How a $500 TV Ad Turned Credit Karma into a $7B Empire

Ken Lin founded Credit Karma in 2007, bootstrapped through the recession, survived a near-shutdown by TransUnion, and ultimately sold to Intuit for $7.1B. In this episode, Ken shares how a $500 DIY TV ad broke their growth, why he avoided an IPO, the non-negotiables that mattered most in M&A, and where AI is taking personal finance next. A must-listen for any founder navigating scale, culture, and billion-dollar decisions.

Episode Transcript

(00:04):
So welcome, Ken Lin.
So I'm really excited today to have Ken Lin,who is the founder and former CEO of Credit
Karma.
And we're here really to talk about the journeyof Credit Karma and then also talk about some
some of the form formative moments coming up tothe building of that business and then also

(00:25):
incredible exit to Intuit that happened kind ofroughly five years ago.
Yeah.
And Ken is you just am I right?
You just stepped down from operating withinIntuit.
Yeah.
So first, thanks for having me here.
Yeah.
So I'm ninety days into my new life of notoperating, but about four years ago, we closed

(00:46):
the deal.
And, you know, ninety days ago, I decided tofinally close the last chapter and walk away
and spend some time with my family and kids.
And it's been a sort of epic fifteen plus yearjourney.
Maybe maybe we go and we've known each eachother, Lucy, for a little bit of this the
second half of that.
Maybe go back way back in terms of the originstory.

(01:09):
Like, how did you come up with this idea tokind of find your yourself to start this
business?
And were you always entrepreneurially minded orthinking about starting doing startups and and
tech?
Yeah.
Well, I mean, it's one of the great things ismy family.
Right?
And my parents were first generationimmigrants.
So I you know, we came over to this to The US.

(01:29):
We lived in Las Vegas of all places.
And they were always hustling.
Right?
Meaning that they were always working multiplejobs.
They were sort of starting businesses on theside, whatever they could do to try to make
ends meet.
And I think in many ways that rubbed off on mein terms of the way that I thought about
things.
So I went to school in Boston, BostonUniversity.
I stayed there for about ten years afterschool, and I came out to the Bay Area in

(01:54):
02/2004.
And as I got here, I worked for eLoan, whichwas an online mortgage company that you may be
familiar with.
And I was working in the marketing departmentand I realized that, hey, we actually were
pretty good at digital marketing and this is,you know, sort of right after the the dot com
bust, but really the resurgence of of Internetin many ways.

(02:15):
And I decided to go out on my own and start amarketing agency based on the work that I was
doing at eLoan, based on, you know, I think wewere good performance marketers.
And somehow we found a niche in digitalmarketing for financial services company.
So one of my first customers was Prosper, whichChris Larsson started.
And, you know, it's he has a path to this storyas well.

(02:37):
But he hired me at Prosper to do a lot of themarketing and, you know, really started there.
And before I knew it, we were running$4,050,000,000 dollars worth of digital
marketing for a lot of financial servicescompanies.
So, like, Wells Fargo, Prosper, Liberty Mutual.
And something crossed my mind, which was thefinancial profile of the consumer was really

(02:58):
important in the success of the marketing.
Right?
So to give you a very simple idea, if AmericanExpress was looking for a customer, well, if
the customer's credit score is too low,American Express could underwrite them.
You know, if they were middle, again, theymight or may not want them.
But it was really on the high end for AmericanExpress that they really cared.
And as a result, you know, half to two thirdsof those marketing dollars were ineffective

(03:21):
because they couldn't market to the right typeof person.
So going back to my direct mail days, my creditcard days, said, well, if you knew the credit
score of the consumer, you would really be ableto, you know, be much more effective.
And at the same time in 02/2006, 02/2007, youknow, there are these dancing pirates that

(03:41):
would talk about getting your free creditscore, but it wasn't actually free because they
would charge you, you know, $20 a month in asubscription service once you try to get your
free credit score.
So we said, well, if we could actually crossthese two models, we might have something
special here.
And that was the impetus of Credit Karma, whichwas let's actually give away the credit score
for free.
We think it's one of the more defining, youknow, components of your financial life.

(04:05):
And at the same time, the data and sort of theprofile about the consumer will really be, you
know, important in the future in the day in thepresent, understanding the right types of
financial services products.
So the idea of Credit Karma was born in02/2007, so in a lot of Starbucks and a lot of
conversations.

(04:25):
Yeah.
I I remember I mean, I remember the era becauseI was running Trulia at the time.
And so and then Experian and Free Credit Reportwere kind of huge advertisers.
And it's like and it was.
It's just like comedic, kind of like attentiongrabbing advertising.
But it sort of I guess it you know, I don'tknow how much involved, but there's there's a

(04:47):
high correlation between caring about yourcredit score and big ticket purchases.
Right?
It's like which you know, whether you're buyinga house or buying a car, you kind of know that
if your credit score is is high, then it makesa meaningful difference to your kind of your
ability to to buy stuff.
Was that always the business model?
Was it always like, okay.

(05:08):
Get people in with a free credit score and thenand then sort of transfer them through to
particular offers?
So there was a small pivot.
You know?
I still have the the business plan somewhere,you know, in in in the Google Cloud.
I think when we started the idea of CreditKarma is we thought that we would actually be
able to help consumers save on their phone,their cable services, sort of subscription

(05:31):
services that were credit adjacent.
Meaning Yeah.
If you're higher credit, you're more likely topay your cable bill.
If you're higher credit, you're more likely notto throw the equipment away.
Right?
So that was the original thesis.
But what we found was that, to your point,people who are coming to check their credit
scores were actually just in market forfinancial services products.

(05:51):
Right?
And I would categorize them in a one to three,which was, you know, they were just curious,
which is an easy one.
They were in market for for a product or theywere really, you know, wanting to improve their
finances so that they could be in product.
Right?
So the latter two, obviously, were reallyimportant in terms of our business model.
And I think that was a correlation that we sawpretty early and realized, wow.

(06:16):
You know, all of these members who are comingin are in one of those three categories.
And then, well, let's go and put a few of theseoffers up.
And and I think, you know, for us, that was oneof the first things that we did and and
probably a smart thing because we were superscrappy, super efficient.
So, you know, we went out to some of theaffiliate sites and quickly just got a couple
of financial services offers on our site.

(06:37):
We stripped out all the, you know, sort of theHTML and the graphics, if you will, just turned
them into hyperlinks and talked about the offerand why we thought it was good for them.
And that really took off.
And that was a little bit of the early days ofthe business model of figuring out what
resonated with our consumers, but moreimportantly led to the pivot away from, you

(06:57):
know, the cable and the credit I'm sorry.
The the cable and the satellites type services.
More into lead gen.
Yeah.
And and, like, of the remarkable things aboutyour story, although you raised a lot of money
later on, you raised kinda next to nothing atthe beginning.
And I and I believe also that you you were kindof a distributed remote team at the beginning.

(07:21):
Maybe share a little bit about the first yearor so, like how you got things going.
Yeah.
I mean, so it was really cool.
You know, we were we were effectively threepeople in completely different geographies.
So I had the
idea Just so so you know, like, we we we don'thave a blanket black and white rule, at NFX,
we're like, that's almost like a yellow flag,if not a red flag.

