It’s easy to mistake the trappings of success for stability. Beautiful office buildings, favorable earnings reports, an international presence and a growing global team not only convey the look and feel of success, but the idea that the success is permanent and that the company behind that success is infallible.
Tempting to believe, perhaps, Green Dot CEO and Co-founder Steven Streit told Karen Webster, but always wrong. The reality for any business — no matter how established, powerful or popular — is that success being permanent is “never the case.” Anyone who doesn’t believe that, he noted, can ask those once at the helms of BlackBerry, Sears, Kodak or Arthur Andersen how quickly things can change.
“Companies are fragile children that can always run into traffic and get hit by a car,” Streit said. “Success is the result of hundreds of decisions made every day, and the watchful hand of a parent to keep the kid on the sidewalk. Lose sight of that, and things can fall apart very quickly.”
Webster and Streit spoke as Green Dot celebrates a milestone that only about 20 percent of businesses started to reach in the late 1990s: its 20-year anniversary.
It’s not something he would have predicted in 1999 when he founded what would become Green Dot, he noted. Then again, Streit wasn’t a payments or finance person — he worked in radio. His main exposure to the payments industry was using his Bank of America debit card to pay for things at the store.
Yet, he bought into the idea that the internet would become a place where people would want to shop one day, once high-speed internet became more ubiquitous. Back then, the only places that offered access to the internet beyond the dial-up modems were university campuses. That brought about an idea to create a card that would give kids — who didn’t have a credit card, but did have access to high-speed internet at school — a way to buy things online.
That product, in its first iteration, was dubbed the iGen card — which rolled out in D.C.-area Rite Aid stores in 1998. It didn’t quite work as expected.
What could be more perfect than giving kids with access to the internet, but no access to a convenient way to pay online, a product that would let them unlock the world of eCommerce awaiting them? The iGen product was sold — and loaded with funds — at convenient retail locations around college campuses and upper middle-class neighborhoods.
However, though Streit had built it, they didn’t come. In fact, he said, the cards failed to make a sale for so long that Streit was concerned Rite Aid would cancel the pilot. That’s when he called a friend in the D.C. suburbs and asked him to buy one just so he could record a sale.
Little by little, people started buying the iGen cards, but their buyers weren’t the kids that Streit and his team had targeted. Those who called the company's “call center” — which was essentially a storage closet with two desks and two phones at the time, Streit noted — were adults with jobs who either didn’t want to have a bank account or had issues that prevented them from getting one.
That’s when Green Dot made its first major pivot, pulled back all its cards from the Rite Aid shelves and repackaged them with a more adult-oriented target. By 2001, sales were good enough that Streit was able to persuade CVS and Walgreens to get in on the action. By 2005, the firm was profitable and, by 2006, had sold over 2 million cards.
“Sometimes, you are smart and strategic, and sometimes, you just get lucky,” Streit said, noting that the company's timing for entering the market was strategic — as Green Dot was early on the bandwagon for concepts that were unheard of in the late ‘90s and early 2000s, like offering products for those outside the mainstream banking world.
Streit noted he was also lucky. He ran a lean, bootstrapped organization that was self-funded by the sale of stock he had acquired when working in radio. He was able to manage the business until it turned a profit, raising very little outside capital. For the entirety of Green Dot’s pre-public life, Streit said, he had raised $30 million in total.
There have been many transformations in Green Dot’s business over the last two decades. In some sense, Streit told Webster, the company is still in its early days. The lesson he and his team have learned continuously is that what’s good enough today may not be good enough two years from now.
“I don’t have a fear of blowing up my own ideas,” he said, noting that half of Green Dot’s revenue today comes from products and services that didn’t even exist three years ago.
The company mantra, he noted, is to ask the teams what products they would build if the business were brand new, and if the target audience was a group in their 20s. The answer is, inevitably, something different from what is offered today.
Streit also acknowledged how thinking that way, and doing things differently, has risks — and it’s easy to shy away from real innovation in favor of iterations on products that are already working. It’s even easy to convince oneself that the iterations one is pursuing are real innovations.
As he and the Green Dot team look at the next generation of customers and the future of banking, he noted, the market needs innovations more than new iterations on what already exists. That's because, for a consumer under 25 (one who doesn’t have a long-established relationship with banking), their financial services needs are simple: a vault in which to place money, and a way to tap into that money to make payments.
“That can be done in many different ways — and the future is [in] finding a natural environment where a young person would be willing to open one,” Streit said, adding that Green Dot’s current evolution into a Banking-as-a-Service provider is about placing the ability to open accounts in those “other” environments where young consumers might seek them out.
It won’t end traditional banking, he noted. There are some services that Main Street banks will always offer better than their digital counterparts, particularly for consumers with complicated financial lives that require a lot of high-touch servicing. Yet, for the average consumer (especially the average young consumer), their needs are simple, and their minds aren’t yet made up about where to tap into those services.
Green Dot’s future, Streit explained, is in offering a wide palette of choices for tapping into those services.
“It is hard to do that, by the way,” he said.
During two decades in business, none of it has been easy. From day one, he noted, it’s been a lot of phone calls to experts, a lot of flexibility and a lot of trying to learn what the company didn’t know. Hard is worth it if the company achieves the mission it set for itself decades ago, Streit said, and that the team has worked full-time to live up to ever since: Green Dot wants to reinvent banking for the masses.
While there is still much left to do, Streit expressed that he feels most proud about the company's contribution over the last two decades to building a different world than the one it entered 20 years ago.
“We will never go back to the days when only middle-class people in middle-class neighborhoods can open a bank account,” Streit explained. “Today, minorities and low-income Americans, and others, can always get a bank account anytime they want, just like anyone else. And they can [do so] — and do it in the millions every year — where they want and how they want.”