Mike Cagney isn't modest in his ambitions.
He doesn't have to be. In four short years his online lending startup, SoFi, has gone from inception to a current valuation "not too far off" from $4 billion -- yes, with a "b." Last month, Japan's SoftBank and other investors cut SoFi a check for $1 billion in series E funding, which the companies called the largest equity round for a financial technology startup. (To trot out the mythical creature analogy, Cagney's investors went beyond turning SoFi into a unicorn; you could say they gave him one instead.)
So where is SoFi aiming that money? Directly at the big banks that trained Cagney, a former head of trading for Wells Fargo. SoFi is using the new money to lower its interest rates and expand its products -- all in the hopes of fully replacing the incumbents that still control much of this country's financial system.
"SoFi would like to be the first non-bank bank," Cagney, the company's co-founder and CEO, told me this month. "I want to be able to give you a SoFi card, and I want you be able to go to an ATM and [shop] and do whatever you want with it, and I don't want a bank involved... I want you out of Wells Fargo entirely."
It's an ambitious potential expansion for a startup that started out in the niche of refinancing existing student loans. SoFi's already branched out to mortgages and personal loans, and Cagney's working on insurance, checking accounts, and wealth management.
The latter is coming soon, possibly for free -- or better. "Every SoFi member gets it. I'll probably give them 100 bucks to start their account," Cagney says. "Look, I just saved you 500 bucks a month on your student loan, so put 200 towards your [long-term] goals."
Wine tastings and job hunting.
I first met Cagney at this year's LendIt conference in April, in a Times Square hotel ballroom overcrowded with competing online lenders and other fin-tech startups. He looked more frazzled car salesman than former banker, in sweaty curls and a blazer shrugged over the requisite company-logo Silicon Valley T-shirt.
Six months later, Cagney's more relaxed on his home turf, inside San Francisco's Lucasfilm campus. He's down to the T-shirt and jeans (sans blazer), but: "You dressed up today!", SoFi's publicist remarks on his attire, apparently without irony. Cagney hates wearing pants, though "I gotta be careful" when saying that, he hastens to add. "I wear shorts. I still wear something. I just don't wear pants."
With the official name "Social Finance," SoFi wants to emphasize its social aspects as much as its financial products. The company hosts regular dinners and happy hours for its nearly 70,000 "members." It's found jobs for 146 of those customers, and has helped 45 start businesses. Dan Macklin, another co-founder and head of community and member services, tells me that so far, only five SoFi customers have failed to repay their loans. In four of those five cases, that's because the customer died.
And Cagney, who's invited 12 customers over for a wine tasting at his house this month, clearly enjoys making connections and buying drinks as much as he does discussing basis points and regulatory hurdles.
"We don't need to sell you five products today. I just need to get you in one product," he says. From there, the SoFi strategy is to "deliver a really good experience, get you to trust us, deliver some really cool externalities -- like help you start a business, or help you find a job, or get you to networking events, or buy you a beer. Whatever it is I need to do, until you're like, 'You know what? I really like this relationship.'"
Cutting banks out of the equation.
Yet SoFi is also taking a more confrontational -- and, if I dare use an overused term, potentially disruptive -- approach than many financial startups have taken toward traditional banks. While the likes of Lending Club and Prosper are frequently hailed as financial revolutionaries, providing loans that banks won't, they also work directly with banks -- and quietly rely on more traditional financial institutions to do much of their back-end processing work.
Cagney, meanwhile, says he wants to compete more with banks than with other lending startups.
"It's something that marketplace lending really loses sight of. If we're really going to compete long term against the banks, we need to diversify products... from the asset or credit side, to the liability side of deposits and wealth management and other functions."
That's something that SoFi's hardly alone in pursuing, though it may be the furthest along.
"We want to own the customer experience end to end," David Klein, the co-founder and CEO of SoFi competitor CommonBond, said during a panel discussion in New York last week. He added that his startup wants "to be our own direct lender by the first half of 2016," and has spent much of the past year working to make that happen.
His company is also planning to expand its products, beyond the student loan refinancing that attracts young, well-educated professionals who seem likely to earn much more money long-term -- and who will then want the mortgages, credit cards, and wealth-management services that banks once had a near-monopoly on offering. "It's absolutely a life-cycle strategy," Klein said.
Cagney told me something similar earlier this month: "The reason that we started SoFi on student loan refinancing is so that we could build a beachhead with a phenomenal customer base -- meaning a group of people that we felt we wanted to have a lifetime financial association with."
Now that those beachheads have been established, SoFi seems ready -- and funded --to lead the next wave of the fin-tech invasion.