The Exchanges

Q Do you think that would change elements for you?

A I, I see now why, um, so many entrepreneurs are, are so young because your cost of living is fine where you can live off top ramen, uh, every day. Three times a week. It's not ideal. You can, uh, sleep on sofas and floors and, uh, whatever sort of minimizes your cost of living and, and hence the ramen profitable sort of mindset for early companies. It does get harder the older you get. So I'm, I'm 39 now. I started when I was 35. I was in a place where I, I happened to, uh, be married and my wife had a job and she was very supportive given she was about to, um, fund our living expenses when I was making zero money. And never see me again. Incredibly generous of her. So I definitely had a, a little bit of a, uh, an easier start than some for somebody at 35 starting it. Yeah. Now I, I think it would be even harder. Now I have a kid, uh, I have a mortgage. I see why it's hard. And, uh, it was, you know, one of the other reasons why we joined Y Combinator, because one, we were going to be surrounded by a bunch of, uh, twenty-year-olds who don't need to sleep, who have a very low cost of living and are Dead set focused. And that was going to be incredibly energizing. And two, just, you know, keeping us laser focused on making this work because it had to work. Uh, I didn't have a choice. I, I had no income. Uh, and, and that just gets harder and harder and harder.

AI assessment note: “Now I, I think it would be even harder. Now I have a kid”

Q What does the right or value added money look like to you then? What do you look for then kind of criteria wise in your investors? Um,

A So at the very early stage, what I looked for was what were the skill sets that we were going to want to have around the table or a phone call or an email away as we grew this business. And so at the early stages, we had a lot of really good, uh, really good partners around. So from an angel perspective, people like, uh, Ben Boyer from Tenaya Capital who had worked in, um, online financial services and lead gen and Alok Banot who had worked in Uh, for fraud management at, uh, he led fraud at PayPal and then at Walmart and started in Kiru. Um, and people like Matt Oko, who was really focused on, uh, machine learning. Um, and then obviously Google Ventures, uh, who have a lot of resources, um, from Google on machine learning and structure. Uh, and then people like branding, uh, like, uh, Jackie Stern, who led acquisitions and branding, uh, and online, uh, marketing for E-Trade and Citigroup and American Express. Uh, So we really wanted to sort of round out our angel investors at a really early stage with people that brought perspectives that were going to help us succeed. And then as we grew, things that were really important were impact investors, like Bronze Investment and Kapor, who really focus on the customer and public policy and social justice. And then traditional VCs like Kleiner and Andreessen, who invested in thinking about You know, just traditional VC and how to buil…

AI assessment note: “what I looked for was what were the skill sets that we were going to want”

Q What does the right or value added money look like to you then? What do you look for then kind of criteria wise in your investors? Um,

A So at the very early stage, what I looked for was what were the skill sets that we were going to want to have around the table or a phone call or an email away as we grew this business. And so at the early stages, we had a lot of really good, uh, really good partners around. So from an angel perspective, people like, uh, Ben Boyer from Tenaya Capital who had worked in, um, online financial services and lead gen and Alok Banot who had worked in Uh, for fraud management at, uh, he led fraud at PayPal and then at Walmart and started in Kiru. Um, and people like Matt Oko, who was really focused on, uh, machine learning. Um, and then obviously Google Ventures, uh, who have a lot of resources, um, from Google on machine learning and structure. Uh, and then people like branding, uh, like, uh, Jackie Stern, who led acquisitions and branding, uh, and online, uh, marketing for E-Trade and Citigroup and American Express. Uh, So we really wanted to sort of round out our angel investors at a really early stage with people that brought perspectives that were going to help us succeed. And then as we grew, things that were really important were impact investors, like Bronze Investment and Kapor, who really focus on the customer and public policy and social justice. And then traditional VCs like Kleiner and Andreessen, who invested in thinking about You know, just traditional VC and how to buil…

AI assessment note: “what I looked for was what were the skill sets that we were going to want”

Q What would you say was the biggest element that you took from, from your time in VC to your time in operations? Was it kind of the laser focus that you learn is so crucial or For startups, is it kind of how to team build the go-to-market strategy? What did you learn from VC that you really took to your time with LendUp with success?

