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Welcome to Portfolio Perspective: Managing Risk & Seizing Opportunity, a podcast focused on the asset-based lending industry. Join Andrew Pace, Chief Client Experience Officer at Asset Compliant Solutions, as he interviews experts, shares insights, and explores strategies for managing risk, optimizing portfolio performance, and seizing opportunities in an ever-evolving financial landscape. From regulatory changes to technological advances, each episode provides actionable takeaways and deep dives into industry trends. Whether you’re a lender, servicer, or recovery expert, this podcast offers valuable perspectives to enhance your approach and improve outcomes.
The most important piece of the puzzle for me has always been people. How do you get the right people on the team with the same vision, with the same tenacity, with the same goals and objectives to get to where you want to be.
Andrew:Welcome back to ACS Portfolio Perspective. I'm your host, Andrew Pace, Chief Client Experience Officer at ACS, joined today by Dan Krudzewski, Executive Vice President at Mazop Capital. With over forty years in equipment finance, Dan brings a wealth of experience from leadership roles at GE Capital and CIT Commercial Finance, where he led multi billion dollar platforms. At Mazo, Dan is spearheading the company's evolution from a discounter to a full service balance sheet lender, a transformation that involves raising capital, building infrastructure, and scaling operations to greatly expand Mazo's annual volume. His career has been defined by building, fixing, and growing equipment finance companies, and his experience and expertise spans capital markets, business development, and strategic growth initiatives.
Andrew:Dan, welcome to the show.
Dan:Thank you very much, Andrew. It's great to be here and great to be with a fellow Buffalonians.
Andrew:Likewise. You've been a part of some major transformation in the industry, but what Mazo is doing now is a big shift, moving from a discounter to a full balance sheet lender. That's a big move. So let's unpack that. Oi, what prompted Mazo's decision to evolve from discounting to becoming a full balance sheet lender?
Dan:Well, I think it's just a natural evolution of what happens from a startup into a more experienced market facing organization. When the company started, they started with the thought and dream of being an independent finance company. And in order to do that in the first couple of years, the usual first step is to go find some business and go see if you can sell it. And therefore they put a pretty good discounting platform together. And they've been successful in that.
Dan:They've grown from zero to $100,000,000 run rate over a four year period.
Andrew:Can you walk us through the phased approach you took to raise that capital and build the necessary infrastructure?
Dan:Yeah, sure, sure. When you take a look at what you need to do in order to go from a discounter into a handbook full service lender, there's a number of different aspects to it. First of all, there's people, there's process, and there's the product. I learned those three P's back in my GE capital days, and I've always leaned on those to see how do we fulfill against that. So when you're talking about having an evolution within an organization, you have to take a look at those three key prospects and see what you need to do in order to enhance and change things.
Andrew:So what were the biggest challenges you faced there in this transition, especially given the current market conditions?
Dan:Well, I think the current market conditions are good for what we want to do. So the challenges were more internally in terms of how do we get ready to change our policies and procedures to go from this discounting environment to this on book capital intense environment, because there's a lot more scrutiny. Our phase one capital was to attract a small line to start doing deals on book. And when you're dealing in that environment, you then have somebody that you're beholding to and you have to give reports to, and you have to have the technology in order to do that, and they have to have the ability to make sure that you get those things done. So first phase was, how do we go from needing to not necessarily report outside of the organization, just internally to having outward facing information.
Andrew:And on the flip side, what opportunities did this shift open up for you guys?
Dan:Well, I think when you're in a marketplace that's growing and you are in a dealer vendor environment, which we are, the things that give me the most desire to grow is how do we grow those relationships? And in a capital intensive marketplace, those sellers of assets, the typical first question they ask you is, Do you have your own capital? Or are you a discounter? And some of the smaller relationships and whether they're dealers or vendors or manufacturers, they're okay with that discounting environment because they just need somebody to take care of them. When you get into a more sophisticated arena, they want you to have your own capital.
