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.
Key Points:
- Ken Lin emphasized the importance of maintaining a strong company culture and staying mission-aligned, even when faced with significant financial pressures and acquisition offers.
- Credit Karma's early scrappiness and unconventional marketing strategies, such as leveraging Google Television Auction for cost-effective TV ads, were pivotal in scaling the business efficiently.
- Ken Lin sees AI as a transformative force in personal finance, enabling more personalized and automated financial advice, which will democratize access to financial planning traditionally reserved for the wealthy.
Timestamps:
(0:00) Introduction to Ken Lin, Credit Karma founder
(0:32) Ken Lin's journey from Intuit to entrepreneurship
(2:15) The inception and evolution of Credit Karma
(7:26) Overcoming the Great Recession and funding strategies
(12:00) Crafting cost-effective marketing and scaling with TV ads
(20:38) Fostering a scrappy company culture and partner relationships
(24:03) Credit Karma's early traction and overcoming TransUnion challenges
(31:14) Building a strong company culture and ethical business practices
(37:32) Insight into IPOs, fundraising, and acquisition dynamics
(43:03) The path to Credit Karma's acquisition by Intuit
(50:32) Deal negotiations and cultural alignment with Intuit
(55:28) The acquisition during COVID-19 and future insights
(1:06:56) Ken Lin's next steps after Credit Karma
Pete Flint: 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 journey of Credit Karma and then also talk about some some of the form formative moments coming up to the building of that business and then also incredible exit to Intuit that happened kind of roughly five years ago.
Ken Lin: Yeah.
Pete Flint: And Ken is you just am I right? You just stepped down from operating within Intuit.
Ken Lin: Yeah. So first, thanks for having me here. Yeah. So I'm ninety days into my new life of not operating, but about four years ago, we closed the deal. And, you know, ninety days ago, I decided to finally close the last chapter and walk away and spend some time with my family and kids.
Pete Flint: And it's been a sort of epic fifteen plus year journey. Maybe maybe we go and we've known each each other, Lucy, for a little bit of this the second half of that. Maybe go back way back in terms of the origin story. Like, how did you come up with this idea to kind of find your yourself to start this business? And were you always entrepreneurially minded or thinking about starting doing startups and and tech?
Ken Lin: Yeah. Well, I mean, it's one of the great things is my family. Right? And my parents were first generation immigrants. So I you know, we came over to this to The US.
Ken Lin: We lived in Las Vegas of all places. And they were always hustling. Right? Meaning that they were always working multiple jobs. They were sort of starting businesses on the side, whatever they could do to try to make ends meet.
Ken Lin: And I think in many ways that rubbed off on me in terms of the way that I thought about things. So I went to school in Boston, Boston University. I stayed there for about ten years after school, and I came out to the Bay Area in 02/2004. And as I got here, I worked for eLoan, which was an online mortgage company that you may be familiar with. And I was working in the marketing department and 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 Internet in many ways.
Ken Lin: And I decided to go out on my own and start a marketing agency based on the work that I was doing at eLoan, based on, you know, I think we were good performance marketers. And somehow we found a niche in digital marketing for financial services company. So one of my first customers was Prosper, which Chris Larsson started. And, you know, it's he has a path to this story as well. But he hired me at Prosper to do a lot of the marketing and, you know, really started there.
Ken Lin: And before I knew it, we were running $4,050,000,000 dollars worth of digital marketing for a lot of financial services companies. So, like, Wells Fargo, Prosper, Liberty Mutual. And something crossed my mind, which was the financial profile of the consumer was really important in the success of the marketing. Right? So to give you a very simple idea, if American Express was looking for a customer, well, if the customer's credit score is too low, American Express could underwrite them.
Ken Lin: You know, if they were middle, again, they might or may not want them. But it was really on the high end for American Express that they really cared. And as a result, you know, half to two thirds of those marketing dollars were ineffective because they couldn't market to the right type of person. So going back to my direct mail days, my credit card days, said, well, if you knew the credit score of the consumer, you would really be able to, you know, be much more effective. And at the same time in 02/2006, 02/2007, you know, there are these dancing pirates that would talk about getting your free credit score, but it wasn't actually free because they would charge you, you know, $20 a month in a subscription service once you try to get your free credit score.
Ken Lin: So we said, well, if we could actually cross these two models, we might have something special here. And that was the impetus of Credit Karma, which was let's actually give away the credit score for free. We think it's one of the more defining, you know, components of your financial life. And at the same time, the data and sort of the profile about the consumer will really be, you know, important in the future in the day in the present, understanding the right types of financial services products. So the idea of Credit Karma was born in 02/2007, so in a lot of Starbucks and a lot of conversations.
Pete Flint: Yeah. I I remember I mean, I remember the era because I was running Trulia at the time. And so and then Experian and Free Credit Report were kind of huge advertisers. And it's like and it was. It's just like comedic, kind of like attention grabbing advertising.
Pete Flint: But it sort of I guess it you know, I don't know how much involved, but there's there's a high correlation between caring about your credit score and big ticket purchases. Right? It's like which you know, whether you're buying a house or buying a car, you kind of know that if your credit score is is high, then it makes a meaningful difference to your kind of your ability to to buy stuff. Was that always the business model? Was it always like, okay.
Pete Flint: Get people in with a free credit score and then and then sort of transfer them through to particular offers?
Ken Lin: 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 Credit Karma is we thought that we would actually be able to help consumers save on their phone, their cable services, sort of subscription services that were credit adjacent. Meaning Yeah.
Ken Lin: If you're higher credit, you're more likely to pay your cable bill. If you're higher credit, you're more likely not to 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 for financial services products.
Ken Lin: 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 they were really, you know, wanting to improve their finances so that they could be in product. Right? So the latter two, obviously, were really important in terms of our business model.
Ken Lin: And I think that was a correlation that we saw pretty early and realized, wow. You know, all of these members who are coming in are in one of those three categories. And then, well, let's go and put a few of these offers up. And and I think, you know, for us, that was one of the first things that we did and and probably a smart thing because we were super scrappy, super efficient. So, you know, we went out to some of the affiliate sites and quickly just got a couple of financial services offers on our site.
