SoFi, an online finance company, works hard to differentiate itself from other banks.
In its pursuit of millennials looking to refinance student loans or take out mortgages, SoFi—short for Social Finance—offers its customers career counseling and events like cocktail mixers for singles. It embraces marketing gimmicks like giving away avocado toast and is running a TV ad featuring its borrowers on a white-water rafting outing.
SoFi wants to connect with its customers on money, careers, and relationships, “which we see as the main drivers for this demographic we’re targeting,” CEO Mike Cagney said in an interview with Quartz earlier this year.
Those bonds may be tested by the controversy now roiling SoFi. Brandon Charles, a former SoFi employee, sued the company last month, claiming (pdf) he was fired for reporting misbehavior, including sexual harassment, by an executive. He later amended his complaint to include Cagney, alleging the CEO fostered “a toxic corporate culture” and defamed Charles at a staff meeting. Nearly a dozen women later told the Wall Street Journal SoFi executives engaged in, or tolerated, inappropriate behavior toward women.
Yesterday (Sept. 11) Cagney announced in a blog post he was stepping down by the end of the year, saying “the combination of HR-related litigation and negative press have become a distraction from the company’s core mission.”
In an earlier blog post, Cagney said the company took the allegations seriously, and “that kind of behavior has no place at SoFi, and we’re not going to tolerate it.” SoFi declined to comment further about the charges or Cagney’s departure.
SoFi, based in San Francisco, is just the latest startup upended by allegations of sexual harassment. Uber CEO Travis Kalanick lost control of the ride-sharing company he founded after a pattern of abusive behavior was revealed, while numerous venture capitalists have been charged with preying on female entrepreneurs.
It’s unclear what price, if any, SoFi will pay for the scandal, though. It’s getting attention in the business media—and appeared on the front page of the paper edition of The New York Times this morning—but it hasn’t yet risen to the point of the saturation coverage that stuck to Uber, Wells Fargo, and Volkswagen, damaging their businesses. By announcing his resignation, Cagney seems eager to put an end to any questions about his future and let the company move on. Unlike some other CEOs, he doesn’t have a high profile or appear in the company’s marketing, which can make a departure awkward.
Ultimately, SoFi’s ability to weather the storm may depend on how invested its borrowers are in the idea of the bank as a community. The more engaged they are with SoFi and its social events, the more likely they are to be aware of the allegations and potentially repulsed by them. But if their relationship with SoFi doesn’t extend beyond their pursuit of a low-interest rate, the bank should be just fine.