Fast Company

A Fi­nan­cial Life­line for Those Who Need It Most

THIS FIN­TECH COM­PANY PRO­VIDES AF­FORD­ABLE PER­SONAL LOANS FOR IN­DI­VID­U­ALS IN UN­DER­SERVED COM­MU­NI­TIES

- AHARRIS@FAST­COM­PANY.COM

A ba­sic pre­req­ui­site for land­ing a con­sumer loan is a credit score. For many, this presents a co­nun­drum: how do you get a credit score if banks won’t ex­tend credit to you? Now, Opor­tun—a fin­tech com­pany pro­vid­ing af­ford­able fi­nan­cial ser­vices to low-to-mod­er­ate-in­come in­di­vid­u­als— has found a so­lu­tion.

About half of Opor­tun cus­tomers do not have credit scores. The other half have been “mis-scored,” mean­ing their rat­ing does not adequately re­flect their abil­ity to pay back the loan. Opor­tun serves low- to mod­er­ate-in­come cus­tomers, many of whom are sup­port­ing fam­i­lies. Be­fore Opor­tun, they would turn to ex­pen­sive, even preda­tory prod­ucts when times were tough, in­clud­ing high-cost, short-term pay­day loans that set them up to fail.

Opor­tun was founded to help peo­ple suc­ceed by pro­vid­ing fair, af­ford­able loans, en­abling cus­tomers to es­tab­lish or im­prove their credit scores. An es­ti­mated 100 mil­lion Amer­i­cans have been shut out by the fi­nan­cial main­stream be­cause they lacked a suf­fi­cient credit his­tory or score, ac­cord­ing to Opor­tun. Its pur­pose-led team uses data and tech­nol­ogy to cus­tom­ize loan sizes and monthly pay­ments for each cus­tomer. The com­pany also pro­vides ac­cess to free fi­nan­cial coach­ing and other part­ner re­sources. This ap­proach helps clients ob­tain the cap­i­tal they need while de­mon­strat­ing their cred­it­wor­thi­ness so they can un­lock new op­por­tu­ni­ties.

PUR­POSE-DRIVEN TECH­NOL­OGY

Since 2006, Opor­tun has lent more than $8.4 bil­lion by mak­ing over 3.7 mil­lion af­ford­able loans. Through those trans­ac­tions, cus­tomers have saved an es­ti­mated $1.7 bil­lion in in­ter­est and fees, ac­cord­ing to a study com­mis­sioned by Opor­tun and con­ducted by the Fi­nan­cial Health Net­work, a lead­ing non­profit au­thor­ity on con­sumer fi­nan­cial health. Opor­tun op­er­ates in 19 states across the United States, and is ex­pand­ing. In do­ing so, it has scaled a suc­cess­ful busi­ness and earned a spot on Fast Com­pany’s “Top 10 Most In­no­va­tive Com­pa­nies in Fi­nance.”

Last year, Opor­tun went pub­lic. CEO Raul Vazquez cred­its the achieve­ment to the team, the mis­sion, and tech­nol­ogy. Opor­tun is head­quar­ted in Sil­i­con Val­ley, which gives it ac­cess to some of the best tal­ent in cloud tech­nol­ogy, mo­bile, ar­ti­fi­cial in­tel­li­gence, and data an­a­lyt­ics. Vazquez notes tech­nol­ogy ad­vance­ments at other com­pa­nies “often feel like they are fo­cused on peo­ple who are al­ready do­ing well and have a lot of op­por­tu­nity.” Opor­tun, on the other hand, uses tech to serve the un­der­served.

FOR THE PEO­PLE, BY THE PEO­PLE

A com­pany can­not max­i­mize tech­nol­ogy’s value with­out a skilled team. Opor­tun’s tal­ented work­force share a strong sense of mis­sion and abide by au­then­tic cor­po­rate val­ues, in­clud­ing ex­cel­lence, in­no­va­tion, care, and ser­vice. Through its omni-chan­nel net­work, which also in­cludes phys­i­cal locations, Opor­tun is able to ser­vice its cus­tomers how, where, and when they want to be served. Vazquez’s lead­er­ship style also re­flects com­pany val­ues. He abides by a ser­vant lead­er­ship phi­los­o­phy and views the org chart as an in­verted pyra­mid. “I am not at the top; I am at the bot­tom and here to help oth­ers,” he ex­plains.

