Independent ATM Pioneer, Phil Rock
Phil Rock (Phillip Arnold Rock) is an American entrepreneur and investor. He is best
known as the CEO/President of ATM Network and is considered one of the
pioneers of the ATM Cash machine industry.
Rock
predominantly grew up in Southern California but briefly relocated to
Oregon where he worked as a sales executive for Card Capture services
and later moved to the Minneapolis
area where he founded his own company, ATM Network, and based most of
his business dealings. In 2012, after serving over 16 years as its chief
officer, Rock sold ATM Network (and its more than 10,000 ATM contract
locations) to Houston-based, Cardtronics Inc.
Skateboarding: During
his youth, Rock (under the name Phil Jetton) was a competitive
freestyle skateboarder and a sponsored team rider for Mattel Toys, Logan
Earth Ski, Vans, Pepsi and Gordon & Smith. He participated in
hundreds of U.S. Pro/am
skateboard championships - earning 2nd place in the 1978 Skateboard
Olympics, 5th Place in the 1979 Oceanside Freestyle Nationals and was an
invitee to the 1980 Oasis Freestyle Contest in San Diego, California.
Source: Wikipedia https://en.wikipedia.org/wiki/Phil_Rock
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Phil Rock’s relentless pursuit of sales builds ATM Network by Burl Gilyard
Ten years ago, Phil Rock went to work for his
kid brother. At the time, the Portland-based Card Capture Services was a
fledging credit card-processing concern trying to find its legs. Rock’s
brother Jeff Jetton (who took the name of the pair’s stepfather) was
the boss; Rock’s job was to help with promotion. “I made it extremely
clear to him that I didn’t want to be in sales,” says Rock. “My
background is in art and design.”
Rock was trying to promote a contraption called GoFax — a fax
machine you could use with a credit card — at various locations. The
trouble was that GoFax wasn’t taking off, and Rock’s brother began
exploring the business of selling ATMs (automatic teller machines), not
affiliated with any bank. At the time, the machines cost $12,500 and
dispensed money in little plastic tubes.
Rock was a reluctant salesman and underwhelmed with his brother’s
idea for diversifying the business. “I said, ‘Are you crazy? No one’s
going to buy one of these machines,’ ” recalls Rock. While making the
rounds trying to talk up the uninspiring GoFax machines, Rock happened
to stop in a Seattle convenience store to buy a can of pop and a bag of
chips.
He started talking to the owner, who said that he wanted a cash
machine for his store, but lamented that the bank was going to charge
him $1,500 a month for the pleasure. Rock went to his car to retrieve a
brochure about the cash machine that his brother wanted to sell. “He
looked at me and said, ‘I’ll buy it,’ ” says Rock.
The deal seemed effortless to Rock. His commission from the single
sale equaled what was then a month’s salary. Rock immediately decided
that he’d found a new calling. “I said, Jeff, I am now an ATM salesman,”
says Rock.
Rock was reborn as an ATM evangelist. In his first month, he sold 25
machines through cold calls. He began to log 100,000 miles a year on his
car throughout the Northwest. “My problem is I’m 150 percent or
nothing,” says Rock.
As Card Capture Services grew, Rock was growing restless, leaving the
firm to light out on his own. Jetton sold Card Capture Services and its
8,500 ATMs to E*Trade Financial Service Inc. in 2000 in an all-stock
deal then worth just shy of $100 million. Today, Jetton is CEO of the
Portland-based Auction Pay, which provides credit card-processing
services for benefit and nonprofit events.
“Basically from the first day that he sold an ATM machine, he was
always our top rep — every single month — and we had some pretty
experienced guys on the sales team,” says Jetton of his brother. “I
think he’s been working extremely hard ever since. He likes to work.
He’s come a long way in a short amount of time.”
Rock left his brother’s firm in 1996 and landed in Minnesota. He was
renting a house in Deephaven and literally began at the bottom: doing
business out of his basement. His business plan, to the extent that he
had one, was rudimentary: sell as many ATMs as possible. “I went out and
sold eight machines the first month,” says Rock, who promptly invested
the proceeds from those sales into marketing materials to promote the
company.
He set up a toll-free number and arranged for the installation and
servicing of the machines by himself. He didn’t need a splashy corporate
office: “No one had ever asked to come to the office,” says Rock, 38,
now the CEO of ATM Network Inc. “I was thinking of the company as me,
myself, and I at the time. I was financing it all out of my own pocket. I
didn’t have these lavish goals for myself. I kept that basement office
until we had 500 machines in place. My philosophy was, take it one step
at a time.”
By chance, Rock met local attorney Jim Hovland, whom Rock calls “a
guardian angel from day one. If I wouldn’t have met Jim, I would have
made a lot of mistakes.” Hovland says that at the outset, he merely
provided “typical legal work” for Rock, offering some advice on
contracts. Today, Hovland is a member of ATM Network’s board of
directors.
Hovland says that Rock has the characteristics of other successful
entrepreneurs he’s known. “The lawyer is more a tool in the toolbox,
they’re not going to make your success. They can help you set up a
structure in which to operate,” says Hovland, a partner with the
Minneapolis firm Krause & Rollins. “You have to have a
single-mindedness of purpose. They’re almost myopic in their outlook.
They’re focused on making their business a success. They don’t have an
avocation. Their business is their avocation.”
As ATM Network grew, Rock needed someone to handle day-to-day
operations, while he focused on growing the company. Russ Freeman signed
in July 1999 as vice president of marketing. Six months later he became
general manager and chief operating officer. Freeman’s background in
marketing includes stints at several ad agencies. (He’s also Hovland’s
son-in-law.)
“Phil has unbelievable business instincts and he knows the ATM
business like nobody else in the business,” says Freeman. “Even though
he’s aggressive and a risk taker, he’s also deliberate in what he does.
