Mike Cagney, Co-Founder & CEO of SoFi

Mike Cagney, Co-Founder & CEO of SoFi

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In many ways SoFi has become the leading company in all of fintech at least in this country. They raised $1 billion in Q3 of 2015, the largest equity round ever in our industry by a considerable margin. Since then they have continued to add new products, break records and execute flawlessly.

The architect of this growth is Mike Cagney, the CEO and co-founder of SoFi, who is the guest on this episode of the Lend Academy podcast. I love talking with Mike because I always learn something and come away inspired. That was certainly the case in this episode.

In this podcast you will learn:

  • How Mike explains what SoFi does today.
  • The part of the business that Mike is most excited about.
  • Where they are at in their student loan business today.
  • Why their unsecured consumer loan product is very different to others in the market.
  • The killer product they have in the real estate market.
  • How SoFi views their wealth management product.
  • Why they decided to move into life insurance.
  • How Mike feels about the Superbowl ad they did in 2016.
  • How they have been raising money recently.
  • What is it about SoFi that makes their securitizations so successful.
  • How they would handle a shutdown in the securitization market.
  • Where SoFi is focusing their resources when it comes to tech.
  • What SoFi customers have in common.
  • The international plans for SoFi and their expansion to Australia.
  • The future vision for SoFi and their place in financial services.

Just a footnote to this episode. It was recorded in late January before SoFi made the announcement that they were acquiring Zenbanx which is obviously a key part of their ambition to offer bank-like services such as deposits and credit cards.

Please read a transcription of our conversation below.


Welcome to the Lend Academy Podcast. Episode No. 89. This is your host, Peter Renton, Founder of Lend Academy.


Peter Renton: We have a special guest for you on today’s show. I’m delighted to welcome back, Mike Cagney. He is the CEO and Co-Founder of SoFi so if you’ve had anything to do with the fintech sector over the last five years, you will have heard of SoFi. They are the most prominent company in this space, they have been executing flawlessly pretty much from day one.

On today’s interview, we cover all kinds of territory, we go into all of the different verticals that they now offer. We talk about the Super Bowl ad, we talk about securitization in some depth and discuss what they’re doing with technology and we also touch on the coming SoFi bank account and credit card. It was a fascinating interview. Mike is one of the most interesting guys in this space. I hope you enjoy the show!

Welcome back to the podcast, Mike.

Mike Cagney: Thanks for having me.

Peter: Okay, so it’s been a while since we’ve had you on here and SoFi has changed a lot in the last couple of years. So what do you say to people now, how do you explain SoFi to people who have never heard of you?

Mike: Sure, I think SoFi obviously is best known for innovating the student refinancing product and that’s still a core component of what we do today, but, obviously, we’ve built on top of that with personal loans, mortgages, wealth, insurance, asset management. Effectively what we are is a different kind of financial services firm. We’re one that embraces the idea of beyond a product, it’s really around the concept of money/career relationships and that’s what we’re trying to deliver into our member base.

On the money side, both products that help them be successful and help them feel empowered in terms of controlling their financial destiny.

On the career side, everything we can do to help them be upwardly mobile and make the most of their education and the most of their opportunities.

On the relationship side, really creating a SoFi community that these folks have the ability to interact, to support one another, whether it’s through the entrepreneurial program or other similar endeavors. Obviously, we’re somewhat famously known for our dating events (Peter laughs), but really rounding the whole thing around money/career relationships is a new kind of financial offering.

Peter: Okay, so then what part…given that there’s a lot of different components there, I mean, what part are you most excited about?

Mike: Yeah, I think what I’m most excited about right now is I feel like our lending business is getting to a point of maturity. It’s obviously still growing at a relatively good clip across all the products, but in terms of the business itself, it’s been significantly de-risked both on the customer acquisition and the capital market side.

So now we’re really focusing on the other side of the balance sheet and what I’m most excited about is kind of the direction we have for 2017 in terms of being able to provide a deposit account, a credit card into our member base and kind of rounding out that holistic offering. And I think that’s key because it’s synergistic to so many of the other things that we do. If you look at an initiative we have like SoFi at Work where we’re going in and currently helping employers pay down their employees’ student loan balances.