This de­sire to help drives the com­pany for­ward. Opor­tun is in­vested in help­ing un­der­served cus­tomers build their fi­nan­cial fu­tures, which also fu­els its growth. Vazquez pre­dicts con­tin­ued progress—for the com­pany, and the peo­ple it serves.

vo­cacy, play­ing the fear­mon­ger. “It’s go­ing to be ex­pen­sive,” he says. “I hope it’s all jus­ti­fied and doable.” Ker­nen of­fers Schul­man a com­pli­ment, but a loaded one: “You need a suc­cess­ful busi­ness, which you have, be­fore you can be­come a just busi­ness.” Yet Schul­man’s own track record at Paypal, which he joined in 2014, sug­gests other­wise. In April 2016, when he was still in the early in­nings of trans­form­ing Paypal’s rev­enue en­gine and win­ning over Wall Street, Paypal com­mit­ted to open­ing an op­er­a­tions cen­ter in North Carolina for 400 em­ploy­ees. The com­pany held a ju­bi­lant news con­fer­ence with then Gover­nor Pat Mc­crory to cel­e­brate. Two weeks later, at Paypal’s New York of­fice, Schul­man stopped short in front of a TV air­ing live coverage of Mc­crory mak­ing an an­nounce­ment. North Carolina had just passed a mea­sure re­quir­ing that peo­ple use the bath­room as­so­ci­ated with the gen­der they were as­signed at birth. Schul­man shook his head. “That’s un­be­liev­able,” he said. He turned to his team: “We’re out.” The de­ci­sion seems to have en­er­gized him. Schul­man soon ag­gra­vated gun rights ad­vo­cates by crack­ing down on the sale of firearms and am­mu­ni­tion through Paypal, lead­ing to a pub­lic spat with Paypal co­founder Peter Thiel, who ob­jects to the pol­icy on lib­er­tar­ian grounds. Dur­ing the Jan­uary 2019 govern­ment shut­down, Paypal stepped up to of­fer fed­eral em­ploy­ees in­ter­est-free cash ad­vances of up to $500. In Fe­bru­ary of this year, Schul­man an­nounced that Paypal would par­tic­i­pate in Time to Vote, a non­par­ti­san ini­tia­tive de­signed to in­crease voter turnout in 2020 by giv­ing work­ers time off to visit the polls. Schul­man is also putting real money on the line. Af­ter sur­vey­ing em­ploy­ees last year, he dis­cov­ered that 60% of those work­ing at call cen­ters or in hourly roles were strug­gling to make ends meet. Other com­pa­nies have com­mit­ted to pay­ing their work­ers a liv­ing wage, typ­i­cally de­fined as around $15 per hour. But af­ter re­view­ing the num­bers, Schul­man didn’t think a liv­ing wage, in it­self, would do enough to im­prove his em­ploy­ees’ fi­nan­cial health. In Oc­to­ber, he in­creased wages, en­sur­ing that em­ploy­ees in each mar­ket where Paypal op­er­ates could cover their es­sen­tial liv­ing ex­penses, such as trans­porta­tion and hous­ing, ad­justed for the lo­cal cost of liv­ing. He also low­ered health­care costs by 58%, on av­er­age; is­sued stock grants; and rolled out a fi­nan­cial ed­u­ca­tion ini­tia­tive. “If you don’t act on val­ues, what you stand for, then you don’t re­ally stand for any­thing,” Schul­man says. The wage boosts have af­fected one-third of Paypal’s 21,000 em­ploy­ees. At the other end of the spec­trum, high earn­ers in the New York of­fice are now pay­ing out of pocket for their catered lunches. Mean­while, Schul­man views Paypal’s prod­ucts and ser­vices them­selves as a de­moc­ra­tiz­ing force. Many of Paypal’s mer­chants, for ex­am­ple, have ex­panded their op­er­a­tions us­ing the com­pany’s work­ing cap­i­tal loans. The com­pany lends more than $1 bil­lion ev­ery quar­ter, much of it di­rected to­ward small busi­nesses in bank­ing deserts where lo­cal bank branches have closed. On his watch, Paypal has also dou­bled the num­ber of ac­counts it serves—a to­tal that to­day sur­passes 305 mil­lion mer­chants and con­sumers—and is aim­ing for an am­bi­tious 1 bil­lion. But there’s no deny­ing that some ten­sion ex­ists be­tween the com­pany’s busi­ness model and its ideals. Paypal pro­cesses pay­ments, and like any pay­ments pro­ces­sor, it lives and dies by trans­ac­tion vol­ume, tak­ing a small cut of each sale. Sim­ply put, Paypal gen­er­ates rev­enue when peo­ple shop. More and more peo­ple to­day are shop­ping on­line, and Schul­man has en­sured that Paypal is poised to take ad­van­tage of that shift, thanks to deals with the likes of In­sta­gram Shop­ping and Uber. Last Novem­ber, he shelled out $4 bil­lion to buy Honey, a com­pany that helps on­line shop­pers find coupons and discounts. Schul­man noted when an­nounc­ing the ac­qui­si­tion that al­most 40% of e-com­merce rev­enue is gen­er­ated by a “trig­ger event”—in other words, by some­thing like an email con­tain­ing a dis­count code. Honey, thanks to its data on con­sumer be­hav­ior, is ar­guably well-po­si­tioned to en­gi­neer per­son­al­ized trig­gers and boost mer­chant sales. To­day, on av­er­age, ac­tive users trans­act via Paypal three dozen times per year; Schul­man sees a path to in­creas­ing that num­ber by a fac­tor of 10. “Even­tu­ally I want Paypal to have enough util­ity that some­body wants to use it ev­ery day,” he says.

