How MotoRefi CEO Kevin Bennett grew to $6.2M revenue and 9K customers in 2024.

hello everyone my guest today is kevin bennett he's the ceo of moto refi a mission driven fintech startup revolutionizing consumers financial relationships with their cars as an experienced ceo he spent over 10 years launching leading startups from early to late stage he holds an mba from the university of virginia jd from georgetown university and a ba from brown university kevin you're ready to take to the top let's do it thanks nick thank you you bet okay so how are you helping consumers uh better finance or better understand the financing of their cars yeah so most consumers cars aren't doing them any financial favors uh what they get at the dealership you know in that transaction and they drive off with a big stack of paper that they usually haven't read or probably won't read it's you know above market interest rates often they're being overcharged on those insurance products they get at the dealer like gap insurance warranties and we help put them in uh better uh auto loans lower price we often cut the interest rate in half um with community banks credit unions or their lending partners and help them save money what are the rates typically i'm just not familiar what are the rates typically we typically will get folks in rates that vary from anywhere from five percent to 25 it's pretty amazing we have rates on our platform as low as 1.49 um and so we'll often cut those rates in half and we save our customers on average 100 a month on their payment interesting okay and so where do you enter sort of customer journey are you selling directly through dealerships or how does it work we are refinancing so uh oftentimes anyone's bought a car they realize they're getting all of that at the dealer they're getting their loan at the deal or they're getting those financial products at the dealer and insurance products and we are actually helping them often discover refinancing most consumers don't even know they can refinance their car and save money and so we're helping them realize that that's a financial moment in their lives that just like refinancing your home uh where you can save money on your uh on your car and that's you know that hundred dollars a month is grocery gas stuff for the kids it's real value for folks oh it's very it's extreme especially today i mean it's very real value so i mean guess give me a sensor one of those on the timeline we're gonna go back to your day one here in a second but i guess last year last 12 months how many did you revive yeah it's it's been pretty wild so we did over 250 million dollars in refinancings last year and we will do uh orders of magnitude above that this year do you think you'll break a billion uh we'll see i mean is it possible you actually know your numbers you have projections yeah it's going to be really interesting to see i mean i think in in the covid world and what's happening i think a year ago uh if we were sitting here hook it was just becoming a thing so i've learned not to try and predict the future too much but we're we're growing again by orders of magnitude so i think we're really excited but does covet do more people refi when they have issues and they're being laid off because of a pandemic or or do less people refi was it a you know a headwind for you or a negative for you i'd say slight tailwind i mean what you've seen is that consumers are looking um you know whether or not that they are personally impacted they know people are impacted they're thinking about their finances rates are relatively low and so you've seen a lot of folks uh refinance their homes for example and that has driven awareness uh with people refinancing their cars learning what else they can do to help right-size their finances optimize their personal finances and what's the 250 million is sort of hard for audience to like wrap their mind around such a big number how many people is that that you helped yeah so it's it's thousands and thousands of people um and we haven't released the exact number and kind of won't break that here on this on this podcast but uh many thousands of people across the country nationwide so uh really excited about the growth and uh continuing to grow that this year okay so take me back to day one when did you launch the company so it's a actually really interesting story so this is a venture build out of qed uh verticalized fintech fund started by nigel morris who co-founded capital one and then co-founded with a number of his uh former uh colleagues and executives from capital one co-founded qed as an adventure fund and they started right around 2008 led the series a credit karma have uh now invest globally in fintech they've been very successful and what they've done in venture uh you know that pattern recognition skill is tried and true and so when they see an opportunity uh in the market where someone isn't necessarily taking advantage of the market dynamics or the opportunity for innovation they'll stand something up and so they actually effectively in an interesting way we found we co-founded the company with our initial venture capital investor qed and that happened end of 2016 early 2017 and i actually joined when they uh got you know their first uh little bit of traction uh as the first ceo of the team in in mid 2018. okay so i mean two years it was a big period 2016 to 2018 what's going on i mean who's running the thing yeah so i'd say it was the very end of 16th so you're really looking about 12 18 month period and so that was you know initially as is often the founding story you have your your first engineer starting up in in building the platform you're just starting to think through the kind of vision and the commercialization and and you're just beginning to take it to market not really at market scale yet um but but just getting there and and so i was fortunate