Our ability to bring a more robust solution where they can actually help their employees better manage their financial lives is really exciting and so getting those kind of solutions in place is what I’m most optimistic about over the next 12 months.

Peter: Okay, well I want to talk about all that stuff in a little bit, but firstly, I just want to delve into the different verticals that you’ve got there. Let’s just start at the beginning with student lending, I mean, you invented the student loan refinancing segment. As you say, it’s a more mature business now. How are you growing that now considering you’re at a fairly large volume already.

Mike: Yeah, you know, it’s an interesting market. I think we’ve always felt that the immediate addressable refinancing market was in the $200/300 billion range and I don’t think we’ve backed off of that number. You know every month we have a record month in student loan origination and it’s growing at a rate of effectively doubling year over year and we’ve been doing that without compromising credit quality, without compromising our margins in the business.

There’s just a lot of opportunity out there to give people a better product and so, effectively, the business is growing at a good clip. We don’t see it slowing down in terms of that doubling potential; the credit quality has stayed very consistent so I think we’ve done probably in the neighborhood of about 130,000 student loans refis as of this point. I think we’re in around 30 defaults or right in that neighborhood of which, you know, a large portion of that are people that have died.

So I don’t think anyone’s gone to market with an unsecured consumer credit book of that kind of size or that kind of performance. So we’re enthusiastic about it and it continues to grow. I’d say in terms of looking at where we are relative to other players in the market, I think Citizens is the second largest refinancer out there and we’ve continued to maintain our advantage over them in terms of production and probably have actually increased it over the last six months.

Peter: Right, right, okay so then can I just talk about then about the unsecured consumer lending because that’s something you went into a little after you’ve been established in student loans. Is this a product that has primarily been focused on your student loan base or is this really…you’re trying to compete with Lending Club and Prosper…where are you at with the unsecured consumer?

Mike: Yeah, so to me it’s a fascinating market, I think it’s a fascinating market on a whole set of dimensions. First off, we’re really not going after the Prosper or Lending Club customer in the sense that our borrowers seem to be more on the prime scale or super prime scale. If you look at use the proceeds about half of the use of proceeds for our personal loan business are related to home improvement. And so what we’re really doing is we’re taking a big portion of the market that used to have home equity and as that product has become harder and harder to get and the banks have withdrawn from that, we’ve had an opportunity to come in behind that and pick up that slack.

So that’s a big portion of what we do and it’s relatively differentiated, but I think one of the things that everyone needs to be sober about in this market is when we talk about the addressable opportunity in the $300 to $400 billion range, and that’s probably right, but if you look at someone like a Discover who just did their earnings announcement, they did $4 billion of personal loan production in 2016; that’s not a huge number.

And so this is a market that I think we’re still figuring out what is the right way to elicit borrower demand, deliver this product to consumers in a way that they want and it’s not the current channel, it’s not the loan broker direct mail channel, it’s not the debt consolidation product. I think there are other ways to acquire customers, whether it’s point of sale or under specific purpose loans and there’s other purposes for the loan. It might be a practice loan for a doctor or a dentist or a Bar loan for a lawyer or private school loans or a whole host of things that I think are relatively untapped in terms of market opportunity and that’s really where the growth in that segment is going to come from over the next one to two years.

What I think is most interesting if you look at the borrower base…our personal loan borrower tends to be a little bit older than our student loan refi borrower, the credit metrics are roughly consistent, the salaries are both high, but I’d say personal loan probably runs around 140k to 150k on a median basis whereas our student loan book is probably around 175k.

But what’s most interesting is, you know, we get about a third of our mortgage through existing members and most of that comes out of personal loan borrowers so we get more cross sell out of personal loan…I’m not allowed to use the word cross sell anymore (Peter laughs)…we get more cross buy…

Peter: No one uses that anymore.