ON A COLD MORN­ING IN

Fe­bru­ary, while in town for other meet­ings, Schul­man pops by Paypal’s mod­est Wash­ing­ton, D.C., of­fice, where two dozen em­ploy­ees sit shoul­der-to-shoul­der in a con­fer­ence room. Af­ter brief re­marks on the prior evening’s Demo­cratic pri­mary de­bate (“You can see the strug­gle for the soul of the Demo­cratic Party”), Schul­man opens the floor.

“Glob­al­iza­tion can be a good thing, but it can leave a lot of peo­ple be­hind. How does Paypal fit into that?” one em­ployee asks. It’s a timely ques­tion: Paypal has just an­nounced a ma­jor part­ner­ship that will al­low it to op­er­ate in China af­ter spend­ing the past few years court­ing reg­u­la­tors there. Al­ready, roughly half of Paypal’s rev­enue orig­i­nates out­side of North Amer­ica. “Ev­ery time I go around the world, I’m struck by how sim­i­lar cit­i­zens are,” Schul­man says. He re­calls strolling Shang­hai’s Wai Tan, or Great River Walk, on one of his many vis­its. “There were Chi­nese fam­i­lies push­ing their kids in their car­riages, tak­ing self­ies, laugh­ing. It struck me as ex­actly the same as when I’m walk­ing down [Hud­son River Park] in New York City. Gov­ern­ments have dif­fer­ent is­sues, and there’s ob­vi­ously com­pe­ti­tion. But the essence of hu­man­ity is pretty much the same.” As Schul­man speaks, it’s easy to for­get that there’s a trade war rag­ing be­tween China and the United States, or that China’s cur­rent ad­min­is­tra­tion has an ugly track record when it comes to trans­gen­der peo­ple and other mi­nori­ties (wit­ness the on­go­ing Uyghur in­tern­ment camps). Schul­man has a knack for re­ori­ent­ing the room around hu­man-scale sto­ries, ad­dress­ing hot-but­ton top­ics with­out push­ing his au­di­ence’s hot but­tons. This is a po­lit­i­cal skill, as much as a cor­po­rate one. The em­ployee gath­er­ing, in a way, feels like a town hall. As it hap­pens, Schul­man has caught the eye of Democrats, who have no­ticed his abil­ity to meld busi­ness suc­cess with pro­gres­sive ac­tion. Demo­cratic Party lead­ers have tried to re­cruit him for a num­ber of roles; for­mer New Jer­sey gover­nor Jon Corzine at one point sug­gested that he run for U.S. Se­nate. Per­haps the right per­son could make the case for giv­ing cap­i­tal­ism an up­grade, rather than giv­ing up on it en­tirely. “I’ve al­ways been in­trigued by pol­i­tics, be­cause I feel like it’s a place where you can make a real dif­fer­ence,” Schul­man says. Back in high school, his foot­ball coach taught him that lead­er­ship is about call­ing plays with con­vic­tion. “You have to call in the hud­dle with enough con­fi­dence that ev­ery­body be­lieves that if we ex­e­cute per­fectly, we will score,” he says. The habit seems to have stuck. No mat­ter what his fu­ture holds, Schul­man says, driv­ing “sub­stan­tive change” will be his fo­cus. “I don’t want to rule out any­thing. I re­ally don’t. But it’s not this big sort of tease. I’m just say­ing, I don’t want to rule out any­thing.” There’s just only so much a CEO can do.

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