By any measure, Douglas Merrill’s had a successful career.
He has a Princeton PhD and was Google’s Chief Information Officer for 6 years.
Now he’s running his own startup called Zest Finance, an online lending service that’s raised $US112 million so far.
He also had to overcome deafness and dyslexia as a kid.
But he likes to defer a lot of the credit to people he’s met along the way in his life. He says he wouldn’t be here without the help of others.
In fact, that’s what inspired him to leave his comfy job at Google and start Zest Finance. He wants to be that helping hand to millions of Americans who don’t have access to regular bank loans — and provide a better way to borrow money.
Overcoming deafness and dyslexia
At the age of three, Merrill lost his hearing because of an auditory nerve infection. Luckily, it was a curable disease, and after three years of treatments, he was able to get his hearing back.
But being isolated from the outside world for so long left him extremely shy and socially awkward. He also had to relearn how to speak, which is why he says he still has a funny accent. On top of that, Merrill was dyslexic, meaning he had a hard time reading and was slow at maths — an irony considering he now has a PhD in cognitive science.
Every summer his parents had to spend hours re-teaching him how to read and solve simple maths problems. His teachers had to constantly work with him and show him tricks to get better at those things.
“I’ve been really lucky that I’ve had a lot of people who’ve been kind enough to influence me positively,” Merrill told Business Insider. “In all those cases, and leading up to Zest Finance, what I’ve tried to do was find interesting problems where people’s lives could be positively influenced.”
Lesson from Eric Schmidt
Merrill says the motivation to help other people also came from his interaction with Google’s executive chairman Eric Schmidt.
As Google’s chief information officer from 2003 to 2008, Merrill played an important role taking the company public. But right before the IPO, Merrill says he made a huge mistake that almost cost him his job.
Although Merrill wouldn’t disclose what it was, he says the mistake was so serious that he thought Schmidt, then-Google’s CEO, would fire him immediately.
“I got a call from Eric to come meet him at a conference room. I walked up there with my head down, opened the conference room door, and the entire board of directors was there,” Merrill said. “I was thinking, ‘I’m not just going to lose my job, I’m going to lose my job in public! This keeps getting better!'”
But instead of a public humiliation, Merrill says he got a coaching lesson he still cherishes to this day. “[Eric] pulled me aside, put his hand on my shoulder and said, ‘I understand you did [make this mistake]…Don’t ever do that again. But I still love you,” Merrill said.
Merrill continues, “In one moment, Eric reinforced our relationship, told me that he valued me, and made it clear that he was disappointed in me. It’s something I tried to learn since then, being very clear when things go wrong, but also reinforcing relationships because relationships are very important to me.”
Serving Americans who can’t get a loan
But of all the things he could’ve chosen, why did Merrill decide to get into the financial tech industry?
He says it was a desperate phone call from his sister-in-law, Vicky, that did it.
She needed emergency snow tires to get to work one day, but didn’t have the money to replace them. Her credit was too low to borrow money from banks, meaning her only option was to go through payday loans, which charge massive interest rates.
“The call from Vicky really shook up my world,” Merrill said. “She deserved a helping hand.”
Merill did some research and discovered that 64% of Americans don’t have a savings account of more than $US1,000 to cover emergency costs, and only 17% of them are able to borrow money from a family member. Most of them had low credit scores that disqualified them from regular bank loans. That meant there were millions of “underbanked” Americans who could benefit from a better lending system.
Merrill quit his job at Google and launched Zest Finance, a company that provides an online lending platform for personal loans. Unlike traditional banks that rely on 20 to 30 variables to vet a borrower, Zest Finance’s technology can look at 70,000 different “signals” to quantify the person’s ability to pay back a loan.
Zest Finance initially started out with a service called Zest Cash, targeting “sub-prime” users who have very low credit scores. But last week, it launched a new service called Basix, branching out to the “near-prime” market, the people with slightly better credit scores but still not enough to get favourable terms at banks.
Although online lending is one of the most competitive spaces these days, largely led by Lending Club and Prosper, both worth billions of dollars, Merrill says Zest Finance is different because it serves the subprime market, the high-risk borrowers most online lending sites and banks don’t deal with.
So far, more than 200,000 people have taken loans out of Zest Finance, Merrill says, and it’s expected to have about $US100 million in sales this year. It lists some of the Valley’s top VCs, including Peter Thiel, Lightspeed Venture Partners, and Matrix Partners, as its investors.
“I feel like I’ve been helped by so many people in my life that it’s just an incredible honour for me to hopefully help other people,” Merrill said. “I think that’s the biggest reflection of me as a human, that our culture is so focused on trying to make other people better.”
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