In this article, we will see the answer to your question ‘How Does NerdWallet Make Money? and will see the NerdWallet Business model.
The NerdWallet platform, based in Finland, offers help with numerous topics, including loans, insurance, taxes, and investing. In addition to reviews, NerdWallet has various tools that help a person manage their finances more effectively.
Profits are generated by affiliate commissions at NerdWallet. The company gets paid for every signup created through its platform by financial institutions, such as banks and mortgage lenders.
Since its founding in 2009, NerdWallet has grown to be a leading financial comparison platform in the United States. Over 160 million people now use the firm every year.
Exactly what is NerdWallet?
A financial advice and content platform, NerdWallet provides content covering topics such as banking, student loans, taxes, insurance, and mortgages.
A major service of the company is its credit card and other financial product reviews. Using NerdWallet as a financial navigator aligns well with its mission of providing clarity in all financial decisions.
In addition, NerdWallet provides a number of calculators to help you plan for these crucial financial decisions, including a mortgage calculator or a loan interest rate calculator.
The company also offers guides about saving money, buying stocks, or refinancing your mortgage. NerdWallet users can check their credit scores and account balances if they sign up for the service. Data collected by NerdWallet will then be used to provide a personalized product and strategy recommendation.
Through its website and mobile apps, NerdWallet is accessible on iPhone and Android devices. Furthermore, anyone looking for more audio content can download any of the company’s podcasts.
A brief history of NerdWallet
In its beginnings, NerdWallet provided information on credit cards. Today, the publication handles a wide range of products including college loans, banking, mortgage loans, stocks, and insurance.
With an economics degree from Stanford in 2004, Tim Chen became the founder of the company. The co-founder of Chen’s company and childhood friend, Jake Gibson, earned a degree from MIT in Mathematics and Management Science.
After college, Chen and Gibson each moved to New York City, Chen starting as an equity analyst with Credit Suisse and Gibson as a trading associate with JPMorgan Chase.
Chen worked for hedge funds including Perry Capital and JAT Capital Management as an equity researcher and investment analyst for the next four years after graduating from college. After he lost his job over Christmas 2008 during the recession, he was devastated.
After losing their jobs, most of his friends who had worked in finance spent the day at sports bars. The sister of Chen, who lived in Australia at the time, contacted him to inquire about a lower foreign transaction fee credit card in 2004. He decided to launch NerdWallet immediately.
NerdWallet was launched in February 2009, using information Chen collected initially to build it. Their first few years of operation were fraught with difficulty, but they had high expectations. During its first year, the site generated only $75 for its founders. The business’s revenue was six figures by the second year.
Chen decided to continue working on NerdWallet when he realized there were no great opportunities on Wall Street, which was still recovering from the effects of the financial crisis. Chen finally gained enough confidence at the end of 2010 to hire all the people he needed to run NerdWallet. NerdWallet’s growth trajectory continued to be positive in the years that followed and is growing ever since as of today.
Jobs at Nerd wallet
NerdWallet describes itself as a solution to help people with financial decisions throughout their lives. In addition to finding the right credit card rates, refinancing student loans, and tracking their spending, they also assist people in many other ways throughout the day.
Among the 50 Greater Bay Area Financial Tech Companies listed by the San Francisco Business Times, NerdWallet was rated one of the Best Workplaces of 2019 by Inc. Their benefits package includes top-quality medical, eye, and dental coverage in addition to generous compensation. Their office in San Francisco offers catered breakfasts and lunches, commuter and gym stipends, as well as maternity and paternity leave.
NerdWallet provides jobs in various categories such as
- Software Development
- Sales
- Management
- Information design and documentation
- Arts and entertainment
- Marketing
- Media and Communications
- Legal
- Mathematics
Salaries at NerdWallet
What does NerdWallet pay its employees? Based on salary estimates, the total salary at NerdWallet is an estimated $131,496 per year or $63 per hour. The estimated median salary at NerdWallet is estimated to be $153,741.
NerdWallet’s highest paying job is that of General Counsel, which pays $303,507 per year, while its lowest paying job is that of an Administrative Assistant, which pays $45,350 per year. By department, NerdWallet salary averages range from $148,457 for Product, $106,725 for Design, $131,767 for Business Development, and $47,247 for Admin. Nearly half of the salaries at NerdWallet exceed $153,741.
The compensation of 53 employees at NerdWallet ranks in the Top 10% of similar sized companies on Comparably (based on 177 ratings) and the perk and benefit experiences of 49 employees rank in the Top 5% of similar sized companies on Comparably (based on 58 ratings).
Growth of NerdWallet
NerdWallet did not initially succeed. Chen had to move into his girlfriend’s flat after nine months because, in spite of working 16 to 20 hours a day, the site had only made $75.
As mentioned earlier, NerdWallet had an excellent second year. In the meantime, Chen thought he might try looking for a far better paying job in finance instead of continuing to work at it. The recession had still not ended and Wall Street firms were not offering good job opportunities at that time, which gave Chen a good reason to stick with NerdWallet. Gibson joined him as co-founder not long after.
At this time, banks were being distrusted by the public, which fueled NerdWallet’s growth. In the study, we found that users were less likely to trust what a banker, broker, or financial adviser told them, and they wanted to do more research independently.
At the same time, it became common for customers to shop online more often, and the first segment of shoppers to adopt this lifestyle was millennials who frequently compared products, read reviews on products, and decided before purchasing in order to do so.