A I think it's all about execution, uh, and there's a bunch of good ideas, and there's a bunch of people that, you know, you can see come out of the woodwork after an idea becomes successful and said, oh, that was, that was my idea, or there's a bunch of really good ideas, but it's the team that executes on it and makes that Idea, a reality. Important. And that's why you see so many VCs not just think about, like, the conditions of the market and the industry, but the founding team and the founders. And I think that's an incredibly critical part. And I didn't quite understand it. I don't think I valued it as much until I saw my peers, you know, not stay quite as laser focused. And it's something we really, really hammer here. Like, ruthless prioritization and laser focus and execution. I think that's the answer.

AI assessment note: “ruthless prioritization and laser focus and execution. I think that's the answer.”

Q let's talk about the banked and the unbanked there. Probably, probably time considering it's a lend up and, uh, we do need to discuss some fintech, I'm sure. So, so with that in mind, what are the trends that you're seeing right now in the fintech space being in the trenches? And, and why do you think banks are in the trouble that many, Including yourself, say they are in.

A So we spend a lot of time thinking about this, and while there's probably a lot of, um, hypotheses, I'm gonna talk specifically about the underbanked world, uh, here in the United States. So, at a high level from a bank, banks in the United States, and I'm, I think all over the world, outsource their software. And that just gives them a couple disadvantages. One, they can't just change code by, like, me going over to our development team and asking them to create this feature. It makes it really slow, and it makes most bank products look almost identical, and their, uh, competitive advantage then became their geographic location of where they built their branches. Well, okay, so that leads to trends number, number two, which is customers don't really want to go into branches, and young people especially, uh, aren't really interested. They want to do everything on their mobile phone. Uh, we build from a mobile-first perspective, and we don't have any branches. We're fully digital, um, and we build all of our own software. And the third is, After the sort of, 2008 financial collapse, both here and the ripple effects around the world, there was a lot of increased regulation. The way that banks deal with changing regulation is they usually add more people and more processes, um, where software can really streamline a lot of that. Those are the reasons why I think banks are at a com…

AI assessment note: “Those are the reasons why I think banks are at a competitive disadvantage”

Q What was the biggest takeaway of the YC experience for you?

A The biggest takeaway as an entity for sort of the broader market, I think is, uh, is write code and talk to users. It's so easy to get distracted with Fundraising and superfluous things that don't drive your business that YC is really good at helping you focus. Uh, and every week we just, we come together and everybody says, right, like what, show me what you did. This incredible focus on doing the thing that is the most important to building your business, uh, at the early stage for, for a software company, writing code and talking to users. So, you know, What you're doing, it's somewhat counterintuitive. I mean, it sounds, it makes sense, but, but not a lot of people do it.

AI assessment note: “is write code and talk to users”

Q Do you think that would change elements for you?

A I, I see now why, um, so many entrepreneurs are, are so young because your cost of living is fine where you can live off top ramen, uh, every day. Three times a week. It's not ideal. You can, uh, sleep on sofas and floors and, uh, whatever sort of minimizes your cost of living and, and hence the ramen profitable sort of mindset for early companies. It does get harder the older you get. So I'm, I'm 39 now. I started when I was 35. I was in a place where I, I happened to, uh, be married and my wife had a job and she was very supportive given she was about to, um, fund our living expenses when I was making zero money. And never see me again. Incredibly generous of her. So I definitely had a, a little bit of a, uh, an easier start than some for somebody at 35 starting it. Yeah. Now I, I think it would be even harder. Now I have a kid, uh, I have a mortgage. I see why it's hard. And, uh, it was, you know, one of the other reasons why we joined Y Combinator, because one, we were going to be surrounded by a bunch of, uh, twenty-year-olds who don't need to sleep, who have a very low cost of living and are Dead set focused. And that was going to be incredibly energizing. And two, just, you know, keeping us laser focused on making this work because it had to work. Uh, I didn't have a choice. I, I had no income. Uh, and, and that just gets harder and harder and harder.

