business model work there? I imagine there are some differences from the US version.

One of the good, fundamental parts of what worked well for us in the Middle East was at least they had adopted the direct settlement model in so far as insurance claims were concerned. Hence, an accident happens, the assessment takes place, and the insurer makes a decision. Either they repair because it seems economically viable, or they do total loss, as you would call it in the States. In the case of a total loss, they pay the customer their money, and the customer merrily runs along to buy a new car. In the meantime, behind the scenes, Copart takes care of the junk. At least, as a concept of an insurance process, it was a known process.

There are other challenges in places like Europe and India and basket cases like China where it's not what happens in the same way, and they net settle. They find out the vehicle's value, and they say, you can get this amount for your vehicle. Take this vehicle to here, you'll get paid by this person we'll give you this much, and we'll give you the balance. It's not a particularly nice experience for a customer who has just been through a potentially traumatic accident and has to deal with potentially unscrupulous partners who then might try and negotiate that amount down. Whereas with indirect settlement, they get the check, they don't have to worry about the piece of junk that is the result of the accident, and they move on – hopefully, in a pleasant way – with life and get on with their new vehicle. That at least exists in the Middle East as the basics, but the concept of auctioning in a transparent, open market way was pretty new to the market.

We came along, and there were no new auction licenses available at the time, so I had to negotiate. We ended up acquiring an existing business, but for a very small amount of money because it was effectively defunct. It wasn't trading. They were selling the odd 20 cars a month if they were lucky, mainly by hand-selling. We came along. We bought the license, we instantly rebranded, renamed, and started to educate buyers in the market. Look, we're running these open-cry auctions from the back of a bus like it still happens in some parts of the world, but get used to it. There still are thousands and thousands of Copart buyers and IAA buyers that exist in that region that were already buying tens of thousands of cars online through auctions in the middle of the night from US jurisdictions, from US sites.

One of the big opportunities I spotted was that we had a huge customer base we could instantly tap into. We started to provide domestic services to these people that transformed their lives. We started to create some lovely revenue streams, just simple things, like a settlement for vehicles you had bought through Copart US. We could now offer you the ability to pay in local currency in the UAE, Oman, Bahrain, Saudi, and during the same banking week as you were used to in your own country, rather than in the western world's banking week. This created issues because you potentially had three days in which to pay. Still, banks weren't working at the right times. You could start to incur storage charges from Copart in the US for not having settled, and it's just because the banks weren't open at the right times. We transformed all of that.

The other opportunity, of course, was shipping. Many brokers exist; domestic brokers in the US have domestic licenses in various states across the US that have their own licensing peculiarities. Some of these brokers operate nationally and therefore make a margin on consolidating shipping and moving tons and tons of containers and vehicles through. We started providing our own shipping services, which again started to offer a nice little margin to Copart, which was also convenient to the customer because they could make one payment at the point of sale, boom. I paid for the car. I paid for the shipping service. I can sit back and know that I can trust Copart to deliver the car to me in Dubai, Bahrain, Oman. That was quite a nice little value add as well.

In addition to taking cars from the local market, the junk, you took cars that people had bought in the US and had shipped. You were taking care of all of that as well.

Absolutely, we acted in both ways.

Where did the junk that you acquired locally go? Did that go to Africa or other markets?

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