SoFi Co-Founder and CEO Mike Cagney to Step Down by Year End

It has been a bad few weeks for SoFi. Back in August there was the news of a sexual harassment lawsuit from a former employee. Before that there had been several senior executive departures, we have had a class action lawsuit and one of Silicon Valley’s most valuable and revered fintech companies was starting to lose some of its luster.

But the truly shocking news came earlier tonight when the Wall Street Journal reported that CEO Mike Cagney was going to step down by the end of the year. He has already stepped down as Chairman, that was effective immediately, and he will step down as CEO by the end of the year.

Existing board member Tom Hutton, managing director of venture capital firm XL Innovate, will take over as executive chairman, effective immediately. Steve Freiburg, another SoFi board member and former CEO of E-Trade will become vice chairman.

In a letter to employees obtained by Lend Academy Mike Cagney said that he had become a distraction for the company:

The combination of HR-related litigation and negative press have become a distraction from the company’s core mission. I want SoFi to focus on helping members, hiring the best people, and growing our company in a way consistent with our values. That can’t happen as well as it should if people are focused on me, which isn’t fair to our members, investors, or you.

The New York Times is also reporting that “Mr. Cagney may have been overaggressive in expanding SoFi’s business, skirting risk and compliance controls.” That is the first I have heard about any compliance issues and if it is true then this could be a much bigger issue for SoFi.

Regardless of the what the real story this is not good for the industry whatsoever. Just when it felt like we had some momentum and the industry was starting to thrive again this is definitely a setback. The press is going to bring up the issues with Lending Club last year and we will have to deal with more negative sentiment.

I have interviewed Mike Cagney twice on the Lend Academy Podcast over the years and I have said many times he is one of the smartest people in all of fintech. And while we don’t know exactly what has gone on inside the company, clearly the board believes that a new leader is needed. Hopefully, they can find an experienced CEO who can right the ship and continue the amazing story that has been SoFi.

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Bo Brustkern
Sep. 12, 2017 7:40 am

The skeptic in me wonders if this is just a convenient departure point for Mike. Look, he’s built a fantastic company and presumably generated incredible wealth for his team, his investors and himself. It might be that his best course — with or without the harassment “distraction” — is to leave the company and hand it off to a mid-stage specialist CEO. The company is one of the best in our midst, and much like Lending Club, it can well survive the ousting of its chief executive. Companies are resilient things when powered by resilient people. Put the right guy or gal in place of Mike, and it should continue to flourish. SoFi has a lot going for it. This is a good, decisive move by the board. Godspeed, Mike!

Jen
Jen
Sep. 12, 2017 6:03 pm
Reply to  Peter Renton

Discrimination against women is rampant in fintech. Mike was fired for creating an environment where harassment of women and was acceptable. I’m actually disappointed. Shorting fin Tech stocks run by sexist men is very profitable. Lending club is a fabulous example. Prospers decimation of their valuation is another example. I wish Sofi and prosper had IPOs I would’ve shorted them to zero.

Jen
Jen
Sep. 12, 2017 10:06 pm
Reply to  Bo Brustkern

Bo..what kind of person views harassment as a “distraction” and wishes the person who harassed women Godspeed? How do you describe yourself?

Bo Brustkern
Sep. 12, 2017 10:39 pm
Reply to  Jen

Well, I’d describe myself as wrong if Mike were up to no good. I don’t know the details of the case, do you? From your comment I can assume you believe, or have proof, that he’s discriminating against women. I’m neither assuming he is or isn’t. Note that I put “distraction” in quotes on purpose. It’s more than that, of course!

From the outside, SoFi appears to be a very fine company with an incredible track record. And I believe companies with a great foundation are bigger than any one individual, CEO or not. SoFi should — and I believe will — survive. It still has a strong purpose.

Jen
Jen
Sep. 13, 2017 5:41 pm
Reply to  Bo Brustkern

I’d suggest describing yourself as sexist.

Steve
Steve
Sep. 19, 2017 8:13 am
Reply to  Jen

Jen,

Bo and others like him perpetuate discrimination Lawsuits were filed against SoFi, employees were interviewed & confirmed the discrimination, Cagney’s assistant reported harassment was given money to leave and the board forced Cagney to step aside but “from the outside SoFo appears to be a fine company”

I agree with Peter, Cagney is one of the smartest people in all of Fintech but that doesn’t negate the fact that he created an environment with women being treated inappropriately.

Darwin Ling
Darwin Ling
Sep. 13, 2017 4:56 pm

SoFi just published a public response https://www.sofi.com/blog/responding-to-the-new-york-times/

Jen, please refrain from including the comment that “Discrimination against women is rampant in fintech” unless you have first hand evidences!

Jen
Jen
Sep. 13, 2017 8:40 pm
Reply to  Darwin Ling

Well I have first hand evidence…not evidences (I’m not smart enough to know to what that is). Having said that. The fact lend academy’s key note speaker RL was fired from lending club for fraud. Lend academy’s fintech “God father” Suber ran Prosper into the ground and misstated returns to investors and was subsequently fired. And lend academy’s winner of reporter of the year was banned UK investors meant regulators for running a Ponzi scheme kinda sorta speaks for itself pumpkin. Now put a smile on that face and I’ll give you 5k if you lose 10 pounds

Jen
Jen
Sep. 16, 2017 1:56 pm

I did notice a comment on LinkedIn about Lendit’s tone deafness regarding sexism and sexual harassment. I think this is evident that Peter refers to Mike as one of smartest people he has met in Fintech and uses the word “malpractice” instead of “fostering an environment where sexual harassment was supported and the CFO commented on women’s breasts and offered them cash to lose weight”. This is not “malpractice”. The LinkedIn comment referenced the sponsors of Lendit. Perhaps it’s time for accountability.

Jen
Jen
Sep. 17, 2017 9:37 am
Reply to  Peter Renton

That’s a start. Thank you