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In this episode, I’m joined by Tim Newell, CEO and founder of GreenFi, a climate-focused fintech that emerged from the ashes of Aspiration’s consumer banking business. Tim brings a fascinating fintech and climate tech pedigree, having previously sold a solar financing company to SolarCity, run financial products at both SolarCity and Tesla, and even survived five years working for Elon Musk. When Aspiration decided to pivot away from consumer banking to focus on global carbon markets in 2022, Tim saw an opportunity to acquire and restructure their consumer business. Through a complex licensing deal, he successfully transitioned over 98% of Aspiration’s customers to his new platform while radically downsizing from 400 employees to just 40.
GreenFi targets the 100 million Americans who cite climate as a significant worry, about 40% of U.S. adults, offering them banking products that guarantee their deposits won’t support fossil fuels, automatically offset carbon from gas purchases, and enable tree planting through everyday transactions. We dive into how Tim thinks about the intersection of fintech and climate action, the challenges of building a sustainable business model in today’s capital environment, and his ambitious vision to become “Patagonia for your bank account.”
In this podcast you will learn:
- Tim’s deep background in financial technology and climate tech.
- What was involved in Aspiration’s pivot away from consumer fintech to the carbon markets.
- How Tim was able to spin out the consumer fintech business from Aspiration.
- How GreenFi grew out of that business.
- The product set for GreenFi and near term product roadmap.
- The huge percentage of deposits that moved over from Aspiration to GreenFi.
- The specific ways they are making their financial offerings carbon-friendly.
- Who makes up their target market.
- How the swing in Washington against climate initiatives is impacting GreenFi.
- How they restructured the business to a radically different cost base.
- How they are offsetting their own carbon footprint.
- The process for raising their $17 million seed round.
- Their different revenue streams.
- The scale that GreenFi is at today.
- Tim’s vision for GreenFi.
Read a transcription of our conversation below.
FINTECH ONE-ON-ONE PODCAST NO. 540 – TIM NEWELL
Tim Newell: Over last 10 years, the worries about the climate, concern about the climate, has been growing steadily among the American population. And now there are about 100 million people, about 40% of the adults in the US, who would cite climate as one of their significant worries and something that they feel like that they would like to take action on. And so, at its largest level, those 100 million climate-conscious consumers are our target market.
Peter Renton: This is the Fintech One-on-One Podcast, the show for fintech enthusiasts looking to better understand the leaders shaping fintech and banking today. My name is Peter Renton, and since 2013, I’ve been conducting in-depth interviews with fintech founders and banking executives. Today, I am delighted to welcome Tim Newell, the CEO and Founder of GreenFi. Now, if you’ve not heard of GreenFi, that’s understandable. It’s a new brand that was spun out of Aspiration, a brand that many listeners will know. Tim details the successful transition of Aspiration’s consumer banking business into GreenFi, what pieces came with this transition, and how he was able to restructure the company. We learn a little bit about the history of Aspiration, but more importantly, we talk about what differentiates GreenFi and why Tim thinks the opportunity is huge today for a climate-friendly fintech. Now, let’s get on with the show.
Welcome to the podcast, Tim.
TN: Thank you very much, Peter. I’m very happy to be here.
PR: My pleasure. So, let’s get started by giving the listeners a little bit of background about yourself. Checking out your LinkedIn, man, you’ve got a varied background working at some really interesting companies. Why don’t you give us some of the highlights of your career to date?
TN: Sure, I’ll give you the highlights. So, I’ve been in and around financial technology for a long time. And, you saying I have a varied career is really kind of a nice way of saying, gee, Jim, you’re pretty old. Having said that, I have been either starting, running, or investing in technology companies, and primarily over the years, financial and climate technology companies, for the last 25 years. And, GreenFi, the company that I’m running now is the, fourth company that I have either been founding investor, founding management team for. And I sold a company, Common Assets to, to SolarCity some years ago. And that was a company that allowed individual investors to participate in financing residential solar, just at the time that residential solar was really taking off.
PR: Yep.