Mike: Cross buy, which means it’s under your own volition.

Peter: Right.

Mike: More cross buy out of the personal loan product than we do out of the student loan refi product.

Peter: Interesting. So you’re basically…I can see how the personal loan product is in some ways…I mean, it’s lead gen as well as actually a product for you.

Mike: That’s right, I mean, in terms of total economic value, it’s an extremely valuable channel. We do about as much personal lending right now, unsecured personal as we do student loan refi. You know, on any given month, they are kind of neck and neck with each other, but it’s been growing faster and so it will easily outpace our student loan book in 2017.

Peter: Okay, wow, that’s fascinating. And then we move on to real estate, which you’ve been making some waves in. I just saw you recently expanded into New York, I mean, it sounds like you’re doing 30-year fixed, you’re doing seven year ARMs or whatever. Tell us about how the real estate has been going and where you’re at with that.

Mike: Yeah, I think the real killer product that we have on the real estate side is the 10% down, non-conforming loans. So, basically, jumbo loan balance, 10% down into a prime borrower. You know, obviously, not a crisis type loan in the sense that it’s owner-occupied, it’s someone with a clean credit history, it’s not someone who’s basically flipping the house. And what we’ve been able to do is really open up the opportunity of home ownership into a broad swath of the consumer base that might have been locked out of it historically. And this has been extremely powerful for us because if you’re a student loan refi customer, for example, and you pay your loan down, the next thing you want to do is buy a house. You just paid a loan down, you’re not flush with assets.

As you know, our members are called HENRYS, which is that acronym High Earner, Not Rich Yet. The “Not Rich Yet” part means that being able to do 10% down in a major metropolitan area like San Francisco or New York is a huge advantage and that’s been a significant differentiator for us. It’s been extremely well received by the capital markets. You know, we have a very deep buying universe of insurance companies and asset managers who buy that product as fast as we can originate it.

And the New York City expansion was huge for us because there’s a tremendous customer base or member base there that can benefit from this solution. You know it’s indicative, as you know, we hold community events 2-3 times a week across the US so we opened up a mortgage event in New York where basically we’re guiding the people in terms of what to think about in terms of a first time home buyer. The event sold out in I think minutes and we set up a second event behind it which also sold out. I think we have a waiting list now of about 300 people trying to get into the next event.

And it’s one of the constant misperceptions about this millennial customer base, the view is millennials don’t want to buy homes; the reality is they absolutely want to buy homes, they just don’t have financing options that fit where they are and this is around the whole concept of product fit and it’s one of the big advantages that we have in market that we think we deliver the kind of solutions people want. That’s what’s given us a big leg up in terms of the banks and how we compete.

Peter: So how big of a loan will you go, what’s the max loan size?

Mike: So $3 million is the max loan size, but we’ve done exceptions and we’ll do exceptions on a case by case basis, but in general, $3 million is what we cap at.

Peter: So if you want to buy a $2 million apartment in Manhattan and you’ve got a $200,000 down then you can go and apply for a loan on SoFi.

Mike: Absolutely, you can go on your phone and in two minutes you’ll know exactly what your rate is going to be from us and then we make the process as seamless and painless as possible buying that.

Peter: Okay, so let’s switch now to wealth management which is something I think you launched in 2016 which I guess is a little bit surprising from my perspective but I want you to talk about. Is this again…what was the word you used, not cross sell, but another opportunity to provide new services to your customers. You said you wanted to go over to the other side of the balance sheet. So what are your plans there and tell us what you’ve been doing?

Mike: Sure, you know, so we started with wealth management with a very basic, goal-based allocation module and we turned it on for our existing members. We didn’t market it, we didn’t advertise it and it actually got pretty good uptick and then we turned it on for outside folks as well, but again, no marketing, no nothing behind it. We have a decent number of wealth management customers today that use that product, but really it’s a beachhead for us to think about what we’re going to build in that vertical.

