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IN-DEPTH 29 September 2020
AGS CEO Special: David Lopez - Sink or swim

From dealing with customers stuck in a lift, to approaching seven years as AGS president and CEO, David Lopez reflects with Tim Poole on the career lessons he’s learned, the mentors he’s had and the dreams he still harbours­.

Even though AGS President and CEO David Lopez graduated from the University of Nevada, Las Vegas (UNLV), there is no question in his eyes where he learned the most during his formative years. “Honestly, the most education I got was from my mother and her business,” he tells Gambling Insider. “I learned a lot more from the family catering business than I did in any of my years of education. Working for my mom and the things she instilled, and for sure my military time, are what shaped me as the person I am today.”

This opening answer from Lopez, AGS President and CEO since February 2014, speaks to the exec’s down-to-earth character. It’s a quality he has always displayed speaking to Gambling Insider and one that no doubt helped win him the American Executive of the Year Award at the Global Gaming Awards Las Vegas 2019. It will have served Lopez equally well during the most challenging period land-based gaming companies have ever endured: the COVID-19 pandemic.

As Lopez speaks to us via video call from his home office, he discusses how he and others have taken paycuts to help reduce costs at AGS. He also speaks of helping the communities AGS is a part of and his dream of becoming a teacher before he retires. Notably, he laughs when recalling how small the issues discussed in his email inbox were on his first day as AGS President and CEO, representing just how far he has come.

Lopez’s career journey took an “indirect path” before leading him to gaming. Returning to New York after completing his basic military training in Fort Benning, Georgia, Lopez sought change – and a move to Las Vegas. Through his sister, one of the first 20 employees at MGM Grand, he was able to secure an interview at the casino hotel. Lopez jokes he was “basically sweeping floors in the warehouse” once accepted, before this evolved into an accounting position. He duly realised he didn’t want any part of accounting.

I learned a lot more from the family catering business than I did in any of my years of education. Working for my mom and the things she instilled, and for sure my military time, are what shaped me as the person I am today

Seeking a more customer-facing role, Lopez couldn’t initially get one in a casino, though he was hired at the Stratosphere. Here, he learned the subtleties of customer service – with a side order of crisis management. “I got to work with customers every day, problem solving with angry customers who might have got stuck in the elevator shaft in the Stratosphere Tower for one or two hours,” he explains. “That made me a really popular person as I’m the one standing there waiting for them as the door opens, they’re dripping with sweat, angry, hungry and needing to use the restroom. And I’m like, ‘We know it was bad! I’m gonna escort you all to the restroom and wait for you outside.’”

In case you’re wondering, yes, Lopez confirms the rollercoaster would get stuck too. But it’s not as though these engineering malfunctions detracted from the first major experience of Lopez’s career. After all, the AGS President and CEO met his wife at the Stratosphere, marrying her in 1998, and learned plenty about face-to-face customer interaction. It was also through the Stratosphere that Lopez’s gaming-specific career truly began. The now-executive was encouraged by Tom Miller, the Stratosphere’s VP of marketing, to apply for a job at Shuffle Master, where he landed the role of marketing specialist.

Lopez would spend the next 13 years with the company, holding “at least” 14 different job titles. “Shuffle Master was a great place because they were growing extremely rapidly,” he reflects. “When I got there, Shuffle was doing well under $20m in EBITDA, maybe $16 to 18m. Under the leadership of Joe Lahti and Mark Yoseloff, that EBITDA number approached $100m or so by the time I left.” As Lopez describes, the Shuffle Master leadership didn’t prioritise external hires, instead being huge believers in “working you really hard, training you up and dropping you into a position.”

This policy was further embodied by Roger Snow, a journalist-turned-gaming developer who joined Shuffle Master in 2000 and – not unlike Lopez – held numerous subsequent roles. Lopez remarks: “I think as Roger Snow would say, the way we trained executives was we essentially put a weighted vest on them, put weights on their ankles, threw them at the bottom of a 10-foot pool and if they came up, they’re good.”

Lopez worked his way through to roles such as product specialist, product manager, director of product management, followed by VP and then senior VP of the same area. It was then that he was most impacted by Shuffle Master’s culture of promoting from within. “One day Mark decided he was going to get rid of the head of sales and said ‘hey David’s going to handle sales for a few months,’” he recalls. “How that evolved was Mark would never replace that position and say ‘we’ll just do this for a few years.’ I ran sales until we decided to hire a VP of sales, so the jobs just kept coming and coming.” By the time he left the company, Lopez had, by his count, run every operational department except accounting and legal. This included roles as COO, member of the board and interim CEO.

About halfway through his career at Shuffle, the executive reached a crossroads, recounting a particular conversation with Yoseloff about getting his MBA. “I told Mark I’d like to be a president or COO one day. He said the best place for you to get your MBA is the university of Shuffle Master. You don’t need to go to UNLV to get an MBA, where they can’t teach you a fraction of what you learn from us on a daily basis. Foolishly, or wisely, I listened to him. Mark has yet to give me a piece of paper for that, by the way.”

Despite his quip, however, Lopez acknowledges this was the right decision. And when we pose him the hypothetical question of how different his career would have been had he pursued that MBA, he is unequivocal: “I think it would have been very similar. I would have just seen less of my family; my time with my kids and my wife would have been less than it was.”

There was one more significant pit stop for Lopez before joining AGS. Around a year after Gavin Isaacs’ appointment as Shuffle Master CEO, Lopez felt it was time to step aside. “I felt like at some point I was in his way. I’m like the old dude there, 14, 15 years in the company,” says Lopez. “I thought things would be done a certain way and he was trying to put them on a rocket ship and send them forward (Shuffle Master ended up as part of Scientific Games in 2014).”

