Forbes

Max­i­mum Mav­er­ick

- By Gi­a­como Tognini

Thrill-seeker ex­traor­di­naire Jared Isaac­man flies MiGs to re­lax, but he just pulled his wildest ma­neu­ver yet: tak­ing his restau­ran­tand ho­tel-pay­ments com­pany pub­lic while his clients are flam­ing out. And he just broke the bil­lion­aire bar­rier.

likes to say that ev­ery­one has a “use­ful fa­tigue life,” to use Air Force jar­gon. That’s lit­er­ally the num­ber of flight hours left in a fighter jet be­fore it out­lives its use­ful­ness and needs to be re­tired from ser­vice. But Isaac­man views the con­cept as a metaphor for how to live his life. “YOU ONLY

get so many flight hours,” he says dur­ing a call from his Shift4 Pay­ments of­fice in Al­len­town, Penn­syl­va­nia, at 5 p.m. the day be­fore a morn­ing trip to his home in Mon­tana. “It’s not a whole lot of time, so it re­ally just comes down to max­i­miz­ing it while you can.”

Adds Isaac­man’s older brother Michael, “He’s a big be­liever that we all have a lim­ited fa­tigue life, so let’s do the most amaz­ing things that we can while we’re alive.”

At age 37, Isaac­man ap­pears to be us­ing his time to the fullest. He started his first busi­ness at 15, a year be­fore drop­ping out of high school to hawk credit-card ter­mi­nals out of his par­ents’ base­ment. At age 28, he started what would be­come the world’s largest pri­vate air force, Draken In­ter­na­tional, and then sold it to Black­stone for a nine-fig­ure sum eight years later. And as of June he is a bil­lion­aire, af­ter tak­ing his restau­ran­tand ho­tel-pay­ments firm pub­lic.

While much more fa­mous bil­lion­aire Jack Dorsey’s Square tar­gets neigh­bor­hood cof­fee shops, Isaac­man’s Shift4 Pay­ments han­dles more than $200 bil­lion in pay­ments every year for a third of the coun­try’s restau­rants and ho­tels, in­clud­ing giants like Hil­ton, Four Sea­sons, KFC and Arby’s, which rely on it to com­plete com­plex pay­ments across dozens of prop­er­ties and lo­ca­tions. Even af­ter Covid-19 lock­downs threw restau­rants across the coun­try into chaos and temporaril­y tabled his much-an­tic­i­pated IPO road­show, Isaac­man pressed ahead. “Peo­ple still have to eat, right?” he says.

Isaac­man is now worth $1.4 bil­lion, thanks al­most en­tirely to his

38% stake in Shift4 Pay­ments. He re­tains a small stake in Draken as part of an es­ti­mated $100 mil­lion worth of ad­di­tional as­sets, in­clud­ing a MiG jet and nine other planes.

For fun, Isaac­man bul­lets the MiG faster than the speed of sound and climbs moun­tains to un­wind from non­stop, in­tense 80-plus-hour weeks. He spent New Year’s Day in Antarc­tica scal­ing Mt. Vin­son, a 16,000-foot wall of snow and ice 800 miles from the South Pole. He had to turn back 500 feet from the sum­mit due to de­hy­dra­tion, but he vows to try again.

ISAAC­MAN

has been chas­ing an adren­a­line rush since child­hood. When he was still in high school in the quiet sub­urb of Far Hills, New Jer­sey, his brother Michael, eight years older, was buy­ing his first house. Tiffany and Marc, the el­dest of the four Isaac­man sib­lings, were 27 and 30, re­spec­tively, and both work­ing. The only one still stuck at home with Mom and Dad, Isaac­man wanted out. “I was al­ways very mo­ti­vated to get to their life­style and not very mo­ti­vated about high school life,” he says.

In 1998, along with his friend Bren­dan Lauber, who was two years older, he set up a small com­pany called De­cho Sys­tems to de­sign web­sites for lo­cal busi­nesses. One of their first clients was Mer­chant Ser­vices Inc. (MSI), a pay­ment pro­ces­sor based in nearby New Prov­i­dence, New Jer­sey. In ad­di­tion to the web­site work, MSI needed help with com­puter se­cu­rity, so Isaac­man of­fered him­self as an in-house con­sul­tant. When that gig turned into a full-time job of­fer, he jumped at the chance to drop out of high school at age 16 and got his GED in­stead.