With NerdWallet, consumers can compare credit cards, mortgages, checking accounts, insurance, mortgage products, and online loans. The year 2012 was a turning point for NerdWallet. However, revenue and profits were beginning to flatten despite the business’ growth.
Just before the annual company holiday party, Chen decided to lay off 20 percent of his workers in preparation for hypergrowth. During the period 2010-2014, Gibson served as the company’s chief operating officer. Earlier in 2014, NerdWallet hired Dan Yoo from LinkedIn’s business operation’s organization as COO.
Up to this point, NerdWallet had surpassed 30 million users each year. With its first round of funding, it raised $64,251,206 in 2015, and its valuation reached $500 million. In the next few years, NerdWallet made several acquisitions.
Moreover, in 2016, the company bought the retirement planning company AboutLife and NerdWallet valued at $502 million. NerdWallet wanted to develop retirement offerings but hadn’t focused much on the idea. AboutLife and NerdWallet both approached retirements similarly. After the acquisition, the entire AboutLife staff joined NerdWallet.
Another year of missed profitability goals led to 53 employees being laid off, or 11 percent of the company’s workforce. With the lay-off, NerdWallet’s Vice president of growth Henry Hsu left the organization, and its COO Dan Yoo became an adviser.
Throughout 2020, many consumers faced financial hardship due to the highly volatile stock market, rising unemployment rates, and soaring interest rates caused by Coronavirus.
In an effort to broaden its offering of financial guidance, NerdWallet acquired Know Your Money, which has operated in the U.K. for more than 15 years before they bought it. By acquiring NerdWallet, the company will gain access to the UK. Know Your Money features a comparison market, a partnership network, and a variety of business products. In the U.K., NerdWallet will benefit from this development.
A stronger foothold in the SMB market has been established with the acquisition of Fundera by NerdWallet, to expand its financial guidance and financing options for small business owners.
Fundera is committed to delivering fair and innovative financing options to business owners and has deep industry knowledge. Because it is a leading player in this segment, it makes sense for NerdWallet to partner with it.
What is the revenue model for NerdWallet?
How does NerdWallet make money if the app and website are free? As part of its revenue model, NerdWallet earns affiliate commissions, which it receives from financial services firms that offer credit cards and similar products after a user clicks through its site.
Depending on the services, NerdWallet’s commissions can be as low as zero or as high as hundreds of dollars. Only 5% of readers make a purchase after reading. The company receives a percentage of payments for products such as loans.
In a disclosure on the site, NerdWallet discloses the affiliate commissions it receives, but it affirms that this does not affect any of the advice or recommendations on the site.
Consumers use NerdWallet to get various types of financial advice, and it conducts user research to understand their preferences. As part of its strategy, the company focuses on hiring the best talent and investing in creating good content to answer user questions.
Having a strong content strategy is among NerdWallet’s reasons for success. Due to these strategies, the company was able to gain the trust of its users and overtake many incumbents in the industry at the time.
When the site was first launched, the founder published 500 high-quality articles each month, which increased to 1000 when the site was mature. The organic search option seemed the most logical choice to him from the start.
This allowed NerdWallet to obtain high-quality links from authoritative sites and become the go-to resource for solid financial research. As the company expands into different market segments and geographic areas, a content strategy will continue to be a crucial component of its success.
Our article should shed some light on NerdWallet’s business model and current financial profile.
The content strategy of NerdWallet
It is free to access NerdWallet, but the company depends on readers to buy around 5% of its products. For Gibson and Chen to meet their revenue targets, this percentage lets them know what kind of readership they must attract. This prolific publishing approach is responsible for much of NerdWallet’s success.
It is crucial for NerdWallet’s approach to generate revenue to prioritize organic search traffic. As a result, they are able to increase their credibility and reach, as well as maintain a low-cost structure.
Endorsements
It is also compensated by certain financial institutions for reviewing their products and services on NerdWallet. Customers may feel it is unethical to earn money from endorsements, but NerdWallet maintains that endorsements don’t affect suggestions or advice.
Revenue, valuation, and funding for NerdWallet
NerdWallet has received $105 million in venture capital funding in 4 rounds, according to Crunchbase. Companies like Silicon Valley Bank, RRE Ventures, Institutional Venture Partners, and more are among the company’s investors.
Since 2016, NerdWallet hasn’t publicly disclosed its valuation. According to NerdWallet, the company was valued at $520 million at the time of the announcement. Since then, one might expect its valuation to have significantly increased.
From its financial content, NerdWallet generates approximately $150,000,000 in revenue every year. Since the Coronavirus pandemic began in 2020, the company has experienced rapid growth due to the growing number of people seeking financial advice on topics like refinancing or maximizing interest rates.
Business model lessons from NerdWallet
NerdWallet is a personal finance comparison website. An $800 investment and a simple mission to analyze credit card offer led it to be founded by Tim Chen and Jacob Gibson.
Affiliate marketing is the primary source of revenue for NerdWallet. It depends on the product advertised and the company’s relationship with NerdWallet on how much commission NerdWallet receives.
FAQ’s
Question 1: What is NerdWallet
NerdWallet is a new free tool that lets you find the most competitive rates on credit cards, savings accounts, healthcare, and airline tickets.
Question 2: How does NerdWallet make money?
Affiliate commissions are how NerdWallet makes money. A financial institution, like a bank or a mortgage lender, pays the company cash for every signup generated by the platform.
Question 3: How do you use NerdWallet?
NerdWallet is free to use. You can use it through their website or mobile app. You don’t have to pay any money to start using it.