As luck would have it, the same day Lopez decided to pursue a new challenge, he received a call from a head hunter seeking the replacement CEO position at Global Cash Access (now Everi Holdings). Becoming company president, Lopez cherishes his experience at Global Cash Access because it meant he had “left the nest.” “It’s easy to look good when you work for a company that has a dominant position in the marketplace, the only shuffler provider in the US,” he comments. “Going to Global Cash Access, it was a good company and they had a great position, but it was a very competitive space and I learned a lot.”

It was here Lopez also developed “one of the greatest relationships” of his life, with Mary Beth Higgins – then CFO of Global Cash Access and now CEO of Affinity Gaming. Alongside Lahti, Yoseloff, the late Tim Parrott (former CEO at Shuffle Master) and current AGS chairman David Sambur, these connections have stayed with Lopez. “The reality is we meet all these people in our career and those people start to become part of you as you move on in life,” he explains.

“In many of the decisions I make, I hear Mary Beth’s voice in my head. At times I hear Joe Lahti’s voice – Mary Beth’s voice is much louder; she’s yelling at me. Joe is talking to me calmly and firmly. Mark Yoseloff is yelling at me too and Tim Parrott is talking to me calmly. Tim Parrott is one of the greatest influences I ever had. Now at AGS, I have the benefit of working with David Sambur, who’s co-head of private equity at Apollo – so sometimes you’re just lucky.”

I got to work with customers every day, problem solving with angry customers who might have got stuck in the elevator shaft in the Stratosphere Tower for one or two hours. That made me a really popular person as I’m the one standing there waiting for them as the door opens, they’re dripping with sweat, angry, hungry and needing to use the restroom. And I’m like, ‘We know it was bad! I’m gonna escort you all to the restroom and wait for you outside’

In February 2014, the executive was appointed AGS President and CEO. “[Almost] Seven years, boom, just like that,” he reflects. Instantly, he recounts the first company AGS acquired during his tenure, Colossal Gaming, “a very small purchase.” Much larger in nature was the purchase of Cadillac Jack in July 2015 (for $370m in cash). In January 2018, AGS’ IPO was “obviously a heavy lift and a big achievement.”

But 2020 has brought a different type of challenge. In Lopez’s own words, “What do I get to add to the resume now, coronavirus CEO, right?” In March, an incorrect prediction of Lopez’s still sits front of mind for the executive. Upon hearing rumours some casinos on the Las Vegas Strip would close, he projected the entire Strip would shut down within two weeks. “I was dead wrong: the Strip shut down within three days of me making that comment.”

Naturally, an immediate response was required. For the exec, maintaining R&D was one of the biggest priorities as, if AGS shut down R&D, Lopez feared falling “very far behind as a small vendor”. Despite examples of some new hires, there were paycuts across the organisation. Furloughs and redundancies became an inevitability, although AGS’ goal throughout was to “maintain our culture and caring about people.”

Along the way, some have left the supplier, with Lopez chuckling at a specific example of an AGS employee joining Disneyland. But Lopez is intent on “building a fence” around his team, keeping them employed, well-treated and as well-remunerated as circumstances will allow. “Everything’s an unknown,” he adds. “Ask me when we think we’ll be back to full pay, or something of the like, and you’re trying to use a crystal ball. People don’t normally use crystal balls.”

From a diversity standpoint, Lopez says the demographics at AGS are “very close” to those of the US, “almost precisely” reflecting the makeup of the American public. AGS also adopts an at-risk school, while it works with the Young Executive Scholar programme at UNLV. Here, Lopez is equally intent on protecting the communities AGS is part of as he is his with own employees.

But acknowledging he’s one of the more diverse candidates within gaming boardrooms, Lopez says the industry as a whole must do more. “I don’t think that’s a soft comment,” he affirms. “When you look at executives and CEOs, it is still far shy of where it should be for women participating in those roles and it’s a long way away for people of colour. We just don’t have enough; it’s far skewed from the population of the US. There can be a whole lot more outreach – and outreach doesn’t have to cost money.”

But to maintain such efforts, and to fund the company more generally, Lopez admits AGS’ short-term goals have changed post-pandemic. First, the supplier needs to become EBITDA positive and then cash-flow positive again. For Q2, revenue fell 78% year-on-year to $16.8m, while adjusted EBITDA fell 103% to negative $1.2m. Lopez, though, maintains AGS could have achieved positive EBITDA had the company made more aggressive changes, not caring what the results of these changes would be on its team.

“Most people know 2021 is still going to be some haircut version of 2019,” he ponders. “That’s always the big question: when will we get back to 2019 levels? 2021 should be better for everyone than 2020. When we get into 2022 we’re back to normal levels.” Elsewhere, Lopez does see a “very small silver lining” in the form of a younger generation “increasingly visiting” US casinos: millennials who previously weren’t visiting. “There’s nothing else to do – you can’t go bowling, you can’t go to the movies,” says Lopez. “One of the entertainment options is casino gaming. So some operators are seeing maybe a rise in millennials.”

Given global events in 2020, it’s understandable the coronavirus dominates Lopez’s short-term thinking. But how much has the uncertainty of 2020 affected the executive’s long-term goals? Traditionally, it’s fitting to end a CEO Special interview by asking what the five-year plan is. Considering how different this year has been, however, that no longer seems appropriate.

But his personal goals remain unchanged. Indeed, there is no corporate jargon as Lopez describes his career-long ambition; it has nothing to do with share prices, earnings or quarterly investor calls. “I want to teach before I retire,” he declares. “That’s been what I wanted to do since high school. It’s a great way to influence and mentor students. There comes a point where I’d like to be at a university somewhere, teaching business, having the opportunity to do things for other students that my teachers did for me. That’s my dream.”

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