“Fintech” companies have been in the dumps lately, as Mike Cagney, CEO of a lender called Social Finance, or SoFi, is the first to tell you. Cagney is quick to add that his company is the king of these midgets, an innovative operator in a staid industry that is a making a go of things.
I visited Cagney Thursday at his office in San Francisco’s historic Presidio. An avid cyclist, Cagney was dressed in jeans and a SoFi t-shirt and already wolfing down a pizza when I arrived. (His office kindly had a delicious beef enchilada waiting for me.) I’d been curious to meet Cagney precisely because it’s a startup that hasn’t seemed to miss a beat.
Cagney started the company in 2010, midway through a Stanford fellowship he did as a way to clear his head from a career in banking and hedge funding. His epiphany was that students with great earnings potential paid the same high rates on their school loans as everyone else. He’d use math—now it’s called data science—to recalibrate risk and offer those students a lower rate. And he’d acquire customers by building a sense of community among like-minded borrowers.
Fast-forward seven years and SoFi is on fire, the rare example of a startup that hasn’t seemed to flounder after advertising during the Super Bowl. Building on its initial student loans business, SoFi now offers mortgages, personal loans and wealth management. It’s not a bank, and Cagney wants to keep it way—despite having taken steps to accept deposits as a broker-dealer. Banks move too slowly, he says.
SoFi is one quirky lender. It literally plays matchmaker, as in offering a dating service to “members,” or borrowers, in New York, Los Angeles, and San Francisco. It also holds networking events in 60 cities, a pure marketing expense it highlights as a way for customers to get ahead in their careers. (A note on the dating service: Cagney learned by hosting some events himself that attendees care about precisely two things in a potential spouse, their FICO credit worthiness scores and their income.)
Whatever SoFi is doing is working. Cagney says the company originated $8 billion in loans last year, a figure that will double this year. He reckons the company will earn $200 million on a pre-tax basis in 2017 on revenues of $650 million.
Now that I think of it, “fintech” is one of those dumb terms like “cleantech.” All good businesses apply technology to be better. Social Finance is building a new kind of lender using some clever technological and human techniques. And it even facilitates love connections. Who could ask for more?
| Adam Lashinsky | |
| @adamlashinsky | |
| adam_lashinsky@fortune.com |
NEWSWORTHY
Deeper trouble. A judge in San Francisco called for a criminal investigation of alleged stolen trade secrets by ride service Uber. In a ruling issued late on Thursday, U.S. District Judge William Alsup also partially granted rival Waymo's request for an injunction against Uber's self-driving car program.
Four down to three? Sprint has started preliminary discussions about merging with wireless rival T-Mobile. Talks to revive a deal that regulators shot down in 2014 are still at an informal level, Bloomberg reported.
Lock it down. President Trump signed an executive order aimed at improving the computer security practices of federal government agencies. The order requires agencies to assess cyber risks and issue a report on their situations within 90 days.
Tracking your every move. A spyware program that logged keystrokes was found installed in the audio driver software on two dozen models of Hewlett-Packard laptops. The company said that the collected data was never accessed and that it would issue an update this week to uninstall the app.
Burying the hatchet. Amazon's Prime Video app will finally show up on the Apple TV and the online retailer will start selling the Apple set top box once again, Buzzfeed reported on Thursday.
Modern day alms. Beggars in parts of China are now accepting donations via mobile payments and QR codes. But some have been hired as part of a marketing ploy to collect cellphone numbers for marketers.
FOOD FOR THOUGHT
A popular chart that made the rounds last year showed that while corporate productivity has increased over the past few decades, wages have not kept pace.
Many explanations have been offered, ranging from the greater mobility of capital to globalization trends to off-balance tax policies. But MIT professor John Van Reenen and graduate student Christina Patterson hypothesize that the root cause is that the modern economy is favoring a smaller and smaller number of super-successful firms.
"It’s not that superstar firms pay lower wages; in fact, on average, big firms usually pay more," they write. "But wages at superstar firms represent a smaller fraction of sales revenue. Superstar companies make lots of profit per employee, so as they become a bigger and bigger part of the economy, the overall share of GDP going to labor goes down."
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