NerdWallet is changing how we shop for financial products
NerdWallet is changing how we shop for financial products
NerdWallet is the personal finance website that helps consumers find, review and compare financial products. It’s like a matchmaker between bank services and customers. The site uses more than 300 journalist and financial experts to provide details on credit cards, personal loans, taxes — anything money related.
The company’s CEO and co-founder, Tim Chen, said the combination of shopping with reviews and a distrust of big banks after the financial crisis created the perfect climate for NerdWallet to take off. Now the site gets more than 100 million visitors a year. Chen spoke with Marketplace host Kai Ryssdal. The following is an edited transcript of the conversation.
Kai Ryssdal: So I have to tell you, we were in a meeting this morning and we were talking about some of the stuff that’s coming up, and I said “Well, I’m talking to Tim Chen of NerdWallet here in a couple of hours,” and like three or four of the millennials in the room went, “Oh, wow, I know that company,” which I thought was interesting that that was the gut reaction of that segment of the audience.
Tim Chen: Yeah, it’s remarkable. We reach 100 million people a year, but predominantly are known by millennials.
Ryssdal: Do me a favor and tell me why this economy needs this company right now.
Chen: Yes. Money is complicated …
Ryssdal: Yes, yes, it is, man.
Chen: It is. And, you know, the thing that we try to do is we try to make it easier. I mean, by the time you’ve had your first kid, you probably have 10 or 12 different financial accounts. And how do you know that they’re the best ones? So it’s hard to stay organized and keep your budgets and all that stuff. So we try to help with those things.
Ryssdal: Give me the origin story about how this company came to be.
Chen: Sure. You know, NerdWallet started as a spreadsheet. So my sister asked me for help finding a credit card, and I thought, “I wonder what the answer is.” And so my first thought was ‘Let me Google that for you.” So I was kind of surprised by what I found. I mean, it was a lot of marketing material, not much financial analysis, the way I would think to do it. You know, I had been working in finance at the time, so I expected something like a spreadsheet. And so, I quickly pulled together all the credit card offers from the biggest banks, and it got forwarded to a few friends, they forwarded it to a few more friends, and that’s kind of how it started. Over time, we branched out into more products than just credit cards. So things like personal loans, savings accounts, CDs, but pretty much the same problem. It’s just hard to figure out apples and oranges.
Ryssdal: Which, and this is deeply cynical, but one has to imagine that the apples and oranges and hard-to-figure-out-thing is somewhat a feature of the system if you’re a financial professional not a bug.
Chen: Yeah, absolutely. I mean, you know, banks, their core business is building a relationship with you, often through something like a checking account, and then selling you more of their own products over time. And the products they have might not be as good as products you can find on the internet. Millennials are just used to comparing things. Even college professors. That’s the one that really strikes me as an older millennial. Yeah, people don’t really take college courses anymore without reading the ratings on their professors and figuring out which ones are good and which ones to avoid. Kind of mind-blowing.
Ryssdal: That’s great, actually, that’s a really good analogy. I want to do a very quick circle around to you and where you came from before you started this company. And I do it in light of the fact that we’re coming off the 10th anniversary of Lehman Brothers. You’re a hedge fund guy, right, who lost a job in the financial crises?
Chen: Yeah, I spent my prior career as an investor and analyzing which technology companies were going to succeed and which ones were going to fail. And, you know, betting our investors’ money based on those hypotheses.
Ryssdal: And how much do you think of your business success now is because people are scarred, I suppose, by that crisis that cost you your job?
Chen: Yeah, I do think that crisis had a big impact on the public’s faith in some of the largest banking institutions out there. And I think it was concurrent with some other factors, such as, you know, this millennial shift towards offline to online and wanting reviews on everything. So I think those two factors really caused people to do things like comparison shop more actively and think a little bit more cynically about trusting everything that a broker or an adviser or a banker was telling them.
Listen to the rest of this interview on our podcast, Corner Office from Marketplace.
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