We took one look at this deck and this is how the conversation played out in our minds:
Cameron: We need some help
McKinsey Partner: Your stock price says it all, bruv
Cameron: We’re looking to convince people we’re different without actually doing anything
McKinsey Partner: I’m a partner at a consulting firm: I’ve built my entire career off doing nothing. If I could operate fuck-all I wouldn’t be a consultant. How about a fancy deck to silence the haters?
Cameron: Now you’re speaking my language. What can I get for… $1M?
McKinsey Partner: We can grind some 22-years olds for 70-hour weeks so your deck looks extra good. Plus I need to bill you a lot of hours and I’m busy on the golf course
Cameron: But those 22-year olds won’t know we’re a total shit show and expose us, right?
McKinsey Partner: No way; they know even less than I do, which is really saying something
Cameron: Amazing. Really need to keep this overpaid position as long as I can. Looking for a Mike Hayford kind of gig, here
McKinsey Partner: Say no more
There are so many contradictions and falsehoods in this deck we don’t even know where to begin.
For starters, why don’t we talk about the seeming fraud that Global is engaged in to increase top line revenues?
Nobody in their right mind has any reason to do this except if they’re struggling to meet growth projections.
And you know how you struggle to meet projections?
By having an inferior, commoditized product that requires you to achieve growth through acquisition. That’s right, using your superior access to capital and higher multiples as a public company to acquire smaller companies, strip out any vestiges of R&D and product, and run them into the ground.
At least Global is transparent in showing that their growth has come from – almost exclusively – M&A.
It’s clear that Global is now chocking on its M&A culture.
Jeff Sloan you magnificent bastard, you milked that cow to the very, very end.
He payment bro’d so hard that he payment bro’d his own employer.
Couldn’t be any truer to the payments bro culture.
Every aspiring payments bro should have a poster of legend Jeff Sloan on their ceiling.
We love how Global continually references “product” as if it’s something they understand and actually care to develop.
This is a joke, right?
As if fleecing merchants with infinite fake fees is “customer-centric” in any capacity. It’s probably just part of their vigorous R&D process.
Global Interviewer: So tell me about how you would launch a new product?
Interviewing Product Manager: Well we would want to understand what challenges the customer has. So first-
Global Interviewer: Wrong!
Interviewing Product Manager: Looks visibly confused
Global Interviewer: We never ask the customers anything. The first rule of Product at Global Payments is to increase rates.
Interviewing Product Manager: Uh, what problem are you solving?
Global Interviewer: LOLz. We don’t solve problems: we’re Global Payments! Actually, I’m only taking this interview because we have to convince the market we spend money on product. I don’t have a budget to hire you, but McKinsey told us “you gotta fake it until the market buys the lie”. Paid a few million bucks to come up with that positioning. Jealous much?
Global euphemistically waxes about margin expansion as if it’s driven by product.
What a knee-slapper.
Let us decode this for you:
Focus on the nexus of software and payments = convince the market we are “software” for the multiple
Capturing significant market opportunities = increasing rates where and when we can
Streamlining through transformation = cut R&D to the bone. Even lower if negative R&D is possible
Delivering strong cash flow and earnings growth = more rate increases!
Pursuing portfolio action to unlock value = even more rate increases. For “value”
Prioritizing shareholder returns = justifying our lack of morals by putting shareholders first
Global pretends it has all this software – and nominally, it does.
But none of it is relevant.
Last we checked, Heartland POS was adding like 500 MIDs a year.
Because companies like (drumroll) Clover, Lightspeed, Oracle, PAR, Shopify, SpotOn, Square, Toast, and dozens more have much better products and (wait for it…)
don’t own the reputation of screwing their customers on payment rates the first chance they get.
Global explicitly points to their “success” in the restaurant industry in this deck as if that’s the vertical they should be emphasizing.
Then they parade out a quote from a McDonald’s employee leading their new concept, CosMcs.
First, this guy works in restaurants, so nothing intelligent is ever going to come out of his mouth; immediately discount whatever he says. This would be like asking a paramecium for the best way to build a quantum computer.
If you think you’re going to get a sensible answer here, you should start working in the restaurant industry.
Second, CosMc’s is by and large a lightweight drinks concept, meaning the feature requirements are small in comparison to those of McDonald’s, and it wouldn’t require a heavy technical lift to serve the brand.
