This New Credit Card Can Help You Buy A Home. But Creating It Was Nearly Impossible.
Bilt is a loyalty program and credit card designed to help people towards home ownership. But to make it work, this entrepreneur had to fail repeatedly.
In 2017, Ankur Jain had sold a company to Tinder, had become its VP of product, and was hating the conversations he was having. He was living in San Francisco, where Silicon Valley types would talk about solving big problems and bettering the world — “and then the kind of stuff I would keep hearing about was, like, ‘We’re building crypto stickers,’ ” Jain says. This in a state where the median household price had hit twice the national mark, and in a city that over the past five years had seen median home prices nearly double. And it wasn’t as if the housing stock had astronomically improved. “The more these things became expensive, the less you got as a consumer,” he remembers realizing. “In what world of private sector markets does that make sense? And that, to me, spells opportunities to change a whole model.”
Even some highly educated, relatively well-paid San Franciscans — buoyed by lucrative jobs yet awash in student loans — could not afford to buy a house there, and homeownership nationwide had been largely dropping for more than a decade. “Then the worst part is, everyone tells you that the only way to ever build wealth in your life is homeownership,” Jain says. This was made even more annoying by the fact that what people did spend to put a roof over their heads — often, especially for young people, paying rent — helped their homeownership hopes very little, even as nearly half of American renter households paid more than 30 percent of their income on the expense. As far as Jain could tell, reliably paying rent only sapped one’s savings. Since few renters could pay rent via credit card, their reliability rarely, if ever, translated into an improved credit score despite rent being so many people’s largest monthly expense. It didn’t even earn you cash back or points like buying gas or groceries or airplane tickets did. Rent was an exceptionally big drag — which was, in its way, exciting.
Related: 5 Tips for Millennial Home Buyers
Jain had been developing a theory of profitable betterment: Take young people’s biggest problems — ones surrounding massive sums of expenditure, like student loans and healthcare costs as they and their parents age — and see if entrepreneurs could reshape them to actually improve one’s life trajectory. “It’s like the age-old adage of ‘Follow the money,’ ” says Jain. “Where are people having to spend money? If you give consumers a better experience, you can disrupt legacy markets.”
That was the guiding principle behind the venture studio, called Kairos, he began as he departed San Francisco and moved to New York. (The incubator shared the name with the wildly popular networking society for aspirant entrepreneurs Jain had founded while a student at Wharton. This had made him a darling to some of the world’s most powerful business elites as they sought out connections to bright, young talent.) And that experience-centric principle drove two of Kairos’ first companies: Rhino, which created a system that allowed renters to avoid paying an enormous up-front security deposit on an apartment and instead contribute a small monthly fee as insurance; and Cera, which aims to make home care for the elderly more affordable and is currently operating across the U.K. “People thought it was, like, a nice-to-tell story,” Jain says of Cera. But he says that, today, both it and Rhino are $500 million businesses. “It’s actually both helping people and making a lot of money because you’re solving a real problem.”
Yet rent — useless, savings-sapping rent — remained Jain’s most loathed nemesis. He had his question, which was ambitious yet simple, as he liked one to be: What if there were a way to help turn renting into a pathway to homeownership? He just couldn’t picture what the answer would look like.
Jain likens building a startup to putting together a puzzle. There’s a mess of pieces — hundreds of them. But at any given moment, a founder and their team have to focus on where to put whichever they believe at the time is the most important piece. Only once that’s set should they move on and look at what seems to be next. “If you try to piece it all together from the beginning, you’ll be lost with where to even begin,” says Jain. “There are so many issues that will happen, you’ll never build the foundation.” And while an entrepreneur may have an initial idea, a startup actually doesn’t know in the beginning what it will build. “Imagine a puzzle where you don’t have the image,” he explains, “but you have to imagine what that image is.”
Jain started asking around to see what was already happening in the homeownership space. He leaned on his formidable, possibly unparalleled-for-his-age network (he’s now 31), asking for connections and conversations. Most of what he saw were techy takes on rent-to-own systems — which seemed innovative and cool, until they seemed useless and even sinister. He felt that the programs preyed on lower-income people by using nearly incomprehensible math to increase the prices over time. “You would never use these programs unless you absolutely had to, and that is the first sign something is predatory,” he says. That clashed with Jain’s ideals. “Technology companies, at their best, improve the quality of what’s best-in-class and democratize access,” he says. “Meaning, if you are someone with high income, you would want this product because it’s better and more affordable. And if you are low-income, you also want it because it’s better and more affordable.”
