Though man may drive nature out, still she returns. As an extension of natural law, the laws of economics are no more sensitive to man’s whims than those of gravity or light. Astute businessmen are, by definition, careful students of human nature and the laws of economics. This fact alone goes far towards explaining why many of the companies within Silicon Valley, particularly recent IPOs, have been colossal failures.
David Zalik, the founder and CEO of GreenSky Credit, is one of the few resolute pragmatists that one might find in the financial technology sector. He has famously quipped that startups not having $30 million in venture capital available is a good thing. That way, those startups have no way to waste $30 million. You won’t find bean bag chairs, complimentary pizza and ping pong tables around the headquarters of GreenSky Credit. Zalik prefers to pay his employees well, and, in return, he expects them to work.
But this pragmatic approach has eluded many of GreenSky Credit’s competitors in the fintech space. These include the IPO horror stories of Lending Club and OnDeck. Both companies have experienced stock declines in excess of 85 percent. But at the end of the day, all the foosball and ping pong tables may simply be the superficial symptom of these companies’ disease, rather than the disease itself.
Far more worrying is these companies’ obsession with one-world, neo-Marxist ideas like so-called microlending and attempts to radically circumvent the established lending channels. This foolishness has had the same predictable results of other well-intended but badly misguided programs, such as minority outreach programs of the Bush Administration for homeownership.
The reality is that, at the end of the day, no wishy washy rhetoric or newfangled theory of human capital can overcome the cold, hard realities of economic law. GreenSky Credit has wisely focused on creating value in the prime-borrowing market. Only servicing customers with 700-plus FICO scores. While its competitors were making 5-figure NINJA loans to street people, GreenSky was building a $5 billion company on sound economic principles. And it’s a solid bet that GreenSky will use that sensible formula to continue its strong growth into the future.