Innovating in Fintech: Jason Hogg, CEO of Lending.com (Part 4)

Sramana Mitra: What year did you do the $10 million first round financing?

Jason Hogg: It was a year later. We did the $10 million financing in May of 2006. I had this idea in my head when I made that connection that I told you about all the way back in 2001. It was knocking around at the back of my head. It took a while to percolate. I had the advantage of being able to talk to my father who’s obviously very knowledgeable about the credit card industry. Over the course of several years while I was doing the turnaround work, it was my pet project. In 2005, one of the other things that Dennis said was, “I want you to build the proof of concept, but I want you to file the intellectual property on this.”

I went and filed a whole series of patents which resulted now in dozens of patents that made it valuable. Then in 2006 when we closed the financing with Steve, we needed to get a team together in order to execute on the idea. I started working to pull together folks. Steve helped build a tremendous Board for us and introduced me to someone who has become a huge mentor in my life—Ted Leonsis who became the Chairman of Revolution Money.

We had great Board members like Lawrence Summers who is the former Secretary of Treasury, Dave Pottruck who is the former CEO of Charles Schwab,  Jim Robinson who is the former Chairman and CEO of American Express, Tige Savage who now runs Steve’s venture fund, and David Golden who is the former Vice Chairman of JP Morgan. We have a very experienced Board that was able to help us get contacts going and also provide incredible operating advice as I was building out the business.

Sramana Mitra: When was the start of the business? When did you launch the platform? Who were the early customers and early adopters? Give me some perspective into that part of the business.

Jason Hogg: The next step that we wanted to do was to have an entire ecosystem so that we could show the technology working from end-to-end with customers in a live environment with live money and retailers. We did a partnership with the Philadelphia Flyers and 76ers. We set the Comcast Spectator up essentially as a lab. We had the ability to issue  cards. We got people to walk up to a kiosk with a laptop. They applied and received an instant approval at the point of sale, which had never been done before at that point. We issued them an anonymous card.

That’s something we patented – the ability to issue a piece of plastic at the point of sale. In the arena, they could use the card instantly to buy goods and services. We had deals and offers hooked up to the account. They could buy a hat or jersey and get a percentage off. They could redeem a hotdog or beer at the concession stand. We were able to really show the entire business model and technology with real customers and real revenues and money flowing through all in that one little lab. That was what they now refer to the proverbial proof point.

From there, we got a break and they were talking to us and we were covered by Wall Street Journal about that. We had been talking to a number of large retailers as well as the acquirers at that time. When they saw that we were able to unilaterally begin to do our processing, they engaged more seriously in discussions with us. That was a seminal deal for us. Our first huge deal was Vantiv. We signed a deal with them. They brought us major retailers. You could use the card from Barnes & Noble.

This segment is part 4 in the series : Innovating in Fintech: Jason Hogg, CEO of Lending.com
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