So he kept having talks and leaning on his network, and eventually he developed what seemed like a vision worth pursuing: a rewards program. He spoke with Barry Sternlicht, founder, chairman, and CEO of Starwood Capital Group, who told Jain about Starwood Preferred Guest, the beloved hotel rewards program that Marriott International acquired when it purchased Starwood Hotels & Resorts Worldwide in 2016. Jain learned about how hotel groups and airlines thrived off not individual bookings but their loyalty programs.
Consumers know the basics of a loyalty program. It creates a form of currency, often called “points” (though airlines typically call theirs “miles”), which have a particular value. Sometimes that value is assigned essentially internally; a Starbucks Rewards card awards points that can be redeemed for Starbucks products. But the value of points can also be agreed upon by a pair of partners — including two distinct rewards programs. A hotel program could create partnerships with airlines in which the hotel members exchange hotel points for a certain amount of those airlines’ miles. The customer doesn’t see that once that exchange occurs, those points are actually sold from one company (the hotel) to the other (the airline).
Such systems have been invaluable to airlines during the pandemic, when United, Spirit, Delta, and American Airlines all collateralized their loyalty programs to raise billions while flights were grounded. American Airlines’ offering this past March reportedly set an aviation industry record by raising $10 billion.
Jain saw a direct application to renters who wanted to one day own a home, by way of the people to whom they paid their rent. To landlords, renters have costly commitment issues. According to the institutional multi-family real estate scion Mitchell Moinian (who is a principal at The Moinian Group and an investor in Rhino, and became an early partner in helping Jain shape the real estate side of this nascent business), about a third of leases in higher-tier buildings aren’t renewed, and that figure expands to about 50 percent of leases nationwide. The costs of that turnover — the vacancies not earning anything, the marketing to find new renters — are substantial. “If you can get an extra handful of people to stay one more year, two more years — massive difference,” says Jain. And a reward program is a proven, popular way to inspire commitment. Jain imagined creating a program that would sell its points to landlords, who could then offer those points to renters as incentives to sign or renew leases or for making a rent payment; at the same time, Jain figured, the rewards program could make it so its points could be cashed in for a down payment on a mortgage — which he thought he could also make money from by eventually getting a mortgage originator license. Landlords would see less turnover; renters would finally get something back for paying rent. All he thought he had to do was get real estate owners to sign up for this program and build from there. “It seemed like a no-brainer,” he says.
He called in the lawyers and asked how he had to set this up. “Then our lawyers come back and say, ‘Hey, love the idea. It might not be legal,’ ” says Jain. “And I was like, ‘Sorry — what?’ ” Apparently, legally, Jain needed explicit approval from the Federal Housing Administration and Fannie Mae in order to allow people to put points toward a qualified mortgage, just as they can legally use personal savings or gifts from their parents. (“Why, by the way, gifts from your parents?” Jain says. “I mean, like, so rich kids can get benefits, but nobody else?”) What had seemed simple now seemed impossible; the regulatory issues felt like a lethal blow. “Suddenly, my picture I’d imagined no longer worked,” he says.
Jain set his sights elsewhere — including on seeking regulatory reforms around the country for Rhino so local governments mandated that all renters in the area have access to its security deposit alternative. Through that process, Jain found, to his Silicon Valley–jaded surprise, that politicians actually wanted to be of service. “We were not just saying, ‘Move fast, break things, and screw you, government’ but actually asking for help,” says Jain. And Rhino received it. It was around this time that Jain reconnected with Tim Mayopoulos, who had recently ended a six-year tenure as president and CEO of Fannie Mae and who agreed with Jain’s earlier thinking: Why should loyalty points earned from paying rent be any different from personal savings? Earnings should be earnings, regardless of the currency.
That renewed Jain’s confidence in what had gained the internal code name of Project Casa, and he traveled to a meeting with the Department of Housing and Urban Development in Washington, D.C. — to find a roomful of high-powered officials, including the head of the FHA and the then HUD secretary, Ben Carson. It seemed that the government not only wanted to help but needed help. Young people were missing out on building wealth through homeownership — risking both a further rise in inequality and an economy in which boomers may soon struggle to liquidate their investments as they retire. “I get to this meeting, and I start to realize how big of an issue this is,” Jain recalls.
So began a nine-months-long gauntlet of working with federal policy and risk teams, asking and answering endless questions, and making adjustment after adjustment to ensure the program would be safe for consumers. The key was to balance conviction in the larger vision while maintaining the humility of knowing it was only a vision — maybe even an ill-informed one — and that reality would fracture it over and over again in instructional ways. “You feel excited and confident that other people share that [vision], but you’re also scared shitless because in the back of your head, you know that you’re trying to figure out the puzzle piece in real time,” he says.