We recently hired John Gardner, he’s one of the Co-Founders of LearnVest over to build our advisory portion of our business. We’re building out an asset management function in our business which will be very synergistic into the wealth channel, but at the end of the day, we want to be able to provide a solution that helps our members go from paying down their debt to accumulating their assets.

We think there’s a lot of different ways to do this and the wealth product is really a first toehold into that to really see how people interact with us with money. It’s been very encouraging, the response has been very strong with no advertising, but a sizable customer base and it’s a good launch point for us as we think about how to better expand into that vertical.

Peter: Right, so then life insurance was your next step. Why did you do life insurance?

Mike: So there’s a couple of aspects to this. One is we want to be everything to our members and we want to be able to provide them a quality solution, a contextual solution so being able to know when they need the solutions and be smart about delivering that into our member base and do it in a transparent, fast, easy, efficient way.

I think one of the most misunderstood products out there is insurance. For example, honestly, I’m relatively well versed in financial services and it wasn’t until recently I understood the difference between whole life and term life as a policy. And so, you know, it’s an interesting solution, but here is the thing about insurance that I think SoFi has this huge advantage in going to market on.

The first is, we have a very unique customer and if you look at the death rate of our customers versus the actuarial tables…so we have I think 230,000 members today so we should have had something like 600 or 700 deaths in the portfolio and we’ve had 30. As much as I like to promote that it’s because the loans are helping everyone live longer, I think there is really a characteristic of our member base that doesn’t behave like the median population and I think there’s value to that in terms of insurance.

I think the other aspects that are interesting to us are we have this whole community and the ability to effectively create common pools of deductibles, sort of a mutual concept where 100 people can band together, have a common deductible and have transparency in to each individual’s behavior really addresses adverse selection and moral hazard which is the crux of the insurance industry so I think there is a huge opportunity to leverage that.

And then finally, we know so much about our members that we have the ability to be purely contextual for them in terms of when they should be thinking about insurance. So you bought a home, you need homeowners’; you had a kid, you need life. Rather than just pushing out spam, for lack of a better word about the insurance product, we can deliver solutions that are timely and relevant. This is what we do across products, this is why we run such high funnel conversion in the market in that we’ve gotten good at reaching out to people when it’s relevant and this is a situation with insurance that we think we know enough to be smart in terms of when to engage our members and do it in a way that’s high value to them.

Peter: Right, that’s fascinating, fascinating. Anyway, I want to switch gears a little bit. We’re recording this ten days before the Super Bowl. Last year you had a Super Bowl ad, I want to ask you, do you think that was money well spent, how do you feel about the Super Bowl ad now?

MIke: It wouldn’t be an interview if you didn’t ask me how I felt about the Super Bowl ad. (Peter laughs) So I think a couple of dynamics on that and I say a couple of dynamics on almost everything you ask me because they’re such good questions that I have to go to multiple levels to respond.

So the Super Bowl ad, obviously, it wasn’t well received critically, but it blew the top of the funnel up and we had so much loan demand come through from that ad, it was incredible. So if you look at it in the context of did it drive volume? Absolutely, it did. You know, I think that as a company we were young, we were thinking about our identity, our brand and we probably evolved a little bit since then and we’d probably run a different ad today than we ran then, but in terms of what we intended to do it accomplished 100% of what we intended it to do.

I think that the challenge was, as you recall a year ago, the capital markets were nowhere near as friendly as they are today. There were some challenges and stress to the business and we came to the conclusion, look…our business is one where, because of the nature of how we sell loans and the nature of our reliance on wholesale capital markets, we’re better served with shorter tenure marketing decisions, not long-tail decisions. And we just felt we have so much demand for the product today, it wasn’t necessary to do that kind of brand outlay again.

So I’d say it absolutely accomplished what we wanted it to do, but we’ve just gotten to a point today where we don’t think we need that brand outreach for hitting our goals and metrics.

Peter: Right, so you’re not going to be like Budweiser and do a Super Bowl ad every year.

Mike: Not yet.

