Fintech

Credit Karma CEO: Mergers should speed you up, not slow you down

Five months after becoming part of Intuit, Ken Lin says there's a virtue in saying "no" to new colleagues.

Intuit CEO Sasan Goodarzi, left, and Credit Karma CEO Ken Lin.

Intuit CEO Sasan Goodarzi, left, and Credit Karma CEO Ken Lin.

Photo: Credit Karma

Credit Karma became one of the pioneers in fintech as the industry was entering a phase of explosive growth. Founded in 2007, the company quickly emerged as a popular personal finance site where people looked for good deals on credit cards, auto loans and mortgages.

But in February 2020, the company stunned the tech world when it announced that it had agreed to be acquired by Intuit, a fintech pioneer that got its start in the 1980s.

This was shortly before the pandemic led to lockdowns, causing disruptions to the global economy. Like most mergers announced during that period, it wasn't clear if the deal would push through. But it did.

In December, the companies finalized the $8.1 billion deal. Credit Karma — minus its tax-preparation business, which it sold to Square — became part of Intuit, creating what many consider a personal finance powerhouse. The merger combined Credit Karma, which has more than 110 million members, with Intuit, whose TurboTax and QuickBooks software are used by 57 million customers.

For now, Credit Karma has remained an independent entity. CEO Ken Lin says that reflects the new approach to tech mergers — one with a focus on accelerating the growth of the acquired company, instead of simply gobbling it up to integrate it.

That has been a challenging transition for Lin, who says he has had to learn to say "no" to his new colleagues at Intuit.

Lin explained the change in an interview with Protocol in which he also talked about the advice he got from LinkedIn executive chairman and Intuit board member Jeff Weiner based on the social network's merger with Microsoft. And Lin also reflected on what it's like to suddenly have to report to a new boss, Intuit CEO Sasan Goodarzi.

This interview has been edited for clarity and brevity.

It's been five months since the merger closed. What's been the biggest change for you personally?

The biggest thing for me personally is just a change in my boss. I went from a board of directors of six or seven individuals to one boss, which is nice. I have a biweekly one-on-one with Sasan as the CEO of Intuit. That's actually been a nice change after 13 years of doing quarterly and monthly board-prep work.

How do you look back on the process of being acquired?

It was a two-and-a-half-year conversation, if you will, a courtship. I didn't know much about Intuit. I don't think they really knew much about us. But as we started talking more and more, we realized we actually had a lot of the same principles, a lot of the same vision. The most important piece was: can you make a difference? That was where I felt we could fundamentally accelerate what we're trying to do by five or 10 years with the acquisition

Tell me about the exact moment you made the decision to sell.

I was in Malé, the capital of the Maldives. We had our 10-year anniversary trip. Sasan had said, "Hey, you mind having a call?" We hadn't talked in six months. He called me and I was pacing around in the courtyard while my wife was in the restaurant having dinner. He said, "I've really been thinking about this a lot. This is really important to me and I think there's a there there. Here's what we're prepared to do."

Everyone was until that point like, "Ken, it's ultimately going to be your decision." It's a huge decision because of how transformative it is for all the people who are really depending on you to make the right decision.

Certainly through the ups and downs of 2020, there were moments like, "What did I do?" [Laughs] Stocks came crashing down and the whole economy looked like it was going to crash. I had friends who were like, "You know, it's gonna take us 10 years to recover to the levels that we're at today."

Did you have second thoughts?

No. But my advisers were like, "You have to be really careful here, because deals fall apart." But to Sasan and Intuit's credit, they were like, "Ken, we are a company of integrity. We are a company that stands behind what we say." They never wavered.

Adrian Nazari, CEO of your competitor Credit Sesame, told me recently that he's pleased that you were acquired by Intuit. That's because Intuit has a bad track record of integrating companies and Credit Karma "is a much bigger acquisition to chew." How do you react to that?

[Laughs] Rather than react to what Adrian said, what I'll say is this: Sasan and Intuit have been very purposeful about autonomy, independence and the idea that Credit Karma was all about acceleration and not about integration.

Where the model came from is Jeff Weiner. Jeff, who is the chairman of LinkedIn and more importantly is on the board of Intuit, had seen it work well. In many ways they are the textbook example of how an acquisition can work and you actually accelerate the business by so doing. That's really the playbook that we have pulled from.

We went into this transaction with a very different mindset and paradigm. We literally have T-shirts that talk about "Accelerate Credit Karma," not "Integrate Credit Karma." That distinction is really important. We are trying something very different and it is working very well.

Integration has been the playbook of most acquisitions over the last 20 years in tech. The new paradigm looks a lot more like what we're doing which is to keep the things that kept companies great and growing at higher rates. You see it with GitHub and Microsoft. You see with LinkedIn. More and more the acquisitions today are not about integration in the things that slow you down, but about the synergies and the acceleration.

What did Jeff Weiner share from the Microsoft-LinkedIn merger?

The challenge with integrations oftentimes is its death by a thousand cuts.

