How Credit Karma turned into a $4 billion startup

Credit
Karma co-founder and chief revenue officer Nichole
Mustard
Credit
Karma

• When Nichole Mustard found herself adrift after
  college, she made a simple promise to herself: “be
  happy.”
• Time and again that choice led her to revamp her life
  and start over someplace new.
• Ten years ago, it led her to sell her house, take a 60%
  pay cut and move her family across the country to found Credit
  Karma – a startup that today employs 800 people and is valued
  at $4 billion.
• But it almost fell apart months after she risked it
  all.

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Nichole Mustard isn’t your classic Silicon Valley tech founder.
She didn’t teach herself to code as a kid. She didn’t attend
Stanford. She didn’t intern at a tech giant.

After college, she was a trainee manager at Pizza Hut, living
hand-to-mouth in a cheap LA apartment with a roommate, she tells
Business Insider.

And yet, today, she is one of the three founders who built Credit
Karma, a consumer credit score company, into a startup worth $4
billion, according to
deal-tracking site Pitchbook.

Her career offers a valuable lesson: focus on being happy and it
will get you through what life throws at you — even when the
startup that you risked everything to build almost falls apart on
you. 

Looking for her happy place

Mustard grew up in the tiny, rural town of Coldwater, Ohio
(population 1,700), and put herself through college at Miami
University to get a degree in zoology. She wanted to be a
scientist, until she discovered that it meant mostly hanging out
with mice.

“I love people,” she laughs. “Me being in the lab with a bunch of
mice was not a great future.”

Credit
Karma’s Nichole Mustard marches in the San Francisco Pride
Parade
Credit
Karma

By ditching her chosen profession, she found herself with no
direction. 

So she made a promise to herself to always be happy. One problem:
she didn’t know what kind of lifestyle would get her there.

So she spent her weekends traveling across the United States,
going from coast to coast in search of her happy place.

That’s how she settles on sunny Los Angeles. She just up and
moved there, with no job, no place to live, knowing no one. She
got an apartment with a friend of a friend and took the first job
she landed: as a trainee manager at a Pizza Hut. With her
paychecks, she slowly bought herself a few essentials: lawn
chairs for the living room, a mattress.

She was happy with her choice to live in California, but didn’t
see a future at Pizza Hut.

“I kept thinking, what makes me happy?” Mustard decided that she
loves investing and helping people, so she studied to become a
certified financial planner and soon built up a thriving
practice.

That’s when she fell in love with her wife-to-be and turned her
life upside down again. Her then-girlfriend was about to take a
job in Boston. So Mustard changed tacks again. She sold her
business and the couple moved to Boston together, and were soon
married. 

It was there that Mustard landed the job that would ultimately
change her life. She became sales director at a hot tech startup
in its day called Compete.com, a site similar to
ComScore that measured web traffic, now defunct. 

Through her role developing partnerships, she met her Credit
Karma co-founder Kenneth Lin, who had been working at a
company called E-Loan. He had an idea for a business —making
consumer credit scores easier for people to see and monitor. And
he thought Mustard would be a great co-founder, with her
background in financial planning, her strong work ethic, her
business connections, and her cheerful attitude.

They were joined by another co-founder, technical wiz Ryan
Graciano, and they were off.

‘It was terrifying’

Mustard sold her house, took a 60% pay cut to work at her
startup, and convinced her wife to relocate to San Francisco with
their young kids.

To save money, the original Credit Karma office was located in “a
fourth floor walk-up above a bar over an overpass in San
Francisco. You can imagine how delightfully smelly that was,” she
says.

Credit
Karma CEO and founder Ken Lin, CMO Greg Lull, CTO and cofounder
Ryan Graciano, CRO and cofounder Nichole Mustard at the company’s
annual Giants game day
Credit
Karma

Thanks to their previous connections in the finance industry,
TransUnion agreed to give the founders free access to the credit
score data they needed. Then, a journalist at American Banker got
wind and wrote about their plans. The article went viral on
Reddit and other sites.

“Our wait list went from 10 people a day to 10 people every
minute,” she remembers.

It was five days of joy, she says, with the founders
telling each other: “we’ve
 got something here.
People want to experience this.”

But then, FedEx delivered a letter from TransUnion, 
saying that they were backing out of the
deal. 
Without free access to those credit
scores, the company would be sunk before it really even
began.

“It was terrifying. It was incredibly hard. I was sick to
my stomach for days,” she remembers. “This was March 2008.
I 
moved my family in December. My wife quit her
job and had to find another one, and it’s falling apart? Are you
kidding me? S
till to this day, I won’t open a
FedEx.”

TransUnion had given them 30 days. It took them 29 days to
pull every string and land a meeting with TransUnion president
John Danaher to sweet-talk him into sticking with the
project. He was on board — the termination notice had come
from a different part of the company — and the issue got
resolved.

Stonewalled on Sand Hill

They bootstrapped for a couple of years, and had about 300,000
people using the service by 2009. It was time to raise some
much-needed investment capital. So, feeling confident, the team
headed to Sand Hill Road, the stretch of Silicon Valley that
houses many of the most prestigious venture investors — only to
find that no one would fund them.

“It was like hitting a brick wall,” she remembers. Investors
didn’t understand the service, the business model or the
financial services industry.

It was a time when Amazon was coming into its dominance, and
daily deal sites like Groupon were hot. Investors expected
Credit Karma to play into this quick-turnaround commerce market,
and kept asking questions like, “‘How do you do same-day offers?’
But financial services aren’t like a Kmart blue light special,”
she said.

Credit
Karma Nichole Mustard with CEO Ken Lin hanging out before an
employee Town Hall meeting
Credit
Karma

The team was stumped. “We came to the realization that they
weren’t our people,” Mustard says of the Silicon Valley
VCs. 

They changed tactics and coasts. Instead, they pitched to
QED Investors, the Virginia-based fund started by Nigel
Morris, co-founder of Capital One. And when they explained their
credit monitoring service to that team, 
“it was
like lights going on,” she said.

They raised a couple million from QUED and other seed
investors, landed in the fintech accelerator Finovate, and
then they were truly off.

Flash forward to 2018. The company has since raised over $370
million from investors, has 80 million users, and employs 800
people at much nicer digs on San Francisco’s Market Street. The
claim-to-fame perk is the mani-pedi at the company’s in-office
nail salon.

And Mustard says she couldn’t be happier. 

“I feel like once you get used to talking those risks like
getting a one-way ticket to LA, you know what it means to rebuild
your lifestyle. You see these things you want to be part of. In
this case there were people I wanted to be with,” she says of her
cofounders. “To do this in a way that’s really actually helping
consumers and not just making money, that feels great.”