Ken Lin: We stripped out all the, you know, sort of the HTML and the graphics, if you will, just turned them into hyperlinks and talked about the offer and why we thought it was good for them. And that really took off. And that was a little bit of the early days of the business model of figuring out what resonated with our consumers, but more importantly led to the pivot away from, you know, the cable and the credit I'm sorry. The the cable and the satellites type services.
Pete Flint: More into lead gen. Yeah. And and, like, of the remarkable things about your story, although you raised a lot of money later on, you raised kinda next to nothing at the beginning. And I and I believe also that you you were kind of a distributed remote team at the beginning. Maybe share a little bit about the first year or so, like how you got things going.
Ken Lin: Yeah. I mean, so it was really cool. You know, we were we were effectively three people in completely different geographies. So I had the
Pete Flint: idea Just so so you know, like, we we we don't have a blanket black and white rule, at NFX, we're like, that's almost like a yellow flag, if not a red flag.
Ken Lin: Well, I think that for us, it was more of the scrappiness. 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 that we didn't have that much we didn't have much funds. We didn't have an office, and people were already in different geographies.
Ken Lin: Yeah. So it was like, well, we could move everyone out here, but that would cost money. So I started the I started the company. I had the idea and, you know, Nicole Mustard was one was sort of the first person I called and I had worked with her when she was at Compete. Smart BD person, really understood the Internet.
Ken Lin: I remember the conversation. She was in LA at the time. I met her at the Saint Francis West End, and I remember 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 she had no idea what the was gonna ask her, had never described the business to her, never really understood the opportunity, but she said yes, which was fantastic.
Ken Lin: That got us started. And then our, you know, chief technology officer, Ryan Graciano, was a friend of a friend. He was, you know, working at IBM, and I asked the friend who, you know, who he knew from a technology perspective. He said, oh, you should just talk to this guy, Ryan. And what I just find amazing about those two is here are two, I don't wanna say random people, but two people who didn't know each other, who barely knew me in some ways.
Ken Lin: We connected. We had an idea. And all the way up to the exit, seventeen years later, they were still at Credit Karma running their respective departments. Right? And I don't think that happens every day, but I think a lot of it is, you know, the luck, the perseverance of having a great team to build these companies.
Pete Flint: How much money did you raise at the beginning? Like, what what was the and, you know, I'm guessing you're pretty you're you were profitable pretty early on. We were. And this
Ken Lin: is the thing that I always found, you know, to be one of our secrets. So the very early days were really hard because to give you a little bit of context, you know, we started in 02/2007. But, you know, 02/2008, 02/2009, the Great Recession happened. So, you know, the early funding was me and an angel investor. And we thought that, hey, we have the great traction and the the, you know, the progress that we need, the metrics that we need to go and raise this, you know, like a reasonable series a.
Ken Lin: But unfortunately, a great recession happened and 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 time frame that we were trying to fundraise in. So very tough period for us. We really just kinda tightened our belts and continued to operate and tried to be as nimble as we could. I remember I didn't take a salary for a long time.
Ken Lin: I remember, again, we were working from our relative 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 of the things that we did early again was to really start trying to monetize. And the good news is I think through our first year or so, you know, we were only burning a few $100,000 a year, which I think is pretty Yeah.
Ken Lin: Uncommon
Pete Flint: a year.
Ken Lin: Yeah. Which is pretty uncommon in most startups. You know, that led us to a couple of amazing things. You know, we raised something like a billion 4, a billion 5 over the course of the history of 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 capital to build that business.
Ken Lin: 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 bit of a carryover. I was at a.com in the late nineties and I saw the excess, the exuberance of what happens when you just kinda spend blindly and think that the revenues are gonna come in. So I think we had a very good handle on the business, and I think that saved us in so many ways because, you know, if we weren't like that, we would never made it through 02/2008, 02/2009.
Pete Flint: 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 just literally couldn't raise was a was a strength in retrospect rather than slowed you down? It might have felt like slowing you down the short term.
Ken Lin: I think in the moment, it never felt like it was like, oh, this is, you know, this is gonna build character. At the moment, it was a lot of lost nights of sleep and just feeling like, you know, everything that we worked for was coming to an end. But I think to your point, it really made us focus on sort of the operating metrics of the business. And I think there is to me, that is one of the core components of how I like to operate and build businesses, which is to be super efficient. And if it's not working subscale, it's not gonna necessarily work at scale or probably won't work at scale.
Ken Lin: So it forced us to be smarter in everything that we did. It forced us to be scrappy. I'll share a little bit of a story and give you an example of how this plays out. And it ended up being one of the defining moments at Credit Karma. So we had been working on the project for roughly two or three years.
Ken Lin: We had, you know, I can't remember if I actually don't think we'd raised our series a yet or maybe Jess had raised our series a which was all of $2,000,000. But most importantly, as context, we built the business to where we got unit economics. So for every user that we had, every member that we had, you know, we would roughly generate a dollar in revenue and it cost us roughly a dollar of operating between buying the credit data, you know, the servers, and so on. So now the question was gonna be, how do we actually build a user base? Right?
Ken Lin: And we had about a million dollars in the bank and my past life in my marketing agency, I'd worked with Hill Holiday, so I called up one of the 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 scale the business and we thought maybe television would work because search and digital is so expensive in this category. And remember the conversation was, well, you know, if you want to try television, you'll probably need to do a creative. That'll cost you $2.03, $400,000.
Ken Lin: 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 whether that is going to be slightly effective. Of course, I'm weighing my million dollars in the bank and the fact that he just said you have to spend $6,700,000 to build a to to build a 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.
Ken Lin: They were sort of hand actors. They were never on camera. We bought some props, maybe $30.40 dollars worth of props. And then we shot a commercial on my camera. Well, the only thing that we did that was professionals, we rented a professional sound studio just so we could do the voiceovers.
Ken Lin: And we did a commercial for, let's just say, $500 all in between the probs. 500 versus the 3 or $400,000. And, you know, at the time, there was this thing 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.
Ken Lin: So it was the day after Christmas, and I got this email. We used to call them good hour emails, would be, hey. It's a good hour if it's more than the average number of registrations. And I saw the email. I like, oh, day after Christmas.
Ken Lin: 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 email and that's weird because that doesn't normally happen with news cycles, right, because they don't repeat. So I remember calling Greg who was leading our marketing at the time, like, hey, what's with these spikes?