There are cost savings by collaborating, or consolidating this particular function. And that team gets bogged down with compliance. It gets bogged down in integrations and a thousand straws that break the camel's back.

Jeff said, "You will have to break glass. You will have moments where you will just have to [tell someone from] Intuit, 'No.' That is the only way to break the paradigm of integration or death by a thousand cuts." Jeff was adamant about this.

What did he mean, you have to break glass?

It is not a popularity contest with other people with Intuit. If you have to push back, if you have to tell somebody you're not going to do something, you have to do it right. You have to break the glass. We're very nice, collaborative cultures but you have to have the ability to say no and push back.

That is one of the Jeff Weiner stories. He shared that some part of the Microsoft sales org wanted LinkedIn to go sell Microsoft products. And Jeff was just like, "No, we're not doing that."

What has been your experience with pushing back and breaking glass?

[Laughs] I have to get better at it, quite candidly. I am a peacemaker. I'm a harmonizer. I tend to like it when teams are very aligned, and I try to find common ground. So I am learning how to break free and challenging myself to say "no."

What has changed in terms of your strategy or your long-term capabilities because you're now part of Intuit?

It's really acceleration. The strategy that we both had is we should leverage the data, the scale, the technology that we have to help our customers be able to achieve financial goals. What that means is we need to have 100-plus million customers with data so that we can simplify their transactions.

To give you an example, one of the things we've been focused on at Credit Karma for a very long time is making loan approval guarantees. The challenge with that is there's a lot of data that goes into whether or not you're going to be approved for a loan. Credit is part of it. But income, cash flow and ability to pay are another part of it.

Credit Karma obviously had one aspect of the formula for a very long time. We have been pursuing the other half of that equation which is: How much money did you make last year? How much of that is going out? What's your cash flow? That's where the tax information really comes into play. We were slowly building that information to three million records at a time, each and every year. Along comes Intuit. They have 57 million customers and quickly, we're able to accelerate that business idea, that concept.

Tell me about your personal story. Your family struggled after they moved to the U.S. from China. How did that influence you?

I immigrated to the States when I was 4 years old. We came from mainland China and we happened to emigrate to Las Vegas. It's a very typical immigrant story. We didn't have much coming from mainland China. My parents didn't speak English. I became the de facto translator. I remember my parents working 60- to 70-hour weeks.

My mother worked at an Asian market that catered to Chinese restaurants. And my dad was a cook at a Chinese restaurant. Over the years, they moved [to other jobs], my dad from a cook at a Chinese restaurant to a cook at the MGM. My mother went from being a cashier at a Chinese grocery store to being a dealer at one of the casinos.

There was limited time to see them. I was being raised by my grandma. Two things struck me. One was their overall work ethic. My parents had multiple jobs and maybe one day off a week, and them coming home at 10 o'clock at night, that certainly ingrained something in me.

The other was the value of money. I saw firsthand how money creates stress and anxiety. I saw my parents fight over money because we didn't have much of it. I saw my parents struggle to balance and pay for things like rent and so on. Those have had profound impacts on me as a little kid hearing the fights, cowering under the sheets as your parents are arguing about money. I was probably 7, 8, 9 years old at the time.

You quickly understand the stress that creates and what it means not to have money. And I've always thought about that in the Credit Karma journey in terms of the way we built the business and the way that we wanted to drive impact.

You and Sasan have fairly similar backgrounds in terms of being immigrants at a young age. He also had a difficult time after his family moved to the U.S. from Iran in the 1970s when he was only 9. Was that anything that you shared on a personal level and has it helped your relationship?

It certainly helped. We both actually understood where we came. Oftentimes these types of deals are solidified between the CEOs of companies. That relatability, quite candidly, and shared experiences, it's a little bit of a bond. I've been through those same experiences. When we talk about our mission and where we're trying to go, it's our experiences as immigrants that really created and shaped how I think about the impact I want to have with Credit Karma and how he thinks about the impact he wants to have with Intuit.

One more question, a tough one. What has been the most annoying part of reporting to Sasan?

[Laughs] That is a tough one to answer.

Well, we can modify it to: What's the most challenging part of reporting to Sasan?

It creates a certain level of empathy. I'm always pushing my team to go and do really crazy things. To sit on the other side of that, have the counterpoint [of], "Oh, that's how it feels like." That has been both humbling and challenging. I'm always the one pushing the team like, "Oh, you want a 10x." I'm like, "Go for a 15x." Now here's Sasan [saying] like, "Ken, you wanted 15x? Let's go for 30x." [Laughs]

It's interesting to be on the other side of that. It gives me better empathy for the people on my team and hopefully helps me be a better lead by understanding what it feels like.

I've been in my seat for 13, 14 years. I've had a board for a long time but not a direct boss, so to speak. It's a great reminder and an opportunity to connect like, "Hey, these are the things that are in people's minds when you have a one-on-one with the CEO." I always tell the story that, for me, I always think of our leadership team as peers. There's a title but I never think about it. The person sitting on the other side of that does not feel the same way. It's a great lesson in humility and empathy.

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