We wouldn’t invest money in the company until we were sure it was
sustainable. In our industry one of the things that we’ve done is really
stayed true to our core competencies. You don’t want to lose focus on
what you really do well.”
The explosion of independent, non-bank ATM companies (dubbed
independent sales organizations, or ISOs, in the trade) began in 1996
with the proliferation of ATM surcharges, which made the business more
lucrative.
Nevertheless, the competition has been intense. Rock set up shop in
the backyard of the Woodbury-based Access Cash, a large industry player.
Access Cash was acquired in stages by eFunds Corp. for $63.9 million in
2001.
“I knew I was coming right into the lion’s den: They were the second
largest ATM company in the industry at the time. I knew I had my work
cut out for me,” says Rock. “I always knew there was room for me in the
market. There was never a moment in my mind where I felt like I had to
give up. From day one, I felt like I was making headway.”
Today, ATM Network has approximately 2,200 machines in every state
except Hawaii. Freeman estimates that in 2003, there will be $350
million dispensed from ATM Network’s machines. Rock says that the
company is adding 60 to 100 new machines a month.
Freeman reckons that the firm today ranks as the 10th largest ISO in
the country, but acknowledges that industry surveys rely heavily on
self-reporting from the players themselves. The largest companies today
in the industry are eFunds (15,700 ATMs), E*Trade (15,000), and
Cardtronics Inc. (11,000).
Today, the typical ATM machine retails for $3,400 to $6,000.
Retailers can either buy or lease machines. In some cases, if there’s
enough traffic in a location, ATM Network can do a “placement” of a
machine, where the retailer has nothing to do with the machine. ATM
Network has three sources of revenue: its percentage of the transaction
revenue (which accounts for more than half of the firm’s revenue), sales
revenue and service revenue. Rock says that the day will come when ATMs
are more than machines that spit out cash, but serve as full-service
kiosks.
Over the years, consumers have often griped about paying ATM fees.
But Rock believes that in general, consumers have come to accept them as
the price of convenience. “Cash is king” is one of Rock’s pet phrases.
“There’s a psychological thing with cash. We know the two biggest things
on a consumer’s mind today are time and convenience,” says Rock, who
notes that retailers like ATMs because they can reduce the risk of
taking bad checks and that customers with cash tend to spend more.
ATM Network’s customers seem happy. John Bergland serves as executive
director of the Arlington, Texas-based Bowling Proprietors Association
of America. The BPAA endorses ATM Network to its 3,200 members across
the nation. “They offer our members stability in that they’ll be around.
They offer what we believe is the best pricing for a member purchasing
or leasing an ATM, and we believe they offer the best customer service.
And we’ve not been disappointed on any of those three,” says Bergland.
“It’s as
good an arrangement as we have with any type of vendor. It’s just
incredible. We have zero problems with this company.” Bergland is the
former executive director of the Minnesota Licensed Beverage
Association, which also endorses ATM Network.
Lynk Systems of Atlanta handles transaction processing for about
150 ISOs. Ken Paull, Lynk’s executive vice president, praises the work
of Rock and his team at ATM Network. “ATM Network has grown to become
one of our largest customers. We consider them one of the strongest ISOs
in the Midwest. We’re only successful if they’re successful, and
they’ve been very successful.”
Paull says that ATM Network is a versatile, nimble player in the
independent ATM market. “They’re very aggressive by nature in the
marketplace. I think they have a unique ability to sell and service a
small mom-and-pop organization all the way up to a large chain
operation. That’s pretty unique,” says Paull. “They also operate with
very high integrity. There’s a lot of companies that are here today,
gone tomorrow. They have been a very consistent and ethical force in
their market.”
Rock lives by credos and mantras — such as “one installation at a
time, one sale at a time” — that have served as guideposts in business.
“I still think that way, even today: What did we do today? At the end of
the day, I make a call into the office and say ‘How did we do today?’
ATM Network has never seen a stagnant month.”
Although it doesn’t seem like it’s been that long since the company
started in Rock’s basement, today ATM Network is a fast-growing company.
In 2002, the company’s sales were about $10 million. Freeman is
projecting sales of $12.5 million for 2003.
The company has been growing 20 percent to 25 percent annually. The
company has no debt, largely because Rock has been adamant from the
beginning about making the company pay for itself. Today, the company
has 20 employees. Rock says that ATM Network is profitable, but declines
to disclose its margins.
Rock owns 87 percent of the company. The remainder is held by the
Krause & Rollins law firm and key employees. Rock says that the
company has entertained the idea of outside financing at various times,
but has always ultimately rejected the idea. “I guess I’m a simple
thinker,” says Rock. “I like to keep it simple. We like the way the
company is running and we feel very comfortable about the way it’s
growing.”
Rock seems driven to succeed at whatever he does. His brother recalls
that as a kid, Rock excelled in an entirely different arena. “He was a
professional skateboarder and amateur surfer,” says Jetton. “He was one
of the top skateboarders in the world back in the early ’80s.” Even as
he nears 40, Rock is still at it: “I feel like I’m skateboarding better
than ever.”
Rock brings the same tenacity to business. “What makes ATM Network so
successful is that we’re extremely competitive,” says Rock. “We’ve put
together a business model that goes after the masses: making a little of
a lot, instead of making a lot of a little.”
Industry consolidation is rampant in the ATM industry, which
theoretically makes an aggressive player like ATM Network a natural
takeover target for the bigger fish swimming in the ATM pond. Rock
professes, “At this point we don’t have an exact exit strategy. We’re a
small company that plays with the big players, and we feel whatever the
big players can do, we can do just as well.”
For now, he’s chasing new business, one machine at a time: “We’re keeping our nose to the grindstone.”
