Joe Ehrhardt is a CEO who doesn’t seek the spotlight, a quality he has in common with Teslar Software, the fintech company he founded in 2009.
Originally incorporated as 3E Software, the company name was quickly overshadowed by the banking software as a service application Ehrhardt wrote that he named after inventor Nikola Tesla. Teslar hit a tremendous growth spurt when the COVID-19 pandemic put enormous pressure on banks through Paycheck Protection Program loans.
Many banks turned to Teslar, which worked with billionaire entrepreneur Mark Cuban and Jill Castilla, CEO of Citizens Bank in Edmond, Oklahoma, to build a free website called PPP.bank. The website simplified the PPP loan forgiveness application procedure, saving banks time and money.
Teslar’s success in the PPP world led to a rapid increase in business and growing appreciation for the versatility of Ehrhardt’s software. Even as PPP disappeared, Teslar’s fortunes continued to rise with 56% revenue growth in 2021 and 47% growth in 2022.
Ehrhardt’s company has doubled its employee count, from 35 in 2020 to about 70 now. His goal for 2023 is 66% revenue growth. Ehrhardt declined to give monetary figures but said he hopes Teslar can reach $100 million in contract revenue within five years.
“For a lot of tech companies, it has turned into a dark hour with all the layoffs,” Ehrhardt said. “We’re doing very well. Our biggest challenge as a company is we don’t want to be a one-hit wonder. PPP was a big hit, and we got a lot of reputation. We are trying to leverage that to grow.”
Ehrhardt said about 170 banks in 31 states use Teslar for thousands of loans per week.
“Joe built this as a workflow product so essentially for us it allows us to not have to use as much paperwork in our day-to-day lives,” said Brant Ward, the COO of Signature Bank of Arkansas of Fayetteville, which had $982.4 million in assets as of Dec. 31. “He is able to sit in between a couple of different systems and help us pass electronic files through that. The real key is he was a banker before he started this company so his lens around the heartache in bankers’ lives is real.
“He knows what the problems are. He solves from the banker’s side of the desk.”
Happy in the Background
For all the publicity, Ehrhardt said Teslar prefers to be the behind-the-scenes player helping banks and commercial borrowers. The SaaS application is not a flashy product but an important one, collecting and organizing documents and data from multiple platforms.
Ward said a bank can take photographs of a construction loan project and send those photos through the Teslar software directly to online storage.
Another example — and an important one, Ward said — is that Teslar can do “exception tracking,” in which the software can automatically identify any documents missing from files or loan applications. That can save banks from having employees sort through pages and pages of documents to find anything missing.
For Ehrhardt, Teslar is about helping banks concentrate on helping their customers.
“It’s not flashy, it’s not in your face, but if we are empowering community banks to better serve their community, then we have done our job,” Ehrhardt said. “We don’t have to be out front and be the fancy fintech in your face.”
Ehrhardt is a big believer that relationships are more important than having the best software applications. He knows what his relationship with Castilla — and hers with Cuban — meant to the company’s fortunes three years ago.
“As a computer guy, I want to always say the best product wins, the smartest wins,” Ehrhardt said. “In business, that is not even close to true.”
Ward said Ehrhardt and his company are key teammates. It helps that Ehrhardt can speak bank to bankers and technology to programmers.
“Joe is the ultimate relationship guy and that permeates through the organization,” Ward said. “If we have a thought or a problem, they are super accessible.”
Teslar’s bread and butter, before and after the pandemic, is helping banks with commercial loans, and Ehrhardt doesn’t expect that to change.
But Teslar will be augmented with a new product Ehrhardt calls Community Connect, which will be aimed at helping community banks more efficiently deploy consumer lending. Many community banks don’t delve into consumer lending — helping customers with personal expense loans — because the margins are smaller but the paperwork headaches are the same.
“Too many community banks do not want to do consumer lending because it doesn’t make a lot of money, it’s high risk and it’s highly inefficient,” Ehrhardt said. “That is sad because community banks are the best banks to serve the people. They have the better product.”
The idea to extend Teslar into the consumer market was a mix of banks’ needs and Ehrhardt’s own intuition. He knows the banking industry well, having worked in banks to pay his way through college at the University of Arkansas in Fayetteville.
“Banks do a lot of indirect lending; banks that have indirect [lending] are the ones who pushed for this,” Ehrhardt said. “They said, ‘We need to be more efficient.’ Our feel as a company was there is no reason that every bank couldn’t, with the tech we built for PPP, service the [consumer] customer.
“The core product [commercial loans], that’s still what pays all the bills and funds everything. We are looking at taking that tech and seeing how we can help the consumer space.”
The Community Connect application is coming available at a time when interest rates have risen. Ehrhardt said bank loans are more attractive because they generally have better rates now than those obtained through car dealerships or home improvement stores, for example, and Teslar can help banks make those loans more feasible to offer.
Ehrhardt said he is at Teslar for the long haul and believes the “sky’s the limit” for the company.
“We want to keep growing and innovating in the banking space,” Ehrhardt said. “The reality is if we never hit that [$100 million] goal, but if we are still a massive impact and we’re changing banking, that would be amazing.”