Interview with Dan Marzuola - June 2018

ERCG continues its ABC leadership interview series with Daniel Marzuola, President and CEO of The Energy Market Exchange (EMEX). We sat down with Dan and discussed several topics, including --

  • Finding new opportunities through a cultivation of trust and hard work
  • Coming through the M&A process for a large ABC, and looking for more growth through M&A
  • Taking a growing company to the next level

 

ERCG: Dan, you joined EMEX in 2013, a time when the company was growing rapidly. What were you doing before 2013, and how did you get your start here?

 

Dan Marzuola: Let me start by noting that my career in energy began in 1988 with Lone Star Gas Company, a natural gas utility located in Dallas at the time. Since then I’ve worked at a couple utilities and retail energy providers across the United States, such as Direct Energy and Hudson Energy. While at Hudson Energy, my responsibilities included managing the growth and oversight of the C&I business in North America, while also opening the residential business in the UK. My time at Hudson was very enjoyable, but after 25 years of working with large publicly traded companies, both domestic and international in various capacities, I knew I was ready for a new challenge and not necessarily in energy. It was then I literally went into the President’s office at Hudson Energy and tendered my resignation.

 

I’ve always had an entrepreneurial mindset, so I was looking for something private and more intimate, either partnering with someone or starting something on my own, and as I mentioned it didn’t have to be in energy. I had a couple of options at the time; I just didn’t have a clear answer of which opportunity I was going to take.

 

One day when talking with Kevin McAlpin, now EMEX’s General Counsel, he mentioned that Todd Segmond was looking for some help at EMEX. My time at each of the suppliers had provided me with the opportunity to foster strong relationships with multiple channel partners and all of my dealings with EMEX were forthright and honest, which I found to be an extremely positive trait. I also knew that Todd had been building some interesting technology. After a productive dinner one evening, Todd let me know that EMEX was in need of structure and organization. He confided that he felt he had taken the company to a place where he thought it best to handoff to someone with a different skill set. Knowing how he conducted his business, I was quite honored to discover that he came to me to continue to build upon what he created.  Here was the opportunity I was looking for, and five years later with a lot of focus, fortitude, and hard work by dedicated employees, we have grown the company to one of the largest energy broker shops in the U.S. today. 

 

 

ERCG: Do you have additional insights on why the company founder and majority shareholder, Todd Segmond, wanted to sell?

 

Marzuola: My first year and a half at EMEX was instrumental in establishing departments, processes, and overall guidelines for maintaining effective and efficient practices.  As the company began to rapidly expand, Todd’s day-to-day role eventually slowed down and he realized the company was running smoothly while fully utilizing our proprietary CRM portal and reverse auction platform that he had spent several years developing and optimizing – his innovations and contributions to this company and the energy industry as a whole simply can’t be overstated. After all of this progress, we knew we needed investors that could provide capital in order for us to grow, and with Todd’s participation level in daily operations reduced significantly, he was ready to divest his interest. It was a difficult decision for him, but he was finally ready to move on to the next phase of his life and felt that EMEX was in good hands and undeniably on its way to continued success.

 

 

ERCG: The O2 acquisition/investment was announced in May. What was the process? When did it start, who did you work with, which type of firms did you seek out? How many were interested?

 

Marzuola: The acquisition by O2 Investment Partners was quite interesting. Todd was ready to sell, so after contemplating several investment bankers we decided to hire Cliff Adams with Coady Diemar Partners.  Kevin and I had met with Cliff the year prior and felt he was the right person to help us with organizing our data and financial information in a way that could tell the complete story of EMEX.  We began the process in the latter part of Q3 2017.  It was around wintertime of that year when Cliff began to tap into his contacts within the industry to spread the news regarding Todd’s desire in selling his interest in EMEX. Cliff immediately found that multiple entities, ranging from energy and technology companies to private equity groups, had interest in our business.  We reduced our large list down to around 25 companies.

 

After evaluating a large number of proposals, we shortlisted those firms we felt could help us continue down the path we already were traveling, while providing EMEX with the capital needed to grow. After we went through management presentations and several weeks of offers and deliberation, needless to say, O2 ended up being the right fit for EMEX. Once we made the decision to partner with O2, Todd and his family sold their shares and I rolled my interest into the new venture. Three months of due diligence later, the transaction was finalized and we were operating with a brand new and exciting partnership in place.

 

 

ERCG: Let’s talk about what made EMEX so attractive to so many parties. Clearly your technology solutions (CRM portal and reverse auction platform) are strong differentiators and drivers of growth. How did that business get started and expand to what it is today?

 

Marzuola: In 2007, Todd, like many energy entrepreneurs, opened an energy brokerage company in Texas.  Shortly after starting EMEX, he envisioned a transparent real-time bidding process for contracting customers.  While EMEX was building an affiliate and direct sales channel, the vision of an enterprise software solution was created to empower this broad range of Affiliates and Channel Partners to help end users achieve optimal price discovery in energy commodities. The reverse auction platform and detailed CRM portal has been crucial in expanding the company’s year-over-year expansion, and the combination of these tools has allowed us to scale EMEX at a promising rate.

