Born in the USA: Golobic and GreatAmerica Keep Marching Forward
by Phil Neuffer Monitor 100 2016
As Monitor 100 celebrates its 25th anniversary, looking back at the industry and its major players over the last quarter century is worthwhile. One man who stands out during that time is Tony Golobic. The chairman and CEO of GreatAmerica Financial Services reflects on his past, the birth of GreatAmerica and the 24 years of success the company has enjoyed.
As you may know, having leafed through this magazine already, the Monitor 100 is celebrating its 25th anniversary this year. That 25-year run coincides almost entirely with that of GreatAmerica Financial Services, which got off the ground in 1992 and has remained a stalwart in the industry ever since. However, the story of GreatAmerica goes back much further than 1992.
Every story needs a protagonist, and Tony Golobic is at the center of this one. Golobic came to the U.S. at the age of 17, intending to stay for a few months before returning to his native Slovenia. However, his grandfather, Martin Golobic, spent a considerable amount of his life in the U.S. and encouraged him to consider staying in “a land of uncommon opportunities.”
As a 17-year-old high school dropout who spoke no English, Golobic did not need much convincing, as two days into his time in the U.S. he got a job. He would eventually join the U.S. Army before earning his bachelor’s degree, CPA and finally an MBA from the University of Chicago Graduate School of Business.
With a wealth of education, both in the classroom and out, Golobic began his career managing a modest investment portfolio with a substantial fixed income portion. It was during these early years that Golobic first became drawn to equipment finance.
“I started searching for superior yields while maintaining credit quality, and I stumbled on private placement notes backed by equipment leveraged leases to investment-grade rated companies. At that time (1971) just about no one understood equipment leasing, let alone leveraged leasing,” says Golobic. “I realized that I had stumbled upon an uncommon opportunity to be a part of the dawn of a nascent industry with a lot of promise.”
It would still be another 21 years before Golobic decided to branch out on his own. He would go on to work for such giants in the industry as GE Capital, LeaseAmerica and Mellon Financial Services. During that time he learned lessons that have stuck with him to this day.
“I learned early on that success is a product of the combined effort of everyone involved and not just the individual at the top and that the degree of success is directly proportional to the degree of the entire group’s engagement,” says Golobic. “I learned that if I wanted to be really successful I needed to become a leader and not just the person in charge.”
Birth of GreatAmerica
After more than two decades in the workforce, Golobic was doing well but he didn’t feel the sense of satisfaction he wanted from his professional life. That gave birth to an idea which would eventually become GreatAmerica Financial Services.
“I started to form a vision of a business that would continuously be raising standards of excellence in everything it did and would thus become so good at everything it touched that it would have no competition,” says Golobic, who admits that even after the idea came to him, it still took time to turn it into action. “For a long time, I didn’t have the guts to do it. After all, I had a family to support, and I was doing well in the corporate world. But when I celebrated my 48th birthday, I suddenly realized that if I didn’t do it then, it would be too late to build my dream. So I quit my job and started on the greatest adventure of my lifetime.”
From the outset, Golobic wanted to build a unique company, one that was more concerned with a pursuit of excellence than a pursuit of the almighty dollar.
“We didn’t start this company to build it, sell it and then walk away with a lot of money. We are building this company to last, way past my lifetime. We are not motivated by money, for us, money is only a byproduct of building our dream,” says Golobic. “At GreatAmerica success, growth and relentless pursuit of excellence are a part of our DNA. This best describes our people and our organizational discipline. We don’t waiver from that, no matter what.”
GreatAmerica was originally founded as a company that financed office equipment, primarily doing business with smaller dealers, and its reputation continued to grow. Golobic credits that to a strong foundation of values and culture.
“From the very beginning, we found highly motivated, high integrity individuals who embraced a strong work ethic and started building an organizational culture that reflected these values,” says Golobic. “The bedrock of GreatAmerica is based on experienced equipment finance professionals who share our common values. Once we had our core team, we started to focus on hiring people that were a tight cultural fit with little or no experience.”
Navigating the Storm
With 24 years under its belt, GreatAmerica has faced all parts of the economic cycle, from the highs of surplus and economic growth to the lows of several recessions. Golobic is particularly proud of how his company fared during the Great Recession.
Most companies found themselves under water and struggling to reach the surface in 2008. GreatAmerica felt that very literally, as its Cedar Rapids office building flooded with more than eight feet of water in June of 2008. Though the building would not open again for three months, GreatAmerica remained in business without much change for its customers.
“Some 80% of our customers never even realized that we were in the middle of a major natural disaster, and we received high praise from those that did. I will never forget one email I received from a customer: ‘Tony, GreatAmerica is a lot better leasing company under water than anyone else is on dry land.’”
Aside from the drive to succeed that Golobic clearly possesses and that emanates from the GreatAmerica brand, prudence best served the company in such times of distress.
“Prudence has always been one of our organizational disciplines. Prudence in everything, from business continuity to the credit quality of our portfolio. We have never compromised the high credit quality of our portfolio, always employed conservative accounting policies and were very transparent to our credit providers,” says Golobic, who is quick to credit the team around him for GreatAmerica’s success. “As a result, we enjoyed their confidence, and our credit facilities were actually significantly increased during those trying days. We have always firmly believed that our GreatAmericans are our greatest asset and that there is no substitute for prudence. Those challenging times have just further reinforced these beliefs.”
Prudence and organizational discipline have helped GreatAmerica become one of the most trusted equipment leasing companies in the U.S., as evidenced by its inclusion in the Monitor 100 since 2000.
Golobic proudly says that GreatAmerica’s growth has been organic and that the company aims to grow by at least 5% each year, but in order to avoid eroding service quality, it does not attempt to force the issue and balloon growth past 15%.
“Every single year during our almost 24 years of existence, regardless of economic conditions, come rain or shine, has been a year of growing business at GreatAmerica,” says Golobic.
That streak continued in 2015 when GreatAmerica grew by 13.1% while its earnings and portfolio quality remained strong. Golobic also says that the company has made “solid progress in further developing [its] presence in certain recently entered segments.”
In addition to overall growth, GreatAmerica surpassed $4 billion in total bond issuance in March of 2015, and it has made further progress since.
“Our most recent bond transaction in February 2016 brought our cumulative issuance to over $4.6 billion through 15 successful transactions over the past 20 years. We are proud of the strong reputation we have earned with investors, rating agencies and underwriters,” says Golobic. “Though we have added significant diversification to our funding strategy over the years, we expect the asset-backed securitization market to remain a very important component going forward.”
To maintain the level of success he has achieved during the last quarter of a century, Golobic understands the need to evolve in step with an ever-changing industry. That includes putting an emphasis on hiring new talent and ensuring GreatAmerica utilizes and adapts to technology. For example, GreatAmerica added Salesforce to its equipment financing process in 2015 in order to automate workflows and increase market penetration.
“We have and will continue to put tremendous investment in technology and people to implement them in ways that are unique to each of our markets,” says Golobic. “The more simple and elegant our solutions are, the more readily they are embraced by our customers.”
Though there will always be new technology and developments in the industry itself, some things will never change at GreatAmerica, and that’s just part of Golobic’s plan.
“I know that in five years GreatAmerica will be bigger and better while continuing to focus on our organizational culture,” he says. “The only sustainable competitive advantage in a nearly commoditized industry is a strong organizational culture that highly engages its employees. Anyone can cut rates and lower credit standards, but it is a long, hard and determined road to build a strong organizational culture which continuously produces value to customers.”