to to work with uh nigel and matt risley who's on our board frank rottman other great folks at qed and great folks on the team uh which was very small and and uh initially just literally the equivalent of starting out of your garage in this case was starting in the vc's basement uh which is where they were based so uh we you know moved us out to our actual first office kind of moved out of the basement got our first apartment as it were and uh and then went from there so you joined officially in 2018 but can you give us a little sense of you personally were you an exited founder like how did you get connected to the qed folks and why not just go do your own thing instead of you know jumping on the back of basically someone else's baby yeah it was uh it was really exciting for me i mean i think i i just wrapped up and it sold a start by co-founded uh with mike spain however who actually eventually came in to be our vp of engineering and is our vp of engineering today was that that you sold home then and that helped people save money actually selling their homes so i had gone through the residential real estate side of things and the financing of where people could save homes to save money then really fell in love with this idea on auto refinancing and auto is a moment when you think about the industry and what they saw and what we saw was student lending had had its sofi moment where there was digital transformation that really changed the way people thought about it could access uh financing for their education and manage that uh efficiently and when you look at mortgage there had been rocket mortgage better mortgage now better had really transformed and is in the process of transforming mortgage industry um but but that really hadn't happened in auto yet and there was this great opportunity for a you know auto as an asset class over 1.2 trillion dollars the same size student loans but hadn't seen the same innovation and so really a huge opportunity to help consumers and and my experiences in mission driven startups uh very very focused on on the mission and and the values of the company and saw the same opportunity and and early on we agreed to the grandma test we weren't going to sell anyone anything that we wouldn't sell to our own grandmother or grandfather and and that's how we operate the business and you know with a tremendous opportunity so it's been a great win-win uh for for our investors for lenders we partner with for our consumers in the team kevin how does motor refi make money so a few ways uh consumers pay us a uh low uh origination fee or processing fee and that is for the technology the convenience for example we saved them the trip to the dmv we take care of that for them that gets we're talking about we're talking like 20 bucks something like that or is it more larger so it ends up being a couple bucks a month like wrapped into the loan and so it becomes it easy and and when i we save i say we save people 100 a month that's net of all fees so that's 100 a month on their payments that they are saving and so for a couple bucks a month for the consumer our lenders are paying us for those loans because we are acquiring new members for the credit unions and helping them through the process and so you're not doing you don't have there's not a balance sheet business behind this you're selling these you're basically underwriting and selling them off and then other people are like qed capital are doing the actual lending so it's with our partners credit unions community banks across the country and they are they actually give us their underwriting we partner with them so we can underwrite an auto decision on our platform so that means for a consumer they can get a firm offer of credit in seconds okay i guess what i'm asking though like there's a lot of fintech businesses today that are actually taking real balance sheet risk there's others like lendio which are just sitting in the middle making high margin profits off referring business out but doing the underwriting and the data analysis what model are you doing correct we're closer to the latter in that we are not balance sheeting any loans which makes sense considering how the company was founded i mean you've got a lot of financial partners that probably want exposure to this asset class anyway so with that being said the question is and this is what makes lendo so valuable is why do people trust your underwriting better than other forms of underwriting or even direct competitors what data sources are you using to refi these and still not have them going to default risk so we run a matching marketplace and what that means is we consumers are getting a digital experience that they're not getting elsewhere and through some initial data they provide in some third-party uh data polls we provide a very rich data set we get the underwriting from our lenders again so our lenders are underwriting these loans but we're really matching customers with the best offers from our variety or suite of lenders and that gives us a more robust blended credit box so depending on the credit policies from our different lending partners we're matching that consumer with the absolute best rate and offer that they could get on the market based on our our tier and group of lenders how many lending partners last year did you source at least one refund so we don't release the aggregate numbers but we doubled the number of lenders in the platform last year okay is there a range you can join me with like ten or a thousand uh less than a thousand is probably a safe bet okay cool cool um got it and then you mentioned that i cut you off you said you make money a bunch of ways a couple bucks a month on the refi stuff how else do you make money yep i mentioned that those lenders are paying us for the loans that were originating and processing for them and finally on those those i products of