Finally, Jain sent a letter requesting formal regulatory approval. Convinced that his team had done everything it could to get a yes, he flew to Chicago to meet with the Pritzker Realty Group and, at long last, pitch the no-brainer — that it should offer a loyalty program to its renters. But as he sat alone in his hotel room the day before, an email arrived from the FHA with a scanned PDF of its decision: Jain’s request was denied. He would have to cancel the Pritzker meeting. He recalls texting the team, “Guys, I think Project Casa just died again.”
Jain called everyone he had been in touch with — people who had helped guide him through the process but had no say over the ruling. He pleaded for another meeting with the government so he could explain the project’s intentions; he was certain something must have been miscommunicated. Soon he had his meeting, in which he made an impassioned case. And soon after that, he got official approval from the FHA. The months of work had actually paid off. “And the irony is,” says Jain now, “if you look back today, that’s such a tiny piece.”
At long last, around September 2019, it was time to talk with the real estate companies. Beyond what Jain believed to be the program’s obvious appeal, he had built a rapport and some credibility with several real estate owners through his work with Rhino. Friends in the industry had encouraged him when he’d soft-pitched them the concept. That made it all the more surprising when, Jain says, the first people he officially met with told him that it was just about the stupidest idea they’d heard.
Reflecting on his mistakes from those early pitches, Jain sees where he erred. For one, he forgot his audience. His early pitches played up the value the rewards program would provide renters but took the benefit to landlords (decreased turnover) a little bit for granted. He was gobsmacked by their skepticism; worst of all, some wondered aloud whether they wanted to encourage homeownership at all. (Their thinking went: More homeowners equals fewer renters.) But over about three months, he refined his presentation and worked through landlords’ abundance of concerns. They began to see the promise, even though the mechanics needed refining. But still they wouldn’t sign up. “Nobody wants to be first, except for a very rare group,” says Jain. So he leaned on owners who were involved in Kairos — people like Barry Sternlicht—to get on board, and once they were, he let FOMO slowly convince others.
Jain also knew that for any of this to work, he would need renters to really buy in on a program where rent earns points that can be spent on mortgages. But while homeownership may have been a deeply held goal, it was also the sort of thing young people typically put off. The team heard from potential customers that the program seemed interesting, and that they may sign up — when they were older. This got Jain wondering, Why do we need to tell you what to do? Yes, the program could enable someone to earn unprecedented points on an enormous expenditure; that would not be nothing. But why design a program in which you must use those points on homeownership — instead of one where you can do so? He wanted to offer not a command but an option.
Jain needed to find other things for which people could redeem the program’s points, but the greater rewards ecosystem was yet another unknown he would have to explore. He reached out to Dave Canty, a rewards-program veteran who had helped design the SPG program, build AutoZone Rewards, design and helm the loyalty side of JetBlue’s TrueBlue, and lead InterContinental Hotels Group’s loyalty programs globally, each of which has millions of members and brings in billions in revenue. “I think within two minutes of listening to what the vision was, I was fully on board,” says Canty, who joined as the project’s director of loyalty.
Canty knew that the major rewards programs heavily relied on people older than 50. Given the comparatively youthful demographics of renters, that presented an opportunity to build something for a new generation and guide it into the more established stages of adulthood. “How I’ve approached this program is: How can I put together a program that is relevant from your very, very first rent payment all the way to homeownership?” says Canty. Whereas some companies may see a loyalty program as a cost of doing business and build out their portfolio of offerings by seeing what their peers had already done, Canty wanted to be more selective and build from what these prospective customers would want to redeem the most. “Redemption breeds loyalty,” Canty says. He would ask himself, What would I want? Or he would ask his Gen-Z daughter what she would want.
One obvious space was travel, and so Canty leaned on his past contacts to start pitching. Jain also brought in Brian Kelly, founder of the website The Points Guy, as a senior loyalty adviser. Kelly saw two particularly attractive targets: American Airlines and Hyatt Hotels, which have some of the most valuable points of any independent airline or hotel, according to The Points Guy’s analysts; he brokered introductions and meetings. Jain, Canty, Kelly, and Tina Moore, who was hired to be a senior director of loyalty and partnerships, divided and conquered.
It was the sort of sell that required the partners to look toward the future. But by wanting to help younger people in particular, Jain says, “we were building a distribution channel to reach millennials and Gen Z that nobody else had access to, around their largest expense, with a program they were going to earn a lot of points on.” Ultimately, it was a convincing proposition. Some of the largest hotel and airline programs partnered up with the rewards program, including American Airlines and Hyatt. The array of choices for how to use the points — on rent, on a down payment, on travel, on fitness classes — expanded and started to feel like a central hub for not just renting but living. They stopped calling the program Project Casa and gave it a proper name: Bilt.
