Imagine if twice as many borrowers could qualify for loans with fewer defaults.
Today, Upstart is a publicly-traded, multi-billion dollar AI lending platform rethinking consumer lending by using a unique, non-FICO based model. But wind back to 2012, and you'll find a small team with a different idea: an income share agreement model.
After investing in their 2012 seed round, we were also proud to lead their Series A, partnering with them throughout their pivot and winding 8-year journey to IPO. Here's what founders should study from their story:
Co-founder Dave Girouard tells the inside story of how Upstart got built and reflects on his journey from startup founder to scale-up CEO.
Dave was a 40-something Apple & Google veteran teaming up with co-founders he didn’t really know — who were so young that their parents were his age. But this trio found a simple rhythm that kept them aligned through founding to IPO: meeting weekly, not to run through a tactical agenda, but to openly discuss what was top of mind and where the company might be exposed. "Even during COVID, we wore masks and went on walks," Dave recalls. "Keeping this ritual going was very central to the company always feeling in tune."
The original income share agreement idea wasn't landing with customers. As Dave recalls: "We had to decide: Were we Airbnb, needing to stick with it and keep tweaking until it worked? Or PayPal, who tried eight business models in a year until finding one that worked?" Given that there weren’t “hordes at the gates,” the team made the decisive pivot from income share agreements to direct lending. The new model immediately showed more promise.
We went from trying to create a new market on a whiteboard to stepping into an incredibly crowded competitive market. It was a different dynamic, but it turned out to be a much better one for us.
Thanks to his viral “Speed as a Habit” First Round Review article, Dave is well known in startup circles for his theory that “fast decisions, unless they’re fatal, are always better.” His simple question — "Why can't this be done sooner?" — asked methodically and habitually, had a profound impact on Upstart's organizational speed.
"It was keeping those blinders on to not get distracted by shinier stars in the industry, and just believing in our central thesis of what we were trying to accomplish."
“We always flew under the radar, frankly. And I'll be honest — oftentimes, that was just annoying,” says Dave. “It was a struggle to face the questions at TGIF every week and constantly tell the team, 'Don't worry about not being a unicorn, that doesn't really mean anything,' or 'We actually think it's a good thing that we haven't raised that much money.”
All things being equal, speed will determine whether your company succeeds or not. Upstart's Dave Girouard shares how to make it core to your culture.
Upstart's Dave Girouard on the uniquely difficult challenge of evaluating and providing feedback to the leaders at your company.
Upstart's Dave Girouard pens this thoughtful case for the importance of strong writing in the startup world — and his tips for leveling up.