MSI’s main busi­ness was sell­ing the clunky ter­mi­nals that swipe credit cards with mag­netic strips. Banks is­sued cards to con­sumers and ex­pected small busi­nesses to ac­cept them with­out any help, out­sourc­ing the process to third par­ties like MSI. Even from his perch in the IT de­part­ment, Isaac­man could see that the process was cum­ber­some and ex­pen­sive. If a lo­cal pizza joint wanted to start ac­cept­ing credit cards, it would take two weeks and moun­tains of forms and fees be­fore it could start swip­ing.

“To sign up to take credit cards 21 years ago, it was the same amount of pa­per­work as get­ting a com­mer­cial mort­gage,” Isaac­man says. “It was very in­tense, it was bur­den­some, it was en­tirely un­nec­es­sary.”

Six months into his job at MSI, he de­cided he could make the process faster, eas­ier and cheaper. So he quit to start United Bank Card, the pro­gen­i­tor of Shift4, in his par­ents’ base­ment. His first hire was his fa­ther, Don, who would soon leave his sales job as vice pres­i­dent of a home-se­cu­rity com­pany. Us­ing his con­nec­tions from MSI and a $10,000 loan from his grand­fa­ther, Isaac­man con­vinced a bank to give him an iden­ti­fi­ca­tion num­ber, which he needed to sell the credit-card ter­mi­nals. Next he hired Lauber, his buddy from De­cho, who dropped out of the Rochester In­sti­tute of Tech­nol­ogy to join the new busi­ness.

“It didn’t take a whole lot of arm-twist­ing,” says Lauber, who now runs Shift4’s “Har­bor­touch” touch­screen soft­ware di­vi­sion. “I’m no or­a­cle, but at the time I knew that this kid’s the real deal.”

It was the apex of the first in­ter­net boom, and the two friends built web ap­pli­ca­tions to sim­plify the process of get­ting a ter­mi­nal and ac­cept­ing cards. Don used his skills as a sales­man to con­vince lo­cal busi­nesses to take a chance on the up­start, led by a kid who was barely old enough to drive.

“I didn’t re­ally come out and ex­pose my age,” Isaac­man re­calls. “I hid in the base­ment.”

By 2003, he still wasn’t old enough to drink, but he had made enough money to pay back his grand­fa­ther’s loan and ex­pand be­yond the Gar­den State. The four-year-old startup, bring­ing in thou­sands of new cus­tomers, opened an of­fice in Ari­zona. The next big break came in 2008, when it launched Har­bor­touch, a then-fu­tur­is­tic touch­screen that com­bined a cash regis­ter and a credit-card ter­mi­nal in one de­vice. “It was years be­fore Square,” Isaac­man says, rat­tling off a list of com­peti­tors that he beat to the punch. “We were way ahead of ev­ery­body else, and this was wildly suc­cess­ful.”

At the same time, he was burn­ing out from years of work build­ing the com­pany from scratch. So he de­cided to take up a hobby: avi­a­tion. He started out fly­ing prop planes, but within two years he wanted more—so he put in hun­dreds of flight hours to move up to fly­ing jets. In 2009, at age 26, on his sec­ond at­tempt, he com­pleted the fastest around-the­world flight in a light jet, fly­ing from—and to—Mor­ris­town, New Jer­sey, via the Azores and Alaska, in 61 hours and 51 min­utes, shat­ter­ing the pre­vi­ous record by 21 hours; be­tween the two flights, he raised more than $100,000 for the Make-A-Wish Foun­da­tion. (His first ef­fort, in 2008, failed when he was

“THAT WAS A PRETTY BIG LIFE-AL­TER­ING MO­MENT. A LOT OF THOUGHTS WERE GO­ING THROUGH MY MIND: ‘ARE PEO­PLE EVER COM­ING BACK TO THE OF­FICE? IS THIS COM­PANY EVEN GO­ING TO BE HERE?’ ”

de­layed by of­fi­cials in In­dia.)

He soon dis­cov­ered that civil­ians could fly mil­i­tary air­craft if they put in enough flight hours and met FAA qual­i­fi­ca­tions—so he started learn­ing how to fly fighter jets. In 2010, his in­creas­ingly ex­treme hobby be­came a part-time job when Isaac­man met Sean Gustafson, then a mem­ber of the Thun­der­birds, the fa­mous Air Force stunt squadron, whose pi­lot call sign is “Stro­ker.” (Isaac­man’s is “Rook,” for rookie.) To­gether they set up an air-show squadron called the Black Di­a­mond Jet Team with other re­tired pi­lots and skilled civil­ians, per­form­ing aerial ac­ro­bat­ics at NFL games and the Indy 500.

“There are very few peo­ple who get that chance to fly a fighter as a civil­ian, and to get checked out and cer­ti­fied by the FAA is ex­tremely rare,” Gustafson says. “It’s just a tes­ta­ment to his de­sire and pas­sion to make that hap­pen.”