It’s why Toast’s first real enterprise customer was Jamba Juice: it’s relatively low hanging fruit as far as POS complexity is concerned.
This does not mean Global has a POS asset worth a damn.
Third, when talking with Global’s POS competitors, they all acknowledged that this was a small test, and Global most assuredly won the test promising the universe and losing material amounts of money to do it.
Global then has the audacity to splatter a page with diarrhea and expect nobody to notice that it’s complete and utter shit.
Half of these logos aren’t even viable softwares.
And how is Global planning to “streamline” these software into a single, coherent, and markedly more relevant software offering when spending nearly nothing on R&D?
Secret: they won’t.
PAR has been working on rearchitecting for six years and that’s with a single POS product.
Lightspeed has been wrangling this challenge for nearly the same amount of time.
And these are legitimately product-led companies.
Global will rebrand the make-believe software Genius, no less.
What epic marketing from McKinsey.
Global then parades out some nonsense about their payfac models.
We’ve literally never met a software (ISV) that has chosen Global to power their payments.
Not. a. single. one.
ISVs are going to Adyen (mostly) and Stripe (to a lesser extent).
We love when the deck turns to the issuer solutions Global grabbed a quote from… their vendor!
BTW, how bad are things that you need a vendor to give you a testimonial?
The next slide to catch our eye again talks about R&D.
We think this IT spend is complete BS and should be investigated for fraud. Remember that Global’s tech spend was 6% of annual revenues is 2018.
We’re to believe their IT spend has grown 7x in 6 years?
A company that can’t even spell R&D is willing to invest so aggressively that their R&D spend has outpaced their revenue growth by more than 2x (GPN revenues have roughly tripled from 2018 to 2024 thanks to inorganic acquisitions)?
Sure, we can believe that some of the software companies Global acquired had real R&D spend, but Global has slashed those wherever it could.
R&D is a drag on earnings, bro.
Just look at how this innovation slide should be reframed:
The 40% productivity enhancements should read “we fired 40% of R&D employees so we could fleece customers faster”.
A 30% increase in customer engagement should read “as we really stepped up rate increases a larger percentage of our customers were going bankrupt faster, resulting in a 30% increase in customer complaints”.
A 25% improvement in fraud detection should read “we had employees take naps for 25% of the workday so we could pass through fake fees without detection”.
Global’s “compelling financial profile” is so sad you start to feel sorry for them.
Consistent track record of financial performance means that they’ve effectively synonymized their brand with fake fees.
Resilient business model means that they take fees whenever they want.
Strategic focus and transformation means that they acquires softwares, strip out R&D, jack payment rates, then hope someone pays for the corpse. Takes almost teenage-level abilities with a spreadsheet to execute such “value”.
Strong cash flow and capital allocation means that Global screws their merchants hard enough to repurchase shares to drive up the share price. They’re the ultimate tax on their customers.
(Psss… Share buybacks happen when a company recognizes that it has no real avenues for strong growth.)
When Adyen’s share price tanked, look what their co-CEO, Ingo Uytdehaage, said:
We’re focused on building a business and we always had a policy where we continue to invest our funds in the business. And that’s what we continue to do.
But Global Payments?
They have no strategy, despite the amount they spend on consultants.
It’s why they’ve earmarked an absurd amount of capital to keep buoying the share price.
Not sure how long Cameron will stay employed, despite his best efforts.
He should return to the Jeff Sloan poster in his bedroom and pay homage for some divine inspiration.
Sadly so many of these things are not true just in the payments industry, this could be said of almost every public company out there.
It seems like so many of these companies “spin” the truth (aka LIE) and most of their stockholders are too incompetent to catch-on … think about all the major consumer companies (AT&T, VERIZON, DirecTv, Netflix, etc) who choose to outsource their support overseas to save money and just “hope” the customer will deal with their inferior product rather than providing actual service. Now I’m even seeing it in the Airline and Travel industry – United Airlines no longer hires employees at most airports, instead they outsource to a 3rd party that may as well be monkeys …
The one advantage is that the payments space has the luxury of ratcheting a few BPS and increasing their bottom line by a few hundred million overnight … even if it ultimately results in more attrition in the long term.
… or they can just make a “billing error” and charge its customers for a bogus fee, then say “oops” when 10% of their customers complain, meanwhile they keep the money they literally “stole” from the other 90%.