At the same time, the Bilt team wanted to go even bigger — to create not just a rewards program but also a credit card through which those points could be earned even faster. That would add a revenue stream: Bilt would make money whenever someone used the card on any purchase, via the merchant fees that stores pay to credit card companies for processing a purchase. It would also accelerate, beyond the baseline rewards program, how quickly customers would accrue points. That would both make money and, if launched simultaneously with the rewards program, be an immediate aid in creating the “brand stickiness” Bilt sought to create in a space that had little to no brands — unlike just about every other market on Earth, be it sports, beverages, or sports beverages.
To make a Bilt-branded credit card, among the multitude of organizations it would need to work with, Bilt particularly needed a bank and a credit card issuer. Jain got a meeting with U.S. Bank, in part by way of a connection made by Roger Goodell, the commissioner of the NFL and a board member of the Kairos venture studio. Jain and his team went in and once again passionately pitched until they learned exactly how wrong they were about something, at which point they would go back to the proverbial (or sometimes literal) whiteboard, rework what they had, then repeat. “It was, like, months of the U.S. Bank team being very nice to us, entertaining the conversation, while clearly recognizing we didn’t have our financial models straight,” says Jain. Over time, things started to align.
A similar process happened with Mastercard. Via a mutual business partner, Jain was introduced to Sherri Haymond, executive vice president of digital partnerships at Mastercard, whom Jain describes as Bilt’s “fairy godmother.” They met not long before the pandemic began and developed a partnership almost completely over phone calls and FaceTime. Slowly, the two companies worked out a payment flow — one that would enable people to pay their rent with the card for no fee. That would also be a boon to helping people better their credit score; counting rent could dramatically improve one’s score, which could enable them to receive a better rate on a mortgage, potentially saving up to tens of thousands of dollars in interest (in addition to potentially redeeming points for the down payment). Conveniently enough, Mastercard had acquired SessionM, a loyalty platform used by partners like Starbucks, and would soon acquire Finicity, which had a wealth of experience in data aggregation for mortgages.
There were seemingly endless more things to figure out. The landlords needed Bilt to sync up with their various aging payment processing and accounting software systems. The company came up with a way of ensuring that people weren’t going into debt due to their rent payments. It had to physically build a card — including a custom baby-blue magnet stripe — amid a global chip shortage. It needed an app that actually explained how to use the points. It created a program where specially selected young artists could sell exclusive art for points within that app, as well as an exclusive home decor collection. It kept pitching and expanding the number of real estate owners and rewards partners involved, who often had their own corporate or legal requirements and data-privacy restrictions and you-name-it.
Along the way, Jain was reminded of a lesson taught to him when he was a child by his father, Naveen, who founded the company InfoSpace during the nineties dot-com bubble and reportedly became a multibillionaire. (He is now CEO of the health-tech company Viome, which he founded.) Ankur recalls, “I was learning and just going to the office, and he was like, ‘In every partnership, every stakeholder has maybe two or three things they really care about, and the rest are fungible. Sometimes they’ll tell you what those are; sometimes they won’t. Ninety-five percent of the time, two out of the three [things they care about] are at direct odds, so you just focus on the one, and the rest flows.’ ”
In Bilt’s case, it wasn’t just each individual partner’s possible internal contradictions. It was a vast collection of competing needs. But it turned out, if you responded with a very clear yet ever-adaptable hypothesis and kept trying to rotate each piece of the puzzle in just the right way (and, sure, maybe tossed or tweaked a piece if absolutely needed), a simple yet complex possibility could appear: Everyone could stand to make money by rewarding reliable renters for doing what they already did.
Most people look back at how smart they thought they were a few years ago and laugh. It’s a kind of reflection that one undergoes only occasionally. But as Jain puts it, he’s spent the past three years looking back just about every week and realizing how naive he’d been a few days prior. Then, energized by those epiphanies or some new information or an exciting idea, he and his team would sprint off, only to collide with another brick wall. They’d rub their heads, plan what seemed like a wiser path, then — thwack.
But over time, the Bilt team could smoothly run a renter, a regulator, a bank, a reward program partner, and a credit card company through the value proposition. The brick walls eroded into predictable bumps — or at least ones the team was now informed enough to know it could manage without losing too much momentum. “That’s the time when we felt, I think we’re ready to launch,” Jain says.
On June 22, Bilt Rewards and Bilt Mastercard debuted with points that could be redeemed through more than a hundred airlines and hotels, in addition to fitness class partners and other redemption options, including, yes, a down payment on a mortgage. It boasted a relationship with a collection of real estate owners whose properties added up to two million rental units that would roll out the program through the summer and into the fall.
It was a success — and just the start. Jain maintained his conviction, and his uncertainty. A couple of weeks before the debut, exhausted but exhilarated, he predicted, “At launch, our hypotheses will be wrong in five other ways. But we’ll adapt then.”