Portfolio Spotlight: Cardless
Year founded: 2019
CEO/founder name(s): Michael Spelfogel and Scott Kazmierowicz
Direct from co-founders Michael Spelfogel and Scott Kazmierowicz, get to know more about Drive by DraftKings portfolio company, Cardless, which intends to disrupt the stale consumer credit sector.
Why did you found the company?
“We founded Cardless because young brands are shut out from building credit cards and customers are mistreated by banks. Banks only partner with companies with massive scale and ones that are willing to bear the costs of working with legacy tech and subpar products. That leaves only airlines, hotels and legacy retailers with few exceptions. Without sufficient scale, brands cannot get favorable terms from banks.
Take Synchrony, the largest co-brand bank. They require fax machines to upload documentation for disputes, average hold times are often over 30 minutes, interest rates are sky high, there are hidden fees everywhere, and it’s frustrating to use the product.
Credit card experiences should be curated by tech companies that have PMs, not legacy banks. Structurally, we’re aligning interests with the end customer with our marketplace of lenders that helps to drive down interest rates.”
What are major trends, data, talking points, growth possibilities in your sector overall?
“Consumer credit is the last banking vertical that hasn’t been disrupted by Fintech. It’s insulated, stale and not consumer friendly. It’s really hard because there are tons of regulations, the networks are hard to work with, and there are tremendous barriers to entry.
But we’re changing that paradigm with a digital-first product, aligned interests with our customers, no fees ever, more approvals, lower interest rates, and tech-focused features to save you time.”
Where do you see your company fitting into this sector?
“We will become the go-to credit card issuer for innovative brands and all consumer segments.”
Who are some of the leaders in the sector?
“There are none in credit cards, but Stripe and Marqeta are two companies I respect in Fintech in general. They are platform businesses that grow from activity not lending out debt capital. They are unique in that way for Fintechs and we’re orienting our business around the same dynamics that have made those companies successful.”
What does the investment from Drive by DraftKings mean to you as you grow your company?
“It’s great for signaling and our foray into betting and sports.”
Why did Drive by DraftKings invest in Cardless and how do you see them disrupting their sector?
“Drive by DraftKings saw a space that is ripe for disruption, with a customer base that is demanding innovation and greater engagement. There hasn’t been innovation in that space in 20 years and Cardless is definitely shaking up a stagnant sector—like Uber and Lyft disrupted transportation and Airbnb did with hotels. And even more importantly, they are creating a way for brands beloved by their customers to engage even more deeply with them and reward them for their loyalty in new ways.”
What advice/words of encouragement do you have to other founders/entrepreneurs?
“Don’t give up if someone doesn’t think highly of your idea. It takes a long time to gain traction and many founders allow others to dissuade them from doing the work they need to be successful.”