TN: And I ran the financial products team at SolarCity, helping to build the technology that would let consumers easily buy solar systems for their homes. And when SolarCity was acquired by Tesla, I moved over to Tesla and I ran the financial products team for Tesla and did essentially the same thing, really focused on building the technology platforms that would allow customers to easily buy cars online, which is something that really hadn’t happened that much before. And took a lot of work to try and make it work well. And, after I left Tesla, after working for Elon Musk for the better part of five years or so…
PR: You need a medal for that.
TN: I needed a little break. And I was advising some really interesting companies and working with them and was asked to come in and take a look at Aspiration Partners. And I’d known the chairman at Aspiration for some time. He asked me to take a look at it. And it was an interesting time for Aspiration. Because they had gotten their start as a company focused on banking for consumers, but trying to build a banking business that aligned with the values of the consumers, and had poured a lot of money into building that and growing it and had built some brand recognition around it. But they were in the midst of pivoting to try to focus on global carbon markets.
PR: Right.
TN: And were frankly struggling with what to do with the consumer business. And that’s when I came on board.
PR: I remember reading about that at the time back, I think it was like 2022 or so, when Aspiration decided to give up on consumer banking and go onto the carbon markets. It’s not a logical pivot. I don’t know if you were part of the decision to do that pivot, but I believe you were at the company. What can you tell us about that change?
TN: Yeah. So can tell you about it as an observer, but not a decision maker.
PR: Right.
TN: Best way to put it, Peter is that it makes a little more sense if you think about the background, which is that Aspiration had been involved in tree planting for a long time as part of the consumer business. Cause that was part of the sort of fundamental value, green value for the consumers of that. And as they became more and more engaged in tree planting to support that, they first looked at how can they vertically integrate, but then as they thought that through, they became more and more interested in the business of investing in carbon projects around the world, like tree planting. And, that’s a very different business. It’s managing, investing in assets, managing assets, and your customers for that are typically large global corporations, who are looking for offsets.
PR: Right.
TN: And it’s just a very different business than the consumers. And at the same time, they’re becoming more interested in that business, the business to consumer area was really changing drastically.
PR: Right.
TN: And if you think about 2022, interest rates are rising and, and for fintechs that were built during a time when money was free and investment capital is readily available, suddenly it was not easy to build and run those businesses. And you know better than anybody else, the kind of destruction that went through the fintech industry as companies struggled to find a business model that worked when, when capital is not free.
PR: Right. For sure. So then how, maybe tell us how you were able to grab control of the consumer business, spin it out and, you know, recapitalize it, rebrand it. Tell us a little bit about that process.
TN: Sure. The Aspiration Partners, which is, was a parent company for this, was struggling with the consumer financial business. It was losing money, as were many financial technology companies at the time, and losing a lot of money. And with no clear path forward as it was structured at the time for them to get to anything else. And they were having to consider, do they sell it? Do they close it down? What do they do with it? And the challenge is when you’re trying to sell a business that is losing tens of millions of dollars annually, it’s a difficult sell. And when you’re trying to close down a business that is heavily regulated, that’s also not an easy process to go through. And as we have seen with other consumer fintechs that have either closed down or been forced to close down.
PR: Right.
TN: And, so that was the place they were in and I saw value to it. And, I sat down again with the chairman of their board and worked through a plan for how the business could be transitioned in a way that protected the parent company, but that would let it essentially spin off and compete on its own in the marketplace.
PR: Right, okay. So you’ve completed that process, and you decided obviously not to use the Aspiration name. You went with GreenFi. What was the thinking there?
TN: Well, we actually did use the Aspiration brand initially. And the process of spinning it out, wasn’t really spinning out the business, because I didn’t acquire the business. Initially, what happened was is that, is that I agreed that my company Mission Financial Partners would operate the business on their behalf to take the operations requirement off of their plate. And I took the key employees from Aspiration that were involved in the consumer business, put them on my payroll. And we began operating the business and more importantly, restructuring the business. And then I completed an agreement with Aspiration Partners, the parent, that I would license the technology platform and license the brand, essentially, because I wanted to keep continuity for the customers. I didn’t want them to have to change their accounts. I didn’t want them to have to change the brand. I didn’t want to have to change any of those things. And so we licensed it. We worked with Coastal Community Bank to set up a new banking partnership. And then we offered the customers a chance to move over to the, we’re essentially a fully new company, fully new platform, but it didn’t feel that way to them. It felt easy. They just, they said yes. And everything went on operating the way it had before for them. And that’s the way we designed it.