Ken Lin: And I remember him saying to me, he's like, I think it was television. And, you know, and and for us, it was like maybe a 100 registrations within that hour, which was pretty good for us. 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.
Ken Lin: So we basically got a 100 incremental registrations for $50. Right? So effective CPM of or sorry, CPA of 50¢. And we were very quiet about this because we're like, is this right? And how scalable is it?
Ken Lin: And the short answer is very scalable. So for us, we went from spending $0 in television to something like $250,000,000 a year the next year because we were the biggest buyer of this remnant inventory.
Pete Flint: So you went from zero to 200,000,000 in a year?
Ken Lin: Yeah. Woah. Because we were getting something like two to three month paybacks. Right?
Pete Flint: When Yeah.
Ken Lin: Yeah. Cost of acquisitions are 50¢, you know, you you you 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.
Ken Lin: But now all of a sudden, we're getting all these users, and now we have the leverage to negotiate better deals with all of our partners. Yeah. So as we're growing more and more users, and these are high quality credit users who are, like, looking for products, you know, our our advertisers are willing us to pay us more and more and more. So, you know, we're sort of growing the number of users. Our costs are going up marginally, but more importantly, our margins per user are increasing drastically because now we're getting scale.
Pete Flint: Yeah. It's a very it's it's such a you know, it's in every 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 would any smart marketer use television? Because it's untrackable.
Pete Flint: You can't sort of you know, you can't target the creative effectively. It's sort of it's like, you know, that the old adage 50% of your marketing is wazy. You just don't know which 50% it is. And it's and I think it's like that unconventional thinking was instrumental because you wouldn't have had the same economics and and opportunity if you if you went through traditional media. Yeah.
Pete Flint: Traditional digital media.
Ken Lin: 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 $20.30 dollars. Right? So the CPC at the time for the terms like free credit score were, like, $3.
Ken Lin: Right? So even if I had a 100% conversion on the $3 per click that I was paying to get the traffic, which you're not gonna get a 100% conversion. Right?
Pete Flint: Yeah.
Ken Lin: It would still have been six times more expensive 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 and trial and perseverance in this, you know, to
Pete Flint: And maybe economically as well at the time. This is 02/2009? 02/2012. 02/2012. Okay.
Pete Flint: You scaled up. Okay. And it was still but it's still, like, there was like, you know, economically, the the environment was media was still pretty cheap.
Ken Lin: It was. Yeah. And and and television. Right? And and because this is the time, to your point, everyone was going all in on television.
Ken Lin: And as we know, offline media is still very performant, 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, which really allowed us to kinda go against the trend Yeah. And be in offline media, which again really played out. But, you know, back to the idea of luck, part of it was surprising for me was luck in the sense that, you know, that television commercial was so performant.
Ken Lin: We tried two other commercials right afterwards and they bombed. They didn't have anywhere near the same response rates as the first commercial.
Pete Flint: $500 one.
Ken Lin: Yeah. And what we then did was we went back and we said, oh, what do we believe are the thesis or sort of the distillation of the key components that made a difference? And then we figured out the formula. And, you know, for us, we we then try to leverage what we thought was both the formula of what made for a good television commercial for us and the fact that we were being scrappy. So we would shoot, you know, five to six commercials per month all in house.
Ken Lin: Never used an agency. Never used, you know, sort of professionals. I remember we were using Craigslist to find talent. I mean, like, we would literally go on to Craigslist and say, hey. We're looking for somebody to be in a national television commercial because we didn't want any SAG actors at the time because we couldn't afford to pay the residuals and so on.
Ken Lin: Right? Again, we were being super scrappy.
Pete Flint: It sort of reminds me a little bit of Costco. Like, Costco is it it sort of comes across like a sort of lower end brand in in when you go 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 Costco is massively premium for the folks that spend money there. And and so I think maybe just the scrappiness actually was attractive to some of your customers that they they felt this was there was but you you were a brand that was spending money on the right places.
Ken Lin: Well, absolutely. I mean, you know, that's what we really focused on. 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 buying data.
Ken Lin: I mean, we were the largest consumers of credit information, I think bigger than any banks. I mean, I actually remember having a meeting with Jamie Dimon a while ago or, you know, many 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're Chase. I bet you we spend more.
Ken Lin: So I told him our number, and I appreciate the fact 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 that number, you know, given how large j t JPMorgan is.
Ken Lin: But, yeah, at the time, we were spending a lot of money on credit data.
Pete Flint: So how do and, you know, and obviously, your you know, part of the business is working with the credit bureaus. Like, I'm curious how those relationships evolved over time and any any sort of pivotal moments there.
Ken Lin: Yeah. I mean, I have a great story in this one. So, you know, we we found the idea of Credit Karma in 02/2007. We'll buy credit scores, we'll give it away for free, you know, we just gotta build the site. You know, the relationships and the data should be easy.
Ken Lin: That was where I was wrong. So, you know, we called all three of the bureaus And funny enough, each bureau would say, like, we're not taking on new customers now. We would describe our model, what we're trying to do. Can you help us? Can you tell us how to, you know, buy your data?
Ken Lin: And every bureau would say, well, we're not taking 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 TransUnion representative at Elone who who I called because I'd worked with him while I was there and said, hey.
Ken Lin: 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 a contract with TransUnion? So, you know, he sends me like a two or three page form, what's the purpose, you know, address, simple stuff.
Ken Lin: Submit it. And he's like, you're approved. Here's your here's the API. Here here is the documentation, and off we go. And our you know, Ryan is coding based on it.
Ken Lin: So we get the site up and running. And we're in, you know, we're sort of in stealth. We're just building the technology for about a year. And I don't think about the contract anymore because, you know, it's a done deal. So we build the site.
Ken Lin: I go on vacation after a year's worth of development. We put the site, you know, sort of like on friends and family access, which means like, hey, it's basically working. We're trying to take a little bit of a pause before 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.
Ken Lin: I remember Nicole calling me and she said, hey, you know, we just made we're on the page of The 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 free credit scores. Don't think anything of it.
Ken Lin: Well, on my way back from Thailand, which is like an eighteen hour flight, you know, I land in LAX and my phone is blowing up. And what had happened was and back then, like in 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?
