Fintech Growth Insider

Julien Brault
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A show where fintech founders and marketers reveal the secrets they used to achieve breakneck growth. www.fintechgrowthinsider.com

Episodes

  1. Carlos Caro Reveals How Credit Karma Turned Free Credit Scores Into a Billion Dollar Business

    APR 13

    Carlos Caro Reveals How Credit Karma Turned Free Credit Scores Into a Billion Dollar Business

    When Carlos Caro joined Credit Karma in 2016, the company had 50 million members and was generating $500 million a year. By the time he left, in 2020, Credit Karma had grown to 110 million members and nearly a billion dollars in revenue and was sold to Intuit for $8.1 billion. Carlos was born in Venezuela, and his family relocated to Washington D.C. when he was three years old. The son of two engineers, he was a strong student, and eventually landed a fully-funded scholarship at Columbia to pursue a PHD in economics. But one year into his PHD, he walked away, because the work felt too abstract. He worried he’d spend his career writing papers that only a handful of peers would ever read. After a year spent playing pro poker, a high school friend convinced him to apply to Capital One. The process included no less than 9 interviews, and a lot of hard questions, but Carlos got in. There, he encountered a data-driven culture that would prepare him for his role at Credit Karma more than any other. Carlos Caro: There are executives who lead based on intuition and gut feel. There are very few of those at Capital One. Everyone’s belief is grounded in real data. If they believe something with conviction, it’s because they’ve seen a result that says this is how the world works. There’s a culture there to challenge, doubt, and pressure test everything. As a senior executive, you can’t get away with a point of view that isn’t grounded in reality. When you made a decision, and I was responsible for many of these, they’re called credit decisions internally, there was a rigorous deck that explained what we’re doing, why we’re recommending it, and then a sensitivity analysis of all the possible outcomes. We’d lay out a pessimistic, optimistic, and base case, and each scenario was pressure tested and standardized. Julien Brault: Capital One has long positioned itself as an option for people with bad credit. How do you avoid negative selection in that model, where you end up attracting only the people everyone else already rejected? And what did you do on the customer acquisition side to mitigate that risk? CC: That’s probably one of the keys to Capital One’s early success. I don’t think they started with a website and a TV ad saying “we have subprime cards, come find us,” because that might have attracted exactly the negative selection you’re describing. But if instead you go to the credit bureaus and say you want to look at their data and mail people that fit a certain profile, now you’re proactively getting in front of the user you think is going to perform. You’re avoiding a lot of the risk of attracting unwanted attention. Capital One was very good in the early days at leveraging targeted channels like direct mail. Over the years, as their brand matured and they expanded into prime products, they got more comfortable making their products open for public application. But I would still guess a very healthy fraction of their book is direct mail and targeted affiliate channels like Experian, Credit Karma, and others that allow you to target based on credit profile. JB: You joined Credit Karma in 2016, when the credit card business was already doing $500 million a year. Were you walking into something that just needed scaling, or did you have to figure out how to get from $500 million to $1 billion? CC: The business was cranking when I joined, for sure. I relocated from DC to San Francisco for the position. What I quickly noticed when I looked around was that the results and performance of the business had outgrown its staffing, at least in my functional area of partnerships and business development. I saw opportunity everywhere. I saw the opportunity to do more business with existing partners, to bring on more partners, and to do more innovative things. Lightbox was one example of that. JB: I have a question about Lightbox. What was it? CC: Lightbox is essentially a targeting platform for marketers. It enables a marketer on Credit Karma to determine the eligibility criteria for who sees their ads. What Karma was solving for with Lightbox was to drive up approval rates. I remember the CEO being very clear that he wanted approval rates to be 100%. So anyone who applied for a product on Karma should get it. In practice they’re not 100%, but they’re very, very high. The reason they’re not at 100% is that the data issuers have and the data Karma has to make decisions can be slightly different and refreshed at different dates. But the rate is extremely high. That was one of the big initiatives that, when I looked around, we just didn’t have enough people to execute on. A lot of my job during my four years was to hire the right team. JB: As VP of Credit Cards at Credit Karma, what was the scope of your role and what was your