PR: Is the product set very similar? Or maybe you could just take us through, what is the product set?
TN: So the product set right now is checking accounts, savings accounts, investment accounts, and then some sustainability products that surround those. And when we moved it over, we moved over with the same product set that it had been. Again, we wanted continuity for the customers and we needed time to restructure the business. And so we brought it over, everything the same. When I say we brought it over, we offered the customers the chance to switch into the new business, but it looked exactly the same to them. And, that was a risk we took, rather than just doing a full new startup, but I think it paid off. More than 98% of all of the deposits moved over.
PR: Wow. That’s amazing.
TN: Which is very high compared to most of these switches.
PR: I would have thought 50% would have been a good result.
TN: More than 98% moved over with us. But we’re now in a period where we’re going to introduce a series of new products. Those products being reformed products are the ones they have now. And then a series of new products. So soon we’ll introduce a new checking and savings accounts that I think will provide better value to the customers, and more green value to the customers. And then we’ll follow on with credit cards, with more types of investment accounts. We’re looking really hard at offering a crypto account, but one that enables customers to intrinsically, as part of their purchase of crypto, deal with the very real challenge of the carbon impact of crypto.
PR: Sure.
TN: And then, we’ll move into lending and the typical path for trying to offer consumers a full suite of solutions to their financial needs.
PR: Right. Okay. So, with the, like the checking, savings account, the credit card that is coming, how are you making that green, carbon-friendly? What are the specific ways you’re doing that?
TN: Great question, Peter. So, there’s a few fundamental ways. First, we guarantee for our customers that none of their deposits will support the fossil fuel industry. And let me tell you why that’s important. Is because for your average consumer, the greatest impact they can have, is not by putting solar on their home, though that’s good, you should do it. It’s not by driving an electric vehicle, though that is good, and you should do it. The greatest impact you can have is with your money: where you deposit it, how you invest it, how you spend it. And if your money is now deposited in one of the 10 largest banks in the U.S., which I would guess yours probably is, Peter, then up to 30% of your deposits are supporting the fossil fuel industry. That’s just the structural nature of our banking business. And that means that your deposits are literally fueling the climate problem.
PR: Right. Right.
TN: So, you know, using the maxim of the first thing you have to do is stop digging when you’re in a hole. Let’s first stop digging. Right? So we want to give customers a place to put their money, where they are confident that it’s not going to be used in a way that’s not investing in the past, that it’s pointed toward the future. And that’s the first way.
PR: Right.
TN: So, the second way is, that we give our customers the ability with all their transactions, every time they put their debit card and swipe it through that they can support giving back by reforesting around the world. And right now our customers, I think in the last year, I think they supported the planting of more than 4 million trees. And right now, we’re planting at the rate of about two and a half football fields a day. That’s crazy. Our customers are supporting the planting of about two and a half football a day, about one tree a little over every seven seconds. So, while we’re talking today, just in the time that we’re going to be talking today, our customers will support the planting of about 400 trees.
PR: Wow. Where are these trees being planted?
TN: A wide range of places: Africa, South America, US, through a variety of our programs, both that program and through some of our other donor programs, we’re supporting principal programs in the Sierras in California to help rebuild after the fires that were out there. And part of the way we do that is we have a roundup program called Plant Your Change where customers, every time you swipe your debit card, the portion of change that’s left over that you want to round up to the nearest dollar, that small portion goes to support tree planting. And it’s very popular among our customers.
PR: Right, right.
TN: It’s also for, one of the best things that you can do about the climate is begin to shift to your transportation. So, drive an electric vehicle, for instance. But that’s not the practical or the right thing yet for everybody.
PR: Right.
TN: So a lot of our customers are still driving the same cars they’ve been driving. And for those customers, those are our premium customers, we will automatically offset the carbon impact of their gas purchases. Just every time they swipe their card and buy gas. So we’re trying to, we’re really focused on just trying to make having an impact, having a climate impact, easy and something you just build into your everyday purchases and everyday use of your money.