Andrew:How long have you been in the industry, Dan?
Dan:Forty three years in financing, forty years in equipment finance.
Andrew:So what lessons from that experience guided this transformation that you guys are going through right now?
Dan:Well, first of all, I go back to my GE Capital days when I went in as a salesperson and came out of Business Leaders, primarily because of my interaction with Six Sigma process management. So I always lean back on that and follow that methodology to take you from where you are to where you want to be. So the first thing with this, utilize tools that you know work. The second part was lean on your experience to know where not to go. Where are those dark holes that may look appetizing, but really will not get you to where you want to be in the long run?
Dan:And lastly, I think the most important piece of the puzzle for me has always been people. How do you get the right people on the team with the same vision, with the same tenacity, with the same goals and objectives to get to where you want to be?
Andrew:That's fascinating evolution and great advice. And of course, none of that happens without capital, as you talked about earlier. The broader capital market environments have been a hot topic. How is capital availability shaping growth strategies and influencing the competitive landscape today?
Dan:I think there's a number of different areas where being in the equipment finance world drives to the availability of capital. First of all, the asset base has always been desired by outside lenders or funds. They feel safety in it because you have a hard collateral, you have an income producing collateral, and you have an aftermarket for most of the collateral. So that brings a lot of capital to the marketplace. The second piece is there's a lot of capital deployed.
Dan:Banks are getting back into equipment finance, but not necessarily owning their own equipment finance companies. You can see a number of different funds and insurance companies getting into it. You see the great amount of people that were ex GE Capital brethren that are opening up finance companies in the last couple of years. And lastly, there is a need to deploy both mezzanine and equity capital, which you need in order to build a finance company.
Andrew:How is the abundance or scarcity of capital shaping competition in the industry today?
Dan:Well, I think there's a lot more competition because there's a lot more capital. So the people that can strategically deploy capital with a proven background like Mazo will be the ones that attract the capital the most.
Andrew:And what strategies have you found most effective for sourcing and structuring capital to support the aggressive growth plans that you have?
Dan:Well, I went out and went to people that we know, certainly there's different levels of capital available. I went to banks where I knew the people. I went to funds where I've done transactions before, and we're going to equity to people that we know and trust in equipment finance business that you would want as a partner. So it always goes back to business with people that you like and you trust.
Andrew:You just talked about that, the partnership. So when lenders and institutions are considering partnerships, what are they really looking for other than the fact that you've already have a familiarity with them?
Dan:Well, I think the first thing they're looking for is what's the management team look like? Do they have the highest degree of integrity? Can they trust us? Do they think we have the experience level that they Have we done this before? And in my case, I have.
Dan:So we bring that to the table that we've done this before, and we're going to be able to do it again successfully. So the first thing they do is, what does the team look like? What's the team dynamic? Is it a good mixture of people that have strategic vision, but also risk vision and syndication vision and core capacity for policies and procedures? Because if you miss any of those, you have this dangling participle out there that doesn't allow them to make a decision correctly.
Dan:So I think the first thing is, how's the management team work? The second is, what's the growth curve been like? And have you been able to expand? Have you been able to attract more and more business? Because they need to deploy capital and they need to deploy it quickly.
Dan:So you have to put together a strategic plan that puts together this people process product scenario that gives you the ability to deploy pretty quickly.
Andrew:And once you have the capital, the next big challenge is scaling operations, building a platform for sustainable growth is no small feat. What does that journey look like operationally as you move to a much higher level of annual volume?
Dan:Well, operationally, luckily for us, the company has been built on a really good Salesforce platform. So there is a lot of capability that gets extracted out of that. So what we've done is we've taken a look at different providers of technology, end to end products in the marketplace, and we've chosen a few that we like, and we'll be deploying them into our system to be able to have a technology product that makes us efficient, fast, and from a credit perspective gives us the right kind of diligence processes that we need. From a people perspective, we are currently building a center of excellence in Arizona as a second facility for us, and that's going to be our sales facility of excellence. So out there, we're actually partnering with Arizona State University and attracting young talent out there to be either salespeople or be in a mentorship program for us.