Ken Lin: 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 to somebody putting the code onto Slick Deals.
Ken Lin: And at the time, Slick Deals is this great deal site. And we were on the front page and we had a code that was, you know, that would sort of limit the the amount of people that you could get onto the site. But somebody had actually put the code onto, you know, SlickDeals. So we've got about 6,000 registrations in that in that time frame. So that was a real great high for us.
Ken Lin: Now, wanna talk about the low, which is like two days later, I'm sitting in our offices and we get an unexpected UPS package, right, an overnight. And the overnight was a termination notice. So what had happened was, you know, the article and the subsequent traffic led to TransUnion noticing and pulling up our contract. And they realized that, well, if these guys were fraudulent, like, we told them exactly what we're gonna do in our contract, but the reality is no one read the contract just to improve the deal. Right?
Ken Lin: So their recourse was, well, they have the thirty day right of termination. So they pulled the trigger on that and said, well, you know
Pete Flint: But you were you were paying them.
Ken Lin: We were paying them. We were paying our bills.
Pete Flint: And it was facts. They were like, know, they were like, your success is our success.
Ken Lin: You would think that, but you have to keep in mind that all of the bureaus are making a lot more money from the subscription product, right, the free credit score, you know, monitoring service. So in many ways, we were super competitive to that cash cow. And, you know, I know this in hindsight, you know, at TransUnion specifically, there was a consumer division that, you know, we did that we went around. So the person in charge of this You're being
Pete Flint: disruptive to them.
Ken Lin: Yes. We're disruptive to them, but they also they were in charge of, you know, direct to consumer business and, you know, our contract went around them. So we got the termination notice and I went from 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, the fourteen, fifteen months worth of work that we have put into this business to this product is going to be gone. So, you know, I called everyone I knew. I, you know, was like desperate to say, who can help me?
Ken Lin: Who made this decision? How do I get in touch with the powers that be a TransUnion? I forget who the person was, but somebody said to me, I think the person you need to know talk to is John Danaher. And I remember, you know, and they're like, I can't even make an introduction for you. I think I have their email address.
Ken Lin: 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 the opportunity. We think we're onto something special.
Ken Lin: And true to form John, who we're great friends now, you know, responded and he said, hey. Listen. I'm gonna be flying through San Francisco on my way to SLO. That's where their one of their offices are. Like, why don't we go and meet for breakfast?
Ken Lin: And I remember this was about a week before the thirty days were up. So this is basically, like, twenty three, twenty four days into the termination notice. He responds and we meet. And I remember it was the most sleepless night of 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 him that, you know, based on the traction that we had, that there was an opportunity for us to build something and that we should partner.
Ken Lin: And I convinced him to do that, and, you know, the rest is history, as they say.
Pete Flint: And so they and they were like they were sort of they were comfortable betting on you even though it would be perhaps detrimental to some of their other relationships and some of their internal mean, big picture thinking from them, but it's obviously surprising as well.
Ken Lin: 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 the psychology. I think there were two things that really swayed him. I think one he shared was this idea that, hey, you guys actually had traction.
Ken Lin: You're able to generate you know, at that point, we probably had 20 or 30,000 users, 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 all these 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 a circuitous route in terms of getting an agreement done.
Ken Lin: The second thing is what he confided me is like, I thought we would have bought you, you know, over the years. Right? And that was what was going on in his mind is if 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, I think companies tend to have a lot of luck along the way.
Ken Lin: I think for them, you know, they were a private company that was about to go public. You know, they had a lot of things that they had 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 reasonable price, right, probably, you know, some tens of millions of dollars, you know, went very quickly because as we got traction, you know, obviously your multiples tend to change based on growth rates. And we probably made it outside of their comfort zone pretty fast.
Pete Flint: Yeah. But it's probably and we'll touch on the kind of M and A stuff later. It's probably an interesting sort of tactic for startups in the finding kind of strategic sponsors within companies that are not perhaps blinkered by the short term of kind of, okay, I need to just do the basics, but really thinking This is a company that we should align ourselves with. This could be helping us in various different forms is is is really important to help the a founder navigate some of these pivotal moments as they go through things. Before we talk about the the m and a stuff and and potential and even, you know, possible IPO, Just wanna touch on culture.
Pete Flint: You mentioned earlier that your cofounder's been with you for seventeen years. Like, there must have been a bit of a special culture in the organization which which you built, and I'm I'm curious how you thought about that and how you built that.
Ken Lin: Yeah. I mean, it brings a smile to my face because I it's one of those things that you become really proud of. And maybe in the moment, you don't recognize how 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
Pete Flint: worked Credit
Ken Lin: That's it. Karma knots. That's what we call one another. People who've worked at Credit Karma, and they just, you know, all reflect on how great and how wonderful our culture was. And I think for many founders, and myself included, we didn't think of I didn't think about these things.
Ken Lin: Let me talk about it from my perspective. I didn't necessarily think about culture as anything special in the beginning. 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 the cohesion of a company.
Ken Lin: And I think it was probably like you're six or seven. We had a little bit of a crisis in the sense that, you know, once you start
Pete Flint: What what year was this roughly?
Ken Lin: 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, you don't you don't then know how to treat one another.
Ken Lin: 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's opinions.
Ken Lin: 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're hyperscaling. Right? So you're getting expertise.
Ken Lin: You're getting people from Google. You're getting from these great and they're great companies, but they don't know the culture of the company. And I remember we had a, you know, I I don't wanna 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 be mercenaries? Right?
Ken Lin: Yeah. Do we care about the mission first and foremost or do we care about making a bunch of money? And, you know, it was at that moment that we really thought about, hey, we have always been focused on the user. We've been focused on one another and making sure that this is a great place to work. We can be proud of our work and that we're doing the right things for both our members and one another.
Ken Lin: And I think it was through that we really, you know, distilled and solidified what our culture is, which is, you know, one of caring, one of empathy, you know, one about making progress each and every day and understanding that. So, you know, we had our, you know, sort of the the the, you know, the four or five key things that we thought about and we just started talking about it. And we started working with, you know, our onboarding teams and make sure like, hey, let's make sure we codified these. Let's make sure that we actually operate these ways. I mean, it's one thing to think about culture, but I think you also have to be authentic.
