David Zalik took the biggest risk of his life when he founded GreenSky Credit back in 2006. The serial entrepreneur and former child prodigy cashed out every cent in equity that he had in order to finance the startup. All told, Zalik went all in with more than $10 million in asset-backed loans. If the loans failed to perform, Zalik would have lost literally everything he had.
While we hear stories like this all the time about the successes that bold entrepreneurs have had, the truth is that the stories we don’t hear are the more important ones. For every success story, there are 10 people who failed. But David Zalik will tell you that he wasn’t all that concerned about the prospects of losing it all. That’s because he already had enormous experience in forming new companies and he knew that with GreenSky Credit, he was sitting on a gold-mine of a business model.
The idea for GreenSky Credit came when Zalik was running his mobile and web development consultancy, OutWeb. He had a large number of home-improvement companies as clients, and he saw that they were frequently losing money on one type of deal. Customers who wanted to complete high-end home improvement projects would come in with unrealistically low ideas of what the final project cost would be. When they were told by the professionals what they could expect to pay, the resulting shortfall between the final cost and what they had budgeted was so great that these deals would often fall through.
Zalik knew that most of these homeowners were prime borrowers. He also realized that, even given the higher-than-expected costs, these homeowners would almost all recoup the costs of the renovation projects almost immediately in the form of increased home values. He saw an opportunity to originate instant, on-site loans that would allow everyone involved, including the banks making the loans, to win.
As a result, GreenSky Credit has become a $3.6 billion company that originates more than $4 billion in new loans per year. The company has found a niche market where it is adding real value for all parties involved.