Dan:That's where we're going to develop the talent that we have. Then lastly, because of the capital base that we're attracting, we're going to be able to go out and attract experienced people that it was difficult to do when we were a discounter.
Andrew:That's awesome. And as far as rapid growth, it can create risk. How do you balance expansion with that operational excellence and risk management?
Dan:Well, can't get out ahead of your skis. You can't have sales pushing the envelope. You can't have operational folks slowing you down. There's got to be this really good balance that says, I've got a timeline. I'm going to stick to the timeline.
Dan:I'm either accelerate or decelerate, depending on factors that we count about. So you have to plan with a timeline. You have to somewhat work to the timeline, but you have to be flexible enough to make adjustments.
Andrew:And you talked a lot about your experience at GE Capital and CIT. How does that inform your approach to building platforms today?
Dan:Well, with this much experience under my belt, I've probably made a lot of mistakes in life, try to avoid those and learn from the good experiences that you had in both of those organizations, and lean on all of the learnings that you've had. The other piece though is we are not those companies and we are not to that scale, so we have to make sure that we don't randomly think that we can do things that we cannot, that they could. When I was at GE Capital, all I had to do was call up treasury and say, I'm going to build this platform or we're going to do this, and I need $2,000,000,000 to fund it. And they would do it because here it's going be a little different. We're going take baby steps as we go along the way and go from phase one capital to phase two to phase three and grow within that and make sure that we are in sync with what a prudent growth plan looks like.
Andrew:You've seen this industry evolve over decades, and it's changed dramatically along the way. From your perspective, what stands out most as we look ahead to 2026? What's next for equipment finance?
Dan:Well, there's a couple of different things. I think several years ago, there was this thing about blockchain, and I don't think it ever took hold, I don't know if people really understood what blockchain meant. And now there's artificial intelligence. And I still think people are trying to say, What does that really mean? Because the intelligence starts with what we put into it.
Dan:And how does that artificial intelligence platform help us in being more predictive about many different things, about trends, about delinquencies, about asset management, about core capabilities, about industry shifting, about geopolitical stuff? How does that help us make decisions on a go forward basis, not only in the short term, but in the long term? So I think this whole artificial intelligence model will become definitely needed to be more predictive instead of just what we've done in the past. Secondarily, it's going faster and faster and faster. We need to be able to turn transactions faster.
Dan:We need to be able to take the wing to wing experience of a dealer or a vendor or a borrower and make it as seamless as possible. That requires internal technology and external technology in order to make the customer experience the best it can be.
Andrew:And what market conditions and trends are you watching closely as you plan for 2026?
Dan:I think the thing that we're looking at mostly is what industry do we want to get into? Mazo has been primarily in the construction and vocational transportation industries, which have done good. The over the road trucking and all those types of things, we've stayed away from that like most people have, but what's the next thing we need to do? I've got great history in many different industries over my career. So we're currently looking as to where do we want to play?
Dan:What we're doing there is we're looking at the sizing of the market, what are the barriers to entry, What's the competition look like? What other potential returns? What does asset management requirements look like? What do after markets look like? And then secondarily, what happens two, three years down the road from a political perspective?
Dan:We're in a great environment, I guess if you're a conservative Republican, but what happens if we go back to a Democrat led Congress or a Democrat house and Senate and presidency. What does that mean from a business perspective? Because the rules do change. So as we're going into this, we're not only looking out to what the next one, two, or three years looks like, we're looking out what happens in that third and fourth year if there is a change in political environment.
Andrew:And what other opportunities and challenges do you see for independent equipment finance companies in the coming years?