(07:44):
Well, I think that for us, it was more of thescrappiness.
Right?
I mean, I if I had it to do it all over again,I would not have done that.
But I think a little bit of of for us was thatwe didn't have that much we didn't have much
funds.
We didn't have an office, and people werealready in different geographies.
Yeah.
So it was like, well, we could move everyoneout here, but that would cost money.
So I started the I started the company.
I had the idea and, you know, Nicole Mustardwas one was sort of the first person I called

(08:10):
and I had worked with her when she was atCompete.
Smart BD person, really understood theInternet.
I remember the conversation.
She was in LA at the time.
I met her at the Saint Francis West End, and Iremember in having a conversation with her in
the lobby.
And in the moment, she said yes.
I mean, it was amazing in the sense that shehad no idea what the was gonna ask her, had

(08:30):
never described the business to her, neverreally understood the opportunity, but she said
yes, which was fantastic.
That got us started.
And then our, you know, chief technologyofficer, Ryan Graciano, was a friend of a
friend.
He was, you know, working at IBM, and I askedthe friend who, you know, who he knew from a

(08:50):
technology perspective.
He said, oh, you should just talk to this guy,Ryan.
And what I just find amazing about those two ishere are two, I don't wanna say random people,
but two people who didn't know each other, whobarely knew me in some ways.
We connected.
We had an idea.
And all the way up to the exit, seventeen yearslater, they were still at Credit Karma running

(09:12):
their respective departments.
Right?
And I don't think that happens every day, but Ithink a lot of it is, you know, the luck, the
perseverance of having a great team to buildthese companies.
How much money did you raise at the beginning?
Like, what what was the and, you know, I'mguessing you're pretty you're you were
profitable pretty early on.
We were.
And this
is the thing that I always found, you know, tobe one of our secrets.

(09:35):
So the very early days were really hard becauseto give you a little bit of context, you know,
we started in 02/2007.
But, you know, 02/2008, 02/2009, the GreatRecession happened.
So, you know, the early funding was me and anangel investor.
And we thought that, hey, we have the greattraction and the the, you know, the progress

(09:56):
that we need, the metrics that we need to goand raise this, you know, like a reasonable
series a.
But unfortunately, a great recession happenedand all financing dried up.
And, you know, as a matter of fact, you know,most banks felt like they were also gonna be
insolvent or going under, and that was the timeframe that we were trying to fundraise in.
So very tough period for us.
We really just kinda tightened our belts andcontinued to operate and tried to be as nimble

(10:19):
as we could.
I remember I didn't take a salary for a longtime.
I remember, again, we were working from ourrelative homes.
We didn't have an office for a long time.
And we were roughly a team of, you know,probably like four full time people and two or
three contractors.
But to your point about being efficient, one ofthe things that we did early again was to
really start trying to monetize.

(10:42):
And the good news is I think through our firstyear or so, you know, we were only burning a
few $100,000 a year, which I think is prettyYeah.
Uncommon
a year.
Yeah.
Which is pretty uncommon in most startups.
You know, that led us to a couple of amazingthings.
You know, we raised something like a billion 4,a billion 5 over the course of the history of

(11:06):
Credit Karma.
But when I look at our cumulative losses,particularly from the early days, I think we
only needed about $5,000,000 worth of capitalto build that business.
Right?
So we were never more than net negative about$5,000,000 as we built the business.
And that, you know, I think it's a little bitof a carryover.
I was at a.com in the late nineties and I sawthe excess, the exuberance of what happens when

(11:31):
you just kinda spend blindly and think that therevenues are gonna come in.
So I think we had a very good handle on thebusiness, and I think that saved us in so many
ways because, you know, if we weren't likethat, we would never made it through 02/2008,
02/2009.
And you and you you just think in retrospect,like, raise not being able to raise because you
might have been able to raise, but you justliterally couldn't raise was a was a strength

(11:54):
in retrospect rather than slowed you down?
It might have felt like slowing you down theshort term.
I think in the moment, it never felt like itwas like, oh, this is, you know, this is gonna
build character.
At the moment, it was a lot of lost nights ofsleep and just feeling like, you know,
everything that we worked for was coming to anend.
But I think to your point, it really made usfocus on sort of the operating metrics of the

(12:17):
business.
And I think there is to me, that is one of thecore components of how I like to operate and
build businesses, which is to be superefficient.
And if it's not working subscale, it's notgonna necessarily work at scale or probably
won't work at scale.
So it forced us to be smarter in everythingthat we did.
It forced us to be scrappy.

(12:39):
I'll share a little bit of a story and give youan example of how this plays out.
And it ended up being one of the definingmoments at Credit Karma.
So we had been working on the project forroughly two or three years.
We had, you know, I can't remember if Iactually don't think we'd raised our series a
yet or maybe Jess had raised our series a whichwas all of $2,000,000.

(13:02):
But most importantly, as context, we built thebusiness to where we got unit economics.
So for every user that we had, every memberthat we had, you know, we would roughly
generate a dollar in revenue and it cost usroughly a dollar of operating between buying
the credit data, you know, the servers, and soon.
So now the question was gonna be, how do weactually build a user base?

(13:25):
Right?
And we had about a million dollars in the bankand my past life in my marketing agency, I'd
worked with Hill Holiday, so I called up one ofthe guys I knew at Hill Holiday and said, hey,
I have a million dollars.
Here's my new business credit karma.
We'd really like to figure out if we can scalethe business and we thought maybe television
would work because search and digital is soexpensive in this category.

(13:47):
And remember the conversation was, well, youknow, if you want to try television, you'll
probably need to do a creative.
That'll cost you $2.03, $400,000.
And then you'll probably want to spend another$2,300,000 in actual media.
And then maybe you'll get a read as to whetherthat is going to be slightly effective.
Of course, I'm weighing my million dollars inthe bank and the fact that he just said you

(14:10):
have to spend $6,700,000 to build a to to builda campaign, so we quickly decided that was not
gonna be a good idea.
But what we did instead is we took my DSLR.
We got three or four employees.
They were sort of hand actors.
They were never on camera.
We bought some props, maybe $30.40 dollarsworth of props.

(14:32):
And then we shot a commercial on my camera.
Well, the only thing that we did that wasprofessionals, we rented a professional sound
studio just so we could do the voiceovers.
And we did a commercial for, let's just say,$500 all in between the probs.
500 versus the 3 or $400,000.

(14:54):
And, you know, at the time, there was thisthing called Google Television Auction, which
you could actually just bid on, you know,remnant inventory anywhere in The United States
at various time slots.
So that was the idea.
And I remember this very well.
So it was the day after Christmas, and I gotthis email.

(15:16):
We used to call them good hour emails, wouldbe, hey.
It's a good hour if it's more than the averagenumber of registrations.
And I saw the email.
I like, oh, day after Christmas.
No big deal.
Maybe some news news outlet picked it up.
So, you know, it carried on with my day.
Then the next day at 11:05, again, you know,this is now I think Wednesday, I get the same

(15:37):
email and that's weird because that doesn'tnormally happen with news cycles, right,
because they don't repeat.
So I remember calling Greg who was leading ourmarketing at the time, like, hey, what's with
these spikes?
And I remember him saying to me, he's like, Ithink it was television.
And, you know, and and for us, it was likemaybe a 100 registrations within that hour,
which was pretty good for us.

(15:58):
And, you know, my question then to him is like,well, how much did we spend for that spot that,
you know, caused the blip in registrations?
And the the dollar amount is what blew my mind.
It's roughly $50.
So we basically got a 100 incrementalregistrations for $50.
Right?
So effective CPM of or sorry, CPA of 50¢.

(16:21):
And we were very quiet about this because we'relike, is this right?
And how scalable is it?
And the short answer is very scalable.
So for us, we went from spending $0 intelevision to something like $250,000,000 a
year the next year because we were the biggestbuyer of this remnant inventory.
So you went from zero to 200,000,000 in a year?