AI assessment note: “Now I, I think it would be even harder. Now I have a kid”

Q Is it not also a bit counterintuitive in the way that kind of your Mark Seuss's of the world say, ABR, always be raising, and then you've got the trouble of, no, but you know, you, it is kind of the theme that you should always be raising now for startup founders, and then how do you balance that with the right code, and speak to users, and to focus?

A Well, so that's another incredible opportunity provided by YC, uh, which is, They, they take care of a lot of the other things. They, they give you all your incorporation paperwork, employment agreements, convertible note, and fundraising, and they stay, they keep you laser focused for three months. And then at the end, it culminates in demo day where they bring together hundreds of investors and hundreds of companies like a big dating pool. So we had a little bit of fortune to be able to focus because we had confidence that we were going to be building something Pretty special. And in the hundreds of VCs, hopefully a few of them, uh, would be interested in funding us. And that's, that's what happened afterwards. And you're able to take that money and then start building a team. One of my core responsibilities, um, is raising and finding not just money, but the right and the most value added money possible.

AI assessment note: “They, they take care of a lot of the other things... keep you laser focused”

Q let's talk about the banked and the unbanked there. Probably, probably time considering it's a lend up and, uh, we do need to discuss some fintech, I'm sure. So, so with that in mind, what are the trends that you're seeing right now in the fintech space being in the trenches? And, and why do you think banks are in the trouble that many, Including yourself, say they are in.

A So we spend a lot of time thinking about this, and while there's probably a lot of, um, hypotheses, I'm gonna talk specifically about the underbanked world, uh, here in the United States. So, at a high level from a bank, banks in the United States, and I'm, I think all over the world, outsource their software. And that just gives them a couple disadvantages. One, they can't just change code by, like, me going over to our development team and asking them to create this feature. It makes it really slow, and it makes most bank products look almost identical, and their, uh, competitive advantage then became their geographic location of where they built their branches. Well, okay, so that leads to trends number, number two, which is customers don't really want to go into branches, and young people especially, uh, aren't really interested. They want to do everything on their mobile phone. Uh, we build from a mobile-first perspective, and we don't have any branches. We're fully digital, um, and we build all of our own software. And the third is, After the sort of, 2008 financial collapse, both here and the ripple effects around the world, there was a lot of increased regulation. The way that banks deal with changing regulation is they usually add more people and more processes, um, where software can really streamline a lot of that. Those are the reasons why I think banks are at a com…

AI assessment note: “Those are the reasons why I think banks are at a competitive disadvantage”

Q What was the biggest takeaway of the YC experience for you?

A The biggest takeaway as an entity for sort of the broader market, I think is, uh, is write code and talk to users. It's so easy to get distracted with Fundraising and superfluous things that don't drive your business that YC is really good at helping you focus. Uh, and every week we just, we come together and everybody says, right, like what, show me what you did. This incredible focus on doing the thing that is the most important to building your business, uh, at the early stage for, for a software company, writing code and talking to users. So, you know, What you're doing, it's somewhat counterintuitive. I mean, it sounds, it makes sense, but, but not a lot of people do it.

AI assessment note: “The biggest takeaway... is, uh, is write code and talk to users.”

Q Is it not also a bit counterintuitive in the way that kind of your Mark Seuss's of the world say, ABR, always be raising, and then you've got the trouble of, no, but you know, you, it is kind of the theme that you should always be raising now for startup founders, and then how do you balance that with the right code, and speak to users, and to focus?