A year later, the two came up with an even bet­ter idea. In the wake of the fi­nan­cial cri­sis, the U.S. mil­i­tary was in cost­cut­ting mode. At Nel­lis Air Force Base just out­side Las Ve­gas, home of the Air Force equiv­a­lent of the Navy’s Top Gun flight school, the mil­i­tary was spend­ing bil­lions of dol­lars to train pi­lots in war games against mock op­po­nents. Tak­ing F-16s and ex­pe­ri­enced pi­lots out of com­bat to have them con­duct drills at home was be­com­ing un­sus­tain­able. The two air-show friends saw an open­ing: If they could per­suade the Air Force to out­source that train­ing to them—us­ing exmil­i­tary air­craft from for­eign al­lies that cost much less to op­er­ate, manned with re­tired air­men not on the mil­i­tary pay­roll—it would save bil­lions and en­able the Air Force’s best pi­lots to fight over­seas rather than train new­bies in the Ne­vada desert. With most of the air-show team on­board, they founded Draken In­ter­na­tional to make that plan a re­al­ity.

Isaac­man sunk money into Draken to buy dozens of fighter jets from around the world, with min­i­mal in­vest­ment from friends and for­mer col­leagues. Dou­glas A-4 Sky­hawks from New Zealand. At­las Chee­tahs from South Africa. Aero L-159s from the Czech Re­pub­lic. They even­tu­ally as­sem­bled 100 jets, the world’s largest pri­vate fleet of mil­i­tary air­craft.

The Navy had a sim­i­lar pro­gram al­ready in place, but it would prove more dif­fi­cult to break in to the no­to­ri­ously in­su­lar cul­ture of the Air Force. It took four years for Draken to get its first con­tract in 2015, and even that was just a small proofof-con­cept trial. Scott “Kidd” Po­teet, who spent seven years as a com­man­der and test pi­lot at Nel­lis be­fore even­tu­ally join­ing Draken to head busi­ness de­vel­op­ment, was skep­ti­cal at first.

“I thought it was a long shot . . . but [Isaac­man] rec­og­nized there was a need,” Po­teet says. “Once he got his foot in the door, he pro­vided a ser­vice the Air Force just couldn’t get enough of.”

While he was fly­ing in air shows and jet­ting around the globe to buy more planes, Isaac­man was still run­ning the pay­ments com­pany. He was putting in his sig­na­ture 16-hour days, roughly 15% of which he spent on Draken. “All I needed to fo­cus on [at Draken] was buy­ing more fighter jets be­fore oth­ers could get their hands on them,” he says. “Shift4 has al­ways been the greater por­tion of my time com­mit­ment.”

In 2014, an op­por­tu­nity emerged that was too good to pass up: His old em­ployer, MSI, was look­ing for a buyer. Isaac­man, who had boot­strapped his pay­ments com­pany for 15 years, sold a 53.5% stake in the busi­ness to pri­vate eq­uity firm Prospect Cap­i­tal for $279 mil­lion in eq­uity and debt. He then used the cash to buy MSI for around $250 mil­lion.

That was the first of seven ac­qui­si­tions. In 2017, a year af­ter Prospect sold its stake to an­other pri­vate eq­uity shop, New York–based Search­light Cap­i­tal, for $328 mil­lion, Isaac­man went on a buy­ing spree. He picked up three soft­ware ri­vals in the restau­rant space and took their nearly 100,000 clients with them, in­clud­ing na­tional chains such as Out­back Steak­house and Denny’s. In Novem­ber 2017, in its big­gest ac­qui­si­tion to date, it pur­chased Shift4 Pay­ments, head­quar­tered in Las Ve­gas. Isaac­man took its name, along with its blue-chip ros­ter of cus­tomers, in­clud­ing Cae­sars Palace and the PGA Tour.

Ac­quir­ing Shift4 more than dou­bled the pay­ment vol­ume Isaac­man was pro­cess­ing to over $100 bil­lion a year. Mar­gins are thin in the in­dus­try, with providers earn­ing a few cents on the

dol­lar for each trans­ac­tion they process. With hun­dreds of soft­ware ver­sions and mul­ti­ple pay­ment de­vices un­der one roof, Isaac­man could now tar­get larger, more lu­cra­tive clients. “That was the sin­gle most trans­for­ma­tive ac­qui­si­tion we’ve ever done,” he says. “It brought us a large por­tion of the en­tire hos­pi­tal­ity mar­ket.”

Isaac­man was al­ready fly­ing high when he won his big­gest deal yet for Draken. Seven months af­ter the Shift4 deal, he signed a first-of-its-kind $280 mil­lion con­tract to train Air Force pi­lots at Nel­lis over five years.