(16:42):
Yeah.
Woah.
Because we were getting something like two tothree month paybacks.
Right?
When Yeah.
Yeah.
Cost of acquisitions are 50¢, you know, you youyou don't have to you don't have to have these
users long on your platform.
And going back to this idea of unit economics.
Right?
We were break roughly breakeven.
But now all of a sudden, we're getting allthese users, and now we have the leverage to

(17:04):
negotiate better deals with all of ourpartners.
Yeah.
So as we're growing more and more users, andthese are high quality credit users who are,
like, looking for products, you know, our ouradvertisers are willing us to pay us more and
more and more.
So, you know, we're sort of growing the numberof users.
Our costs are going up marginally, but moreimportantly, our margins per user are

(17:25):
increasing drastically because now we'regetting scale.
Yeah.
It's a very it's it's such a you know, it's inevery breakthrough startup, they break some
rules.
You know?
And I think it was at the time, like, you know,I was running Truly on it, and then and you and
there was a sort of narrative, like, why wouldany smart marketer use television?

(17:47):
Because it's untrackable.
You can't sort of you know, you can't targetthe creative effectively.
It's sort of it's like, you know, that the oldadage 50% of your marketing is wazy.
You just don't know which 50% it is.
And it's and I think it's like thatunconventional thinking was instrumental

(18:08):
because you wouldn't have had the sameeconomics and and opportunity if you if you
went through traditional media.
Yeah.
Traditional digital media.
Well, absolutely.
Right?
And I mean, just to I mean, to go context,because, you know, the other players in the
space were so profitable, they're making $20.30dollars.
Right?
So the CPC at the time for the terms like freecredit score were, like, $3.

(18:29):
Right?
So even if I had a 100% conversion on the $3per click that I was paying to get the traffic,
which you're not gonna get a 100% conversion.
Right?
Yeah.
It would still have been six times moreexpensive than what we had found in television.
Right?
And it goes back to this idea of of, you know,again, being unconventional.
And I think there's a fair amount of luck andtrial and perseverance in this, you know, to

(18:51):
And maybe economically as well at the time.
This is 02/2009?
02/2012.
02/2012.
Okay.
You scaled up.
Okay.
And it was still but it's still, like, therewas like, you know, economically, the the
environment was media was still pretty cheap.
It was.
Yeah.
And and and television.
Right?
And and because this is the time, to yourpoint, everyone was going all in on television.

(19:14):
And as we know, offline media is still veryperformant, what are we, you know, twelve years
later.
But back then, everyone thought there was this,you know, transition that was happening.
So everyone wanted to be in digital, whichreally allowed us to kinda go against the trend
Yeah.
And be in offline media, which again reallyplayed out.

(19:35):
But, you know, back to the idea of luck, partof it was surprising for me was luck in the
sense that, you know, that televisioncommercial was so performant.
We tried two other commercials right afterwardsand they bombed.
They didn't have anywhere near the sameresponse rates as the first commercial.
$500 one.
Yeah.
And what we then did was we went back and wesaid, oh, what do we believe are the thesis or

(19:58):
sort of the distillation of the key componentsthat made a difference?
And then we figured out the formula.
And, you know, for us, we we then try toleverage what we thought was both the formula
of what made for a good television commercialfor us and the fact that we were being scrappy.
So we would shoot, you know, five to sixcommercials per month all in house.

(20:20):
Never used an agency.
Never used, you know, sort of professionals.
I remember we were using Craigslist to findtalent.
I mean, like, we would literally go on toCraigslist and say, hey.
We're looking for somebody to be in a nationaltelevision commercial because we didn't want
any SAG actors at the time because we couldn'tafford to pay the residuals and so on.
Right?
Again, we were being super scrappy.
It sort of reminds me a little bit of Costco.
Like, Costco is it it sort of comes across likea sort of lower end brand in in when you go

(20:47):
into the store, but then you actually, like,dig behind it, and it's like they just spend
money on the right things.
And you as a premium you know?
And the but the audience that goes into Costcois massively premium for the folks that spend
money there.
And and so I think maybe just the scrappinessactually was attractive to some of your
customers that they they felt this was therewas but you you were a brand that was spending

(21:12):
money on the right places.
Well, absolutely.
I mean, you know, that's what we really focusedon.
Right?
I mean, our offices weren't luxurious.
And if you look at the first five or six years,I would say, you know, aside from the marketing
dollars, we're spending all the money buyingdata.
I mean, we were the largest consumers of creditinformation, I think bigger than any banks.
I mean, I actually remember having a meetingwith Jamie Dimon a while ago or, you know, many

(21:35):
years ago, and we were actually talking about,you know, the the amount of money that that we
spend.
And and I was like, I think we're the biggest,you know, buyer of credit debt.
And he was like, you know, he was like, we'reChase.
I bet you we spend more.
So I told him our number, and I appreciate thefact that he knew how much he spent.
He's like, no.
You're right.
You actually spend more than we do.
But I was surprised that he actually knew thatnumber, you know, given how large j t JPMorgan

(21:59):
is.
But, yeah, at the time, we were spending a lotof money on credit data.
So how do and, you know, and obviously, youryou know, part of the business is working with
the credit bureaus.
Like, I'm curious how those relationshipsevolved over time and any any sort of pivotal
moments there.
Yeah.
I mean, I have a great story in this one.
So, you know, we we found the idea of CreditKarma in 02/2007.

(22:22):
We'll buy credit scores, we'll give it away forfree, you know, we just gotta build the site.
You know, the relationships and the data shouldbe easy.
That was where I was wrong.
So, you know, we called all three of thebureaus And funny enough, each bureau would
say, like, we're not taking on new customersnow.
We would describe our model, what we're tryingto do.
Can you help us?

(22:42):
Can you tell us how to, you know, buy yourdata?
And every bureau would say, well, we're nottaking on new customers.
Go talk to the other two bureaus.
Was like, well, that's weird.
So luck would have it.
As I worked at Elone, we had a TransUnionrepresentative at Elone who who I called
because I'd worked with him while I was thereand said, hey.

(23:03):
Here's what I'm thinking.
Here's the business model.
No one's willing to work with me.
Is there a way that you could help me get acontract with TransUnion?
So, you know, he sends me like a two or threepage form, what's the purpose, you know,
address, simple stuff.
Submit it.
And he's like, you're approved.
Here's your here's the API.

(23:25):
Here here is the documentation, and off we go.
And our you know, Ryan is coding based on it.
So we get the site up and running.
And we're in, you know, we're sort of instealth.
We're just building the technology for about ayear.
And I don't think about the contract anymorebecause, you know, it's a done deal.
So we build the site.
I go on vacation after a year's worth ofdevelopment.

(23:46):
We put the site, you know, sort of like onfriends and family access, which means like,
hey, it's basically working.
We're trying to take a little bit of a pausebefore we really go into the the heart of
marketing and trying to build this business.
And it was my first time in in Thailand.
The phones aren't very good.
I remember Nicole calling me and she said, hey,you know, we just made we're on the page of The

(24:08):
American Banker, which is really a a business,you know, publication.
It's a small blurb all of, a paragraph.
Right?
Talking about Credit Karma is giving away freecredit scores.
Don't think anything of it.
Well, on my way back from Thailand, which islike an eighteen hour flight, you know, I land
in LAX and my phone is blowing up.

(24:30):
And what had happened was and back then, likein the very early days, I literally got an
email for every registration.
I'd land in, like, for half an hour.
Just go ding ding ding ding ding ding ding.
Right?
So I called Nicole and said, hey.
What happened?
I was just on a trip.
And she's like, well, funny story.
That American banker conversation led tosomebody putting the code onto Slick Deals.

(24:51):
And at the time, Slick Deals is this great dealsite.
And we were on the front page and we had a codethat was, you know, that would sort of limit
the the amount of people that you could getonto the site.
But somebody had actually put the code onto,you know, SlickDeals.
So we've got about 6,000 registrations in thatin that time frame.

