
The Sex Scandal That Toppled SoFi’s C.E.O - s73ver_
https://www.nytimes.com/2017/09/12/technology/sofi-chief-executive-toxic-workplace.html?smid=tw-share
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noobermin
This is a random thought, I'm not sure where this can or should go, but this
article made me think of universal healthcare. One of the arguments for a
single-payer is that it takes the burden of understanding healthcare and
health insurance issues from employers.

One of the general issues with corporate structure is that corporations are
machines that are to prioritize profits above all else, hence, their turning a
blind eye to his issues. This is because a CEO isn't just an administrator for
a money making organization, but is a caretaker of culture, ethics, and
morality of a company. Work is so much a part of our lives that a person in a
supervisor position over us actually has a lot of power in other aspects of
our lives: food, shelter, healthcare, future work opportunities, even access
to a social life given our work centered culture; and this gives them power to
leverage it to hurt others.

This isn't to alleviate any of his guilt, but somewhere in here is a larger
comment on our culture and how many jobs _should not_ be the "best welfare
program" (or shelter program, or food program, or social program, or
networking program, or etc.) that our lives should not be dominated by work
only.

~~~
ams6110
It's not a good argument for single payer health care, because _any_
alternative to employer-provided health insurance would do that. But I do
agree that would be beneficial.

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mi100hael
Seriously, how are these people raising _so_ much money?? Scandals &
impropriety of one sort or another among execs are becoming par for the course
in SV, and yet investors seem perfectly happy to throw cash at any half-baked
"disruptive" idea (where "disruptive" simply means "brick-and-mortar business
moved entirely to an app").

Are investors really that dumb?

~~~
JSONwebtoken
Sunk cost fallacy. Investors put in $100 million in 2011 when the mere concept
of Fintech would give venture capitalists chubs. Back then, it wasn't so clear
that millennials and personal finance are like water and oil -- and that you
would need more than a landing page and a webform to drive organic growth.

SoFi would also feed investors both false information (as mentioned in the
article), and inflated user growth numbers fueled by their freedom as a
"startup" to spend insane amounts of money on customer acquisition with no
regard for profitability.

Basically, SoFi spent all their money convincing people through advertising
that they were "a new kind of finance company", all without actually creating
anything new.

Turns out the company stops growing if you stop giving them money, and VCs
didn't want to lose their $100 million commitment or admit that the company
was DoA, so along came more rounds of funding.

There you go, that's the path to a $4 billion tech valuation with no actual
tech product.

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somberi
Arc of the story in three phases; all from one magazine:

1\. [https://www.bloomberg.com/news/articles/2015-12-03/this-
lend...](https://www.bloomberg.com/news/articles/2015-12-03/this-lender-lures-
millennials-with-free-cocktail-parties)

2\. [https://www.bloomberg.com/news/articles/2017-02-24/sofi-
rais...](https://www.bloomberg.com/news/articles/2017-02-24/sofi-
raises-500-million-led-by-silver-lake-for-global-expansion)

3\. [https://www.bloomberg.com/news/articles/2017-03-13/sofi-s-
lo...](https://www.bloomberg.com/news/articles/2017-03-13/sofi-s-loan-losses-
pile-up-as-even-wealthy-borrowers-default)

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seasonalgrit
> "About 10 SoFi executives met to discuss the situation; it was then that
> some of them learned Mr. Cagney had not actually secured the $90 million for
> the loan product, according to people who were at the meeting. Some
> attendees said they were dismayed at the possibility that they had made
> material misstatements to investors."

The litany of business misdealings detailed in this article makes me wonder
how SoFi hasn't been fined out of existence by now.

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calvinbhai
Can the startup employees sues such founders for screwing with their stock
option value?

~~~
huac
There's an argument that basically every crime involving a company or officers
of a company is a financial crime, so theoretically the SEC could bring
securities charges...

~~~
rhizome
That might make more sense if Fiduciary Duty was ever prosecuted (in the
general sense) in reality.

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zaroth
I dunno... this article is certainly _colorful_ but I can only imagine there
is some _embellishment_ going on here. No facts or evidence to support any of
it. And just to clarify, there isn't actually any sex in this particular CEO's
sex scandal?

But believe me, this was a wine-soaked orgy of a frat house. Used condoms in
the staircase, sex in the parking lot level crazy.

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svskeptic
Why are the investors involved with this company, specifically the board
members, that allowed the sexual harassment to go on unchecked not being named
and shamed? It was their job to keep the CEO in check.

If they looked aside, in the pursuit of a unicorn, then they shouldn't be
allowed to pass off all blame to the CEO. What were they doing? Where is their
accountability in all this?

Most people at that level do not change their behaviour unless they have a
financial downside. If we keep looking at CEOs while the board/investors/VCs
are not called out, nothing is going to change.

