Thinking strategically: Melissa Smith helps spur WEX to $1B milestone
PHOTo / Tim Greenway
Melissa Smith, president and CEO of WEX Inc., says there's 'more energy and innovation that comes with being a global company.'
Photo / Tim Greenway
Melissa Smith, president and CEO of WEX, leads a company with $1 billion in revenue and 2,700 employees, including 750 in Maine. Here she makes time for office teamwork-building with software engineer Krishna Kokatla, at WEX’s Darling Avenue offices in South Portland.
It takes a village.
That's the quick answer that WEX President and CEO Melissa Smith gives when asked what it took for WEX Inc. to join, by the end of 2016, IDEXX and L.L.Bean in the elite group of Maine companies earning more than $1 billion in yearly revenue. To be more precise: A village of 2,700 WEX employees worldwide, including 750 in Maine.
Smith is quick to add: It also takes focus, discipline and a commitment to outstanding customer service and best-of-class technology in every segment of WEX's global business. In the past year, besides hitting the $1 billion in sales mark, WEX made an acquisition of $1.1 billion in cash and 4 million shares of common stock.
“We touch so many types of business, both large and small. It's a lot of volume and we make money little bits at a time,” Smith says. The company's value proposition to its customers in the fleet, travel and corporate payments, and health-and-employee-benefits segments of its business, she says, is that there is both “security and reliability” and “a high standard of customer service” behind each and every one of those transactions.
“People just presume it works, but there is a lot of effort that goes into making sure that is true,” she says.
Since becoming president in May 2013 as part of a planned leadership succession plan announced by WEX Inc.'s longtime president and CEO Michael E. Dubyak that culminated in her assuming the additional role of CEO in 2014, Smith has presided over an impressive trajectory of yearly growth. From $717.5 million in revenues for 2013, the company closed 2014 at $817.6 million, 2015 at $854.6 million and 2016 at $1.01 billion, a 19% increase.
“The last $200 million we added was a lot easier than the $200 million before that,” she says, noting that strategic acquisitions WEX made in the past few years are making significant contributions to the bottom line.
'Organic growth': The starting point
Smith says the company's growth trajectory is shaped by three strategic priorities:
- Drive continued growth: Smith says this is being achieved through a combination of “organic” improvements in its products, marketing, sales force productivity and revenue management practices that are complemented by acquisitions offering opportunities to grow revenues and expand WEX's market share.
- Lead through superior technology: Achieving this goal, says Smith, depends on innovation and WEX's ability to deliver payment solutions in each segment that are competitively priced, secure and streamline the payment process for customers.
- Maintain top-of-class operational excellence: In each the segments, Smith says WEX strives “to deliver the best solutions to our partners and customers” quickly, nimbly and with superior customer service.
“We start with organic,” she says. “Every one of WEX's divisions is growing organically. When I talk about organic growth, it's about having products in the marketplace that are in demand and selling them to more people.”
And the biggest piece of that focus, says Smith, is hiring salespeople who are adept at finding leads, closing them and making sure they're implemented in a way that meets the new customer's needs and expectations.
“We're very disciplined about how we think about sales deployment,” she adds, noting that from its earliest years WEX has cultivated customer loyalty, which she says is “based on relationships and delivering what you promise to do.”
Acquisitions accelerate 2016 growth
Prior to the 2005 public offering — which Smith oversaw in her then-role as senior vice president/finance and chief financial officer of what was then called Wright Express Corp. — the company's growth was primarily organic. Since 2005 and the greater access to capital, acquisitions have played an ever-greater role in driving the company's growth.
The most recent example is the July 2016 purchase of Electronic Funds Source LLC for $1.1 billion cash plus 4 million shares of common stock. The acquisition of the Utah-based fleet and corporate payments company was cited as having a positive impact on WEX's fleet division revenues that grew 41% in the fourth quarter to $192 million and closed the year with an overall 17% increase to $642 million.
“EFS creates synergies to scale up. They had functionality that we didn't have for our own core fleet market,” Smith says, citing as one example a product EFS offered in Canada that WEX can now offer to its U.S. customers that also do business in Canada.
In the health and employee benefits division, WEX rebranded in 2016 two wholly owned subsidiaries as WEX Health: Evolution 1, a cloud-based technology and health care payment company purchased in 2014 for $532.5 million in cash, and Benaissance, a health care billing software firm acquired in 2015 for $80 million.
Revenues in that division rose 44% to $161.1 million in 2016.
The company's travel and corporate payment segment, which operates in North America, Europe, South America and the Asia-Pacific markets, closed the year with revenues up 10% to $215.2 million.
An upside of being a global company, Smith says, is that meeting the different needs of different markets in a particular segment often spurs innovation that benefits WEX's other divisions.
“We have products to deploy that we wouldn't have had otherwise,” she says. “There is more energy and innovation that comes with being a global company. It goes beyond what we'd done before. The level of innovation is higher. Diversity creates complexity, but it also adds innovation.”
Lessons in leadership, giving back
For her own growth, Smith credits her mentors. “I always start with my mom. A divorced mom with three kids in her 30s, she taught us how to be independent.”
Next on her list is her predecessor, Michael Dubyak, who moved into the new role of serving as chairman of the WEX board after turning over the CEO reins to Smith in 2014. “He's passionate and tenacious,” she says.
Other than that, Smith says she tries to learn something from everyone she meets — particularly people who can think strategically but also are able to deliver and to do it in a way that acknowledges contributions made by others. The WEX ethos, she says, is built on the understanding “it's not just what you do, but how you do it.”
“I think you learn from others what you'd like to see in yourself as a leader,” she says, adding that the flipside can be true as well, namely, learning what doesn't work. WEX's board is filled with “great people to learn from,” she adds, including a board member who has taught entrepreneurship at Harvard Business School and encourages a business approach of “starting with where you want to be and then working backward” to identify how to get there.
Since becoming president and CEO, Smith says she's made a point of hiring people who “bring diversity of thought” to her leadership team. Roughly one-third are promoted from within, one third are from acquisitions and one-third are hired from outside the company. In hiring people from outside of WEX, she typically looks for someone with global expertise or who's been involved in mergers and acquisitions.
In the coming year, Smith expects WEX will be adding more than 100 jobs in Maine — in technology, finance, operations and sales.
Success enhances the company's ability to give back — and that's a longstanding WEX tradition Smith is passionate about. The company gave more than $800,000 in corporate contributions last year, with donations going to what Smith calls “pillars”: the arts, basic needs, economic development, education, wellness and a host of good causes its employees care about and are willing to give their time and money to support.
“That's important to us,” she says of the latter pillar. “We want to support the causes our people feel passionate about. It's important for us to be helping the communities where our employees live and work.”
Looking ahead, Smith is confident the company's three-pronged growth strategy is sustainable and likely to generate continued double-digit growth.
“We're pretty focused on optimizing what we have right now,” she says. “It's a lot of work to integrate what we have in place. We are very focused in the shorter time on optimizing and really leveraging what we have and making sure the products that we bring to the marketplace are typically the best in their class.
“We are well positioned in the markets we're in. I feel very good about the future of the company. ”
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