Concord Servicing Corporation CEO Bob Bertrand Talks About the Past, the Present, and the Future (and what else is there?)

By Bill Ryczek

“People tend to think of an entrepreneur as a hail-fellow-well-met, a glad hander, an extreme extrovert,” said Concord CEO Bob Bertrand, a reserved, deeply thoughtful man who is the antithesis of the back-slapping salesman.  “I don’t think that’s true.  I think an entrepreneur is someone who’s willing to take risks and to live with the consequences of those risks.”  Just a few months after he launched Concord in September 1988, Bertrand became painfully aware of the consequence of taking risks.  He had a new company, a few clients, and a court-issued injunction that prevented him from using the software that was essential to operating his business.


In the spring of 1988, Bertrand was the CEO of a small company in Virginia called Finalco, but after a hostile takeover, he found himself back in Arizona sharing office space with a gentleman named Scott Spangler.  Spangler had been approached by two managers of a small timeshare servicing firm who wanted to raise money and buy the company.  He wasn’t interested, but suggested they speak with Bertrand, who had some capital and was looking for his next opportunity.  “I always wanted to have my own company,” Bertrand said.  “I’d dreamed of it since I was a little kid.”


The owners of the company didn’t want to sell, so Bertrand teamed up with the managers and formed a new entity.  Although he had legal assurances that he could lease the same software used by the managers’ old company, the company filed a lawsuit that resulted in an injunction.


“As a startup,” Bertrand recalled, “we were losing money, and at the rate we were going, I thought I might have to shut the company down by the middle of the next year.  I was spending all my time trying to find someone who could develop software for us, and I finally did.”  At about the same time the new software came on line, Concord acquired two sizable new clients that put them over the breakeven point, and the pressure was off.


A technology problem nearly sunk Concord before it left shore, but Bertrand believes that technology is now the company’s strongest suit.  “Technology, demographics, globalization, and urbanization are the great forces of our time,” he said, “and anyone who’s not investing in technology isn’t going to be successful.  I realized early on that our business is ultimately about technology.  We never want to tell a customer we can’t solve their problem, and that requires a very flexible system.”  Of Concord’s 180 employees, 52 are in the IT Department.


The timeshare industry has changed dramatically since Concord began operations in 1988.  There has been consolidation, an increase in securitizations, and a severe recession, all of which have impacted Concord’s business.  “Some of our clients were acquired by companies that did their servicing in house,” said Bertrand, “some developers went out of business during the recession, and lower sales levels meant lower revenue for us.”


But if entrepreneurs need to take risk, they must also be capable of adapting to changing circumstances.  “Despite all that happened,” Bertrand said, “we never came close to having a problem with profitability.  We work very hard to maintain our existing clients, and for new business development, we’re focusing on the bigger companies in the industry.  Larger companies are more complex and have a need for more sophisticated technology.  They’re probably operating internationally, which means that in addition to the usual issues, they have currency and language problems.  Our systems can handle all those issues.”


How important is pricing when competing for clients?  “It’s always an issue,” Bertrand said, “and it’s usually the most important issue in a relatively small, vanilla transaction.  But as the size of the deal increases, the client is more interested in how well you can meet all of their specific needs.  Take disaster recovery.  Everyone asks whether a servicer has a disaster recovery plan, and when you say yes, they check it off their list.  But there’s a big difference in quality.  I was told by a Fortune 100 company that our plan was the best they’d ever seen.  It’s got to be, because we control a huge share of our client’s money, and they can’t operate without it.  In a disaster situation, each of our employees would be able to work from home.  That may not seem like much, but it’s incredibly difficult, especially when you consider that we have 35-40 employees in Mexico and the rest in the U.S.”


After more than a quarter of a century collecting other people’s receivables, what advice would Bertrand give to a developer who wants to maximize portfolio performance and minimize defaults?  “The most important factor,” he said, “is to exceed the consumers’ expectations.  Happiness occurs when reality exceeds expectations.  You have two golfers who each shoot an 86.  The scratch golfer is depressed while the 36 handicapper is ecstatic.  Deliver more than you promised rather than the other way around.  A second key, of course, is credit scores.  We know from overwhelming empirical evidence that portfolios with higher FICO scores perform the best.  Finally, use professional collectors backed up by a sophisticated system.”


What does the future hold for Concord?  “I think the timeshare industry is here to stay,” Bertrand said.  “It’s about vacations, and I think vacations will always be with us.  We’re diversifying into other lines of business, such as servicing energy conservation loans, but we expect timeshare to constitute the bulk of our volume.  It’s an incredibly complex business, which is both a curse and a blessing.  It’s a curse because every portfolio is different, and the software has to be capable of accommodating those differences.  On the other hand, it’s a blessing because the complexity creates very high barriers to entry.  During the past decade, we’ve seen a number of our smaller competitors exit the business because they couldn’t afford the investment in technology.”


Concord celebrated its 25th anniversary in 2013, a milestone Bertrand wasn’t sure he’d see when he was burning up the phone lines in late 1988 looking for anyone who could create the software he desperately needed.  Nor did he foresee, when he was running Finalco, that a few months later he would own a timeshare servicing company.


“As fate would have it,” Bertrand said, “some of the very difficult and troubling things that happened to me along the way turned out to be blessings in disguise, just very well disguised at the time.  The Dali Lama once said: ‘Remember that sometimes not getting what you want is a wonderful stroke of luck.’  Not remaining president of Finalco and being forced to develop our own software in 1988 were things I didn’t want at the time, but led to Concord being what it is today, which was indeed  a great stroke of luck.”


Bill Ryczek

After obtaining an MBA Degree from Penn State University, Bill began a career in the banking industry, and joined Barclays American Business Credit in 1979. Barclays was one of the first companies to make loans to the newly-developing timeshare industry, and Bill was one of the first in the country to specialize in timeshare lending. He was national marketing manager for the timeshare division when he left Barclays to join Liberty Bank as Vice President and Timeshare Manager in 1988. At the time he left Liberty in 2002, Bill was Chief Lending Officer, with responsibility for a $1.3 billion portfolio, consisting of residential mortgages, consumer loans, commercial mortgages and commercial loans, as well as the Bank’s $300 million timeshare portfolio. He is well-known throughout the industry and a frequent speaker at conventions on the topic of receivable financing.