main KPI? CC: My KPI was top line revenue. The scope was to manage all the lender partnerships. At the time, Karma’s sole source of revenue was lender partnerships. We were essentially a media seller. These lenders wanted to advertise on our platform and we sold media to all of them. JB: So you were focused on cards specifically? CC: Yes, I was on the card side, though at the time we also had a personal loan business, an auto refinance business, and an insurance business. My job was to make sure our lenders felt good about the ROI they were getting on the platform. What usually happened is they would come back asking for more and more. They wanted the growth, and then our marketing and engagement team would have to do the hard work of finding more Credit Karma members so we could serve the demand from the lending side. JB: Not long after you joined, Credit Karma entered the Canadian market in 2016 and then the UK market in 2019. Those markets already had established credit monitoring apps. How did Credit Karma differentiate itself there? CC: I’ll caveat this with the fact that I was very focused on the domestic business. But what I observed is that we more or less migrated the same playbook from the States. In the US, the free credit score was the hook to get people to register, ongoing monitoring was the hook to get them to come back, and monetization was the lender ads on the platform. It was more or less the same playbook in Canada and the UK. JB: At the time, what was driving Credit Karma’s growth? CC: Our secret sauce was brand marketing. They started doing some experiments on YouTube and programmatic TV. There was an ad they recorded very cheaply, something like $50,000, that started to move the needle on web traffic. And then they just kept leaning into brand marketing. That was one of the bigger drivers for membership. JB: When did they make that shift toward brand marketing? CC: That was around 2012. There was a real inflection point after they figured it out. The shape of the growth curve really hit an inflection point after that. JB: You mentioned Lightbox earlier. Was the goal to increase revenue per member? What was its impact on the business? CC: It was really designed to drive better outcomes for all three constituents of the marketplace. No one likes to shop for credit card offers and then get declined. That actually runs counter to Credit Karma’s mission, which is to help people make financial progress. If they’re encouraging someone to apply for a product and that person gets declined, it actually hurts their credit score. From the lender perspective, operational costs go way down the higher the approval rate is, because they have costs tied to website maintenance, credit bureau data, and a bunch of other things they pay for on a per application basis. So the higher the approval rate, the better off they are from a cost perspective as well. When we launched the business we were really keyed in on measuring outcomes across all three constituents: is Credit Karma growing, are customers getting a better experience, and are lenders achieving a lower cost of acquisition? We found all three to be true. JB: I’m curious about this, because if you look at the numbers, in 2016 it was 50 million users generating $500 million in revenue. When it sold to Intuit, it had 110 million users and about a billion dollars in revenue. The revenue per user was flat or had diminished over that period. Why do you think that was? CC: It’s a really good question. Those comparisons are hard to make, but I think it’s the right math to calibrate on, like a yield-per-user metric. I would suspect if you continued to draw that curve past 2020, the picture would look different. A couple of things to consider: Lightbox was still fairly early in its maturity when Intuit acquired the business. The very first year it launched was 2017, and the acquisition was early 2020, so Lightbox had only really been in the market about two years. The penetration rate across the industry was actually still fairly low. I would say the majority of issuers had not yet adopted the technology. Right now I think it’s at maturity, so if you did the same math today, you’d likely see a different result. JB: During that period, what was the definition of a “member”? Was it a monthly active user? CC: It was a consumer who came to the app and was a verified, credit-active consumer with the credit bureau. You had to go through identity verification, and the bureaus had to match you against a record in their database. So it wasn’t enough to just be a real person. JB: So they may not have been active, but we knew they had checked their credit score at least once. During the period you were there, Credit Karma launched new products like tax filing, insurance, and mortgage. Was this a way to get more data on the user? How did it fit into the business? CC: The tax move seemed entirely connected to the mission of financial progress, and I think Intuit still thinks about it that way, because they do a lot of cross-promotion between TurboTax and cards. Some very high percentage of consumer

    35 min
  2. Maxwell Nicholson Reveals Why He Abandoned His Brokerage Plans to Build a Social Network