 

A definitive moment in EMEX’s history began in 2011, when the company made a concentrated push into the government space of New Jersey.  During that time the majority of contracting with suppliers was a much more arduous process than it is today.  The transparency and efficiency of our reverse auction platform helped to streamline the system for municipalities.  It was extremely important that we performed at the highest level of quality and integrity in this vertical.  Word spreads quickly throughout this community, so if you misstep it very well could be your last. On the other hand, stellar and thorough work will grant you advocates in your pursuit of success in energy.  We performed at the highest level, which was the catalyst of our initial growth, and this led to EMEX being awarded Business Leader of the year in 2013 and 2016 by the NJ Conference of Mayors.

 

Several years of hard work later, with the business model refined and focused on retail electric and natural gas markets, EMEX has fulfilled the vision, simultaneously becoming a profitable and thriving enterprise. Our technology was unquestionably an influential factor that drove interest in EMEX.  However, the full scope for application of the platform has yet to be realized, and we have begun to explore other areas of the energy industry to which we can apply it, including wholesale markets and other energy byproducts. This technology, along with a knowledgeable staff and the ability to work in both regulated and deregulated markets, made EMEX an attractive platform to build on. 

 

The energy broker market is very fragmented and our platform allows us to integrate brokerage companies seamlessly and quickly without missing a beat. This was evident when we acquired the TEA assets the year prior – and the success of our development team in integrating that acquisition rapidly got bidders comfortable that we could replicate that success.

 

It really is hard to overstate the work of our outstanding development team, who not only created the system but continues to stay vigilant in implementing necessary changes that aid the rest of our departments in maximizing the effect of our system.

 

 

ERCG: Your sales partnerships are also critical to your growth story. Why do affiliates (non-energy experts) and ABCs (energy experts) want to use the EMEX online platform? What’s in it for them?

 

Marzuola: EMEX has a diverse portfolio of sales channels so as not to be too concentrated in one area.  With that said, we take our relationships with other ABCs and Affiliates very seriously.  It is a large responsibility of our professional and knowledgeable staff to aid these channels with facilitating their business across their client base throughout the entire country.  Our technology and expertise, tied together with an expansive market presence and supplier portfolio, enables our channel partners to work in markets that they might have never had access to or even considered working in previously.  

 

Having worked with broker and consultant channels for many years on the supplier side, I always found it to be a mix of invigorating and frustrating, but dealing with these groups has managed to create something quite rewarding at the same time. I have many friends and contemporaries in this space, and I hope that all the collaborative work we have done with them over the years will continue to grow.

 

 

ERCG: What qualities do you look for in an ideal supplier partner?

 

Marzuola: EMEX currently works with over 120 suppliers across all available regulated and deregulated markets in the United States, so we make sure to approach each of our relationships with our suppliers in a uniform manner. Our optimal partner exhibits integrity, flexibility, and transparency while also demonstrating the ability to work for a customer’s best interest. Now I could delve into contract terms, competitive pricing, and other more technical aspects as well, which are also imperative, but a common thread I find in the most compelling suppliers we work with are not only the traits I mentioned previously, but a willingness to uphold those values on a daily basis. It’s no secret that suppliers shoulder the majority of the risk when dealing with retail energy, and we want to make sure to mitigate that risk for everyone involved. That’s where trust and reputability are forged, and we will continue to work to uphold those with our partners.

 

 

ERCG: O2 – what do they bring to the table? What is the future of EMEX with the O2 partnership? How will you change?

 

Marzuola: First, I would like to mention that our team of employees and the culture we have built in this organization has gotten us to where we are today.  For that very reason, I hope that we never change.  Their dedication and determination to create and bring new ideas on growing and succeeding is crucial.  In addition, our affiliate base and ABC partners have been amazing contributors towards our growth as well. O2 fits into our philosophy by sincerely believing in what we do, how we do it, allowing us to continue down our carefully designed path. At the same time, they have brought knowledge to aid in our growth, capital to help us realize our aspirations, and operational support when requested. 

 

We have very aggressive goals and O2 has encouraged EMEX to continue to search for reputable energy companies to acquire that are complementary to our vision of becoming a first tier full service energy consulting firm.  They are undeniably in our corner. I know this because O2 is a family owned business with a great reputation for helping companies grow and succeed, and their concerns about our employees and their wellbeing are a priority for them.  I’m extremely bullish on our future with O2 on our side. As you reported, we are currently the 5th largest energy consultant in the nation, and O2 will certainly be a contributing factor for us moving up in rankings by the end of 2019, if not by the end of this year.

 

Partnerships and future plans aside, I want to make sure to note that I have an unwavering amount of pride in every EMEX employee.  The bond that was built in the early days of this company has flourished through today and I absolutely feel it is my responsibility to maintain that bond and grow it even stronger in the future.  The greatest asset we possess is our people, and I wholeheartedly believe that. They are of the type that will continue to transform EMEX into the sustainable, successful market leader that I know it can be.

 

 

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ERCG sat down with Dan Marzuola at EMEX.

 

The transcript is available in the ABC Leadership Interview Series section.