A Well, so that's another incredible opportunity provided by YC, uh, which is, They, they take care of a lot of the other things. They, they give you all your incorporation paperwork, employment agreements, convertible note, and fundraising, and they stay, they keep you laser focused for three months. And then at the end, it culminates in demo day where they bring together hundreds of investors and hundreds of companies like a big dating pool. So we had a little bit of fortune to be able to focus because we had confidence that we were going to be building something Pretty special. And in the hundreds of VCs, hopefully a few of them, uh, would be interested in funding us. And that's, that's what happened afterwards. And you're able to take that money and then start building a team. One of my core responsibilities, um, is raising and finding not just money, but the right and the most value added money possible.

AI assessment note: “they keep you laser focused for three months. And then at the end, it culminates in demo day”

Q And I'm intrigued. You said about the kind of multi-platform approach there. You mentioned your angels and then the later stage funding that you've more recently got. So how did the funding rounds differ from stage to stage? And what was your preferred stage?

A You know, there's advantages. Uh, we've been pretty fortunate, so I'll tell you the story, uh, a little bit about, about how, how we, we approached raising, and sometimes it works, and sometimes it does. In our case, it's worked really well. My favorite, though, was the very early stage. You're getting to meet so many angel investors that were just incredibly accomplished in their own careers, whether as entrepreneurs, or executives, or as just career VCs. It was fun, because it, It expands your network, and it gives you a perspective on your business from a lot of different viewpoints. So that might have been my favorite. The pressure was also a little bit lower because it was just me and my stepbrother and a friend, and we weren't taking any salary, and it was just early on. Everything was optimistic.

AI assessment note: “My favorite, though, was the very early stage.”

Q What would you say was the biggest element that you took from, from your time in VC to your time in operations? Was it kind of the laser focus that you learn is so crucial or For startups, is it kind of how to team build the go-to-market strategy? What did you learn from VC that you really took to your time with LendUp with success?

A I think it's all about execution, uh, and there's a bunch of good ideas, and there's a bunch of people that, you know, you can see come out of the woodwork after an idea becomes successful and said, oh, that was, that was my idea, or there's a bunch of really good ideas, but it's the team that executes on it and makes that Idea, a reality. Important. And that's why you see so many VCs not just think about, like, the conditions of the market and the industry, but the founding team and the founders. And I think that's an incredibly critical part. And I didn't quite understand it. I don't think I valued it as much until I saw my peers, you know, not stay quite as laser focused. And it's something we really, really hammer here. Like, ruthless prioritization and laser focus and execution. I think that's the answer.

AI assessment note: “I think it's all about execution, uh, and there's a bunch of good ideas”

Q And I'm intrigued. You said about the kind of multi-platform approach there. You mentioned your angels and then the later stage funding that you've more recently got. So how did the funding rounds differ from stage to stage? And what was your preferred stage?

A You know, there's advantages. Uh, we've been pretty fortunate, so I'll tell you the story, uh, a little bit about, about how, how we, we approached raising, and sometimes it works, and sometimes it does. In our case, it's worked really well. My favorite, though, was the very early stage. You're getting to meet so many angel investors that were just incredibly accomplished in their own careers, whether as entrepreneurs, or executives, or as just career VCs. It was fun, because it, It expands your network, and it gives you a perspective on your business from a lot of different viewpoints. So that might have been my favorite. The pressure was also a little bit lower because it was just me and my stepbrother and a friend, and we weren't taking any salary, and it was just early on. Everything was optimistic.

AI assessment note: “My favorite, though, was the very early stage.”

Q Is it not hard, is it not hard to send that because you have no traction?

A Well, it's, it's, it's both sides. It's harder because you have no traction, but it's easier because you have no traction. You get to sell the vision of what you're trying to accomplish. We had a pretty big and aggressive vision, and a lot of things were happening along around the same time when trends in technology and regulation and mobile phones here in the United States, a huge vision that we thought everybody in the United States deserve the ability to build their credit directly from their mobile phone with a few swipes of their thumb, and that was, and still is, pretty revolutionary here. The United States is a very divided market between the banked, which is, uh, and the unbanked, Um, and then the sort of payday title pawn, uh, markets, um, and there isn't this bridge between the worlds. That's a big and growing market given the shrinking middle class in the United States.

