Steve Streit had a number of important decisions to make in 2012 and 2013 that would shape the future of Green Dot Corp.
The company was transitioning from a young startup to a more established business and was facing some pretty stiff competition in its space for the first time.
“We had a series of large new competitors that had publicly announced and that we also had communicated to investors would attempt to take our position and squash our products and our companies,” says Streit, Green Dot’s founder, chairman, president and CEO. “Companies like Chase and American Express and probably half a dozen other smaller companies that were still large relative to our prepaid industry. Prior to that, we had the market to ourselves.”
Green Dot had established itself as a bank that represents low- and moderate-income families with services that include prepaid cards, checking accounts and cash processing services.
“The have-nots are as much as half of the country’s households with household incomes of less than $50,000 annually,” Streit says. “You’re not enjoying your day-to-day existence very much if you live in that household. For Green Dot, that’s our world.”
Those customers were very much on Streit’s mind as he pondered Green Dot’s immediate future.
“People expect certain things of Green Dot,” Streit says. “Good, bad or indifferent, it has a flavor, it has a feel, it has a character expectation. And I think companies violate that expectation at their own risk. It’s a very dangerous thing to do.”
Streit was strong in his belief that he could develop a plan that would take his company forward and not disappoint those customers who had grown to depend on Green Dot. He wasn’t as confident, however, that the plan would actually work.
“I was confident in my ability and confident in the process, that working collaboratively with smart people I could trust and allow my brain breathing space to non-emotionally figure out if the scenario would ultimately be the best chance at success,” Streit says. “But success itself was not certain.”
One of the best things Streit did to position Green Dot for continued success in a more competitive market was to have trust in the steps he had taken to that point.
“When faced with a challenging time, people often knee-jerk and wander off course,” Streit says. “It’s extremely common. The best thing we did was not overreact. We allowed time to take its course and we monitored conditions thoughtfully. We knew we had a great product, a great value and a strong brand name. So the biggest thing we fixed was we didn’t fix. We just let it be.”
At the same time, there were some concerns at Green Dot that needed to be addressed. Mobile technology was evolving rapidly and Streit needed to come up with a plan for a mobile banking strategy.
“We did not in those days have the kind of technology we knew we would need to be competitive with all kinds of new offerings that would be coming, the Apple Pays of the world,” Streit says. “We set about rebuilding our technology underpinning from soup to nuts. It’s the equivalent of changing the fan blades on a jet while you’re 30,000 feet in the air. It’s a very tricky job, but we did it and we did it successfully.”
Mobile banking was a service that Streit knew would appeal to his customers. One of the other decisions he faced would have likely had just the opposite effect on their view of Green Dot.
“Our biggest competitors have overdraft fees, they do not have free ATM machines and there’s no way to waive monthly fees,” Streit says. “It would have been so tempting to add an overdraft fee, which is legal and we could have done it. It was so tempting to raise our monthly fee and charge another $3 or $4 a month and still be competitive with our competitors.
“It was so tempting to get rid of a fee waiver. Those things would have guaranteed tremendous growth in profit and revenue on a short-term basis. But it violated our religious conviction that treating the customer right will lead to decades of success and a position as an iconic brand name.”
The competition for Green Dot was becoming fierce and if Streit had begun to lose ground with his competitors or if he had seen revenue drop, it could have led to some nervous moments for investors.
But Streit knew there was no going back if he crossed that line of disappointing his customers. So once again, he held firm and trusted in what he had built.
“When you disappoint a consumer, just like when you disappoint a family member or a wife disappoints a husband, you may get over it,” Streit says. “But you never forget it and it forever tarnishes that relationship. I think the same is true with consumers.”
That’s not to say that Streit was unwilling to make changes in the way Green Dot operates or to take risks.
“We were not afraid to blow off what we thought was not good,” Streit says. “We were not afraid to make investments, even though it may have been controversial at the time, in the future. And we were not afraid to stand our ground, especially on issues like consumer pricing and consumerism in general. Now you look back and say of course, but at the time, it was not of course.”
So what’s the key to knowing when to pivot left, when to pivot right and when to just stand your ground and be confident in what you’ve built?
“As you grow your company bigger, you have to be open to the fact that this is a complex job with many different stakeholders, many different facilities, many different needs and many different customers,” Streit says.
“You have to be willing to accept all that, understand it’s a balancing act, be fair to everybody, be honest all the time and at the same time, try to do your best to achieve all your goals all the time, knowing that nobody wins all the time with everyone.”