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hyad
I had been meaning to refinance my student loans with them, but now I have
second thoughts. However, they seem to have better customer service than their
competitors such as Darien Rowayton Bank. Just wondering about the company's
finances.

~~~
ams6110
What does it matter? If they refinance your loan, and then go out of business,
your loan is still a contract and you'll just make the payments to whomever
ends up buying the loan portfolio.

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JSONwebtoken
I don't understand the value of this company. What services do they provide
that existing internet companies don't provide at a lower price and higher
level of quality in its separate service lines (personal loans, student loans,
mortgages)?

In offering so many products, what economics of scale do they bring over
established banks and credit unions? If there are any newly discovered
efficiencies, they certainly aren't passed down to the consumer as the rates
I've been quoted for their loan products are terrible; it's shocking that they
get any organic business at all.

They call themselves "a new kind of finance company" but there's literally
nothing new to benefit the consumer. If anything, they've taken multiple steps
back because they're a 1990s boiler room down to their culture, their
management, and especially their channel of sales: they masquerade as an "tech
company," but really they're just a web form that prints leads to their sleazy
call center.

If you tick the boxes of the specific demographic they're going after (High
Earners, Not Rich Yet - as they call them at SoFi) and you make the mistake of
giving them your information by applying for any one of their products, all
the mini-Belforts at the company will relentlessly pitch you over the phone to
trust them to manage all of your wealth... for a princely return of 1.18%.

They have no defensible moats, they have no IP, they have no talent on staff.
Their Chief Technical Officer is the CEO's wife, who has a 1 year remote
degree from Stanford and no prior experience in software. Seemingly her job is
just to stand around and pretend everything is "normal" while her husband
sexually assaults girls half her age in the room across. How sad.

~~~
t0mbstone
Speaking as someone who has multiple loans from SoFi (consolidated credit card
debt, and then re-financed a couple of times as my credit score improved),
getting a loan from them was remarkably painless.

Their online application was easy to use, and once it was approved, an
electronic deposit for the amount simply appeared in my bank account a couple
of days later. The interest rates were low, the terms were easy to understand,
and there were no gotchas like front-weighted interest or unexpected fees.

If another company exists that will happily give me a hassle-free, unsecured
loan for $50,000 at 5-6% interest, via an easy to use online form, and then
deliver the funds in only a couple of days... please, by all means, let me
know!

~~~
JSONwebtoken
[1] [https://www.avant.com/](https://www.avant.com/)

[2] [https://www.upstart.com/](https://www.upstart.com/)

[3] [https://www.lendingclub.com/](https://www.lendingclub.com/)

[4] [https://www.prosper.com/](https://www.prosper.com/)

[5] [https://www.marcus.com/us/en](https://www.marcus.com/us/en)

~~~
bduerst
A couple of those companies don't specialize in student loan refinancing.

SoFi started as a student loan refinancing institution for low-risk
professional pools with Stanford and Harvard alumni. As someone who refinanced
their student loans recently with SoFi and shopped around, I can tell you I
got the best rate from SoFi.

You seem adamantly opposed to SoFi though. Despite the unfounded accusations
in your rant, why are you?

~~~
pyre
Personally, I don't know if "has the best rate" is strong enough to warrant
the moniker, "a new kind of finance company," but that's just me.

~~~
sjg007
The real criticism is that they take out the repayers and leave the govt with
the defaulters aka privatize the profits and socialize the losses. it will
eventually undermine the student loan program.

~~~
icelancer
That is not unique to SoFi by any means.

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icantdrive55
1\. They were having sex in vechicles.

2\. There was nepotism in hiring.

3\. The founder "hit" on employees. The founder also has a hedge fund in the
city? What a guy. Quite the go getter. BOD gave him the boot, but will be at
the end of the year.

4\. The Vice President supposedly paid women to loose weight, and he kicked
garbage cans. (He denied everything, except kicking the cans. 'There's So much
stress in a start up!'

5\. I still don't know what the company does, nor care. I don't know what
allegations are true, or false.

6\. Moral of story--don't say anything off color, sexually suggestive at work.
That goes for females too. Don't have sex at work--ouch! Gotta be hard being a
CEO in this bubble? So many difficult rules! So much stress for the Founder!
(I hope this dudes wife has a prenup? Then again I'm still not exactly sure
what crime he committed, other than being a privileged white male, with poor
social skills?

7\. I'm still kind interested in his hedge fund. I'm astonished over the money
certain white males can accumulate in America.

8\. If I owned any company. My first speech would be, "Don't use this bubbly
job as a place to socialize." And that's the rub. So many people use that
bubbly job as their hatching ground for socializing. My ex went to work daily
in SF, and complained the gay men at work wouldn't hit on her. I once told her
that if she's using work to socialize, it's pathetic. She read me the riot
act. Never said anything about her job again. I need to say this-- San
Francisco runs very low on available straight men to socialize with. I've seen
women throw themselves at average dudes. Average in all categories. For one--
stop it. To the guys who get the big egos; stop it. Or, keep it up, and get
kicked out of your own company.