PR: Right. Right. So can you tell us a little bit more about that, your target customer or your typical customer? I mean, obviously, they have an environmental bent, I imagine. But are these younger people, in general, or totally across the age spectrum? Tell us a little bit more about them.
TN: So Peter, I think you’d be surprised. Over the last 10 years, the worries about the climate, concern about the climate, has been growing steadily among the American population. And now there are about a hundred million people, about 40% of the adults in the US, who would cite climate as one of their significant worries, and something that they feel like that they would like to take action on. And so,at itsnlargest level, those hundred million climate conscious consumers are our target market. And that’s different than a company like Chime, for instance, great business, but their focus is on people that typically are either underbanked or at the beginning of their financial journey. Whereas, we really focus across a wide spectrum of people, many of whom, some are boomers, some are Gen Z and everything in the middle. And, what is in common between them is their concern for the climate and for finding a way in their own lives to take action on it. It crosses urban versus rural, it crosses population, it crosses ethnicities, it crosses gender, skews a little bit more toward women. It includes both young people just starting out and it includes people who are very well established financially. It tends to be a higher deposit level than your average customer. And especially among the core group that we’re starting with, that we’re really focused on, they tend to have more financial accounts and more financial transactions. Pretty digital, this group typically is. And so it’s a great target market for us to start with, but in that sense, our focus is different than you’d see many of the other neo banks focus on. And that we cut across lots of different groups. It’s an attractive group. It’s large. It tends to be more affluent than many others.
PR: It doesn’t cut across political parties though, I would imagine, for the most part. My next question is, I mean, it’s hard to kind of talk about this sort of thing these days with what’s going on in Washington. And I’m just wondering, you know, there’s a very strong anti-ESG movement at the federal government right now. How is that impacting you guys?
TN: Well, there seems to be a very strong anti-lot of things at the federal government. It’s very much the case that there’s been a very hard, sharp swing in the engagement of our federal government on the climate. And I spent a lot of years in Washington, before I was released on good behavior from the government. I worked on Capitol Hill. I worked for a great Congressman out of California, out of Silicon Valley, named Norm Mineta. And then I spent five years on the White House staff, focused on technology and its impacts across the country.
PR: Under President Clinton, right?
TN: President Clinton. Working for President Clinton and Vice President Gore. And so I definitely did my time really focused on what’s happening in Washington. Our business, I would say, our business really isn’t affected by that, but that’s not true. It’s ironic, but our business is really being helped by it right now. The reason why is because anybody who’s concerned about the climate, who’s concerned about the environment, their concern is only going up right now.
PR: Right.
TN: And for very valid reasons. And they look at what’s going on in Washington and they know that they can’t depend upon what’s going on in Washington to solve what they feel is a real problem, which is the climate. And so as they look for ways to have an impact themselves, that’s where we come in, which is we can help people have a real impact themselves that is easy. That fits into their life and that lets them turn to their own life and make an impact where they don’t feel like that can be done in Washington.
PR: Right. That’s interesting, very interesting. Okay. You mentioned at the start of the show here that Aspiration struggled very much to make a profit. Running a neo bank is not an easy thing to do to generate profits. Even Chime, which we now know exactly how much profit they’ve been making because they just released their S1, and, while they’re not making losses anymore, they’re also a very long-established business with a lot of scale. How are you approaching this with the expectation obviously that you’re going to get to profitability, but I imagine you aren’t there right now. I mean, what is your approach to try and get to profitability?
