Innovating in Fintech: Jason Hogg, CEO of Lending.com (Part 7)

Sramana Mitra: What did American Express do with it? Did they keep the card? Since 2009 on to 2015, what happened in the business?

Jason Hogg: American Express actually created Serve, which is their reloadable prepaid product. We were also, at that time, early in the mobile and smartphone game with money transfer and other transaction capabilities. Serve is active there as well as it’s hooked into the American Express network. We ended up shutting down the Revolution card network in lieu of American Express’ network because they have over 7.5 million merchants already in the network. We plugged into that. Now, people have cards that are accessed anywhere American Express is accepted. We did a deal with Walmart that resulted in an alternative banking product called Blue Bird.

The interesting thing for me was, it isn’t always easy to just do partnerships. The illustrative example of that was we ended up having discussions with Walmart way back in 2006 and 2007. Frank Greens, who was on my Board, Steve Case, and a guy name Mike Cook over at Walmart liked the idea of being able to have an alternative banking product and to provide bank-like capabilities to their customers. Interestingly enough, those we have kept in touch persisted for years. Then in 2010 as soon as we completed the transaction in January, we were in active dialog with them and we ended up closing a deal with Walmart to create Blue Bird on what is originally the Revolution Money platform.

Sramana Mitra: What happens after that?

Jason Hogg: After that, I spent a couple of years doing that and getting it transitioned. Ken Chenault gave me an interesting opportunity. We had done a deal with a company called LianLian in China to get into the reloadable wallet business there. They were going to leverage the operating system that I invented. I went over to China and I actually helped to found AmEx’s mainland China operations and run the joint venture. It turned out to be successful.

At that point in time, I had come full circle and was looking to do something else and different. I was four years into working for American Express as a Division President. I wanted to go back to being more of an entrepreneur. I really like the challenge of building something and doing something new. I ended up talking to Ken and had an amicable exit. I think that’s an important thing. If you do sell your company, you want to make sure that you stick around to make sure it’s a successful transaction and that it does what you promised it would do. From there, I started looking at other spaces out there for disruption. That’s how I ended up teaming up with Blackstone to start Lending.com.

Sramana Mitra: What is this company?

Jason Hogg: This is another platform company. I look at the lending space now like I looked at the alternative payment space back in 2003 and 2004 when I was coming up with the idea for Revolution Money. It’s very archaic. There are very few players involved. It’s highly regulated and there’s a lot of displacement for borrowers and consumers. The aftermath of the financial crisis has left retailers seeking solutions for their customers. We created a platform that is vertically integrated that does everything from origination, automated decisioning, to balance sheet management, and all the way out to capital markets.

We picked an area where Blackstone obviously has a tremendous amount of fortitude and expertise in the real estate space. We started a business called B2R as an anchor tenant of the platform doing single-family rental lending. We used that as a forcing mechanism. As an entrepreneur, it’s always good to have a very specific partnership or product to act as a forcing mechanism to make sure you got the critical functions up and running for your business.

Sramana Mitra: What is the capitalization of this company? What has been the evolution of this company? What year did you start this one?

Jason Hogg: We started this last year. Over the course of the past year, we’ve originated billion dollars and we’ve already taken the loans all the way from origination through to securitization twice now. The first was a $230 million securitization in April. We had a $300 million securitization just last month in November. We’ve expanded our product set. We then moved into other areas in real estate. We started to see that borrowers who had been in the real estate space had been used to dealing with piles of paper and sending reams of paper, and the process of getting a loan taking months and months.

When we started to provide them with solutions that were instant, digital, and mobile, the response has been amazing. We launched a new product about 70 days ago called Foundation where someone can literally look for a house that they want to purchase as a rental property and they can apply for a loan and get quotes from the front yard. If they want, they can even get pre-approved in the front yard and lock-in a quote on the spot on their mobile device. That’s really taken off tremendously well. We’re taking that format and moving into other areas of installment lending. If you think about it, mortgages are just a very complicated installment loan. Now, we’re starting to move into small business lending as well as durable goods and other installment type loans.

Sramana Mitra: Great! Thank you for your time.

This segment is part 7 in the series : Innovating in Fintech: Jason Hogg, CEO of Lending.com
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