Ken Lin: I think a lot of times people think about, you know, culture as being something, oh, I want our culture to be this way. But if you're not authentic about it, if you don'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 Credit Karma being special because of our culture and the way that we thought about the business model, our members, and one another.
Pete Flint: Yeah. It could I mean, the nature of your industry, there's a lot of organizations which are, like, seemingly terrible cultures, you know, that are, like, lead gen businesses that are kind of financial services businesses. But I think it's I think it's it all just, from my observation, extends into the brand as well. Like, the brand that you built, which is so powerful, is a is a also a function of the team that you built.
Ken Lin: 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 the standard 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.
Ken Lin: But, we're on the verge of going out. I remember just having a conversation with a team and said, I don't know if we'll be able to fundraise. But, you know, there's a there's a moment here where we could fundamentally, like, spam our members to generate more revenue. We could sell the data to generate more revenue. And I said, you know what?
Ken Lin: I never liked those companies. I don't wanna work at one of those companies. So so I I remember we as a leadership team decided that we wouldn't do those things and that we would rather just go out of business than get into the model and sort of the business practices that we despised. I think it became a defining moment for for us and our culture in the way that we operate because if we were willing to bet the farm
Pete Flint: Yeah.
Ken Lin: You know, on something like that, it gave us a sense as we became more profitable and more successful that, well, that's just another example of that. And by the way, this is much smaller stakes now. Right? Like, great. We'd leave some hundreds of thousands of dollars on the rev on the table or or maybe even millions.
Ken Lin: That's nothing compared with the existential decision that we made way back in the day. So it was a foundation for us.
Pete Flint: Yeah. You touched on briefly, like, TransUnion was kind of, you know, in in retrospect, sort of sniffing around to kind of potentially acquire you. Tell me and then you raised a bunch of money from investors who are kinda looking for a return. And and obviously, you didn't start the company to sell the company, and you started the company to to to help millions of people. But but they come to a point where you're probably thinking, okay.
Pete Flint: Multibillion dollar enterprise, IPO or acquisition. And I I think you you wrote something a while ago, which was sort of quite negative on on on kind of IPOs. And and I so firstly, I'd love to kind of your thought price. Okay. Do we go public?
Pete Flint: Because you probably we could have done. Or do we think about some sort of combination with another entity? Do we I'd love if could share kinda how you thought about those two parts.
Ken Lin: Yeah. So, I mean, I think the the the I wrote an article a while back that talked about how I thought y p IPOs were a bit of a they're a financing event. Right? And I think a lot of founders go into business thinking like, hey. I'm my end goal is either to go public or to be sold.
Ken Lin: And I think over the course of Credit Karma, I realized that that was not my goal. My goal was to build an enduring business that could really change the landscape of financial 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 the article 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.
Ken Lin: And, you know, I think to the chagrin of some of our investors, like, well, where's the liquidity? How do we get to the end of that?
Pete Flint: Do they do they contact you and say,
Ken Lin: 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 meetings that you're taking funds from, you give a time frame. And I said, listen.
Ken Lin: 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 employees about, like, what we were trying to do, that the vision and the mission that we're on was more important than the next actually, now, you know, to be completely fair as well, those billions 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 situation where you have all this, like, equity value that's locked up that nobody can access.
Ken Lin: So we wanted to find the right balance of the two. So it's not like I had my head in the sand in terms of what was important. But that was the way that we've operated the business, you know. And at the same time, I always thought about being pragmatic. Right?
Ken Lin: Meaning that, listen, you can't be there can't be 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 things and, what's negotiable, what's nonnegotiable. So that was the context of the I thought of a public offering as a financing event, not the end goal.
Pete Flint: It's interesting because it like, I think I think you read the article in 02/2014, if if I remember, like That sounds about right. And it's and it's yeah. Truly went public in 02/2012. And as you say, it's like a finance event. Sure.
Pete Flint: But we couldn't raise money in the private markets and in our brand. But the public markets were very receptive. And I think that and that was 2012 that there was just all this money sitting on the sidelines, which which I think it may be the situation soon in the the the I mean, the the private markets and the public markets can be can be quite frothy. But I I think I think it changed a couple years later that is I I think of the a lot of the kind of growth rounds came in low interest environment. And so it's like you could actually raise a lot of money in the private markets.
Ken Lin: You're absolutely right around that. Right? Because for us, we were catching the fintech wave. Right? We were what you know, fintech didn't exist as a term when we started, but we were the fast growing business in that round.
Ken Lin: 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 willing to write us, you know, half a billion dollar checks and and, you know, over three weeks of diligence or three months of an s one filing. Right? So you look at the comparable of those two things and you say, well, if I'm gonna do a financing event, would I rather do the route of an IPO or would I actually do a series, you know, d or e? So that also led into a little bit of the the psyche for us. But, you know, sometimes timing, luck, you know, again, execution, all those things do matter.
Ken Lin: But you're right. There were so many dollars that it was easier for us to do a private round and not have to subjugate ourselves to all the scrutiny and or the publicity sometimes of being a public company.
Pete Flint: And so and so as a private company, I'm I suspect you had a number of kind of suitors that were getting close to the company over over years. Like, how how was how was you know, whether that's Jamie Dimond or whether that's, you know, other credit bureaus. How how was that process? And how did you think about it?
Ken Lin: Yeah. I think it always goes back to being, you know, one, again, pragmatic. And and, you know, for me, it was never about this one thing or bust. It's always looking at, you know, the dynamics that existed. So over the years, you know, we we certainly had a few inbounds, but our ambitions are, I think, were always a little bit higher than the the ambitions or the vision of the people who who were were calling.
Ken Lin: But, you know, we would always take the time to great. That whether it's, you know, like, is this a real thing? How material is it? And, you know, the the one, again, nonnegotiable that we focused on was, like, how mission aligned is this idea? Right?
Ken Lin: And how mission aligned is this company with what we were trying to do? So I think that was the the first test for us. And, you know, nothing really ever came about those 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.
Pete Flint: And was that sort of like how did that relationship form? Because it you know, it's a very big decision for for you, but also a very big decision for them. Like, what was, the dating process?
Ken Lin: Yeah. So connections networks do matter quite a bit. So I had a good friend, James Kim, who said, Hey. Know the head of business development at Tua, Danton, And I think you guys should just meet for coffee. Right?