AI assessment note: “It's harder because you have no traction, but it's easier because you have no traction.”

Q Is it not hard, is it not hard to send that because you have no traction?

A Well, it's, it's, it's both sides. It's harder because you have no traction, but it's easier because you have no traction. You get to sell the vision of what you're trying to accomplish. We had a pretty big and aggressive vision, and a lot of things were happening along around the same time when trends in technology and regulation and mobile phones here in the United States, a huge vision that we thought everybody in the United States deserve the ability to build their credit directly from their mobile phone with a few swipes of their thumb, and that was, and still is, pretty revolutionary here. The United States is a very divided market between the banked, which is, uh, and the unbanked, Um, and then the sort of payday title pawn, uh, markets, um, and there isn't this bridge between the worlds. That's a big and growing market given the shrinking middle class in the United States.

AI assessment note: “It's harder because you have no traction, but it's easier because you have no traction.”

Q Can I ask, does the product itself It's altered dramatically when catering for the banked and the unbanked. Is there kind of increased simplicity in the UI for the unbanked who maybe haven't communicated with such products before extensively compared to more complicated versions for the bank? How does the product itself differ or does it not?

A I'll give you a perfect example. For me, let's take a couple years step back to when I was a VC and I was making pretty good money and working relatively minimal hours. My, my income vastly exceeded my expenses. So on my credit card, it really didn't matter. I was never going to hit my credit line, never really concerned with meeting my expenses. I also have a very sort of low cost lifestyle. When you're looking at people that are making lower incomes and are working and have low lines of access to credit, things like budgeting and savings are really important. Building your credit score is really important. Building tools and features that keep very busy people that are working long hours, don't have a lot of savings, Are really important. So a lot of alerts and reminders embedded into the experience so that when people are managing the money and a couple days really matter between when a paycheck hits and when an expense hits is really important. And credit cards can be very tempting and speed can be very important. So we've had to focus a lot on, on speed, a lot of reminders, a lot on a very simple, transparent experience to make it work for the majority of people. And as I'm saying this, I realize that I'm sounding douchey for saying that. And, uh, but it's just a reality. Like I, I've, I've had a lot of fortune and, and that is something where, where I've been very fortuna…

AI assessment note: “So a lot of alerts and reminders embedded into the experience”

Q Can I ask, does the product itself It's altered dramatically when catering for the banked and the unbanked. Is there kind of increased simplicity in the UI for the unbanked who maybe haven't communicated with such products before extensively compared to more complicated versions for the bank? How does the product itself differ or does it not?

A I'll give you a perfect example. For me, let's take a couple years step back to when I was a VC and I was making pretty good money and working relatively minimal hours. My, my income vastly exceeded my expenses. So on my credit card, it really didn't matter. I was never going to hit my credit line, never really concerned with meeting my expenses. I also have a very sort of low cost lifestyle. When you're looking at people that are making lower incomes and are working and have low lines of access to credit, things like budgeting and savings are really important. Building your credit score is really important. Building tools and features that keep very busy people that are working long hours, don't have a lot of savings, Are really important. So a lot of alerts and reminders embedded into the experience so that when people are managing the money and a couple days really matter between when a paycheck hits and when an expense hits is really important. And credit cards can be very tempting and speed can be very important. So we've had to focus a lot on, on speed, a lot of reminders, a lot on a very simple, transparent experience to make it work for the majority of people. And as I'm saying this, I realize that I'm sounding douchey for saying that. And, uh, but it's just a reality. Like I, I've, I've had a lot of fortune and, and that is something where, where I've been very fortuna…

AI assessment note: “a lot of reminders, a lot on a very simple, transparent experience”