Jack Nelson '03: Novice CEO Propels Company to Success

Appeared in Record issue: 
Fall 2013

In 2007, Jack Nelson, ’03, left his job at a big law firm in Austin, Texas, and moved his family to San Antonio, where he, along with a college buddy and another fellow, started up a small company making loans that were hard for its customers to get from conventional financial institutions. Nelson served as CEO of the new company.

“In the beginning, we were all over the place,” Nelson recalls. “We didn’t have a business plan. Our CEO—me—had zero real-world business experience. We made loans that were collateralized by people’s mineral rights; we looked at the risky student loan market; we even loaned money to a guy who was putting up billboards in Honduras and Nicaragua.” How did that work out? Well, last year the company, Propel Financial Services, was bought by a bigger company, Encore Capital Group, for $186.8 million. Nelson is still at the helm, leading almost 80 employees, and he sees great growth potential ahead.

Three primary factors turned around the company’s inauspicious beginning, Nelson says. First, they zeroed in on a profitable niche: lending money to homeowners to pay their property taxes. In Texas, penalties and interest can add as much as 48 percent to late property tax payments, so getting a loan to pay them on time is close to being a no-brainer. Second, they built very advanced cloud-based IT systems that fully automated virtually all aspects of the business, which reduced costs and increased responsiveness from the beginning of the lending process to its end.

The third factor was that the other person who started the company with Nelson and his pal was the legendary Texas entrepreneur Billy Joe “Red” McCombs, who has enjoyed a place on Forbes magazine’s list of the 400 richest Americans for more than a decade. “Mr. McCombs is brilliant and determined,” Nelson says, “and he’s also encouraging and good-hearted. The company wasn’t going to come up short with him around.”

Nelson says that many things he learned at the Law School helped him overcome his inexperience and become an effective CEO: “First of all, I was constantly humbled being around so many incredibly smart people at the Law School. I think that gave me a kind of resilience to keep plugging away, and that has been very helpful at Propel. Then there were practical skills of problem analysis and problem solving that I use every day. For example, we work in a complex political and regulatory environment, so it’s been very useful to me to have learned how to look at all the layers of an issue before going forward. I also have had a big advantage from just the basic legal skills of being able to read and understand statutes and other legal instruments. That’s still very helpful as we expand into more states—all with different laws.”

Nelson notes that Propel’s customers like its services and like the way they are provided—at last check, 98.6 percent of the company’s customers reported themselves as either extremely satisfied or very satisfied. Doing good in good ways also helps create a satisfied team at work: This year, Propel was rated as one of the best places to work in all of Texas, and it has enjoyed a similar distinction in San Antonio for each of the last three years.

The company’s goal of expanding nationally requires the enactment of appropriate legislation, state by state, which means that Nelson is now involved in testifying before legislators. “We have a great story to tell and I enjoy telling it,” he says. “What we do is good for everyone: our customers, local and state governments, our employees, and our business. It’s a win-win-win-win situation—just the kind of solution we learned to look for at the Law School.”