Thought Leaders in Financial Technology: Grain CoFounder and COO Carl Memnon (Part 4)

Sramana Mitra: When you launched on the app store while you were in YC, what was the regulatory status? Did you go through all these individual state-wise regulatory approval processes for all of them?

Carl Memnon: One of the learnings that came out of Arizona was that we don’t need to be the lender on record. In order to get a financial institution to deploy this technology, we needed to get to that point of maturity in terms of the product.

Once we were able to bring the MVP to different bank partners, we further developed the algorithm with them. We just provide the technology. Our bank partners are the lenders. They use our technology to service and lend. We needed to get all of those things in place such that a financial institution would adopt our program even incrementally.

We’ve grown exponentially since then but in that first $5 million program, we had to do a lot of building and understanding of the product and getting them comfortable with the product and the black box without having to get licenses in each state. We’re purely a technology company.

Sramana Mitra: The Grain app that sits on the consumer’s phone is a Grain app?

Carl Memnon: Yes.

Sramana Mitra: They’re choosing to work with a financial institution and all the approval is on the institution.

Carl Memnon: Correct. We jointly developed the programs in terms of underwriting. The onboarding of the user, the experience on the mobile app, all of that is Grain. That’s the mutually beneficial part of it. I mentioned how we work with community banks. Our customers are millennials and Gen Zs who would traditionally go to Bank of America or Capital One for a credit card.

These community banks have the capital to deploy, but millennials and Gen Zs are not opening up credit accounts with them. We built this technology that millennials and Gen Zs like to use. The bank, on the back end, is deploying its capital. We just sit in the middle.

Sramana Mitra: Very good. Talk about the go-to-market strategy. How do millennials and Gen Zs find out about you?

Carl Memnon: We advertise primarily on Facebook, Instagram, and Apple search. A lot of our growth has been driven by word-of-mouth. We don’t have any referral programs in the product yet. We are currently only on iOS. We’ve got a lot of traction just from people sharing their products. We’ve seen a lot of couples coming in and sharing with their partners. It’s been a combination of both.

The reason for some of that organic growth is the uniqueness of the product. We’re meeting them where they are. We’re not competing for wallet share or with a different card. They can access credit very quickly and responsibly. That’s appealing to the debt-conscious millennial.

Sramana Mitra: Is there a segment that you’re going after within millennial and Gen Z?

Carl Memnon: We have three segments of users on our platform. I wouldn’t necessarily say that we are targeting one over the other. We have a segment of individuals who are like me when I first came. They have no credit history with good incomes and they want to build their credit. We see a lot of immigrants.

This segment is part 4 in the series : Thought Leaders in Financial Technology: Grain CoFounder and COO Carl Memnon
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