Ken Lin: And it's as simple and as innocent as that. And, of course, you know, there's probably a little bit of subtext to it, but, you know, Anton and I meet. And, you know, Intuit was very what I thought was interesting was sort of two or three things stand out for me. It was one, as part of the introductions often have is, like, you talk about your company, but, you know, the other company tends to reciprocate and talk about their vision and what really mattered. And of the things that struck me in that very early meeting was that while we used different words, we actually had a lot of the same vision in place.
Ken Lin: Now, you know, context of that is, you know, we had started our tax business. They had started a Credit Karma competitor. Right? So, like, we were moving in the same same direction. But I thought that was really interesting because I thought that was one of the things that really mattered to me.
Ken Lin: But the other thing that stuck out to me was that they were a very big and slow moving organization. Right? So I remember having a meeting, didn't hearing from them for, you know, like, six weeks. They were like, hey. Really interesting meeting.
Ken Lin: 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.
Ken Lin: And another, you know, six to twelve weeks later, 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, you know, a selling opportunity. Was more of like, yeah, we're happy to share what we're doing.
Pete Flint: And you were and you were sharing just from a sort of BD development to try to build a relationship with them or you or you where you could learn from them? I'm just curious why you invested because, you know, a lot of founders, which would, like, avoid corp dev, biz dev folks at big corporations, they slow you down. But Yeah. Obviously, in this case, it, you know, it it led to something quite interesting.
Ken Lin: We didn't know where it was gonna go. Right? But, you know, this is sort of the the culture and the way that we operate at Credit Karma generally, which was, you know, we we would, you know, have amazing business partners over the years, and they all start from these types of conversations. Right? Like, you know, whether it was TransUnion or the various banking institutions that we have, like, we had really close relationships with them.
Ken Lin: So we didn't know if it was gonna be a business development deal, a lead gen partnership deal, an M and A deal. Right? But there are obviously areas where we were all playing 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.
Ken Lin: And, you know, at some point it crosses, like, you know, certain questions like, yeah, we're not gonna answer, you know, margin questions or our growth rate questions, but we can certainly give you a perspective of how efficient we are or or, you know, where where we're focused. 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.
Pete Flint: The 2,019?
Ken Lin: This is actually about 02/2017, 2000 Okay. And, you know, so I, you know, like, they threw out 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 tells the stories I told him to go take a hike. I didn't say that.
Ken Lin: I when I politely declined the offer and says, like, this is I just don't think this actually values Credit Karma in terms of the opportunity that we're trying to create and the vision that we're trying to do. And I appreciate the synergies and actually think 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.
Ken Lin: You're just not in the right ballpark. So, anyways, I politely declined the offer, and and, you know, we went about just kinda running the business. And it was about eighteen months later that Sasan 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.
Ken Lin: And that started the ball of the process of us sort 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 of all places. Was having it was my wife and I's tenth anniversary.
Ken Lin: We're in The Maldives. We were flying back, and I remember I having dinner with her. I'm like, I need to take this call. You know? So I stepped out of dinner, and and he'd sort of, like, got to, you know, sort of the outline of what he was thinking.
Ken Lin: And from Thanksgiving until the New Year, we were working on the term sheet. And then from the term sheet, we were working on the definitive agreement that ultimately was announced, you know, I think February 24. So sort of, you know, month worth of term sheet and two months of sort of definitive agreement.
Pete Flint: And how did you like, the conversation with your cofounders, like, you know, how how did that go? Because, obviously, you've been in it together for at least a decade at
Ken Lin: this point. That so, yeah, that was '19. Right? So we'd been together for twelve, thirteen years at that point. You know, I think it goes back to trust rapport culture.
Ken Lin: Right? You know, they'd known me over those years to be very pragmatic. You know, we had liquidity events in terms of, you know, secondary opportunities along the 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.
Ken Lin: I think there's an opportunity here, and we could sort of go on our own. But if you really thought about we bought a tax company, we think you know, let me let me start with the vision, which is we think having the full profile of a consumer is the way that we can help them. And the thing that we were missing over the years is we actually had the credit side, so we had the liabilities of most consumers. But we actually didn't have the other side of the balance sheet. Right?
Ken Lin: We didn't have the income. We didn't actually have sort of the cash flow. But if we had those pieces, now we could actually understand a consumer's financial life and really help them holistically and really understand what their needs are, how to help them save money. And we had been on a mission to sort of round out that whole balance sheet for the consumer. And, you know, here was Intuit at massive scale who could help us do that.
Ken Lin: And that was what I shared with them. I'm like, we could do this alone, but I don't know. We're three years into our tax business and we've got like two and a half million members. 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.
Ken Lin: So, you know, I think the the mission and the opportunity aligned itself, and then, you know, then it turned into a little bit of the, you know, sort of the details of the deal. But I remember what mattered for us was what do we really care about? What are our nonnegotiables in the term sheet itself? You know, as you know, term sheets can get quite long and lengthy and the negotiation process can take a while. But I remember we thought about what are the two or three things that really matter for us?
Ken Lin: What are the nonnegotiables? And let's see what happens if we can lock down the nonnegotiables and see if there's a deal here.
Pete Flint: And and anything in the nonnegotiables that you are able to share?
Ken Lin: Sure. Of course. I mean, I think there were there were really three things that ultimately mattered for us. You know? I think one was the mission.
Ken Lin: Right? What we were doing. That that to me was the most important thing. If that didn't work, if that didn't play out the way that we wanted it to, we wouldn't do the deal. And when I say, you know, mission, I sort of put mission, agency, autonomy as sort of, like, all in one one bullet.
Ken Lin: And we thought it was really important that we were able to continue what we're doing. And, you know, one of the nice things that actually happened because of that nonnegotiable is that we were effectively run as a, you know, I'll say, independent company for many years.
Pete Flint: And you would you'd still be the CEO and you'd have
Ken Lin: 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 the business.
Ken Lin: I think, you know, and there were some carve outs, right, because we were moving into a public company. Know, ethics, compliance, finances, like, had to have its own path to go and make all of that 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 employees were cut, if if, you know, they weren't treated right, if if there was anything sort of negative associated with the deal.
