David Zalik’s brilliant vision for GreenSky Credit

Making money over the long term is all about finding value where others fail to see it. In different industries, this can be accomplished by radically different means. One entrepreneur, David Zalik, proved a statement that Carl Icahn has made famous: You make the most money by doing the simplest things.

With his firm, GreenSky Credit, Zalik has turned a simple idea into an ever-expanding enterprise that is on the verge of a possible IPO, which analysts have valued at upwards of $10 billion. This is an astonishing story of growth and adaptation that has seen GreenSky go from a self-financed startup to being one of the most dominant players in the fintech industry.

Creating real value is always best

Zalik had two key insights in the creation of GreenSky. The first was that there were a tremendous number of home improvement customers who were abandoning projects due to a lack of liquidity. The second key insight was that these borrowers were high-end and they were doing projects that almost invariably created net value, meaning that the cost of the home improvement projects was less than the total that it added to the home’s value.

Zalik knew that if GreenSky could make loans to customers who were doing profitable deals that the chances of most of the loans being paid back in full and on time would be close to 100 percent. It is well known throughout the banking industry that customers who are making large amounts of money directly from the use of their loans are far less likely to slip into default. At the same time, the fact that these borrowers were among those with the highest FICO scores to begin with meant that they were already excellent candidates to loan to.

This further meant that GreenSky would have no trouble bringing onboard some of the top lenders in the industry. Today, GreenSky is making billions of dollars’ worth of loans each year, using the services of some of the top lenders in the industry, including Fifth Third Bancorp, Sun Trust and Region’s bank. Zalik has been coy, but there are currently rumors swirling of an IPO that could be worth up to $10 billion.

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