the f and i products at the dealership so gap insurance warranties we are offering those products at a much lower rate than consumers are paying at the dealership and so they can often get a refund in the mail a thousand two thousand three thousand dollars back by canceling the policy they have which they're probably overpaying on and then getting a policy through us and wrapping it into their financing interesting what is the again i haven't bought a car since i think 2011. i'm just not a big car driver being a millennial using uber all the time probably should but what is the average like size of a refi these days like is it like 10 grand or i don't know i just have no idea it's significantly larger i mean oh wow but it could be you know 15 to 30 easily sometimes north of 30. oh wow okay is that i mean is that sort of a fair average between 15 and 30 for most refines um yeah i mean broadly speaking it goes a little north of 30 and but down to 15 is about right and most people are overpaying at the dealer it actually makes sense to refinance pretty quickly and so there's a lot of residual value on that vehicle and you can save money over a longer period of time interesting and then again i don't do a lot of b you know interviews or data or understanding or studying on the b2c sort of balance sheet business from fintech models i'm more on the b2b side i know on the b2b side though one of the ways a lot of these folks make money is there again they're charging a one to sometimes two two and a half percent for a referral fee right when they when they have a lending provider that actually fills the loan that they helped underwrite and collect data on are you i mean i imagine your rates are obviously different with every lending partner but is it generally sort of in the one to five percent range for each one you sell off uh so that's where the lenders pay us for the for the loans that we're originating for them for sure exactly i'm just curious is it is it a percentage and is the percentage somewhere between sort of one and five usually or is it lower or higher yeah ballpark that's roughly right interesting do you when you look at b2c like models like yours i mean is this the revenue is this sort of the revenue model of the future for these fintech players you have experience at homes they have experience here is there anything you change about the business model and opportunity you see that's not being executed yet no i think we're really excited i mean we think when you look at the opportunity in the space there's so much opportunity for innovation there's so much opportunity to provide a better better digital experience to leverage data to be more efficient both on the consumer side and the lender side and that's we're creating a ton of value we think that business model that we have really reflects that where the consumer isn't paying most of the cost it's really split a number of different ways and that that allows everyone to win yep that makes sense now when you look at your three different revenue models that you just articulated the uh origination fee spread out over the term of the of the refi the selling it off to a lender and then also i think you said gap and warranties and the direct products like this uh without asking them to say absolute numbers you don't want to share those but on a percentage basis can you break down like last year's 100 what percent was in each of these buckets it's about even within each oh wow so okay so it's about 30 33 30. yeah i mean roughly speaking i wouldn't give exact percentages but are you more bullish or bearish on any one of these lines over the next five years no we're not i mean we think all makes sense and are a great deal i mean the consumer again neda fees is saving a hundred dollars a month on on the refinance and that's 1200 a year obviously in real money and for the lenders it's a great deal we operate up to 20 more efficiently when it comes to approval rates and funding rates uh based on the data integrations we have based on the software we run so incredibly efficient for the lenders uh which provides a faster better experience for the consumer but also efficiency for the lender so we think we've got a great value prop uh for all of our partners and are really excited just to keep growing and scaling the business with the federal government printing money like crazy there's a lot of people arguing cost of capital right i mean capital is basically becoming a commodity in some of these aspects does that put downward pressure on your ability to charge even if it is just a couple extra dollars per month as an origination fee i well i think when we're delivering savings i mean the reality is our value proposition to consumers is is free money right we're saving them a hundred dollars a month where they wouldn't otherwise get that uh that savings so we're really excited about the value prop and we don't we don't see a lot of resistance to to the model in fact people are really excited about being able to say let me yes sorry let me re-ask that the the thousand or so or less than a thousand lending partners that you have as they see more pressure because there's more sources of capital there's more capital in the marketplace they're going to be less and less likely to have margin to pay you your one to five percent do you see down or do you anticipate downward pressure on that line of your revenue so we actually see auto as an asset class being more compelling relative to other asset classes uh based on the return and risk profile so we see more emphasis and growth in in auto lending actually vis-a-vis other other types of lending so while there could be impact on other areas of a bank or lender's business we're not seeing it data interesting is there any data business here are you selling data related to these refines to anyone else besides folks that are on your cap table