His old high school friend wasn’t sur­prised. “He’s the best at what he does, and he’s proven it in to­tally dif­fer­ent in­dus­tries, start­ing from zero,” Lauber says. “His per­son­al­ity is ‘see it, con­quer it and be the best at it.’ ”

ISAAC­MAN

went into 2020 with a nine-digit net worth and grand vi­sions of an IPO. The com­pany had re­ported record rev­enues of $731 mil­lion, though it was still los­ing money. Then came ma­jor, un­ex­pected tur­bu­lence.

On March 18, Isaac­man was cooped up in a con­fer­ence room at Shift4’s head­quar­ters in Al­len­town with se­nior man­age­ment. Two days ear­lier, the S&P 500 had col­lapsed on the way to its worst day since 1987, trig­ger­ing a halt in trad­ing for the third time in two weeks.

Shift4’s in­vestor road­show, planned for the fol­low­ing week, be­gan to look less likely by the minute. Mid­way through a cri­sis meet­ing on how to grad­u­ally tran­si­tion em­ploy­ees to work­ing from home, some­one in the room broke the news: Penn­syl­va­nia Gov­er­nor Tom Wolf was about to im­pose a stricter stay-at-home or­der the next day that would ef­fec­tively shut Shift4’s offices down.

“That was a pretty big life-al­ter­ing mo­ment,” Isaac­man says. “A lot of thoughts were go­ing through my mind: ‘Are peo­ple ever com­ing back to the of­fice? Is this com­pany even go­ing to be here?’ ” By the last week of March, trans­ac­tions at Shift4’s 125,000 restau­rant cus­tomers were down 74% com­pared to the first week of Fe­bru­ary, while its 21,000 ho­tels were down 86%.

Ev­ery­one went home ex­cept for Isaac­man. Sur­rounded by rows of empty cu­bi­cles at Shift4’s 80,000-square­foot head­quar­ters, he worked 16-hour week­days and 9-to5 week­ends. To help keep strug­gling clients afloat, he waived fees for three months and launched a site where shop­pers could buy gift cards; Shift4 matched 5% of all money raised. He rolled out QR codes for con­tact­less pay­ments and de­buted a new ser­vice to help restau­rants switch to on­line or­ders.

Soon enough, Shift4 roared back to life. Restau­rant in­dus­try trans­ac­tions re­bounded by 45% by May from their low point in March, though ho­tels con­tin­ued to lag. The com­pany went pub­lic in June on the New York Stock Ex­change be­fore record­ing its best month ever in July—han­dling 25% more pay­ments than dur­ing the same pe­riod in 2019.

Since the IPO, Isaac­man’s work­days have got­ten even longer. De­spite record­ing a net loss of $75 mil­lion on sales of $67 mil­lion in the sec­ond quar­ter—due largely to the pan­demic—Shift4 is now adding cus­tomers again. (The NFL’s Las Ve­gas Raiders and their new home, Al­le­giant Sta­dium, signed on in July.) Shift4’s low fees rel­a­tive to its main ri­vals Elavon and Free­domPay are even more at­trac­tive now as restau­rants and ho­tels look for ways to cut costs. Isaac­man is plot­ting over­seas ex­pan­sion and plans to move be­yond his home turf of hos­pi­tal­ity pay­ments.

When he needs a break from his non­stop sched­ule, he heads to his home in south­ern Mon­tana, where he keeps his MiG. He then trades his Shift4 shirt for a flight suit and takes to the skies. “It’s still ther­apy,” he says. “It’s still an es­cape.”

A sec­ond wave of Covid-19 cases this win­ter could still put ev­ery­thing in jeopardy, but Isaac­man isn’t wor­ried. “This is a long game,” he says. “The world will come back to life.”

“THERE ARE VERY FEW PEO­PLE WHO GET THAT CHANCE TO FLY A FIGHTER JET AS A CIVIL­IAN. IT IS EX­TREMELY RARE. IT’S JUST A TES­TA­MENT TO HIS DE­SIRE AND PAS­SION.”

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 ??  ?? Jared Isaac­man pur­chased this Soviet-era Mikoyan MiG-29 fighter jet from the es­tate of Mi­crosoft co­founder Paul Allen in 2019. “It’s ther­apy,” he says of his fly­ing hobby. Rook
Jared Isaac­man pur­chased this Soviet-era Mikoyan MiG-29 fighter jet from the es­tate of Mi­crosoft co­founder Paul Allen in 2019. “It’s ther­apy,” he says of his fly­ing hobby. Rook

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