(25:14):
So that was a real great high for us.
Now, wanna talk about the low, which is liketwo days later, I'm sitting in our offices and
we get an unexpected UPS package, right, anovernight.
And the overnight was a termination notice.
So what had happened was, you know, the articleand the subsequent traffic led to TransUnion

(25:35):
noticing and pulling up our contract.
And they realized that, well, if these guyswere fraudulent, like, we told them exactly
what we're gonna do in our contract, but thereality is no one read the contract just to
improve the deal.
Right?
So their recourse was, well, they have thethirty day right of termination.
So they pulled the trigger on that and said,well, you know

(25:58):
But you were you were paying them.
We were paying them.
We were paying our bills.
And it was facts.
They were like, know, they were like, yoursuccess is our success.
You would think that, but you have to keep inmind that all of the bureaus are making a lot
more money from the subscription product,right, the free credit score, you know,

(26:18):
monitoring service.
So in many ways, we were super competitive tothat cash cow.
And, you know, I know this in hindsight, youknow, at TransUnion specifically, there was a
consumer division that, you know, we did thatwe went around.
So the person in charge of this You're being
disruptive to them.

(26:38):
Yes.
We're disruptive to them, but they also theywere in charge of, you know, direct to consumer
business and, you know, our contract wentaround them.
So we got the termination notice and I wentfrom this high of like, wow, we really have
product consumer fit here, market fit, right,to, oh my gosh, in thirty days, you're going to
shut down our business and, you know, thefourteen, fifteen months worth of work that we

(27:01):
have put into this business to this product isgoing to be gone.
So, you know, I called everyone I knew.
I, you know, was like desperate to say, who canhelp me?
Who made this decision?
How do I get in touch with the powers that be aTransUnion?
I forget who the person was, but somebody saidto me, I think the person you need to know talk

(27:23):
to is John Danaher.
And I remember, you know, and they're like, Ican't even make an introduction for you.
I think I have their email address.
So I remember writing cold email, right, like,hey, John, You don't know me.
I started this little company.
Here's a little context.
I'd really love to talk to you about theopportunity.
We think we're onto something special.

(27:45):
And true to form John, who we're great friendsnow, you know, responded and he said, hey.
Listen.
I'm gonna be flying through San Francisco on myway to SLO.
That's where their one of their offices are.
Like, why don't we go and meet for breakfast?
And I remember this was about a week before thethirty days were up.
So this is basically, like, twenty three,twenty four days into the termination notice.

(28:07):
He responds and we meet.
And I remember it was the most sleepless nightof my life in terms of Credit Karma because I
knew it was such an important meeting for me.
But we had breakfast, and I had convinced himthat, you know, based on the traction that we
had, that there was an opportunity for us tobuild something and that we should partner.
And I convinced him to do that, and, you know,the rest is history, as they say.

(28:30):
And so they and they were like they were sortof they were comfortable betting on you even
though it would be perhaps detrimental to someof their other relationships and some of their
internal mean, big picture thinking from them,but it's obviously surprising as well.

(28:51):
Yeah.
I mean, over the course of the seventeen years,John and I became really good friends.
And he let me know into a little bit of thepsychology.
I think there were two things that reallyswayed him.
I think one he shared was this idea that, hey,you guys actually had traction.
You're able to generate you know, at thatpoint, we probably had 20 or 30,000 users,

(29:11):
right, in the time that we had, you know,launched and got the termination notice and
coming close to it.
He's like, pretty amazing.
He had no marketing dollars and able to get allthese users on your platform.
So that was the first thing to notice.
And sometimes it reminds me of the idea that,you know, forgiveness is better than
permission, right, because we kind of went acircuitous route in terms of getting an
agreement done.

(29:31):
The second thing is what he confided me islike, I thought we would have bought you, you
know, over the years.
Right?
And that was what was going on in his mind isif they're successful, we'll just buy this
company.
And, you know, if they're not then, you know,no harm, no foul.
And what's interesting is and, you know, Ithink companies tend to have a lot of luck

(29:54):
along the way.
I think for them, you know, they were a privatecompany that was about to go public.
You know, they had a lot of things that theyhad to do internally in terms of getting the
company ready to go public.
So I think these things just kind of, you know,passed by them and, you know, we were growing
rapidly and almost in a blank.
The chances of them buying us for a reasonableprice, right, probably, you know, some tens of

(30:16):
millions of dollars, you know, went veryquickly because as we got traction, you know,
obviously your multiples tend to change basedon growth rates.
And we probably made it outside of theircomfort zone pretty fast.
Yeah.
But it's probably and we'll touch on the kindof M and A stuff later.
It's probably an interesting sort of tactic forstartups in the finding kind of strategic

(30:41):
sponsors within companies that are not perhapsblinkered by the short term of kind of, okay, I
need to just do the basics, but really thinkingThis is a company that we should align
ourselves with.
This could be helping us in various differentforms is is is really important to help the a
founder navigate some of these pivotal momentsas they go through things.

(31:04):
Before we talk about the the m and a stuff andand potential and even, you know, possible IPO,
Just wanna touch on culture.
You mentioned earlier that your cofounder'sbeen with you for seventeen years.
Like, there must have been a bit of a specialculture in the organization which which you

(31:24):
built, and I'm I'm curious how you thoughtabout that and how you built that.
Yeah.
I mean, it brings a smile to my face because Iit's one of those things that you become really
proud of.
And maybe in the moment, you don't recognizehow special it is, but as I've stepped away
from the business, I mean, the the you know,one source of pride for me is just kinda
hearing from past karma knots, people who've
worked Credit
That's it.

(31:44):
Karma knots.
That's what we call one another.
People who've worked at Credit Karma, and theyjust, you know, all reflect on how great and
how wonderful our culture was.
And I think for many founders, and myselfincluded, we didn't think of I didn't think
about these things.
Let me talk about it from my perspective.
I didn't necessarily think about culture asanything special in the beginning.

(32:04):
Right?
You know, I always thought, like, culture is,like, you know, it's these words that you put
on the wall that don't really mean a lot.
But over the years, what I really learned was,you know, culture was the way that you showed
that you cared for one another and that was thecohesion of a company.
And I think it was probably like you're six orseven.
We had a little bit of a crisis in the sensethat, you know, once you start

(32:28):
What what year was this roughly?
So this is probably 02/1314.
Yeah.
Right?
So we're seven, eight years in.
And what I found is that once you, you know,you don't know everyone's names, once people
aren't in the meetings with the leadership, youdon't you don't then know how to treat one

(32:50):
another.
Right?
You you can't you you can't sort of role model.
Like, hey.
We don't yell at each other.
We we really care about other people'sopinions.
They're all valued in those types of aspects.
And I start and I think we started losing.
And at the same time, this is when we'rehyperscaling.
Right?
So you're getting expertise.
You're getting people from Google.
You're getting from these great and they'regreat companies, but they don't know the
culture of the company.

(33:11):
And I remember we had a, you know, I I don'twanna say crisis, but we had a moment where we
had to really think about what type of company,what type of culture do we wanna be.
Do we wanna be missionaries or do wanna bemercenaries?
Right?
Yeah.
Do we care about the mission first and foremostor do we care about making a bunch of money?
And, you know, it was at that moment that wereally thought about, hey, we have always been
focused on the user.
We've been focused on one another and makingsure that this is a great place to work.

