GreenSky Credit’s Crazy No-risk Business Model

David Kalik has always been good at math. Fortunately, those math skills lead him to amass a fortune of $2.5 billion. But David Kalik has never been too good at school. In fact, he didn’t even graduate high school. His story is remarkable.

David leveraged his Atlanta real estate to put himself $10 million in debt to start a company called GreenSky Credit. He fended off investors for years choosing to run the company on his own merit. And investors were chomping at the bit to throw money at his idea. Finally, he relinquished part of his budding company for more than $500 million.

He still owns more than 50% of GreenSky Credit. Revenues for 2017 topped $250 million while projections put the company at $500 million in 2018. It’s a good time to be David Kalik.

The revolutionary idea that launched his massive company is quite simple. Essentially, he developed an app for contractors. He rightly saw contractors as the conduit to homeowners. And homeowners are a lucrative demographic. They are all searching to upgrade their homes in order to create their dream houses.

Contractors took GreenSky Credit’s app to the homeowners themselves. The app provides all sorts of financial products that allow the homeowner to secure a home improvement loan. This allows the homeowner to hold onto some of their cash. That cash could then be used to perform more upgrades.

This flow of credit means that contractors are getting more work. The contractors are so happy that they share 6% of the loan amount with GreenSky Credit. Then the brilliance of GreenSky Credit’s business model really kicks in.

The financial services tech company then takes the loan to a bank. The bank funds the home improvement project while sharing 1% of their balance sheets with GreenSky Credit at the end of the year.

David Kalik figured out a way to own nothing but the transaction without assuming any risk. The bank assumes all the risk of default while the contractors own the equipment and perform the work. David and his company simply profit off of both sides of the equation.

https://www.bbb.org/atlanta/business-reviews/loan-servicing/greensky-trade-credit-in-atlanta-ga-27259210/reviews-and-complaints