    FEB 15

    Maxwell Nicholson Reveals Why He Abandoned His Brokerage Plans to Build a Social Network

    I‘m Julien Brault and on the show today, how Maxwell Nicholson, CEO and co-founder of Blossom Social, built a social network for investors with over 160,000 monthly active users, 3.8 million dollars in annual revenue and a weekly newsletter that generates 500,000 dollars per year. Maxwell was making $120,000 a year at McKinsey with a clear path to double that within a few years, but he couldn't shake the feeling that he was meant for something else. He grew up in a small Canadian town called Grand Forks in British Columbia. His dad was a welder and his mom a stay-at-home mom. He and his brother were the first in their family to graduate university. So, when he landed a job at McKinsey, his grandma thought he was crazy to even consider leaving. But in 2021, at the height of the pandemic investing craze, Maxwell walked away to build a social stock trading app for Canadian investors. Maxwell Nicholson: I knew that I wanted to leave, so it wasn't too difficult of a decision for me. The senior partner of the McKinsey Vancouver office was actually one of our early investors. So I owe a lot to McKinsey and I loved my time there. Julien Brault: In 2022, you raised a pre-seed of $750,000 and it included two Canadian stock market YouTubers, Brandon Beavis, who's now a co-founder, and Shay Huang. How did you find them? Because at the time Blossom was not a household name. I don't even know if they had heard about it. So how did you convince people or did they reach out to you? I'm just curious because I do think raising from influencers can create leverage. So I'm curious to hear about that. MN: Well, Brandon joining the company was a huge turning point for us. I think at that point we had less than a thousand users, maybe less than 10,000. Brandon was really the one that has driven all of our growth to this point. We had reached out to him on LinkedIn because we were just looking for anyone who had investing in their bio on Instagram or LinkedIn and just cold DMing them. So we cold DMed Brandon. He hopped on a call with us and then he told us his rates to sponsor a video. We were like, "Wow, we can't afford that. We definitely don't have the money." Then I had another opportunity where a friend of a friend invited me to a barbecue that he was going to be at. I built a more personal relationship with him and sold the vision. JB: Did he just say, "Okay, I'll do $100,000 worth of media, influencing videos, and you just give me stock?" Or did he actually sign a check? MN: We were raising our pre-seed round, so Brandon invested $50,000 of his own money. He invested and we granted advisory shares. Over the course of the year, he started driving immense value. I think a lot of times a startup might see someone driving all this value and think, "We got him for so cheap, we barely gave him any equity. That's great for us." But for me, I was like, "Wow, there's a huge mismatch in the value he's driving and the equity he received." So I actually had a meeting with him and said, "Hey, we're going to double your equity from the advisory agreement." He just continued to deliver incredible value and we kept increasing it. Eventually the three co-founders had a conversation and said, "Hey, Brandon's basically operating like a co-founder. Let's officially make him one." We had a few beers and I put my arm around him and said, "Brandon, we got to have you on as a co-founder." And he's like, "You better not just be saying this because you're drunk, man." We had a few beers and I put my arm around him and said, “Brandon, we got to have you on as a co-founder.” JB: When was that? When did he join full-time as a co-founder? MN: I think it was pretty early. It was either a year in or a year and a half in. It was probably like six months after that press release you mentioned in 2022. And I'll touch quickly on Shay, the Humble Trader, who's another incredible YouTuber. The only reason she invested was because Brandon invested. So Brandon and her had sushi together. Right off the bat, day one, Brandon brought in an incredible investor. If that doesn't speak to the early signals of him being an incredible value add to the team, I don't know what does. JB: You initially started with the social component, a little bit like Robinhood. A lot of people don't know, but Robinhood launched a non-trading app at the very beginning. The plan was eventually to launch a brokerage, a little bit like what Dub is doing. Then later on you announced that you're happy to be a social network and you don't want the regulatory hurdles of operating a brokerage. So what changed? Because today it's probably easier than ever. There are players like white label, API-driven players like Alpaca that would allow you to basically add this without getting an introducing broker license. So what made you change your mind about allowing trades? MN: I believe at the time, and maybe it's different now, Alpaca