(33:35):
We can be proud of our work and that we'redoing the right things for both our members and
one another.
And I think it was through that we really, youknow, distilled and solidified what our culture
is, which is, you know, one of caring, one ofempathy, you know, one about making progress
each and every day and understanding that.
So, you know, we had our, you know, sort of thethe the, you know, the four or five key things

(34:00):
that we thought about and we just startedtalking about it.
And we started working with, you know, ouronboarding teams and make sure like, hey, let's
make sure we codified these.
Let's make sure that we actually operate theseways.
I mean, it's one thing to think about culture,but I think you also have to be authentic.
I think a lot of times people think about, youknow, culture as being something, oh, I want

(34:21):
our culture to be this way.
But if you're not authentic about it, if youdon't behave that way, if you don't role model
it, it doesn't play out that way.
And, you know, again, even to this day,seventeen, eighteen years later, people talk
about the experience that they had at CreditKarma being special because of our culture and
the way that we thought about the businessmodel, our members, and one another.
Yeah.

(34:41):
It could I mean, the nature of your industry,there's a lot of organizations which are, like,
seemingly terrible cultures, you know, thatare, like, lead gen businesses that are kind of
financial services businesses.
But I think it's I think it's it all just, frommy observation, extends into the brand as well.
Like, the brand that you built, which is sopowerful, is a is a also a function of the team

(35:05):
that you built.
Yeah.
I mean, I I remember one one story, you know,going back to this moment of of near failure.
And I I think it helps solidify really thestandard by which we were going to operate was,
you know, this is 02/2009, 02/2010.
We're quickly running out of money.
And, you know, I remember trying to fundraise,number one.

(35:29):
But, we're on the verge of going out.
I remember just having a conversation with ateam and said, I don't know if we'll be able to
fundraise.
But, you know, there's a there's a moment herewhere we could fundamentally, like, spam our
members to generate more revenue.
We could sell the data to generate morerevenue.
And I said, you know what?
I never liked those companies.
I don't wanna work at one of those companies.

(35:49):
So so I I remember we as a leadership teamdecided that we wouldn't do those things and
that we would rather just go out of businessthan get into the model and sort of the
business practices that we despised.
I think it became a defining moment for for usand our culture in the way that we operate
because if we were willing to bet the farm

(36:09):
Yeah.
You know, on something like that, it gave us asense as we became more profitable and more
successful that, well, that's just anotherexample of that.
And by the way, this is much smaller stakesnow.
Right?
Like, great.
We'd leave some hundreds of thousands ofdollars on the rev on the table or or maybe
even millions.
That's nothing compared with the existentialdecision that we made way back in the day.

(36:31):
So it was a foundation for us.
Yeah.
You touched on briefly, like, TransUnion waskind of, you know, in in retrospect, sort of
sniffing around to kind of potentially acquireyou.
Tell me and then you raised a bunch of moneyfrom investors who are kinda looking for a
return.
And and obviously, you didn't start the companyto sell the company, and you started the

(36:54):
company to to to help millions of people.
But but they come to a point where you'reprobably thinking, okay.
Multibillion dollar enterprise, IPO oracquisition.
And I I think you you wrote something a whileago, which was sort of quite negative on on on
kind of IPOs.
And and I so firstly, I'd love to kind of yourthought price.

(37:17):
Okay.
Do we go public?
Because you probably we could have done.
Or do we think about some sort of combinationwith another entity?
Do we I'd love if could share kinda how youthought about those two parts.
Yeah.
So, I mean, I think the the the I wrote anarticle a while back that talked about how I

(37:37):
thought y p IPOs were a bit of a they're afinancing event.
Right?
And I think a lot of founders go into businessthinking like, hey.
I'm my end goal is either to go public or to besold.
And I think over the course of Credit Karma, Irealized that that was not my goal.
My goal was to build an enduring business thatcould really change the landscape of financial

(37:59):
services for consumers all for the better.
And I think when you have that as your vision,as your end goal, right, the way you operate is
fundamentally different, which led to thearticle of why I thought like, hey, an IPO is
not my end goal.
It's not what I think about from Credit Karma.
I think about how do we change the landscape.
And, you know, I think to the chagrin of someof our investors, like, well, where's the

(38:20):
liquidity?
How do we get to the end of that?
Do they do they contact you and say,
like No.
I mean, they knew me from the board meetings.
They knew me from the engagements.
And, you know, in every one of those meetingsthat you're taking funds from, you give a
frame.
And I said, listen.
I think this is the way we've operated.
I don't think this is anything new.
But I wanted to be very clear to the employeesabout, like, what we were trying to do, that

(38:41):
the vision and the mission that we're on wasmore important than the next actually, now, you
know, to be completely fair as well, thosebillions of that billion plus of of, you know,
of fundraising that we did over the years,we're to create liquidity for employees too.
Right?
So that, you know, you're not in a situationwhere you have all this, like, equity value
that's locked up that nobody can access.

(39:03):
So we wanted to find the right balance of thetwo.
So it's not like I had my head in the sand interms of what was important.
But that was the way that we've operated thebusiness, you know.
And at the same time, I always thought aboutbeing pragmatic.
Right?
Meaning that, listen, you can't be there can'tbe a dogma to running a business.
For some, there can be.
But for me, I was always about, you know,weighing all the various options and looking at

(39:26):
things and, what's negotiable, what'snonnegotiable.
So that was the context of the I thought of apublic offering as a financing event, not the
end goal.
It's interesting because it like, I think Ithink you read the article in 02/2014, if if I
remember, like That sounds about right.

(39:47):
And it's and it's yeah.
Truly went public in 02/2012.
And as you say, it's like a finance event.
Sure.
But we couldn't raise money in the privatemarkets and in our brand.
But the public markets were very receptive.
And I think that and that was 2012 that therewas just all this money sitting on the
sidelines, which which I think it may be thesituation soon in the the the I mean, the the

(40:14):
private markets and the public markets can becan be quite frothy.
But I I think I think it changed a couple yearslater that is I I think of the a lot of the
kind of growth rounds came in low interestenvironment.
And so it's like you could actually raise a lotof money in the private markets.
You're absolutely right around that.
Right?
Because for us, we were catching the fintechwave.

(40:37):
Right?
We were what you know, fintech didn't exist asa term when we started, but we were the fast
growing business in that round.
And to your point, all of a sudden, you know,there were billions of dollars on the sideline
in the private markets, and people were willingto write us, you know, half a billion dollar
checks and and, you know, over three weeks ofdiligence or three months of an s one filing.

(40:58):
Right?
So you look at the comparable of those twothings and you say, well, if I'm gonna do a
financing event, would I rather do the route ofan IPO or would I actually do a series, you
know, d or e?
So that also led into a little bit of the thepsyche for us.
But, you know, sometimes timing, luck, youknow, again, execution, all those things do
matter.
But you're right.
There were so many dollars that it was easierfor us to do a private round and not have to

(41:24):
subjugate ourselves to all the scrutiny and orthe publicity sometimes of being a public
company.
And so and so as a private company, I'm Isuspect you had a number of kind of suitors
that were getting close to the company overover years.
Like, how how was how was you know, whetherthat's Jamie Dimond or whether that's, you

(41:46):
know, other credit bureaus.
How how was that process?
And how did you think about it?
Yeah.
I think it always goes back to being, you know,one, again, pragmatic.
And and, you know, for me, it was never aboutthis one thing or bust.
It's always looking at, you know, the dynamicsthat existed.
So over the years, you know, we we certainlyhad a few inbounds, but our ambitions are, I

(42:08):
think, were always a little bit higher than thethe ambitions or the vision of the people who
who were were calling.
But, you know, we would always take the time togreat.
That whether it's, you know, like, is this areal thing?
How material is it?
And, you know, the the one, again,nonnegotiable that we focused on was, like, how

(42:29):
mission aligned is this idea?
Right?
And how mission aligned is this company withwhat we were trying to do?
So I think that was the the first test for us.
And, you know, nothing really ever came aboutthose opportunities until a little bit of the
conversation that we had with Intuit, you know,many, many years into the the founding of
Credit Karma.

(42:49):
And was that sort of like how did thatrelationship form?
Because it you know, it's a very big decisionfor for you, but also a very big decision for
them.
Like, what was, the dating process?
Yeah.
So connections networks do matter quite a bit.
So I had a good friend, James Kim, who said,Hey.

(43:12):
Know the head of business development at Tua,Danton, And I think you guys should just meet
for coffee.
Right?
And it's as simple and as innocent as that.
And, of course, you know, there's probably alittle bit of subtext to it, but, you know,
Anton and I meet.
And, you know, Intuit was very what I thoughtwas interesting was sort of two or three things

(43:33):
stand out for me.
It was one, as part of the introductions oftenhave is, like, you talk about your company,
but, you know, the other company tends toreciprocate and talk about their vision and
what really mattered.
And of the things that struck me in that veryearly meeting was that while we used different
words, we actually had a lot of the same visionin place.
Now, you know, context of that is, you know, wehad started our tax business.

(43:55):
They had started a Credit Karma competitor.
Right?
So, like, we were moving in the same samedirection.
But I thought that was really interestingbecause I thought that was one of the things
that really mattered to me.
But the other thing that stuck out to me wasthat they were a very big and slow moving
organization.
Right?
So I remember having a meeting, didn't hearingfrom them for, you know, like, six weeks.

(44:16):
They were like, hey.
Really interesting meeting.
We'd love to learn a little bit more.
You know?
Could we ask you a few more questions?
And, you know, sure.
We gave them some answers, and they go off.
And another, you know, six to twelve weekslater, you don't really get a good response.
That's fine because we weren't focused.
You know, we didn't think of it as being, youknow, a selling opportunity.
Was more of like, yeah, we're happy to sharewhat we're doing.
And you were and you were sharing just from asort of BD development to try to build a

(44:41):
relationship with them or you or you where youcould learn from them?
I'm just curious why you invested because, youknow, a lot of founders, which would, like,
avoid corp dev, biz dev folks at bigcorporations, they slow you down.
But Yeah.
Obviously, in this case, it, you know, it itled to something quite interesting.
We didn't know where it was gonna go.
Right?
But, you know, this is sort of the the cultureand the way that we operate at Credit Karma

(45:04):
generally, which was, you know, we we would,you know, have amazing business partners over
the years, and they all start from these typesof conversations.
Right?
Like, you know, whether it was TransUnion orthe various banking institutions that we have,
like, we had really close relationships withthem.
So we didn't know if it was gonna be a businessdevelopment deal, a lead gen partnership deal,

(45:25):
an M and A deal.
Right?
But there are obviously areas where we were allplaying for, you know, whether it's the same
customer or the same industry.
Like, so you don't know how it's gonna develop.
So we were open minded about it.
And, you know, at some point it crosses, like,you know, certain questions like, yeah, we're
not gonna answer, you know, margin questions orour growth rate questions, but we can certainly
give you a perspective of how efficient we areor or, you know, where where we're focused.

(45:51):
So something like four or five months go by,and then out of the blue they give me a call
and say, hey, we've been pouring over the data,and we'd love to make an offer for the
business.
The 2,019?
This is actually about 02/2017, 2000 Okay.

(46:12):
And, you know, so I, you know, like, they threwout a number and it didn't meet my threshold.
And I think Sasan, who's the CEO of Intuit,still talks about the story of day.
So, you know, I told him politely, and he tellsthe stories I told him to go take a hike.
I didn't say that.
I when I politely declined the offer and says,like, this is I just don't think this actually

(46:34):
values Credit Karma in terms of the opportunitythat we're trying to create and the vision that
we're trying to do.
And I appreciate the synergies and actuallythink those are really interesting, but I'm
just not interested.
And I remember, you know, he's like, what?
Not even a counteroffer or rebuttal?
I'm like, no.
You're just not in the right ballpark.
So, anyways, I politely declined the offer, andand, you know, we went about just kinda running

(46:54):
the business.
And it was about eighteen months later thatSasan called me out of the blue, He said, okay.
I've been thinking about this, you know,eighteen months of thinking or, you know,
roughly that time period of thinking.
And he came back with another number, right,which was more in the ZIP code that I was
thinking about.

(47:15):
And that started the ball of the process of ussort of having ongoing conversation.
That led to a little bit more of a negotiation.
And I remember he called me actually, I think,the day before Thanksgiving.
I remember because we were in The Maldives ofall places.
Was having it was my wife and I's tenthanniversary.

(47:36):
We're in The Maldives.
We were flying back, and I remember I havingdinner with her.
I'm like, I need to take this call.
You know?
So I stepped out of dinner, and and he'd sortof, like, got to, you know, sort of the outline
of what he was thinking.
And from Thanksgiving until the New Year, wewere working on the term sheet.
And then from the term sheet, we were workingon the definitive agreement that ultimately was

(48:00):
announced, you know, I think February 24.
So sort of, you know, month worth of term sheetand two months of sort of definitive agreement.
And how did you like, the conversation withyour cofounders, like, you know, how how did
that go?
Because, obviously, you've been in it togetherfor at least a decade at
this point.

(48:20):
That so, yeah, that was '19.
Right?
So we'd been together for twelve, thirteenyears at that point.
You know, I think it goes back to trust rapportculture.
Right?
You know, they'd known me over those years tobe very pragmatic.
You know, we had liquidity events in terms of,you know, secondary opportunities along the

(48:41):
way.
But I think the conversation really was one of,you know, honesty and, you know, sort of
vulnerability, which is like, hey.
I think we're mission aligned.
I think there's an opportunity here, and wecould sort of go on our own.
But if you really thought about we bought a taxcompany, we think you know, let me let me start

(49:03):
with the vision, which is we think having thefull profile of a consumer is the way that we
can help them.
And the thing that we were missing over theyears is we actually had the credit side, so we
had the liabilities of most consumers.
But we actually didn't have the other side ofthe balance sheet.
Right?
We didn't have the income.
We didn't actually have sort of the cash flow.
But if we had those pieces, now we couldactually understand a consumer's financial life

(49:25):
and really help them holistically and reallyunderstand what their needs are, how to help
them save money.
And we had been on a mission to sort of roundout that whole balance sheet for the consumer.
And, you know, here was Intuit at massive scalewho could help us do that.
And that was what I shared with them.
I'm like, we could do this alone, but I don'tknow.
We're three years into our tax business andwe've got like two and a half million members.

(49:49):
It's gonna take us a long time to do this.
And, you know, Intuit has 30 plus, you know,33, 35,000,000 plus tax filers each and every
year.
So, you know, I think the the mission and theopportunity aligned itself, and then, you know,
then it turned into a little bit of the, youknow, sort of the details of the deal.
But I remember what mattered for us was what dowe really care about?

(50:12):
What are our nonnegotiables in the term sheetitself?
You know, as you know, term sheets can getquite long and lengthy and the negotiation
process can take a while.
But I remember we thought about what are thetwo or three things that really matter for us?
What are the nonnegotiables?
And let's see what happens if we can lock downthe nonnegotiables and see if there's a deal
here.
And and anything in the nonnegotiables that youare able to share?

(50:35):
Sure.
Of course.
I mean, I think there were there were reallythree things that ultimately mattered for us.
You know?
I think one was the mission.
Right?
What we were doing.
That that to me was the most important thing.
If that didn't work, if that didn't play outthe way that we wanted it to, we wouldn't do
the deal.
And when I say, you know, mission, I sort ofput mission, agency, autonomy as sort of, like,

(51:00):
all in one one bullet.
And we thought it was really important that wewere able to continue what we're doing.
And, you know, one of the nice things thatactually happened because of that nonnegotiable
is that we were effectively run as a, you know,I'll say, independent company for many years.
And you would you'd still be the CEO and you'dhave

(51:21):
You'd still be the CEO.
The founders.
And I would just report into Sasan.
My C team would continue to report into me.
You know, we would effectively run thebusiness.
I think, you know, and there were some carveouts, right, because we were moving into a
public company.
Know, ethics, compliance, finances, like, hadto have its own path to go and make all of that

(51:42):
work, and we figured those things out.
But that was certainly one.
The second was employees.
Like, I would not do the deal if the employeeswere cut, if if, you know, they weren't treated
right, if if there was anything sort ofnegative associated with the deal.
And the third one was just kind of the standardterms of the pricing.
Like, I already had a bogey in mind and what Ithought about the value.
But those are our three negotiables and or sortof non negotiables.

(52:05):
And, you know, what somebody taught me early onwas like, hey, the momentum of the deal, the
fatigue of the deal, you will start caving inon things if you don't take a moment out to
write what are your nonnegotiables.
What are the three things that when that lineis crossed, you just won't do it?
And it was, I think, really helpful in terms ofthe next, you know, effectively like eight,

(52:26):
nine weeks of nonstop, you know, and paperingof the deal.
And and how did you how did you get comfortablewith the culture?
You know, culture is obviously very importantto you, and and we were talking before the show
just around Scott Cook as just a legend withinSilicon Valley.
He's a a friend of the firm, you know, he'sjust a terrific a terrific guy.

(52:51):
And and Intuit has a, you know, has a greatculture, but it's probably less wacky, I think,
than at least my understanding from the fromthe advertising of the Credit Karma culture.
Yeah.
I think this is also extremely important in anysort of M and A deal.
Right?
I mean, think they've done diligence on us, butfor for for us to do diligence back was really

(53:15):
spending time with their leaders andunderstanding how they operate.
Right?
Is it a, you know, a collaborative culture?
Is it a competitive culture?
Like simple things like that.
Like, we were always very collaborative atCredit Karma, and they are also at Intuit as
well.
But it's actually, you know, keep in mind thatfrom the time of the first engagement with
Anton, I mean, something like three years hadtranspired.

(53:36):
But in those three years, like, I'd gotten toknow more and more of those people.
And then specifically from the time that Sasancalled me the day before Thanksgiving all the
way up to, you know, February when weannounced.
I've been going down there and meeting withthem, meeting with all the various departments,
really trying to understand.
And I got quite comfortable with how theyoperated.

(53:59):
And now, you know, you you you don't exactlyknow.
Right?
And you'll never exactly know in that processbecause it's a little bit of a sales process.
It's a little bit of a, you know, high level.
But the good news is I got a sense of who thepeople were.
I got a sense that they were aligned on themission.
And and I think part of it goes back to, like,you're testing for, hey, you told me this about

(54:20):
how important this was.
When you're five or six meetings later, yousort of have an opportunity.
Like, how do you think about this?
Right?
And you want to have the same answer.
Forth of Volley, back and forth and differentthings.
And and did you because when I was goingthrough the Truly Azela merger, we were both
public companies and we spent a lot of timetogether at similar stuff, but we would it

(54:41):
would be these very awkward, like, we'd have toget the private dining room at some restaurant
and you would you would arrive at 08:00 andwe'd arrive at 08:15 and, like, you know, and
there'd be this sort of, you know, hush-hushdark glasses and kind of like disguises.
I mean, I imagine similar stuff had to go onbecause these you didn't wanna necessarily get

(55:04):
to the the press or the employees.
Yeah.
Well, there was as much of that as we could do.
The good news is we weren't two publiccompanies that would probably would cause more
more attention.
But I I remember, I think about ten days priorto our announcing, the story was leaked to The
Wall Street Journal.

(55:25):
And I remember having that meeting, which was,what do we do?
Right?
I mean Leaked
by a banker, think?
Well, to this day to this day, I still don'tknow.
Don't know who leaked it.
Those are probably good guesses, by the way.
But I remember, you know, we're in sort ofcrisis mode of understanding what's going to
happen, and I remember we saw no comment.

(55:46):
Right?
That was our approach, is like we'll neitherconfirm nor deny this.
As a private company, it didn't really matterto us so much.
But for Intuit, it's public, honey.
That has huge ramifications in terms of how itplayed out.
But the good news is, you know, it didn'treally you know, we got a lot of in downs, but
I think Intuit's history of just no comment onthese things and us also sticking by the no
comment just made it, you know, kind of a anothing issue for a while.

(56:10):
And it's exactly the same thing happened withTrulia and and Zilla, which and in in
retrospect for me as the CEO, it's it wasactually like a little bit of a pressure valve.
Yeah.
Because it's sort of like there'd been all thisinternal tension with the sort of executives,
and you're trying to navigate this very stickyit's a very complicated situation.

(56:33):
And you're kind of at the final line, butyou're actually trying to navigate how do you
communicate this to kind of the constituents.
Yeah.
And and in some ways, was like, okay.
Everyone kind of thought, is this going on?
It doesn't it kind of made sense, but we can'ttalk about it.
But it's sort of like it was the fact weweren't talking about it knew it might was

(56:56):
gonna happen.
And and it sort of helped us sort of soften theblow a little bit or or kind of like help us to
kind of tune the messaging about how employeeswould think about it.
A similar thing.
You're you're totally right.
And I think I misspoke when I said it didn'taffect us because that was where it did affect
us, right, I mean, an employee perspective.
One is it put it out there in the ether that,okay, now it's a thing.

(57:17):
You know, and and, you know, I I think it's oneof those things that you can't ignore forever,
but you can give it a little bit of time.
And for us, that little bit of time was, know,roughly sort of a week to ten days worth of,
okay.
Great.
It's out there.
I have to respond to it, but I'm also at thesame time, like, trying to, you know, get the
papers and making this deal happen.
But to your point, it does kind of float theidea, and you can get a sense of the employee

(57:40):
reaction.
Yeah.
And now you can craft your message, you know,ten days later in the all hands about, great.
Here's what some set of constituents are gonnathink.
Here's what other people are going to think.
And, it kind of helped me understand, okay,here are the things I'm going have to address
and talk about.
As you think back through this process, maybeadvice for founders, different stages of a

(58:05):
startup journey, is there anything that you'ddo differently?
Or similarly, I'm so glad I did that because ithelped to navigate.
And again, you don't start a company to sell acompany, but this stuff's important for all
your different constituents.
Yeah.
Well, I'll tell you a really interestingconstruct that hopefully will never ever happen
again, but it goes back to the moral, which islike sweat the details here.

(58:28):
Right?
So we worked on this deal for, you know,roughly three months, but two months worth of
papering.
And we announced the deal the morning ofFebruary 24.
Mhmm.
This is basically a week Twenty '20.

(58:49):
2020.
Yes.
So this is roughly a week before COVID lockdownhappens.
And The US was getting scared about COVID, andthe Dow futures were down 600 points that
morning before the announcement.
So it's several ominous moment for us, but wedecided like, hey, you know, the deal's we we
signed it early that morning and we're ready toannounce, so we announce.

(59:12):
A week later, we're in lockdown.
Now in our deal, we have to go through DOJ.
Well, most deals require DOJ review, And wethought there was a decent chance that we would
have to have second review, which really meansthat, you know, in in addition to the thirty
days that the DOJ needs, they're gonna ask formore time to look at all the competitive
aspects.
I'm sure you had a version of that.

