Most fintech start-up CEOs tend to come from finance. Brett Crosby, who recently started PeerStreet - an investing platform for real estate loans - has spent the past decade in the inner sanctum at Google.
Crosby helped to start its mobile advertising business, ran the Google+ product marketing team and most recently ran the global teams tasked with spearheading the growth of Chrome, Gmail, Docs and Drive. But, more impressively, he only ended up in Silicon Valley because Google snapped up his first tech company – Urchin Software Corp. – in 2005 and then rebranded it as Google Analytics.
Crosby attended the Search Engine Strategies trade show in California representing Urchin in 2004. Two then-twenty-something Google executives – David Friedberg (who would later found Climate Corp. and sell it to Monsanto) and Wesley Chan (who is now a managing director at Felicis Ventures, a venture capital firm that invested in PeerStreet) – approached Urchin’s booth and basically said, “Hey, we heard about you guys and we’d like to talk about a business development opportunity – can you show me the product?”
Crosby was already planning to attend Google Dance, a big party at the Mountain View HQ, the next day.
“I said, ‘We’re here for the trade show and Google Dance, so let’s meet tomorrow,’” Crosby said. “They said it was a ‘biz dev opportunity,’ but it was very clear it was an acquisition meeting based on the level of seniority in the room."
It almost never happened. "They said if it leaked they’d kill the deal, and it did leak a couple of days before we were going to seal the deal, but they decided to go through with it,” he said. “It almost didn’t happen, but they had me help write up a press release and they announced the deal in 2005 a couple of days before my wedding. I actually signed the deal right before I walked down the aisle, and immediately after our honeymoon, I reported to work at Google.”
The deal paid Crosby and his co-founders half in cash, half in stock, and because they hit the post-acquisition milestones, the stock component alone doubled the value of the deal. That kind of dream-scenario exit is how entrepreneurs draw it up in business school but seems pretty difficult to replicate.
“It’s like we were playing Triple-A ball and the Yankees called and said ‘We’re going to be in the World Series – can you pitch for us?’” Crosby said. “We rebranded Urchin, put it on Google infrastructure, and Google Analytics became many orders of magnitude more popular than we ever could have imagined – it’s by far the most widely used web analytics platform in the world.
“Google was an incredible place to learn,” he said. “We went from a startup to a big company undergoing explosive growth – when I got there it was around 2,500 people, and I saw it grow to more than 100k."
Why would Crosby leave a company like Google? The JOBS Act opened up the crowdsourcing business model, and he felt the time was right to launch a digital platform for investing in real estate loans.
PeerStreet was launched in 2014, not as a direct lender or registered investment adviser (RIA), but rather a secondary market for lenders. It is aiming to become LendingClub for short-term real estate debt – the average yield ranges between 7% and 12%. In the last year of operations, approximately $230m was invested through the platform.
“We identified a great asset class, but it had some problems – real estate-backed loans can be fantastic investments when underwritten correctly, but they were not accessible, high concentration and hard to diversify so if something went wrong it was a bummer,” Crosby said. “Our idea was to turn it into a low-touch asset class with a greater degree of diversification.
“With general acceptance of companies like LendingClub and Prosper, we can do something like that with a much better asset class, because there’s something backing it,” he said.
Currently PeerStreet employs around 50 people, with about a third in general operations, including legal, compliance, PR and marketing, a third in products, tech and engineering, and a third on the real estate side of the business. The latter consists of employees who onboard lenders and work with them, real estate analysts, loan-servicing specialists and portfolio managers.
Crosby said he looks to hire candidates with multi-disciplinary backgrounds.
“That helps a tremendous amount, because it’s not the most intuitive or easy business, and hiring high-quality people helps set the culture going forward,” Crosby said. “A lot of best practices in hiring I’ve taken from my experience at Google and applied to this business.
“I look for people who can see beyond just their own specific area and have greater breadth and depth of experience,” he said. “We’re big travelers, and we value life experience, and intellectual curiosity – people who can identify problems and come up with solutions.”
On the real estate side of the business, PeerStreet is actively hiring lender-onboarding, payment-servicing, underwriting and commercial-banking specialists.
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