Home renovation has never been so easy or affordable. GreenSky Credit has been quietly perfecting a smartphone app that connects homeowners, contractors and banks. homeowners simply log into the app to peruse a bunch of different financial products to suit their tastes. They choose the financial product that allows them to renovate their homes while leaving some cash left over for themselves. Homeowners are then free to use that cash to create the home of their dreams.
This seems like an incredibly simple idea and you may be lost on how GreenSky Credit creates more than $200 million in yearly revenue. But the devil is in the details and GreenSky Credit’s details are simply fascinating.
The app allows contractors to secure more work. Contractors tend to have incredibly good relationships with homeowners and homeowners are one of America’s most profitable demographics. The contractors promote the app to the homeowner in order to secure a renovation loan. And contractors are happy to advertise this app as it gives them an abundance of work.
In fact, they are so happy that they share 6% of the loan amount with GreenSky Credit. The financial tech services company then takes that loan to one of their partner banks. The bank and then approves the loan because GreenSky Credit has a strict screening process. The company only approves those with good FICO scores.
The banks appreciate this rock solid relationship. They show this appreciation by sharing 1% of their spreadsheets on an annual basis. Here is where the real brilliance of GreenSky Credit can be seen.
The financial services tech company assumes none of the responsibility. GreenSky also doesn’t own anything tangible. They don’t own any hammers or nails. The only thing that the company owns is the transaction itself.
GreenSky loses no money if a homeowner defaults on a loan. They also lose no money if the contractor does subprime work. They simply facilitate a transaction and reap the benefits on both sides of the equation. It has allowed founder and CEO David Zalik to amass a $2.5 billion personal fortune. Not bad for somebody who did not graduate high school.