Twenty years is a long time for anyone who has worked in radio to hold onto one role, regardless of how much innovation is involved.
Outgoing Green Dot CEO and founder Steve Streit acknowledged as much at a conference in October, calling himself "the OG of fintech." But, in referring to his past career as a disc jockey and programming executive, he also expressed a keen awareness of how quickly tastes change.
"As soon as I had a hot format, I’d immediately throw it away and try to invent a new format because I was always worried it wouldn’t be popular," Streit said. "My preference has always been not to change with the times but to make the times change."
Green Dot announced Wednesday Streit would step down Dec. 31 as CEO, and that William Jacobs, the company’s board chairman, would take the role on an interim basis. Mark Shifke, who has served as Green Dot’s CFO since 2015, is also leaving the company. Streit will continue with the company as a chief innovation officer and adviser to Jacobs, Green Dot said.
Streit said in a press release he promised himself and his family that he would retire in October at the 20th anniversary of the company’s founding. That same month, he admitted he’d given much thought to retiring but that he was still driven by the desire to satisfy people — be they co-workers, business partners or individual customers.
"I would rather die than to disappoint a Walmart or an Apple or a Stash or an Uber or anyone else," Streit said during the Money20/20 conference in Las Vegas. "Or a Green Dot customer who calls me at midnight because they got my cell phone off the internet, and is angry because this and that happened to their card — and I’d handle it. And there’s a certain piece of that that becomes addictive."
The idea for Green Dot came about after Streit met with Disney representatives who wanted to sell records, theme park tickets and other merchandise online but found challenges — namely that their target demographic — kids — didn’t have credit cards, Streit said.
It was the late 1990s. As a research tool, the internet was still in its infancy, so Streit went to the library. "I went to the stacks and researched 'how does a mag[netic] stripe work' and 'what is a [point-of-sale] device,'" he said, and he used money from his radio days to start Green Dot in 1999.
The company has evolved over two decades from selling its first prepaid debit card at a Rite Aid drugstore in Loudoun County, Virginia, to launching its mobile banking arm, GoBank, in 2009, to broaching banking-as-a-service in 2016, Streit said. Along the way, he said, the company became the largest tax processor in the U.S., became a bank in 2011, and forged a lucrative partnership with Walmart and other companies.
About 35% of Green Dot's second-quarter revenue this year came from sales at Walmart’s stores, according to an August securities filing. The companies renewed their prepaid card partnership through 2027 in October, and Green Dot launched a fintech accelerator, TailFin Labs, the majority of which Walmart will own.
Green Dot also targeted a broader market this summer with a high-yield savings account. The company has historically focused on an underserved, lower-income customer base, along with, as Streit describes them, "younger people who don’t have any patience time or inclination to open a bank account in a branch environment."
The company counts 50 million customers on its platform, Streit said. But it lost 300,000 of them in the third quarter, he said, as competition with neobanks has intensified.
"We’re not 'neo-anything,'" Streit said, adding that seven or eight companies offer products similar to Green Dot’s at no cost. "The marketing is, 'Why pay for Green Dot when you get such-and-such for free?'"
Streit said he finds the free model unsustainable because of profitability challenges, but noted that Green Dot’s competitors are also among their partners on the company’s cash processing network.
Green Dot shares have plummeted by 60% since May, according to American Banker. And the company said it expects adjusted earnings before interest, taxes, depreciation and amortization to be about 25% lower in 2020 than what it projected for this year. But this isn’t Streit’s first brush with stock volatility. An activist investor sought to oust him in 2016 amid a previous drop in value and fierce competition from American Express and others. Streit kept his job as CEO but lost the board chairman position.
Asked in October about the company’s next steps, Streit cited the need for Green Dot to stabilize and "prove to ourselves and our investors that we can win back our customers in a way that’s honorable, ethical and profitable."
The company also needs to "continue to develop the next generation of leadership to make sure there’s always somebody else to feel the passion that [Green Dot] can remain the company it’s known to be," he said.
"The story of Green Dot, long after I’m gone, that will be written, is — uh … I get emotional — it’s people," Streit said.