(59:32):
Right?
But, you know, while all of this is happening,COVID also happens to us.
So we went from I'll give you round numbershere, the approximations.
We went from roughly a $100,000,000 a month inrevenue to something like $40,000,000 a month
in revenue.
We were, you know, instead of making 20 or$30,000,000 worth of revenue, we or netting in

(59:55):
profit, you know, we were like minus 40.
Woah.
So, you know and Yeah.
And we signed agreement.
We signed a definitive agreement.
Right?
And the bottom falls underneath from yourbusiness.
And Intuit is, you know, like, I'm looking atIntuit.
Right?
Like, what are you gonna do?
And my board's looking at me, and they're like,Ken, you you can't think that this deal is

(01:00:19):
going to happen.
You But it's it's the definitive deal issigned.
The definitive deal is signed, but And there's
act of God or sort of like
There's there's two components that you that,like, all the legal counsel that you have
around the table are thinking about, which isfirst, a MAC.
Right?
A material adverse effect or condition.
Right?
Yeah.
And so they say, listen.

(01:00:39):
They could just call that and say, listen.
This is COVID is a MAC.
That's a way out of the deal.
And the other side of it is, like, you have tohave a business continuity.
Like, you have to run the business as you wouldhave always run the business until close.
Right?
So if you spent 50,000,000, $60,000,000 a yeara month in marketing, you have to keep spending
$5,060,000,000 dollars a month in marketing.

(01:01:01):
Right?
Or that would be an out for them.
Right?
So I'm trying to look at these two things.
I'm like, what are they going to do?
How should I run the business?
And then at the same time, you know, ourinvestors are calling us and like, Ken, we
think COVID is a ten year thing.
We think that this is a big gun.
And to their you know, like, to to be fair tothem, like, this is April, May of twenty

(01:01:21):
twenty.
Like, we had no idea.
We had no idea what COVID was going to be.
So I was really stuck with this dilemma of,okay.
What do I do here?
I've got investors who think I should lay offhalf the company and brace and, you know, you
know, not expect the deal to go through.

(01:01:42):
And at the same time, you know, I'm kindatalking around the issue with Sasan.
Like, I'm not never really directly talkingabout, hey.
Are you gonna close this deal?
Right?
Because it's, like, it's a weird it's a weirdconversation.
And I remember just kinda thinking about whatwe need do, and I remember I thought long and
hard about it.
And one of the smart things that investors hadtold me to do early on was like, we should have

(01:02:02):
a rainy day fund.
Right?
And, you know, to the billion $2.03, 4 that wehad raised, we had about half a billion dollars
worth of cash in the bank.
And, you know, we raised it for maybe anacquisition in the future or a rainy day.
And I remember saying, well, we're raisingdollars for a rainy day.
Right?
I'm not sure if they're we're ever gonna have arainier day than this.
So so we made the decision.

(01:02:24):
I made the decision in many ways that we werenot gonna lay off the company.
We would do everything we could to rein in ourexpenses.
We all took pay cuts.
We, you know, sort of any marketing that wasn'tcommitted, we would pull back, and we would
just really tighten the belt as much as wecould.
The DOJ ultimately said, okay.
You know, if you do x y and z, we'll let thisdeal happen.

(01:02:46):
So in December of twenty twenty, we we closedthe deal.
You know, credit as
an industry and these big ticket items are it'ssort it hasn't changed that much in decades.
And then, you know, as you look forward overthe next few years, like, how will how will
those how will this industry change?

(01:03:07):
Or do you think it's just going to stay thesame?
No.
I think I think there is a I I think we're inthat moment now.
You know?
I think in the next five years, thetransformation of of how a consumer's
relationship with money will be redefined viaAI.
And what I mean by that is, you know, rightnow, the model is if you're at the top, you

(01:03:29):
know, let's say, one to 3% of incomes, you havea personal banker, you have a c CFA, CPA, you
name it, who can help you advise on your money.
And the model a day works roughly because yougenerate enough revenue for the banker,
whomever, to pay that particular person to giveyou individual advice.
And I think that day is coming now where AI canactually do that for the masses.

(01:03:52):
So even when you're helping just generate, youknow, pennies worth of incremental revenue,
that will be enough to have the AI componentsmanage and give you personalized advice.
And I should note, like, that professionalthat, you know, people have had historically
that have made mistakes.
Right?
Like, you know, your financial planner is notinfallible.

(01:04:13):
And I think in many ways, that opportunity withtechnology is going to change the way that we
have interactions with money.
I think that's the first piece.
So the advice, sort of the pathing, theplanning that we have will be fundamentally
better.
But I think the second wave of that is now thethings that we are too lazy to do even though

(01:04:33):
we should do them will also happenautomatically.
Right?
So, you know, bill pay is a very simpleexample, but I'll just use it because it's like
we know we should pill it, but sometimes wedon't have the funds or the means to do it.
But most of the time or many of the times orsome of the times, depending on where you are,
you're just kinda lazy.
Right?
And all of these things get automated.
Right?
And I I think the world moves to a place wherethe mundane and knowing what you should do is

(01:04:58):
very clear.
Now it's a function of do you have the selfcontrol to do it?
Do you have the desire to do x, y, and z?
And where do you ultimately wanna be?
But I think that's transformative because Ithink for a long time there was a lot of
confusion in what finances are and what youshould do as a consumer.
And the tedium of, you know, these little smalltasks of paying bills on time, doing these like

(01:05:21):
sort of, you know, refinancing your loan,they're they're kind of painful.
Right?
Like, I don't wanna refinance my mortgage tosave $50.
But if it's
Automated and AI and agent.
Like, hey.
I'll do all of it for you.
Of course, I would do that.
Right?
And I think that will, in the next five years,will change the the way that we think about our
relationship with money and advisers.

(01:05:43):
Yeah.
That's yeah.
The the the top one percentage, you say, haveaccess to these people that will recommend
these changes, and that's that's gonna beavailable to, you know, a large portion.
Yeah.
I wanna say all.
Right?
Because it's unclear whether the data and sortof the infrastructure supports that today, but
it will change the percentage for sure.
Yeah.

(01:06:03):
I know I know friends that have updated theirthey've uploaded their bank statements and
their tax forms to ChatGPT.
And they've and they've I've not seen theoutputs, but, like, they said, oh, I got a
bunch of pointers that were kind of superuseful.
Yeah.
I'm not I'm not recommending people kind ofupload their stuff there, but it's but it's,

(01:06:24):
you know, fairly basic stuff can be prettyintuitive.
You just think you you roll it forward a fewyears.
Yeah.
It still makes very interesting.
It still makes some mistakes to your point, andand, you know, you have to be careful about it.
But I think, by and large, advice is actuallyvery good and sound for a vast majority of
consumers.
And I think, again, that's the beginning.
Now I think some of it is you still have totake a lot of action.

(01:06:45):
Right?
Like, You you gave me six steps and sixpointers.
I may not wanna do those.
And I think when you can have those six pointsor steps done for you, I think that becomes
really fundamentally significant.
Yeah.
And so what's next for Ken Lynn?
Are you you're out of an operating role?
What are you thinking about next or notthinking about next?

(01:07:05):
Well, my my goal is just to do nothing for thenext, you know, nine to twelve months.
Think giving it's been a seventeen year run forme giving a little bit of space.
I have young kids that I'm dying to spend timewith, and, you know, there are a lot of things
you give up or are willing to trade off whenyou're operating.
And I wanna make no more trade offs and reallyfocus on the things that I enjoy doing, and

(01:07:30):
then we'll see.
But what's clear for me is what I wanna do forthe next, you know, nine ish months.
Awesome.
Well, you well deserved.
Thank you.
Well, thanks for joining us today.
It's been a terrific conversation.
Oh, my pleasure.
This is fun.
Thank you.