Q&A: Seeing Green
Green Dot CEO Steven Streit continues to grow his company by giving its customers what they want — no credit.
Ramona Rosales
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E-mailSteven Streit started Green Dot Corp. (GDOT) in 1999 at a desk that he and his son built in their San Marino, Calif. home. Eleven years later, the company, based in Monrovia, Calif., has 300 employees and says it is the leading provider of reloadable prepaid debit cards at more than 50,000 U.S. retail stores, including CVS Caremark Corp. (CVS), Walgreen Co. (WAG) and Wal-Mart Stores Inc. (WMT). Green Dot says revenues — derived from card fees, cash transfer fees and interchange fees &mdash are up 48 percent, to $93 million, from the second quarter of 2009. It has 3.2 million active cards in circulation, a 60 percent increase from the same period last year. In July the company went public.
MORE ON GREEN DOT
A FAMILIAR CUSTOMER
What was your inspiration for the Green Dot concept?
I had been in the radio business for nearly 20 years when I left in 1999, shortly before the company I worked for was to be acquired. I didn’t know what to do next. A friend was working for a company with a Website for young people. It was attracting visitors, but nobody was buying anything. When I asked why, I was told that young people didn’t have credit cards. I was inspired to invent a [prepaid] card that young people could use instead of borrowing their parent’s card to shop online. The i-GEN, for “Internet Generation,” for Mastercard Inc. (MA), was born.
In 2001 we did a pilot test with Rite Aid Corp. (RAD) and discovered that everyone was buying our cards except kids, which wasn’t what we had expected. We talked to customers about why they bought our cards, and they told us that they didn’t have a bank account or couldn’t get a credit card for one reason or another. The i-GEN was a substitute for a bank account or a credit card. Armed with this new insight, we quickly changed our packaging to target adults instead of kids, and we went national with Rite Aid in 2002, followed by CVS, Walgreens and many others.
BIO FACTS
- AGE: 48
- CEO SINCE: 1999
- PREVIOUS AFFILIATION: Vice president of programming at radio broadcasting group AMFM Inc.
- ALL IN THE FAMILY: A single dad of six children: two sons and four daughters ranging in age from 17 to 23
- U.S. PRESIDENT HE ADMIRES MOST: Abraham Lincoln
How has the economic downturn affected your business?
We’ve had phenomenal growth. It’s hard to know if we’ve been successful because of or in spite of the economy. What is certain is that bank fees have climbed, especially punitive ones such as overdraft fees that seem designed to help consumers fail. Dissatisfaction with traditional branch banks has helped build our market. We have no overdraft or penalty fees and no minimum balance requirement.
What else is fueling the growth in prepaid debit cards?
Three years ago, having a credit card was a badge of honor. Now credit has become a bad word because people tie the economic collapse to overleverage, on both corporate and personal levels. People are smarter about how they budget and spend their money. That’s helped fuel the consumption of products that are cash-based and keep you out of debt.
Green Dot has announced plans to acquire a bank. Why?
As we grow, owning a bank will let us develop new products and services more quickly. Today half of our customers have accounts at traditional retail banks. We believe that our distribution method, combined with our fee structure, can offer consumers a better value than a traditional bank account.
“We’ve had phenomenal growth. It’s hard to know if we’ve been successful because of or in spite of the economy.”
What does the government need to do to stimulate entrepreneurship?
America is still a country where, if you work hard, you can achieve more than you could anywhere else in the world. America is still a place for entrepreneurs. Of course, there are times when I feel like government could do more to provide an incentive to stimulate entrepreneurship and encourage the expansion of small business — two of the greatest job creators. After all, this country was a startup, led by entrepreneurs who gathered in Philadelphia to launch a new venture called the United States of America.
What has been your most satisfying moment in business?
As someone who started a company in his bedroom with his own money, a hugely proud moment for me was ringing The Opening Bell® at the NYSE, where so many great entrepreneurs have stood. But I’m most proud when a Green Dot customer tells me how much he or she enjoys our product and how a Green Dot card saved hundreds of dollars a year in bank fees. That makes me feel great.