directly we are not so there is a ton of opportunity in the data we are generating a lot of data that data gets compoundingly more valuable and effective in helping us operationalize our business optimize our business and we're really excited about it but we're just using it to help uh increase and improve our value prop to our lenders and our customers you just recently did a series a or maybe a series a extension bringing in uh i think pronunciation ventures how much to love you raised to date raised about 25 million today and what's it like telling a story going out when you're negotiating evaluation with again your last capital partner i mean do they value one of these revenue streams more than another or is it all really equal i think the the interesting theme and trend really what we're seeing in fundraising for us and in general in the capital markets um is is a very healthy robust market out there and you're seeing a lot of flexibility so when we went out for example we raised a series a about a year ago and that was roughly 10 million dollars and we weren't planning on raising again until later in 2021 later this year and what we saw given our growth numbers and trajectory was a lot of inbound interest toward the end of last year and and the opportunity to be efficient opportunistic thoughtful about uh incrementally adding capital to the business from the right partner at a low dilution and a strong valuation and so um modern is a great partner and liza's been great to work with and they have experience across real estate fintech and suretech and have been another great partner down to the cap table um in the business you said 250 million was the number for 2020. what was that number for 2019 in terms of total refunds don't remember off top my head but significantly less like was it i'm trying to back into a growth rate was it more than 100 percent over your growth oh so we so we announced it when we announced the round that we grew last year uh monthly revenue 6x 6x got it so you mean that means you're probably doing something like 40 to 50 million dollars in a revised in 2019 250 and 2020 and if all goes well maybe you do 800 900 million this year we are we are seeing things on a similar trajectory so we're feeling really good about the growth and we think this year is going to look a lot like last year if not better kevin we love that let's wrap up here with the famous five number one what's your favorite business book my favorite book and i will give you my favorite chapter of book which is i still love good to great i still love level five leadership and the contrast of level five and level four it's really it's not about me it's not about any ceo it's about building the right theme and systems and processes and culture and uh still love that uh that lesson uh to this day number two name a leader you're following or studying i will say one of the leaders that i follow and have gotten been fortunate to get to know is nigel morris who co-founded capital one and co-founded qed and his views and insights and acuity is broadly speaking around the future of fintech i would recommend frank rothman's white paper uh the connecticut revolution in banking so say that again the what revolution copernican revolution like as in copernicus the copernican revolution in banking that frank rotman uh you know what matt is uh putting out on social media matt risley and and nigel of course in his interviews it's really great stuff and they have their finger on the pulse of the future of fintech and they've been great partners in the business actually i meant to ask this would you ever raise a 200 million fund and start doing these yourself to capture extra margin actually launch a balance sheet business you know it's a great question i think one of the keys to success is often do less and do it better and really stay focused and so i think we're really focused right now on scaling what is a great and fast growing business and and really heads down on that and i think we see tons of opportunity in the future to to expand on the core business model but i think we're we are for the near near term focused on just continuing to grow and build the core business which is operating really really strongly number three what's your favorite online tool for building the business could you repeat that i'm sorry favorite online tool for building motor refi online tool um well i would say to slack we are a slack culture slack over email for sure we use slack a ton and lattice lattice in terms of culture and one-on-ones and and feedback has been really great for us kevin number four how many hours of sleep to eat every night i aim for eight i often get a little less than that and what's your situation married single kids uh i am uh married and a proud uh parent to a rescue boxer pit bull named judy garland oh i love that and how are you you said how old are you yeah 40 40. last question what's something you wish you knew when you were 20. i wish i knew the power of technology i i came late to the tech industry and and was in in more of the public service political world which which i very much enjoyed and um what i love today is building mission-driven businesses that leverage the power of technology to drive exponential outcomes guys motor refi.com 25 million dollars raised launched in 2016. kevin came in in 2018 to lead a ceo they make money three ways origination fees is they save money for consumers as they refi those auto loans lenders then pay for a lot of these loans and then they also sell direct gap insurance warranties things of that nature kevin we're rooting for you did over 250 million bucks in refunds last year we'll see what happens in 2021 thanks for taking us to the top nathan it was great enjoyed it thank you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we gotta push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya