The NerdWallet Story: How an Affiliate Site Went Public
How two bros turned $800 into $1.5 billion
“Now join me in welcoming your CEO, Tim Chen, for further remarks”.
The chief executive walked towards the podium with one hand stuffed in the pocket of his gray blazer, clearly uncomfortable with the public attention.
Despite his awkward body language, the huge smile that spread across his face revealed that this was a peak moment in the man’s life: the company that he and a friend had started with an initial investment of $800 had just gone public with a $1.5 billion valuation. On this cold winter day in November 2021, he would finally get the opportunity to ring the famous Nasdaq closing bell.
Tim Chen pumped both of his fists in the air and began his remarks.
“When my buddy Jake and I started this company 12 years ago, it was really hard to imagine how far things would have gone. Now we’re helping millions and millions of small businesses and consumers every day; and that reach has been incredible, unexpected, and awesome to be a part of”, he said.
The small personal finance affiliate site that Chen and co-founder Jacob Gibson started in 2009 would go on to close out the year with $379.6 million in revenue.
How exactly did two friends turn an $800 initial investment into a public company worth $1.5 billion?
“I always dreamed of doing something entrepreneurial. I just never felt like I had the permission to”.
Tim Chen created Nerdwallet out of necessity.
He had spent four years in the finance industry, working at hedge funds JAT Capital Management and Perry Capital. His career was on a rocket-ship trajectory and he felt certain that he was going to work in finance for the rest of his life.
…I’d just been very achievement-oriented my whole life and I was very concerned with external status and all that stuff.
- Tim Chen
Chen’s high-flying hedge fund career came to an abrupt halt when the 2008 financial crisis hit. As waves of layoffs reverberated throughout the industry, he dutifully went to work every day, knowing that it was just a matter of time before his number came up. Near the end of the year, “basically on Christmas Day,” he was finally laid off.
The 25-year-old found himself unemployed with no source of income during a time when no one was hiring.
With no job and no hope of getting a new job amidst the carnage of the Great Financial Crisis, Chen found himself “sitting around twiddling my thumbs”.
One day, he was spending yet another day in his apartment trying to find a way to occupy his time when he received an email from his sister. She had been living in Australia and was frustrated with the foreign transaction fees on credit cards. Did he know of any brands that had lower fees than the one she was using?
According to Chen, his first thought was “Let me Google that for you and I’ll get back to you in three minutes”. He quickly realized that Google wouldn’t be much help. All he could find was marketing material from the banks and aggressively promotional affiliate content.
With nothing better to do, Chen spent a week researching different credit card offers and compiled them into an Excel spreadsheet that he sent to his sister. She quickly forwarded it to several of her friends, who sent it to several of their friends.
[There was a] real shopability problem in financial services. Your checking account provider might give you a mortgage, a credit card, an auto loan, eventually insurance or wealth management services, and they’ll make something like $50,000 off of you over the course of your life. That’s how the whole system works”.
- Tim Chen
The popularity of the spreadsheet led Chen to his business idea: starting a personal finance comparison website. With no sign of the financial crisis abating, Chen decided to go for it.
“I always dreamed of doing something entrepreneurial. I just never felt like I had the permission to".
- Tim Chen
Working from the kitchen table of his Manhattan apartment in the beginning of 2009, Chen used $800 of his own money to pay for software, hosting, and other start-up costs. He contacted his friend Jacob Gibson, who agreed to co-found the business with him as his COO.
Nerdwallet was born.
“We make an honest to goodness effort to list every credit card”.
The site initially featured a tool where users could enter a few descriptors (whether they’re working or retired, whether they pay their bill in full each month, etc.). The tool then took the user data and used mathematical formulas developed by Chen to recommend the best credit card for them with the click of a button.
They settled on a content strategy to attract users from search engines and grow their business. Personal finance journalists would write articles on the pros and cons of different products and provide advice to consumers that would help them make routine financial decisions.
It was a disaster.
After nine months of working 16-20 hour days, Chen was forced to move into his girlfriend’s apartment to save money. He had only made $75 total during Nerdwallet’s first year in business.
“I was eating Subway everyday… It was like anything you could do to save money”.
- Tim Chen