Dan:Well, I think they have to stay the course. They have to understand who they are and what they can do. Where I've seen the most problems over my career is when you try to do too much and be too much to too many people. There was a number of independent organizations that decided that they wanted to be technology companies instead of independent finance companies, and they leaned more towards that. Then they lost their path and burned through a lot of capital for nothing.
Dan:We want to avoid that. We want to be who we are, what we are, what we do best, and utilizing technology to help us grow and advanced intelligence, but don't let that be the leading indicator. Let that be the supporting mechanism.
Andrew:Right. Use it to compliment your existing team. Don't use it to replace. And what other advice could you give peers in the industry based on your experience?
Dan:Well, I look at this forty three years as not a career, but a hobby. So I say, Stay with it. One of the things I really like to do is mentor younger people, and I want to get as many people into this industry as possible and have them stay the course. While there's many twists and turns and ups and downs, it's been pretty good to me for forty three years. And I think it'd be good to a lot of people for forty more years of their careers.
Dan:So the thing that I say is there's always opportunity. There's always room for advancement, whether it's with the company you're with or the next company you want to be with. There's always opportunity within this industry and stay the course, be proactive, be intuitive, be inquisitive, and just keep going.
Andrew:And you're heavily involved in the industry. Obviously, you're involved in EF Cares, involved in ELFA. Those are also other opportunities for people to get involved in the industry, right?
Dan:Yeah. Well, if you're going to be in the industry, you need to broaden your scope of people that you know and you want to have interaction with. I've been with the ELFA now for close to thirty years. And I was on various independent finance committees and vendor finance committee and subcommittees. I've given talks at the IFA conventions.
Dan:Then luckily for me, was tapped to be on the board and then I was the treasurer for a number of years of the organization. And then Jesse came to me and asked me to be on the advisory committee for Equipment Finance Cares. And all of those have been significant experiences in my life that have brought broader experience, more people to know, and have allowed me to learn from the best in the industry. I like to play a lot of golf and people say, How did you become a good golfer? And I said, Well, I really didn't like to practice, but I liked playing with good players because I watched them play.
Dan:I became a better golfer because I watched them play and I mimicked them. It's just like being in this industry. Surround yourself with people that you really respect and you'll get a lot out of it.
Andrew:What's your favorite course?
Dan:Have- have to say Craigburn, which is my home course in Buffalo, New York. I was a member there for thirty five years, so I've got to say that. If you take a look at courses that I've played throughout the country, Bebble Beach Course, Pinehurst Number Two, and then a friend of mine from Buffalo actually belongs to a course in South Carolina called Secession. It's in Beaufort, South Carolina. Then lastly, I used to live in Florida, so I got to play in the TPC lot.
Dan:So those are kind of the courses that I like to play.
Andrew:Very nice. Well, has been an incredible conversation. Thank you so much for sharing We've your insights and covered everything from transforming business models to navigating capital markets and scaling for growth, all the way to what the future might hold for equipment finance. As we head into 2026, what's one thing you're most excited about for the industry?
Dan:Well, I'm glad the economy is going at the pace that it's at, And to me, it doesn't seem to be any real strong headwinds out there that I think would really shatter what our expectations are.
Andrew:Since you're originally from Buffalo, we got to settle this for our listeners. Blue cheese or ranch with your wings?
Dan:Paul, it's got to be blue cheese. When you come to Buffalo and you go out for wings, if you order ranch, they will tell you to leave the restaurant.
Andrew:Very true.
Dan:Very true. So when was with another finance company, we had a headquarters down in Fort Worth, Texas. There was a restaurant called Buffalo Brothers there. They're from Buffalo and they had a Buffalo section to their menu. So I took my team out to there for the first time that we met together as a team, and I ordered the food.
Dan:I ordered a pizza like Lenovo. I ordered beef on WEC. I ordered Loganberry. I ordered wings and I ordered blue cheese. I specifically told my team that if anybody eats ranch, they're fired.
