In the middle of the recession, everyone was talking about their personal finances. So, what’s a good startup idea? A personal finance site.
Back in 2009, that’s what NerdWallet did. Its mission? To offer financial tools and advice from an objective standpoint to help people make the best decision for themselves.
“Seeing NerdWallet grow from a singular credit cards tool in 2009 to providing content and tools across 11 personal finance topics today is something I have great pride in,” said Tim Chen, CEO and cofounder of NerdWallet.
NerdWallet started with three employees, two of which were Chen and his childhood friend and cofounder, Jacob Gibson. The original idea grew out of the middle of the recession, after he was laid off from his big banking job and his family started asking him for advice about credit cards and mutual funds. While he had some knowledge base, he realized that there wan’t a great place online for people to find solid and unbiased answers to personal finance questions.
“We take pride in helping consumers make informed financial decisions based on the expert, honest advice and objective information we provide,” said Chen. “We will continue to empower consumers and provide clarity on complicated financial decisions to help them change the way they think about their finances.”
Chen, who is a former hedge fund analyst, originally cofounded NerdWallet as a credit card marketing website. The site has evolved to a landing for a wide array of topics related to personal finance, with about 3 million monthly web visitors. The predominant way NerdWallet makes money is by click-throughs and if those clicks become credit card applications with approvals.
According to Chen, the business was started with just $800. Now, the total equity funding is $69 million after two rounds from seven investors. NerdWallet recently had a valuation of $550 million.
NerdWallet does have some competition. Just a little — from Bankrate (which owns CreditCards.com), to Credit Karma, Betterment, Wealthfront, Mint, Zenefits, LendingTree, The Motley Fool and even WebMD (NerdWallet ventured into the health data industry in 2013). There’s also the historic investment businesses like Fidelity, Vanguard and Schwab, as well as insurance companies, like Prudential.
Its San Francisco headquarters now has more than 400 people — or Nerds, as they call them — and includes all the snazzy startup accoutrements, like health-conscious catered lunches, as well as nap rooms, free bootcamps and other quirky things, like “Nerding” rooms and DJ booths (that double as conference rooms) and a place to challenge your colleague to a foosball game.
“We have an inclusive, collaborative and casual vibe with open-space offices built for employees to come together, the best technology to equip our employees with what they need to be successful and rooftop hangouts to refresh,” said Chen. “We start every week with a company-wide meeting and end the week with a happy hour to celebrate all the great work.”
When asked about his proudest moment over the past seven years, Chen replied: “I have many proud moments since founding NerdWallet. Everyday I’m inspired by the level of talent surrounding me at the company and being able to work with these exceptionally smart people to deliver on NerdWallet’s mission.”
Seems rosy, right? Still, there have been some hiccups along the way.
According to Chen, 2012 was a pivotal moment at NerdWallet. The business was continuing to grow, but profitability and revenue were beginning to flatten.
“Coincidentally, I was talking to different business leaders in the Valley for advice on how to prepare for hypergrowth, and it was apparent that there were major factors that were getting in the way of achieving our ambitious vision,” said Chen. “As a result, I led a reorganization of NerdWallet where several employees were let go. I was faced with a hard decision of making major changes to enable the company to reach the next level.”
Chen, who has been known to have anxiety about making any wrong choices, decided to layoff about 20 percent of his employees, right before the annual company holiday party.
But despite that, there have been some really interesting additions, some even padding NerdWallet’s wallet.
In March 2014, NerdWallet brought on former LinkedIn business operations VP Dan Yoo as COO, and three months later, the company moved to the competitive area of Market Street in San Francisco. Last September, Chen was appointed to the Consumer Financial Protection Bureau’s Consumer Advisory Board.
Investment has been good. It’s evolved with the type of people who have been brought aboard. In Oct. 2015, Simon Williams, chairman and CEO of Camelot Financial Capital Management LLC, was elected to the board of directors. Simultaneously, Camelot invested $5 million in the business, bringing NerdWallet’s Series A funding to $69 million.
As it’s looked to the future, NerdWallet’s also looked at retirement — acquiring related retirement finance businesses, that is. The business made its first acquisition, taking on AboutLife, in order to expand its retirement planning programs.
When asked the reason for the success to date, Chen said: “Our success has come from staying true to our consumer-first ethos and building a company of top caliber talent that mirrors that consumer-first mentality.”