Peter: (laughs) Okay, so then I want to talk about raising money. It seems like every time I talk to you, you’re in the middle of a road show raising money of some kind, either on the debt or equity side…can you share anything about…there’s been lots of rumors out there about your new equity round and obviously you’re always raising money on the debt side. What can you tell us about your fundraising activities today?

Mike: Yeah, I think everybody in our space should constantly be raising money. I think that the one thing that’s come out of 2016 is that being in the lending space is capital intensive. And, you know, the idea of this being balance sheet light has gone by the wayside and so we always…if you’re expanding your business, if you’re growing your business, you’re always going to be raising money and whether you’re doing that in the private market or you’re doing that in the public market via IPO, you know, there’s different ways to do it or you’re doing it through debt financing, but you’re always going to be raising money as you grow the business.

And so I think it’s been reported that we’ve been out in the market on the equity side. I think we’re basically at closure on that now and very content about the outcome there, more of that will come out in the next few weeks.

On the debt side, we’ve got about a hundred counter parties that we have direct relationships with now that we manage and the deals we’ve done have been significantly well subscribed. I’d say the last several securitizations have been between three and seven times over subscribed; buyers from Asia, Europe, US and we continue to build and broaden that buyer base.

You know what we’ve been very focused on recently is permanent capital where we have buyers who are coming in buying $100 million a month for 10 months or 12 months and committing into that. That gives us a lot more predictability in the business and allows us to withstand a lot of the market volatility that’s inherent in our business.

Peter: So I want to talk about securitization for a second. What is it about SoFi that has caused you to succeed so well in this market because clearly, as you said your deals are over subscribed and there’s been a lot of…people look to SoFi as a standard bearer certainly in our space and even throughout the entire securitization industry now, why has the market responded so positively to your deals?

Mike: Yeah, I think we’ve actually become a top 5 ABS issuer and we continue to grow that market as well. I think there’s a few components to this.

One is that I think having come from the securitization market, as both an originator and a buyer, we had a good appreciation for the right balance to strike for investors and for the company. And so things like doing risk retention before it was mandated or required…where having that alignment went a long way to encourage participation in the deals. You know, working very proactively with the rating agencies and getting to triple A faster than we originally said we could even get a rated transaction done. This year we should add a second major triple A to the deals and start doing public transactions which is a whole other dimension, you know, I think facilitating liquidity for the trades.

Today, any unsecured consumer print, half those prints in the market are SoFi paper and then just delivering consistency and quality and providing education and context. I can’t tell you…part of why I’m always on the road is I’m meeting people, telling them the SoFi story and giving them visibility into our thought process and getting them really comfortable with the credit. What’s very specific about SoFi is we bring deals in size, but they’re the same deal; the credit quality isn’t changed from deal to deal, the characteristics don’t change from deal to deal so you participate in one transaction, you can participate in ten and that’s served us very, very well.

Obviously, the performance has been stellar, the returns have been very, very strong to the buyers and so at the end of the day, the best way to attract money is make people money. (Peter laughs) And we’ve done a good job on that so far on the securities side.

Peter: So then what about…as we all know from the financial crisis and even since then sometimes these markets seize up and they don’t just slow down, they completely seize up, what will you do if and when the securitization market shuts down?

Mike: Yeah, so it will shut down, it always does and effectively, the way that we approach this is we have a balance sheet. So today we have a billion-four of equity; that’s obviously going to go up in the most recent raise and we have $4.5 billion of warehouse capacity so almost $6 billion of lending at the corp level. If you take that $6 billion of lending, you take the fact that we have permanent capital partners who are committed to buy under any market circumstance and then you take into account the ability that we change pricing all the time to reflect the market.

You know, I always laugh when Bloomberg reports that Lending Club or Prosper changed their rates because we change our rates whenever we need to (laughs) so it’s never a news event because we run a real marketplace where we’re trying to target a particular margin and if we make more, we lower rates; if we make less, we raise rates. But we’re in a situation where we feel that we can withstand a 12-month total shutdown in wholesale capital markets and still originate loans and the way that we gate ourselves….