didn't even support Canadian stock trading. So that was a no-go if you're targeting the Canadian market. We sat down and looked at the numbers. If you look at Robinhood's public financial statements, where brokerages make most of their money isn't on equity trading. Equity trading has almost become a loss leader for them at zero dollar commission. They make most of their money on options trading and crypto trading. So even if you can get over the hurdle of the brokerage license, which is maybe a two to three year journey, now you're entering a competitive market with Wealthsimple and Questrade. Wealthsimple is an incredible product, by the way. Our only differentiation that we really had was that we were going to be a social broker, which in hindsight, I don't think is a true differentiation point to switch someone from Wealthsimple. There's no way in our initial version we're going to be as seamless and simple as they are. I had told all our investors that we're going to be a brokerage. So pivoting was very hard. I remember calling our investors and saying, "Hey, I don't think this brokerage path is the right path." And they said, "Okay, well, how are you going to make money then?" And I was like, "Well, I don't really know." I remember calling our investors and saying, “Hey, I don’t think this brokerage path is the right path.” And they said, “Okay, well, how are you going to make money then?” And I was like, “Well, I don’t really know.” Now, we make a lot of our money through advertising and ETF partnerships. We had some early indications of that, but not enough where I could confidently say, "Hey, we're going to grow from $300,000 to $4 million in two years," like we've done. When we pivoted, that was very unclear. So it was in a sense a very risky pivot. JB: When you were mentioning the competitive landscape, you mainly mentioned Canadian players. What's the share of your users in Canada versus the US? MN: At the time we were fully focused on Canada. Then when we pivoted away from the brokerage path and went to be a pure play social network, we were like, "Okay, now we can actually be a truly global company." Within six months or so, our audience was 60-40. But I think we're getting closer to 50-50 now. Canada has always been our core market, but we see the US as the next frontier. Obviously there's a way bigger opportunity in the US and that's been a big focus for us over this year and will continue to be over next year. JB: You raised $7 million with a substantial portion of it coming from equity crowdfunding. I actually had a similar experience with my own fintech and I know for a fact it's not an easy path. Did raising money from the crowd become a hurdle or did it actually end up being an advantage? MN: Having a community of 2,000 super fans is massive. I will send out emails like, "Go upload or repost this LinkedIn post." When we got featured in Forbes, I sent out an email to help boost that. But I think the biggest example of it was our events. So we held an event at the Rogers Center where we had over 1,400 people come out. Probably a good third of those people who came out were shareholders. When you're a shareholder of this company, our event almost has a dual purpose: it's like a conference as well as almost like a shareholder meetup. JB: Were you charging for the event or was it just for making money? MN: The event itself was break even. In fact, I think we lost a little bit of money on it. But we charged $60 for the event to cover the cost. Obviously Rogers Center, for context, I think cost us $250,000 to book out. I think they're telling us we might have to pay more next year if we do it there again next year. But yeah, that was epic. JB: In a recent LinkedIn post, you mentioned that the Blossom newsletter, The Weekly Buzz, is generating over $500,000 in annual revenue on its own. Most fintechs actually have a newsletter, but it's mostly for product updates and re-engaging existing users. How did it become an actual profit center? Can you tell me the story behind this? MN: The story behind it was two years ago I remember seeing in the news that The Peak sold for $6 million to Zoomer. I remember seeing that and I had seen The Peak's media kit because we had considered advertising in them. So I knew how many emails they had and I was like, "Wait, we have almost that many emails from our users who obviously joined our mailing list and everything." So I was like, "Maybe we can do something like that." And obviously we took inspiration from Wealthsimple TLDR and some of these other great newsletters. So we started really putting time into it, giving a weekly recap of the markets. Since a lot of our business comes from advertising and partnerships with ETF providers in the app, it was very easy for us to add in newsletter advertising as part of those packages. So I think we do have it easier than other companies, because obviously the sales side of it is the complicated side. If you're just a random fintech, you're not really going to