Dan:There's the blue cheese.
Andrew:All the Buffalo Staples, you're missing sponge candy and Weber's mustard.
Dan:Well, they did have Weber's and they had Salen's Hot Dogs. Okay.
Andrew:All right. Well, let's talk about the sponge candy. What's your favorite kind of sponge candy from Buffalo?
Dan:There's a place in West Seneca that used to be I can't remember the name of it, on the hill in West Seneca. Antoinette's, on the hill. Antoinette's, yes. Yeah, and it got bought out by somebody else, but Antoinette's make the best chocolate in my opinion.
Andrew:I think it's a Char Lapse ice cream now. Okay. At least at that location. There's still the original Antoinettes on Transit Road in Lancaster.
Dan:And my kid's grandmother, the one that lives near the stadium I was telling you about earlier, she worked there for forty years at Antoinettes.
Andrew:Oh, wow. Yeah. Wow. I'm a Watsons. I love Watsons.
Andrew:Yeah. Sponge candy. I'm a huge fan of Watsons. But you can't I mean, obviously, you can't go wrong. Is there anything that we didn't cover today, Dan, that you'd to share with our listeners?
Dan:Well, there's only one thing you got to do when you're from Buffalo. Go Bills. Go I went to my first game in 1965, and I've been a long suffering Bills fan for sixty years. Need a Super Bowl. I desperately need a Super Bowl.
Andrew:Just one before we die, right?
Dan:Just one before the end of tech. We got to get a Super Bowl win soon.
Andrew:Will you be back to see one final game at, as we call it, the RAL for Highmark Stadium now?
Dan:No, I won't be there, but I went to the first game in Highmark Stadium, the current stadium, with my dad. It was against the Washington Redskins, and on the opening kickoff, Herb Mulkey ran the ball back 105 yards for a touchdown. Wow. First kickoff in the new stadium. I'm going to go to Buffalo for the first game in the new stadium, and I'm going to take my son.
Andrew:Oh, that's awesome. That is awesome.
Dan:I was a season ticket holder for thirty years, and people ask me, How could you go to those games when it was snowing and raining and sleeting and 20 to below zero wind chills? It's because you're a Bills fan. And nobody really understands the complexity of the Bills Mafia, what that means to Western New York, and what it means really to the rest of the country and to the NFL. That fan base does so many things outside of Western New York for needy people and for people that may have come into Buffalo when they get an injury, and then they go support their causes. And then to build Josh Talan's grandmother's legacy with a wing at Children's Hospital with $2,000,000 worth of donations from the fan base.
Dan:It's pretty amazing what that means to the organization and to the country and to the NFL and especially to Western New York. It's kind of mind boggling.
Andrew:It is. It is, and that really started when, I would say, Andy Dalton, that game against the Ravens when the Bengals went went into Baltimore and upset the Ravens, we were able to back back into the playoffs. And Bills fans donated money to Dalton's foundation, you know, over a million dollars. And I think that's really kinda what started it. Obviously, I think the four Super Bowl runs in the nineties, we attracted a lot of football fans who, you know, loved watching the Bills.
Andrew:They were able to, I would say, the Kellys and the Reeds and Bruce Smith. So there are lot of popular players that people followed, and I think we gained a lot of fans from that generation, from that team. And then obviously, Allen's story and how he became the player that he's become today has obviously attracted a lot of fans all over the country as well.
Dan:Yeah, so as we wrap this up, in the words of Josh Allen, Be good, do good, go Bills.
Andrew:Absolutely, 100%. For everyone tuning in, be sure to follow Dan and his team to keep up with their continued growth and market leadership. Thank you for being part of ACS Portfolio Perspective. I'm Andrew Pace. I appreciate everyone who joined us today.
Andrew:Subscribe and catch future episodes as we explore the people and perspectives shaping the equipment finance industry. Until next time, thanks for listening and go Bills. Thank you, Dan. Take care.