One of the most lucrative businesses in the country, which most people never give a second thought to, is the home improvement sector. With more than $410 billion per year in total revenues across all aspects of the industry, the home improvement and repair industry ranks as one of the largest in the country, on the same scale as car sales, petroleum and medicine.
But the industry gets a surprisingly little amount of attention. This may be due, in part, to the fact that it isn’t as dynamic and interesting as some other huge-money industries. However, some very large fortunes have been made in this age-old business. One example of that is the incredible rise of David Zalik and his company, GreenSky Credit.
Spotting value where no one else can
Zalik’s great insight came when he was working as a financial consultant for a number of home improvement businesses. He spotted a leak in their business model that he instantly recognized to be so huge that it was difficult for Zalik to believe that no one else had ever tried to address it.
Many home improvement customers were coming into stores or calling contractors to get estimates on major home improvement projects, only to find out that their own ideas of what the projects would ultimately cost were so far short of the true estimates that they simply abandoned the projects outright.
Zalik saw as this phenomenon played out over and over, costing these home improvement retailers and contractors billions of dollars each year in lost deals. But Zalik noticed another recurring theme. The people trying to complete these projects were almost invariably top-end borrowers, meaning that they would be eligible for loans up to almost any limit. Zalik knew that if he could create a business, GreenSky Credit, that could offer instant point-of-sale loans to these customers, billions of dollars in additional jobs and sales would materialize.
This was the idea behind GreenSky. And Zalik quickly proved it to be a good one. Today, GreenSky Credit is doing billions of dollars in new loans each year and the company is worth an amount estimated at more than $5 billion.