TN: So we all have seen the Chime S1 and seen what’s in it and, great business, I look forward to growing up to be them someday. But we’re not there yet. As I said in the beginning, we’re a startup. And so we’re still in a growth phase. The initial approach we took was to do a fairly radical restructuring of the business when I took it over. At the time when I began working with the Aspiration consumer platform, there were more than 400 people working on that platform, working with the business in one way or another. Today, there’s a little more than 40. So, it took, uh, as you can imagine, Peter, it took a really radical restructuring of the business to be able to essentially operate on 10% of the size of the team that was operating before. How do you do that? You do that with a lot of great uses of technology. You do that with some great people. And I’d be the first one to say that the most important thing that I acquired, if you say that I acquired, when I acquired the assets, was a team of really fabulous people. Because you curated that from more than 400, you curated down to 40 people who could really engage and run the business. And you take those people, and you give them some great technology tools. You invest in the tools they need to run the business, and build products, and operate the business. And you can do some pretty magical things. We have had a fairly steady and significant focus on using AI. And we continue that today, and we are only going to escalate it further. The focus is on how do you pour the value into the products that you’re giving the customers and start there? Again, these businesses, like the original Aspiration, and like other ones, were started at a time when investment capital was readily available. You’d walk down the street and someone wants to give you $10 million. And that just isn’t the case. And so you have to build the business differently. And that’s what we did. We cut, I think, in the end, we probably cut more than 60% of the vendor costs, the technology costs out of the business. And we’re still not there. We’re still not at profitability, but I definitely can see directly what the path is for us to get there. And it’s not that far off. The challenge is that running a bank, and we’re not a bank, we’re a technology company. We partner with Coastal Community Bank, as you know. But running that takes a certain basic infrastructure. It’s a technology platform, you have to have, I have to do operations, we have to have compliance. You have marketing, have all those kinds of things. And so you have to have those in place, whether you have one customer or 1 million customers.
PR: Right.
TN: And so, you put it in place, and then you get to grow to a certain place. The trick is being able to grow without having to add to that fundamental infrastructure. And I think we’re at that place. I think we’re at the place where we have insight, how far we need to grow to get to profitability, and what the strategy is for getting there.
PR: Right. Right. So, how do you think about measuring your own carbon footprint? When you talked about AI, really big power needs to run those AI models. Obviously, just running a technology platform has pretty significant resource needs. How are you kind of approaching that, because every company has a carbon footprint, and if you’re using AI models and data centers and all that you have, it’s not insignificant. So, how are you kind of offsetting all of that?
TN: It’s not insignificant. So, we worked with a third-party organization to come in and work with us to take a look at our operations with us. And we’re certified, or I think we’re just at the point of checking the box, being certified carbon neutral. And that took a lot of work across the business. And it includes, in the areas where we can’t quite get there, investing in offsets to be able to make sure that we come in as carbon neutral. And our commitment is to stay there. But it adds a whole another layer of work that you have to do.
PR: Work and cost.
TN: You have to think about the choices you make in terms of what is its carbon impact. Its financial impact, its impact on customers, and its carbon impact.
PR: And it does make it like other, your competitors that are not doing that have lower, you know, potentially lower costs because of that.
TN: They do have lower costs. I think, in the long run, it is good work to do. It forces you to really look at your operations and really understand your operations. And in the long run, it makes a difference for your business. And so I’m lucky that I have some great people working in this area. Chad Hunter, who heads up product and sustainability for us, is a phenomenal guy out of MIT and the National Renewable Energy Laboratory and then built his own company, heads up that space for us and does a phenomenal job.
PR: Okay, so let’s talk about the seed round that you announced last month, not sure when it closed, but we all heard about this. Well, that’s what prompted, obviously, this interview. You’re an interesting company because, in some ways, you’re a total startup, and in other ways, you’ve got a lot of experience and institutional experience and knowledge behind you. But tell us a little bit about how that fundraising round went.
TN: The fundraising round was a little over $17 million. And we viewed it as a seed round because we’re establishing a new business, and we’re just getting it up and going and getting the right products in place. A significant chunk of that went to covering the debt that we incurred in spinning the assets out of Aspiration Partners. And so I had used venture debt to do the spin out of those assets. And so a chunk of that round was the conversion of that debt into equity for the company.
PR: Gotcha.
TN: And then we added some equity on top of that, some additional equity on top of that for operations. And so we closed at about 17. We have some interest by investors in extending that somewhat. And so we’re in discussions right now about whether we’re going to extend that round additionally. And so I would expect to see us extending it somewhat, you know, five, six more million dollars, and then close it off and move ahead. And what we’re really doing with that capital is two things. One is that we’re doing the development work for the suite of products that we want to roll out. And so that we can get those in the market rolled out. And we are doing a lot of market testing. And marketing testing, so what are the messages that you need to use? How do you reach people? What are the channels? And so right now we have hundreds of different tests out in the marketplace and all at a low level, all really testing how you get the customer acquisition costs to where they’re supported by the business, supported by the revenue flows that come from the business. And when we finish those two things, one is building the new suite of products that we want, and doing the market testing that we wanted to do, then you’ll see us next year probably come back into the market for an additional larger round that we use to then scale up the business and really begin scaling it.
