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Alumni in the News: Portland Business Journal: Doug Shafer, Medium Private Company CFO of the Year
Author: By Maureen McGrain, Portland Business Journal
Posted: May 21, 2013

Read the original article in the Portland Business Journal here.

 

For a finance guy who takes comfort in the predictability of numbers, Doug Shafer credits the stars for landing his current job as chief financial officer of Iovation Inc.

“It was serendipity,” Shafer says of his joining the company in the fall of 2008. “They needed help, and I needed to work.”

Indeed, the Portland-based maker of fraud detection software had hit a rough patch that serendipitous year. It was investing more than it was earning, and with the economy hitting rock bottom, one of Iovation’s largest customers went away.

In five years, Shafer helped the company that lost $10 million in 2008 get back on track to hitting revenue of $15 million in 2012. Iovation is on pace to net more than $1 million this year, with six consecutive months of profitability.

Shafer helped guide the company through an immediate short-term fix to stop the bleeding, including 24 layoffs, significant executive pay cuts and reducing its rent by consolidating to one floor at the U.S. Bancorp Tower. Over the long-term, the company took a more disciplined approach to investing and it grew its way out of the losses.

It helps that the company operates within a mostly recession-proof space: online fraud detection. Founded in 2004, Iovation’s customers include retail credit and debit card administrators as well as online gaming sites wary of cheaters and social networking sites that want to block stalkers or child predators. Its software detects computers previously associated with fraud or abuse and immediately alerts clients when those devices emerge at their Web site.

By the fall of 2012, Iovation surpassed the 1 billion mark of tracked devices, 8 billion protected transactions and 10 million fraud activities detected. That includes identity theft, online scams, account takeovers and chat room abuse.

The company now employs more than 80, with plans to boost hiring in 2013.

The growth, stability and profitability the executive team has created is one of Shafer’s proudest accomplishments of his 30-plus-year finance career. Shafer spent 20 years at Tektronix, where he held a number of positions, including president of Americas operations and finance manager for Tektronix’s German subsidiary and European operations.

He was in East Berlin right before the Wall came down, and his son was born in Germany. He and his wife also have a daughter, with both kids now in their early 20s.

Tektronix eventually named Shafer president and CEO of its video compression spinoff VideoTele.com. That company was sold to Tut Systems and later purchased by Motorola.

Shafer wanted to take a six-month hiatus after the stress of growing and then selling VideoTele.com, but it only lasted six weeks. His friend, former Intel executive Frank Gill appealed to Shafer about going to Unicru, a Beaverton-based software provider of hiring management solutions that was losing money.

As CFO of Unicru, Shafer helped the company double its revenue over three years before Massachusetts-based Kronos Inc. purchased it in 2006.

When that gig was up, Shafer decided the time was right for that much-needed break. His son was a senior in high school, and Shafer enjoyed the business of his kids’ activities as well as hiking, cycling, golfing and fishing.

He planned for a year, but when that year turned into a year and a half, Shafer realized “I was driving my wife crazy.” He turned to his former colleague, Unicru CEO Chris Marsh, for some advice on what to do next. Marsh put him in contact with his good friend, Greg Pierson, CEO of Iovation.

At the same time, Marsh called Pierson and told him to do himself a favor and hire Shafer.

“From day one, he acted like he’d been with us for years,” recalled Pierson of Shafer’s early days with Iovation. “He just rolled up his sleeves and got to work. He has a quiet confidence about him, and he wasn’t afraid to share his opinion.”

In fact, there was no contract, no salary discussion at all. Shafer just started working. After a few weeks, Pierson called him to discuss employment, to which Shafer replied, “Greg, I’m busy right now. I’ll have to call you back.”

Pierson knew then he had the right guy. Shafer went from consultant to CFO in a few months.

Pierson appreciates Shafer’s extensive operational experience and his understanding of arbitrage. The homegrown CFO — he earned degrees from Portland State University and University of Oregon after graduating from Aloha High School — enjoys the cash management and customer sides of finance.

That experience, particularly in the international realm, is a boon to Iovation, which is in growth mode, investing both in new features as well as new geographical spaces. The challenge for Shafer now is maintaining the delicate balance between investing enough to optimize growth and keeping the company from spending too much and finding itself back in the red a la 2008.

Doug Shafer

Shafer on how his job has recently changed: “In very simple terms, my focus has gone from worrying about making payroll and finding more areas to cut costs to a more enjoyable focus on making the right level of investments to maximize our growth potential.”