Ken Lin: And the third one was just kind of the standard terms of the pricing. Like, I already had a bogey in mind and what I thought about the value. But those are our three negotiables and or sort of non negotiables. And, you know, what somebody taught me early on was like, hey, the momentum of the deal, the fatigue of the deal, you will start caving in on things if you don't take a moment out to write what are your nonnegotiables. What are the three things that when that line is crossed, you just won't do it?
Ken Lin: And it was, I think, really helpful in terms of the next, you know, effectively like eight, nine weeks of nonstop, you know, and papering of the deal.
Pete Flint: And and how did you how did you get comfortable with the culture? You know, culture is obviously very important to you, and and we were talking before the show just around Scott Cook as just a legend within Silicon Valley. He's a a friend of the firm, you know, he's just a terrific a terrific guy. And and Intuit has a, you know, has a great culture, but it's probably less wacky, I think, than at least my understanding from the from the advertising of the Credit Karma culture.
Ken Lin: Yeah. I think this is also extremely important in any sort of M and A deal. Right? I mean, think they've done diligence on us, but for for for us to do diligence back was really spending time with their leaders and understanding how they operate. Right?
Ken Lin: Is it a, you know, a collaborative culture? Is it a competitive culture? Like simple things like that. Like, we were always very collaborative at Credit Karma, and they are also at Intuit as well. But it's actually, you know, keep in mind that from the time of the first engagement with Anton, I mean, something like three years had transpired.
Ken Lin: But in those three years, like, I'd gotten to know more and more of those people. And then specifically from the time that Sasan called me the day before Thanksgiving all the way up to, you know, February when we announced. I've been going down there and meeting with them, meeting with all the various departments, really trying to understand. And I got quite comfortable with how they operated. And now, you know, you you you don't exactly know.
Ken Lin: Right? And you'll never exactly know in that process because 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 the people were. I got a sense that they were aligned on the mission.
Ken Lin: And and I think part of it goes back to, like, you're testing for, hey, you told me this about how important this was. When you're five or six meetings later, you sort of have an opportunity. Like, how do you think about this? Right? And you want to have the same answer.
Pete Flint: Forth of Volley, back and forth and different things. And and did you because when I was going through the Truly Azela merger, we were both public companies and we spent a lot of time together at similar stuff, but we would it would be these very awkward, like, we'd have to get the private dining room at some restaurant and you would you would arrive at 08:00 and we'd arrive at 08:15 and, like, you know, and there'd be this sort of, you know, hush-hush dark glasses and kind of like disguises. I mean, I imagine similar stuff had to go on because these you didn't wanna necessarily get to the the press or the employees.
Ken Lin: Yeah. Well, there was as much of that as we could do. The good news is we weren't two public companies that would probably would cause more more attention. But I I remember, I think about ten days prior to our announcing, the story was leaked to The Wall Street Journal. And I remember having that meeting, which was, what do we do?
Ken Lin: Right? I mean Leaked
Pete Flint: by a banker, think?
Ken Lin: Well, to this day to this day, I still don't know. Don't know who leaked it. Those are probably good guesses, by the way. But I remember, you know, we're in sort of crisis mode of understanding what's going to happen, and I remember we saw no comment. Right?
Ken Lin: That was our approach, is like we'll neither confirm nor deny this. As a private company, it didn't really matter to us so much. But for Intuit, it's public, honey. That has huge ramifications in terms of how it played out. But the good news is, you know, it didn't really you know, we got a lot of in downs, but I think Intuit's history of just no comment on these things and us also sticking by the no comment just made it, you know, kind of a a nothing issue for a while.
Pete Flint: And it's exactly the same thing happened with Trulia and and Zilla, which and in in retrospect for me as the CEO, it's it was actually like a little bit of a pressure valve. Yeah. Because it's sort of like there'd been all this internal tension with the sort of executives, and you're trying to navigate this very sticky it's a very complicated situation. And you're kind of at the final line, but you're actually trying to navigate how do you communicate this to kind of the constituents.
Ken Lin: Yeah.
Pete Flint: 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't talk about it. But it's sort of like it was the fact we weren't talking about it knew it might was gonna happen. And and it sort of helped us sort of soften the blow a little bit or or kind of like help us to kind of tune the messaging about how employees would think about it.
Pete Flint: A similar thing.
Ken Lin: You're you're totally right. And I think I misspoke when I said it didn't affect 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. You know, and and, you know, I I think it's one of 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.
Ken Lin: Great. It's out there. I have to respond to it, but I'm also at the same time, like, trying to, you know, get the papers and making this deal happen. But to your point, it does kind of float the idea, and you can get a sense of the employee reaction. Yeah.
Ken Lin: 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 gonna think. 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.
Pete Flint: As you think back through this process, maybe advice for founders, different stages of a startup journey, is there anything that you'd do differently? Or similarly, I'm so glad I did that because it helped to navigate. And again, you don't start a company to sell a company, but this stuff's important for all your different constituents.
Ken Lin: Yeah. Well, I'll tell you a really interesting construct that hopefully will never ever happen again, but it goes back to the moral, which is like sweat the details here. 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 of February 24.
Ken Lin: Mhmm. This is basically a week Twenty '20. 2020. Yes. So this is roughly a week before COVID lockdown happens.
Ken Lin: And The US was getting scared about COVID, and the Dow futures were down 600 points that morning before the announcement. So it's several ominous moment for us, but we decided like, hey, you know, the deal's we we signed it early that morning and we're ready to announce, so we announce. A week later, we're in lockdown. Now in our deal, we have to go through DOJ. Well, most deals require DOJ review, And we thought there was a decent chance that we would have to have second review, which really means that, you know, in in addition to the thirty days that the DOJ needs, they're gonna ask for more time to look at all the competitive aspects.
Ken Lin: I'm sure you had a version of that. Right? But, you know, while all of this is happening, COVID also happens to us. So we went from I'll give you round numbers here, the approximations. We went from roughly a $100,000,000 a month in revenue to something like $40,000,000 a month in revenue.
Ken Lin: We were, you know, instead of making 20 or $30,000,000 worth of revenue, we or netting in profit, you know, we were like minus 40. Woah. So, you know and Yeah. And we signed agreement. We signed a definitive agreement.
