What is NerdWallet? Making Personal Finance Transparent

What is NerdWallet? Making Personal Finance Transparent

Whether you’re searching for a new mortgage or a 
credit card, financial advice is often a bit of a   maze and that’s with all the technological 
advancements we have at our disposal.   Now think back 13 years to 2008 when this 
advice was more of a minefield than a maze,   with one wrong move potentially crippling you 
financially. Tim Chen found himself in this   position at the time. A former Analyst at some 
leading Hedge Funds like Perry Capital and JAT   Capital Management, he found himself unemployed 
after being laid off on Christmas day.

He received   an email from his sister to help her to find a 
credit card with lower transaction fees and with   nothing else to do, he got to work researching. 
But after a few quick google searches,   Chen was shocked that the only information 
he could find was marketing or promotions,   nothing concrete. So he spent the next week 
professionally researching the major banks and   credit companies to build a list of options for 
his sister. But this sparked an idea in his mind   and in his wallet. So today, we’ll explore 
the history of NerdWallet and how they’ve   become one of the most reputable Financial 
Advisors in America. Here’s How It Happened. Firstly, what is NerdWallet. Well it’s a Fintech 
platform that provides financial advice for loans,   mortgages, insurance, tax and investments 
alongside calculators to work out how Much   you can borrow. Their mission is “to provide 
clarity for all of life’s financial decisions.”.   The website now sees 10s of millions 
of visitors every month and will likely   have a valuation when they IPO in 2021 of 

But it wasn’t so easy back in 2008.  Chen realised in his research 
that the material was so dense,   nothing was easy to understand and it was almost 
impossible to compare products. He wanted more   transparency and the only way was to launch his 
own website. So, using $800 and working from his   Manhattan apartment, he launched NerdWallet 
to provide the pros and cons of financial   services with a Q&A offering and professionally 
written articles thanks to financial journalists. The start was – well – tough. in the first year 
he, along with his co-founder Jacob Gibson,   only made $75 whilst working 20 hour days and was 
forced to move into his girlfriend’s apartment   to save money.

A year later and NerdWallet 
had done $60,000 in revenue, a positive step   but not exactly a fortune and if it 
wasn’t for the poor economic outlook   caused by the global financial crisis, Chen admits 
he might have got another job with a hedge fund.   But from mid 2010, NerdWallet began seeing 
more visitors and revenues rocketed. By 2015,   NerdWallet raised $64mn in their first funding 
round and they were already turning a profit,   adding cash to the balance sheet. the Impressive 
growth was partly thanks to the low quality   already on offer in the industry which were so bad 
they had led to lawsuits for fraudulent practices   and mistrust with big banks. NerdWallet 
hired established writers from USA Today and   the Wall St Journal who pumped out well written 
financial articles which not only added gravitas,   but helped to flood Google with NerdWallet content 
and improved their search engine optimisation,   making it easier for them to be found and 
not having to pay for marketing or SEO. "Most consumers want to know that they can trust 
somebody who is not beholden to one financial   institution," "They're worried that they don't 
know the right answers and they're going to make   a mistake.

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We want them to have the confidence 
that they're making a good solid decision." But Chen himself didn’t always make good 
solid decisions. Along the way he had a   philosophy of hiring smart people and letting 
them figure it out. The business became silod   and some new employees didn’t match the 
culture they were building. The issue is   that when you then let those people make hires for 
themselves, the culture can become toxic quickly.   So in December 2013, Chen fired 11 employees, 20% 
of the workforce at the time to fix his mistake.   Chen was a poor public speaker and the speech was 
described as brutal and visibly uncomfortable,   but it had to be done.

He had to do the same 
thing again in 2017, firing 50 employees or 13%   of the workforce to continue the trend of 
ensuring the strategic direction of the business. But as the business has grown, you 
might be sat there asking yourself   how does NerdWallet make money? Well they run 
affiliate marketing through their website.   If someone clicks on a link and signs 
up to a credit card or mortgage,   NerdWallet gets paid by the lender.
There are however question marks around whether   or not NerdWallet promote the offers that have 
the highest affiliate commission despite them   confirming they always have their clients’ best 
interests at heart. Something to think about.  Nerdwallet now generates around 
$150mn annually and their growth has   even expanded internationally, acquiring 
the Know Your Money platform in the UK.

Despite the competition from the Fidelitys and 
Vanguards of this world, alongside the Bankrates,   Credit Karmas and Motley Fools, NerdWallet 
stands by its mission to help people make   decisions confidently when it comes to finance 
by making information transparent. It’s broad   breadth of financial content means that 
whenever you input a financial question   into google you’re bound to be faced by the nerds 
as they try to anticipate your financial dilemmas.   Even Chen believes it’s a waste if 
people don’t find the right answer.   When Chen started, he admits he was more 
concerned about building a successful company,   but now he’s become more mission oriented and he 
believes that if they focus on doing what’s right,   maybe they can build a relationship with a 
person so they come back, time and time again.” And that’s how it happened. Thanks for watching.

As found on YouTube

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