Credit Karma's Nichole Mustard: Self-driving finance

  • What is Credit Karma? We started with free credit scores. We have broadened that to free tax preparation and free identity management. We use your data to show you offers that are most relevant to you. [Credit Karma gets paid a commission if you buy a product they recommend.]

  • How did Credit Karma start? Ken [one of the co-founders of Credit Karma] and I were working together. We were always talking about ideas. He told me the idea for Credit Karma and he asked if we could do this business together. We never thought about building a big business or how we could exit. It was just an intellectually stimulating problem to solve.

  • My Bachelor of Arts degree game me a lot of critical thinking skills: You have a hard problem. You put a circle around it. Business is the same thing. You have a conversion problem or you have a new member problem. Put a circle around it. What are all the ins and outs? Where can I find leverage to solve that problem? How do I dissect it?

  • When I first moved to LA [after college] I worked at a Pizza Hut: They were hiring for a manager in training. I grew up in a town of 1700. If you need to work, you work. You find a job that is close and you get to work. So that is what I did. 

  • While at Pizza Hut I decided to get my Series 7 license and become a financial planner: I started my own practice and started managing money for high net worth individuals. To get clients I found a list of successful talent agents and sent them letters cold. With perseverance and time I had a successful practice.

  • Credit Karma started right before the financial crisis: As the crisis hit we went from 300 credit offers on the site to 3. We had high costs and now no revenue. It was tough. There was no money for payroll. We had to figure out the hard questions of how to invest in the business and how much we really believe in it.

  • What was the initial customer acquisition strategy of Credit Karma? We were very direct response-based business. We built our business by offering truly free credit scores.

  • Almost all the growth happened in the last 5 years: The first 3 to 5 years were lean and mean. We have 85 million members. 75 million of them were added in the last 5 years.

  • The opportunity for new financial technology companies: Build trust. Trust is are you doing what is best for me? Legacy businesses have a lot of tensions inside them between what the right thing for the business is and what is best for the consumer. Trust is something we measure. We believe it is a forward-looking measure of how well we are doing delivering value to the consumer.

  • How I think about autonomous finance: The word trust is what companies don’t focus on and they should. Today at Credit Karma we are providing members our recommendations. We are monitoring if they trust us to do that. When they go to 3rd party sites they have to put all their information in. Eventually, we will post that information for them. And in the future consumers will say you got it Credit Karma - you know what I need. Do it for me. Make good decisions for me. Help me manage my financial life. That will be autonomous finance.

  • There is always a question of who are you solving problems for? We are very clear about this. We are a consumer-oriented company. The consumer wants more time back in their life. They want a seamless, frictionless experience. No one is doing that for them. Financial institutions make money from the 1%. We want to democratize and make these services for everyone else.

  • Going public is not a plan for us: IPO’s solve problems. They either solve brand credibility, access to funds, or liquidity. We’ve been able to solve those problems internally.

  • Full podcast here.