We’re not gated by capital per se in the sense that, you know, with over subscriptions in securitizations obviously, we could bring bigger deals and place them in the market. We’re gated where we want to be able to go 12 months if the markets shut down so we do a little over a billion a month in originations today and that’s specifically geared towards being able to….if the markets shut down and we do these adjustments, we can go 12 months without hitting the market and not interrupt our business operations. As we get more balance sheet capital, as we get more permanent capital to take out, we can increase the amount of monthly production that we do, but that’s effectively how we think about the business.

Peter: That should be long enough, I would expect. So let’s talk about tech, you talk about doing a $2 million application on your phone, where are you focused? Are you focused on mobile, are you doing AI, blockchain, I mean, where are you focused in the tech side of the business?

Mike: So we’re doing a bunch of stuff. I think the piece that people don’t see where we’ve made a lot of investment in technology and has paid huge dividends to us is on our loan operations infrastructure and our ability to manage our pipe and get our operations people to the most likely to close transaction and facilitate that is huge; it’s been a big advantage.

If you look at loans processed per employee, I think we’re way ahead of the pack, no matter what vertical you look at, whether it’s personal lending or small business lending or any of the others and so there’s been a big tech investment there, historically.

Where we’re going now is on a couple of fronts. We have a big mobile initiative going on, a lot of that incorporates a biometric identification, things that we’re thinking about in terms of both application and ongoing management of your account via mobile and we’re thinking about mobile in the context of rich contextual outreach, geolocation outreach. Things that…again, we can just provide more and more personalization to you through that device and then we’re doing some stuff on some of the cutting edge tech.

We’ve got a project now exploring the viability of taking public records out of the file system and on to either Bitcoin or Ethereum but one of the two blockchain platforms. We think there is huge application for that kind of technology for that purpose and it serves us well in our lending business and so we’ve got some initiatives going along those lines as well.

Peter: Fascinating, I’d love to dig into that, but I want to get to this other topic because we’re running out of time. There was an article recently, you just mentioned it at the beginning of this interview that you want to introduce a bank account and a credit or debit card this year, what can you tell us about how you’re going to execute on that promise?

Mike: Yeah, so I can’t tell you much yet since it’s not fully baked other than we have a very good idea of how we execute and we’ll have a deposit account and credit card out in 2017.

Peter: Okay, okay, we’ll have to leave it there then. So I want to talk about your social gatherings, you’ve talked about the dating that seems to have gotten you a lot of good PR, but given that you’ve got student lending, consumer, real estate, I mean, you’ve got a whole range of different kinds of offerings now, do you have separate meet-ups for those separate offerings? I mean or do you sort of bring everybody under the one SoFi umbrella? What do SoFi customers have in common?

Mike: So it’s a great question. Obviously, we have members who are as young as 19, as old as 90 and across the board in terms of region and occupation and interests so what we do is very specific. I talked about the events we’re having in New York for first time homebuyers and it’s very specific to a product and specific to a particular demographic that falls into that. Some of them are much more open in terms of networking and engagement.

And so what we found is that the common thesis that SoFi members share and why there’s a SoFi community is they tend to be people who are ambitious, who want more in life and who really relish the opportunity to engage with other folks and like minded people to talk about what they’re doing, both in the context of pure validation, but also in the context of opportunity.

And so what’s really cool is about 10% of our member base so out of the 230,000 now let’s call it 23,000 have gone to SoFi offline events and we’re trying to build that up to 15% this year. I don’t think any financial institution has ever had that kind of engagement with a community that we have and it’s something we’re going to continue to build on.

Peter: Yeah, yeah, forsure. I don’t think you get 10% of Chase customers going to a social event.

So I was down in Australia in November, that’s where I’m from, and people were talking to me about SoFi down there and then I’ve read a bit of news that you are planning…it looks like you’re planning on opening up an Australian office, what can you tell us about your international plans?

Mike: Sure, so Australia will be the first place we go outside of the US. You know, it’s a market predominantly dominated by the big four banks, it’s in I think desperate need for good cutting edge technology, particularly on the mortgage side, but it also is ripe for product innovation on the mortgage side. For example, you well know, as an Australian, there’s no 30-year mortgage product in Australia today.