PR: So what are the revenue drivers right now? I imagine it’s primarily interchange. I mean, like, it sounds like you’re going to be adding new revenue streams in the near future, but tell us a little bit about that.
TN: So our revenue streams are pretty diverse right now. So our largest revenue stream is net interest margin, just off our deposits. The second largest revenue stream of that is interchange. But we also have revenue streams that come from our subscriptions by premium customers, people who sign up because they want to participate in a larger way with us. And for instance, get the gas from the car offset or do other things. We also have what I think is a very unique model, which is pay what is fair. And we don’t charge fees for our checking accounts or savings accounts, but we have a program that lets customers tell us, “Hey, I like what you’re doing. I want to support this. I want to support this kind of program.” And they’ll just tell us what they think is fair to pay. And so we have a revenue stream that comes in from those. And then we have your normal other banking fees that come through the process. And so we have a sort of a wide range of revenue sources and none of those individual sources are even 50% of the revenue. It’s fairly equal across them all.
PR: Okay, that’s great. So, can you give us a sense of the scale you guys are at today?
TN: Sure. We’re a startup, we’re an early startup. We have around 150,000 customers.
PR: Okay.
TN: And between our deposits and our investment business, we have around $300 million in deposits and assets under management.
PR: Okay.
TN: So it puts us definitely early in the space, but it’s a real operating business. And you know, we’re running nearly five million transactions a month through our system. And so we have the operations to support it and scale significantly more above that.
PR: Okay, so then last question. As you’re looking at the product roadmap and beyond, I’d love to get a sense of what’s your vision? Is this gonna be like the green Chime? Is that sort of what you’re thinking here, or where are you taking this?
TN: My vision is that someday Chime will want to be the regular version of a GreenFi. So two ways look at this. One is that our intention is to build the leading consumer brand for climate-conscious consumers, consumer financial brand for climate-conscious consumers. Think of it as Patagonia, but for your bank account. And that means solving the problems for customers so that they can do well financially, and do good at the same time. So that means a checking account that works for them with no fees. It means a high-interest savings account that pays you, you know, three, three and a half percent, so that you’re staying ahead of inflation with your savings. It means getting a credit card that will not only help you plant trees, but it can give you cash back and even higher cash back if you’re buying products that are sustainable. It means supporting things like crypto and purchases of crypto assets, but in a way that takes into account the carbon impact of those purchases. It means offering lending that takes into account, or that is designed to focus on, the kind of lending that these customers want. Lending for EVs, green home mortgages, lending for upgrading your home to be more energy efficient. And then we also have a green marketplace where consumers can go and find products that are inherently more sustainable. And we have hundreds of brands in there. We’re expanding all the time. And I think that will grow to be a significant business for us. And then finally, what I would say is we have our initial investment accounts in a mutual fund that is a mutual fund of ours, the GreenFi Redwood Fund. But I would expect that that’ll be a very, very large part of our business as we add more and more and more funds. A lot of my background is in the investment area. And so I’m particularly looking forward to giving consumers more choices for how to invest, but in ways that are consistent with their values.
PR: Right, right. Okay. We’ll have to leave it there, Tim. Really great to chat with you. I’ve always wanted to know what was going on with Aspiration, and now you’ve shared the full story here. I really appreciate it. So, best of luck to you and thanks for coming on the show.
TN: Well, thanks for having me, Peter, I really appreciate it.
PR: Okay, see ya.
In some ways, GreenFi has it a little easier than many other fintechs. They occupy a large niche with a very passionate customer base. This should help them with their customer acquisition costs and the amount of revenue they generate per customer. I imagine it is already above most of the big-name fintechs in the space and will only grow as they add more products. They have what many fintechs covet: an engaged customer base that is actively looking to do more business with you. That and the fact that Tim has been very conscious of controlling costs greatly enhances their chances of success.
Anyway, that’s it for today’s show. If you enjoy these episodes, please go ahead and subscribe, tell a friend or leave a review. And thank you so much for listening.