Anthony Noto’s Mission as SoFi CEO: Get the Startup Ready to Go PublicBy
New CEO says opportunity for the startup is ‘tremendous’
Leadership looks to instill confidence after a tumultuous year
Anthony Noto, the new chief executive officer of Social Finance Inc., is looking to steer the company out of crisis and get it in shape for a potential initial public offering.
Noto officially joined SoFi on Monday from Twitter Inc., where he was chief operations officer, though he’s been seen around the startup’s office multiple times since last month’s CEO announcement. He discussed his plans for the financial-technology company on Monday in his first interview on the job.
The vision for SoFi outlined by Noto didn’t stray far from the one set by his predecessor Mike Cagney, who was ousted after accusations of sexual misconduct inside the company. Noto wants to create a broad online financial-service company, adding checking and savings accounts and wealth management to the main business of refinancing student loans.
“I’m going to spend the first month listening and learning, and making sure we are going in the right direction and unlock that opportunity,” Noto said. “We’re going to focus now on continuing to execute on the strategic plan, and build out our muscle and strength that would give us the option to be a public company at some point.”
Noto, a onetime U.S. Army captain and investment banker at Goldman Sachs Group Inc., seems to crave crisis. When he joined Twitter in 2014 as chief financial officer, the stock was down 34 percent from the start of the year. The CEO was gone a year later, and Noto was given a second job as operations chief, spearheading Twitter’s live-streaming strategy and leading its business divisions.
The situation at SoFi may be even more critical. The San Francisco-based company, which is privately held, was once the darling of the fintech industry. Then it encountered several issues last year, including allegations of sexual harassment and misstatements about loan products to investors. Other high-ranking executives besides Cagney also departed last year, leaving the company without a long-term CFO or chief revenue officer.
Another issue is personal loan losses. In a letter to investors this month, SoFi said that while the number of customers and demand for loans both saw large increases, there were concerns around performance of its personal loan product and associated costs.
“Despite strong loan volume and demand, our fourth quarter financials did not meet our expectations,” Tom Hutton, SoFi’s executive chairman, wrote in the letter obtained by Bloomberg. The causes were largely tied to costs associated with the management transition as well as marking down the value of some of the assets tied to personal loans “due to lower-than-expected credit performance,” he wrote.
To help guide the firm through this issue, it’s continuing the search for a CFO, and Noto said he’s reviewing the list of candidates. He’s also looking for a chief technology officer. Although the SoFi IPO watch has been going since at least 2015, it won’t happen without a CFO.
“We have no specific plans, but I think it is a good company objective over the longer term,” Noto said. “The growth has been incredibly strong, the demand has been really positive, and I want to make sure that we are allocating our resources for the next wave of growth beyond 2018.”
— With assistance by Selina Wang