    28 min
  3. Simon Lejeune Reveals How Wealthsimple Reached $100B In Assets in 10 Years

    JAN 18

    Simon Lejeune Reveals How Wealthsimple Reached $100B In Assets in 10 Years

    Born in Belgium, Wealthsimple’s Chief Growth Officer Simon Lejeune wanted to be a journalist growing up. His parents did not think it was a great idea, and Simon decided to study business engineering to keep his parents happy, with the secret goal of, one day, owning a newspaper. He moved to Montreal after graduation, and held various marketing jobs that led him to become head of user acquisition at Hopper, a flight booking app now valued at $5B. In February 2020, a few weeks before Covid paralyzed the airline industry, Simon generously agreed to meet with me at the Hopper HQ in Montreal to give me some growth tips for my own fintech venture. The Chinese economy was starting to grind to a halt, and I asked Simon if selling plane tickets was harder as a result. I was surprised when he said conversion had never been as high, as airlines were discounting their tickets. This bonanza did not last, though, and Hopper ended up making deep cuts to weather the storm. Simon left Hopper to start a growth marketing agency and Wealthsimple quickly became one of its top clients. Founded in Toronto in 2014, Wealthsimple was initially a robo-advisor offering low-cost ETF portfolios. In 2019, it ran with Robinhood’s playbook and launched the first zero-commission trading app in Canada. It was an instant hit, but it became more than that after Covid hit. People were bored and flush with generous government aid cheques. As a result, an entire generation got into stock trading using the Wealthsimple Trade app. When Simon was offered a full-time job at Wealthsimple in 2021, he did not think twice. Simon Lejeune: I worked for like eight to 10 different clients. Wealthsimple was one of them, and I was super close. I was seeing the rocket ship was about to launch and I was on the launch pad. Don’t stay on the launch pad when someone offers you a seat on the rocket. I really liked Mike [Katchen], Brett [Huneycutt], and Rudy [Adler] in marketing. I thought they were super smart and knew what they were doing. So I decided to fully join Wealthsimple with a couple of people who were working with me at the agency at the time. We’re still working with Wealthsimple now. Julien Brault: Did you move to Toronto? SL: No, I stayed in Montreal. That was also interesting because it was during COVID. Wealthsimple really grew during COVID and went from a couple hundred employees to over a thousand. We’re a super distributed team. My leadership team in growth marketing, I have someone in New York, someone in Vancouver, someone in San Francisco. It’s very remote first. We do have a core office in Toronto where people go. JB: You joined Wealthsimple in 2021, and at the time Wealthsimple was known as the robo advisor. I think they had started Wealthsimple Trade, so they were a little bit like the Robinhood of Canada. It was around $10 billion in 2021 when you joined, and now we’re talking about $100 billion. There was a 10X growth. How is marketing different to go from 0 to 10 or 10 to 100 in a fintech? Obviously you cannot just do the same thing to get so much more assets. SL: Totally. It was a super important pivotal year for Wealthsimple, a pivotal moment for sure. I think the success was already sort of baked in at its inception because it’s the same people, the same mission, the same culture, and the same naive ambition of trying to become the largest financial institution in Canada. What is also still the same is a very high quality, high bar for product. We’re a very product led organization. We still grow mostly by expanding our product suite or improving existing products. What hasn’t changed is our brand strategy. It’s the same people making still unbelievable, unique, different ads. JB: I had a question I wanted to ask you later about that. I see a lot of fintechs that reach a certain scale and all their marketing budget was performance, Facebook ads, TikTok ads. Then they realize huge companies like Airbnb are investing so much in branding, and they start to say, “Okay, we should probably put a percentage at least of our budget into branding.” In the Wealthsimple case, I’ve followed them since pretty much the beginning. They always had care for branding. I’ve seen billboards since way before it was worth $10 billion. What’s the role of branding at Wealthsimple and why do you think they invested in branding since the beginning? SL: Yeah, I think there’s multiple ways to tell this story. When I think about it, it’s because that’s what the people at the time in the marketing team knew how to do. Rudy [Adler] was one of the three co-founders, and he worked in ad agencies in New York. He was this very creative guy, and he hired a bunch of people from very creative backgrounds. They didn’t really necessarily have the performance marketing DNA. In a way, that’s how we’ve operated. Hire really smart people and then let them do what they’re really good at. They’re really good at brand marketing. In retrospect, it was kind of interesting because it is an industry where you need a lot of trust and credibility for convincing people to move their life savings to you. All that brand investment they did in the first few years paid a ton of dividends. All that brand investment they did in the first few years paid a ton of dividends. When we went from $10 billion to $100 billion, we started to really accelerate with growth marketing. We had a lot of that trust and credibility and brand love in the bank, so to speak, to make those performance dollars go even further. The way I think about brand and performance marketing is that they have different time horizons. If you’re an early fintech startup, I usually would still advise you to invest first in performance marketing. I think Wealthsimple is maybe a bit unique in that sense, unless you have a crazy filmmaker on the team who can make amazing films, then let them do that. But you do performance marketing because you don’t know if you’re going to be alive in five years. Why would you invest in a brand that might not be around in two, three years? Eventually, as you gain confidence in your trajectory, you want to start investing in brand slowly and more and more. I see it as like a portfolio of investment where you need to have dollars going into next week, next month, next quarter’s results, but also start investing more in brand for the next two, three, five, 10 years. It compounds everything else. JB: Do you know what the percentage of investments in branding versus measurable ROI driven performance marketing is today? SL: We do more growth marketing, more performance marketing. I don’t know the exact percentage, but the way I think a brand marketing investment is sized, you set a budget based on how big your company is, how much you can spend without obviously bankrupting the company. Maybe you’re going to put 10, 20, 30% into brand. Whereas performance marketing budget, you don’t necessarily have a set budget to spend, but you have a target you want to hit in terms of return on investment or payback periods or IRR. If you find a pocket of profitable investment, you start to really press your advantage. It’s not even a cost center, it’s more revenue generating investment. We have found a few pockets like that, and we’ve been able to scale our investment into growth marketing to a point where it started to take over any other investment at the company at some point. JB: How do you decide if you should invest in a campaign about the cash account or the trading account or the tax account? How do you make those types of decisions? SL: In terms of growth marketing, we try to be a little bit more agnostic and say, how are we going to deploy our budget to get as many clients through the door in a profitable way? Eventually, what we’ve seen is once clients get through the door, they slowly but surely adopt most of our products. JB: So if I understand well, the goal is to get as many new clients as opposed to being like, “This line of business is a little more profitable.” It’s not really a profitability calculus, but more how much it costs to get someone in the door. Maybe it’s not the most profitable product, but then the lifetime value is high, so you can cross sell. SL: Yeah, it is a business, right? So we are trying to drive revenue growth to allow us to grow as a business. We do look at each product line and profitability. But like you said, the keyword we’re looking is lifetime value. There’s no point in you joining, getting burned into a very profitable product for us that was a bad fit for you, and then you’re going to leave after six months. JB: As a marketer who manages millions of dollars per month in ad spend, what keeps you up at night? SL: The fraud on Meta is out of control. I don’t know if you saw the recent report that about 10% of their revenue was potentially coming from fraudulent ads. If you go into the Facebook ads library today and you type the keyword “Wealthsimple,” there’ll be more fraudulent ads, but that works with any fintech brand, by the way. You can try Questrade, any, even the banks. There will be like 10 times more fraudulent ads than legitimate Wealthsimple ads. They use the name Wealthsimple in the copy and images. They use fake AI avatars of [Wealthsimple CEO] Mike Katchen or whatever. We report them every single day. We try to warn our customers about this, but it takes several days to take them down. JB: Their AI is not able to do a simple keyword search? SL: Clearly, their AI is able to do it, right? So it’s not about whether they have the technical capability. Google clearly allowed this a long time ago, where you can’t use my brand in your ad copy if I register my brand. Facebook just needs to do the same. I almost want to tell our customers “Never click on an ad online about Wealthsimple,” but I don’t want to say that because I still want to use those channels. JB:

    34 min
  • 3 Episodes

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A show where fintech founders and marketers reveal the secrets they used to achieve breakneck growth. www.fintechgrowthinsider.com

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    Julien Brault
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