Peter: Right.

Mike: And so I think there’s both customer appetite and investor appetite for some product innovation in the Australia rates and the credit market. You know, we’re excited about the opportunity to get there so first half of this year expect us to be live and doing loans in Australia.

Peter: So you’re focusing on real estate then as your first product?

Mike: Yeah, it’s a core part of the offering and we’re also looking at wealth, we’re looking at personal loans, but real estate is really kind of a tip of the spear for us over there.

Peter: Right, I think you’ll do well. I think the four big banks in Australia are extremely profitable and I don’t think they have seen anyone with the likes of SoFi come down there so I think that will be very interesting for me personally to see how that plays out.

So I want to talk about the vision you have because I feel like…I’m always fascinated when I talk with you because you have these big plans, but you’re also executing and I feel like you’re driving fast, you’re coming out with new products all the time, so what is the big vision for SoFi? I mean, in 25 years time, how would you like SoFi to be considered? Is this the 21st century version of Chase or Citi or is it something different?

Mike: Yeah, it’s a great question. I think, fundamentally, the way we look at our opportunity is if you look at banks today in the US, they are valued out somewhere between $10,000 and $100,000 a customer, not an account because a customer can have multiple accounts. Hopefully, multiple accounts that they themselves open, but multiple accounts (Peter laughs).

So a regional bank is going to worth $10,000 a customer, someone like First Republic; that’s more of a private bank, $100,000 a customer. We have 230,000 customers today; we’re going to have 500,000 at the end of this year, we’ll have 2 million in a couple of years after that which will include non-US customers. And we don’t think it’s unrealistic that we could have a product set and be efficient enough in cross buy that we could be worth something in the middle, call it $50,000 a customer. So that’s effectively how you build a $100 billion platform; 2 million customers, $50,000 a customer which translates to north of $100,000 in revenue per relationship that you have.

And so everything that we’re doing in terms of expanding the product set, expanding the geography and the footprint, continuing to solidify the channels through things like our community development, all this is geared towards building the next generation financial services platform for the next generation market. It’s not that we preclude anyone who is not a HENRY or not a 25 to 45-year old demographic; we love everybody and everyone’s a great member, but that segment in particular is just misunderstood and somewhat ignored by traditional financial players.

We think there is a tremendous opportunity for us to execute and it’s not specific to the US, it’s everywhere. There’s HENRYs in China, there’s HENRYs in India, there’s HENRYs in the Middle East, there’s HENRYs in Europe, in Australia obviously. And so we’re just very excited about the opportunity that’s in front of us and what we really ought to do is make sure that we don’t run too fast and get too far ahead of ourselves in terms of the business and execution, but there’s a lot to be done and a lot of green field to do it in.

Peter: Okay, we’ll have to leave it there but I really appreciate you coming on the show today, Mike, it’s always great to chat with you.

Mike: Great, thanks for having me.

Peter: See you.

I just want to go back and revisit that point that Mike just made about this 25 to 45-year old demographic. Obviously, at SoFi you have to have a high income, but you’d think that these would be the customers that banks would just be falling over themselves to try and get, but that has not been the case. SoFi has been able to come in and build a pretty sizable business in a short amount of time. This is something that I think if the banks were serving this customer base well, SoFi would have had a lot harder time. In fact, a lot of the companies in this industry would have had a harder time.

So I feel like what SoFi has done, they’ve sort of recognized a segment that should be getting fantastic service from traditional financial institutions and weren’t and they’ve gone and developed it. As you can see, they are off to the races, they’ve already built a successful business and I wouldn’t be putting any limits on where they can go in the future.

Anyway, before I sign off, I would like to remind everybody about LendIt USA coming up March 6th and 7th, LendIt.com, if you have not registered, please go do so today. It’s coming up really fast and I would love to see all of the Lend Academy podcast listeners there.

Anyway, on that note I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.