Another credit related firm or lending payment system firm is Credit Karma A Credit Karma doesn't provide loans directly to consumers All they do is help you out with your credit they provide you information So as a consumer you can go get a free credit report from Credit Karma You can also get some other value added services that will help you improve your credit score or understand your credit score or protest something that's wrong Credit Karma will also provide you with some consulting or additional value added services if you wish to have that But, if your credit is great your credit score is great they will also work with you and say "Would you like a credit card? Would you like a mortgage loan? 'Would you like a car finance loan?" I assume you were looking at your credit score for some reason Would you like some help or links to good companies? That might be able to provide you great rates on loans And because Credit Karma has a good reputation and hasn't charged anything to its customers and they're feeling good about it they're feeling happy with it When Credit Karma makes these targeted ads or offers of helping you find financing it doesn't feel as odd or as commercial in its nature as do some bank commercials or ads You know, you get a commercial "Would you like a mortgage?" And you're watching a YouTube video and you say "Go away. Skip Ad." With Credit Karma, you're looking at your credit report and you're now thinking "I wonder what it would cost me if I wanted to borrow money to buy a car." And Credit Karma says, "Have you been wondering about buying a car? We have some great lenders that might be able to help you with that." "Oh, yeah. I'll click there. What do you have in mind? What do you advise? What do you suggest?" And the banks love Credit Karma because they're getting a lot of information and a lot of filtering of the front end to the customer So the banks are getting better referrals better leads, than they would from just a general ad They're getting something much more valuable from Credit Karma and they're willing to pay for that And the consumers are getting a more customized advertisement that they're happier with than a general ad So Credit Karma is doing very well at making money They're doing this through referral fees and through banks being willing to pay for leads The final company I want to talk about is a company that has been a pioneer and a leader in this industry They started in 1997 when the internet was young Now, the Internet itself wasn't young I shouldn't say the internet was young The internet has been around a long time in one variation or another But the web was young The internet, as a visual graphic-based entity rather than a text-based entity, was young And so they were an early e-commerce-like platform in the early days of web commerce So 1997, they started up They are very simple value proposition that would give you loans, easier, faster, simple particularly for mortgages and or auto financing, they were very easy to work with and very large They got some funding from Softbank, from Yahoo from Sequoia Capital, and that helped them get started In the first year, they raised $25 million in venture funding And eventually by 1998 they had received an offer from Intuit to buy their company for 130 million And that's a big increase in valuation Now we're talking about four times jump in value in one year 400 percent a year that's pretty good return. They turned it down More interesting. They did raise 25 million or 23 million I think it was from Yahoo for one quarter of their company which was a lower valuation but it allowed them to stay independent And eventually, they did sell the whole company to Popular Inc. a bank holding company, in 2005 a couple of years later, for 300 million Mind you, this is after the dot com crash So even though not all companies were now magically valued at big numbers like they might have been in 1998 By 2005, we're well past the dot com crash and they're still selling out for huge multiple over their initial listing of their company and raising of capital over their private placements So big gains for the founders, for the company So this is a success a cash out, for an early pioneer in payment systems, eLoan Now you may be thinking "But I've never heard of eLoan." Yeah, they went away in 2009 They went away before there were very many smartphones out there Before we have apps like we do today of Apple phones or Samsung phones, or our Google pay, they were gone Why? Because Popular Bank who bought them preferred to move all the direct banking and direct lending under their own name So now it was Popular direct, not eLoan And so it's just a banks front end for originating loans, electronically And that bank paid a lot to buy this but they wanted to buy the capabilities, the technologies the ideas, the ability to assess loan risk in an automated way, and they got it They got it, they brought it in-house they turned it into their own brand And the FinTech startup is gone That doesn't mean FinTech is gone that means this particular startup was acquired by a bank the founder made money the early investors made money the users got great service and then it went out of business as a bank took over that business But then other firms started up in this space like our lending club or like Circle Fund in the UK or like Credit Karma and linking in to sell your bank lead information to financial service firms And so, many firms in this space there are lots of startups in this space literally hundreds of startups, some are big When eLoan was around it was more than a quarter of the entire lending space by the time it was bought out So, big firms, some big successes sometimes merged into existing financial services firms Thus, you may say "The banks' view of this may be like Mark Twain once said famously 'reports of my death have been greatly exaggerated.' " Reports of the death of banks may well be greatly exaggerated but we may see FinTech firms getting merged in or purchased by large financial institutions and becoming part of those firms. Thank you