Ken Lin: Right? And the bottom falls underneath from your business. And Intuit is, you know, like, I'm looking at Intuit. Right? Like, what are you gonna do?
Ken Lin: And my board's looking at me, and they're like, Ken, you you can't think that this deal is going to happen.
Pete Flint: You But it's it's the definitive deal is signed.
Ken Lin: The definitive deal is signed, but And there's
Pete Flint: act of God or sort of like
Ken Lin: There's there's two components that you that, like, all the legal counsel that you have around the table are thinking about, which is first, a MAC. Right? A material adverse effect or condition. Right? Yeah.
Ken Lin: And so they say, listen. 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 to have a business continuity.
Ken Lin: Like, you have to run the business as you would have always run the business until close. Right? So if you spent 50,000,000, $60,000,000 a year a month in marketing, you have to keep spending $5,060,000,000 dollars a month in marketing. Right? Or that would be an out for them.
Ken Lin: 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, our investors are calling us and like, Ken, we think COVID is a ten year thing.
Ken Lin: We think that this is a big gun. And to their you know, like, to to be fair to them, like, this is April, May of twenty 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.
Ken Lin: What do I do here? I've got investors who think I should lay off half the company and brace and, you know, you know, not expect the deal to go through. And at the same time, you know, I'm kinda talking around the issue with Sasan. Like, I'm not never really directly talking about, hey. Are you gonna close this deal?
Ken Lin: Right? Because it's, like, it's a weird it's a weird conversation. And I remember just kinda thinking about what we need do, and I remember I thought long and hard about it. And one of the smart things that investors had told me to do early on was like, we should have a rainy day fund. Right?
Ken Lin: And, you know, to the billion $2.03, 4 that we had raised, we had about half a billion dollars worth of cash in the bank. And, you know, we raised it for maybe an acquisition in the future or a rainy day. And I remember saying, well, we're raising dollars for a rainy day. Right? I'm not sure if they're we're ever gonna have a rainier day than this.
Ken Lin: So so we made the decision. I made the decision in many ways that we were not gonna lay off the company. We would do everything we could to rein in our expenses. We all took pay cuts. We, you know, sort of any marketing that wasn't committed, we would pull back, and we would just really tighten the belt as much as we could.
Ken Lin: The DOJ ultimately said, okay. You know, if you do x y and z, we'll let this deal happen. So in December of twenty twenty, we we closed the deal. You know, credit as
Pete Flint: an industry and these big ticket items are it's sort it hasn't changed that much in decades. And then, you know, as you look forward over the next few years, like, how will how will those how will this industry change? Or do you think it's just going to stay the same?
Ken Lin: No. I think I think there is a I I think we're in that moment now. You know? I think in the next five years, the transformation of of how a consumer's relationship with money will be redefined via AI. And what I mean by that is, you know, right now, the model is if you're at the top, you know, let's say, one to 3% of incomes, you have a personal banker, you have a c CFA, CPA, you name it, who can help you advise on your money.
Ken Lin: And the model a day works roughly because you generate enough revenue for the banker, whomever, to pay that particular person to give you individual advice. And I think that day is coming now where AI can actually do that for the masses. So even when you're helping just generate, you know, pennies worth of incremental revenue, that will be enough to have the AI components manage and give you personalized advice. And I should note, like, that professional that, you know, people have had historically that have made mistakes. Right?
Ken Lin: Like, you know, your financial planner is not infallible. And I think in many ways, that opportunity with technology 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, the planning that we have will be fundamentally better. But I think the second wave of that is now the things that we are too lazy to do even though we should do them will also happen automatically.
Ken Lin: Right? So, you know, bill pay is a very simple example, but I'll just use it because it's like we know we should pill it, but sometimes we don't have the funds or the means to do it. But most of the time or many of the times or some of the times, depending on where you are, you're just kinda lazy. Right? And all of these things get automated.
Ken Lin: Right? And I I think the world moves to a place where the mundane and knowing what you should do is very clear. Now it's a function of do you have the self control to do it? Do you have the desire to do x, y, and z? And where do you ultimately wanna be?
Ken Lin: But I think that's transformative because I think for a long time there was a lot of confusion in what finances are and what you should do as a consumer. And the tedium of, you know, these little small tasks of paying bills on time, doing these like sort of, you know, refinancing your loan, they're they're kind of painful. Right? Like, I don't wanna refinance my mortgage to save $50. But if it's
Pete Flint: Automated and AI and agent.
Ken Lin: 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.
Pete Flint: Yeah. That's yeah. The the the top one percentage, you say, have access to these people that will recommend these changes, and that's that's gonna be available to, you know, a large portion.
Ken Lin: Yeah. I wanna say all. Right? Because it's unclear whether the data and sort of the infrastructure supports that today, but it will change the percentage for sure.
Pete Flint: Yeah. I know I know friends that have updated their they've uploaded their bank statements and their tax forms to ChatGPT. And they've and they've I've not seen the outputs, but, like, they said, oh, I got a bunch of pointers that were kind of super useful. Yeah. I'm not I'm not recommending people kind of upload their stuff there, but it's but it's, you know, fairly basic stuff can be pretty intuitive.
Pete Flint: You just think you you roll it forward a few years. Yeah. It still makes very interesting.
Ken Lin: It still makes some mistakes to your point, and and, you know, you have to be careful about it. But I think, by and large, advice is actually very 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 to take a lot of action. Right?
Ken Lin: Like, You you gave me six steps and six pointers. I may not wanna do those. And I think when you can have those six points or steps done for you, I think that becomes really fundamentally significant.
Pete Flint: 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 not thinking about next?
Ken Lin: Well, my my goal is just to do nothing for the next, you know, nine to twelve months. Think giving it's been a seventeen year run for me giving a little bit of space. I have young kids that I'm dying to spend time with, and, you know, there are a lot of things you give up or are willing to trade off when you're operating. And I wanna make no more trade offs and really focus on the things that I enjoy doing, and then we'll see. But what's clear for me is what I wanna do for the next, you know, nine ish months.
Pete Flint: Awesome. Well, you well deserved. Thank you. Well, thanks for joining us today. It's been a terrific conversation.
Ken Lin: Oh, my pleasure. This is fun.
Pete Flint: Thank you.