Fresh Off IPO, Upstart’s CEO Shares Why the Startup Isn’t a Typical Success Story

Back in November, Upstart filed its S-1, which began with these opening lines in the founders' letter, penned by CEO Dave Girouard:

“I left Google in 2012 to found Upstart with Anna and Paul. We were convinced that technology and data science could improve access to affordable credit, but we were a little fuzzy on the details. It seemed obvious that there was room for improvement: Why should a credit score invented 30 years ago, prior to the emergence of cloud computing and modern data science, decide who is approved for a loan and who isn’t?”

One particular word — fuzzy — jumped out at us. It's not something you often see in a prospectus, but it precisely captures Upstart's earliest days, which we happened to see up close. After squeezing into the company's seed round back in 2012, the First Round team settled into our front-row seats as the long, winding, eight-year journey unfolded.

Today, Upstart’s product has grown into an incredible AI-powered lending platform, which they leverage to partner with banks and expand access to affordable credit. But the bet Girouard and his co-founders Anna Counselman and Paul Gu first started with didn't quite take off. Back in 2012, this trio was working on a “Kickstarter for people” idea, where folks could swap future earnings for a crowdfunded personal loan.

Despite some progress and press features, the concept just wasn't taking off. “The sharpest memory that stands out is a board meeting where Josh Kopelman said to me, ‘You know, when First Round first invested, I remember you telling me there were going to be hordes at the gate for this product. I don't sense that the case here — are there hordes at the gate, Dave?’ And I said, ‘No, Josh, there are no hordes at the gate,” Girouard laughs. “It was an admission that while we were showing numbers and progress, we were just trying to talk around the fact that we hadn't quite figured it out yet.”

Now, many years later and on the heels of an IPO, Girouard looks back on the company's scrappy beginnings — from diving into entrepreneurship with co-founders he barely knew, to pivoting the business model and grinding through fundraising even though he (in his words) sucked at it.

In this exclusive interview, Girouard shares a detailed accounting of how Upstart got built, with colorful stories (such as the painful feedback he got from investors), thoughtful reflections (like his “management by exception” philosophy) and tactical frameworks (from his “Are you Airbnb or PayPal?” test, to the four mental models founders can use to manage their own psychology).

Today's read is a long one, but when you get the opportunity to pick the brain of a founder who's game to talk shop in such incredible detail, who can blame us for hanging onto every word?

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Here's a sneak peek at some of the lessons:

- "We went from trying to create a new market on a whiteboard to stepping into an incredibly crowded competitive market. It was a completely different dynamic, but it turned out to be a much better one for us."

- "Whether it’s the press, the Silicon Valley community, or investors, we never really got what I would consider strong validation from the outside world of what we were doing. Instead, there was strong internal conviction inside the company that we were onto something very good, even if the rest of the world hadn't quite figured it out yet."

- "As CEO, if someone brings a problem to me, of course, I'm always anxious to solve it. But I'm always going to think, 'How did this problem come to be? And how did it come to me? And should it have come to me?' 

- "One mental exercise I've invested in is thinking about is what would happen if tomorrow my board got together and fired me, replacing me with the very best CEO in the world, one who would just make me look like a fool — what would she do differently than what I'm doing? I think about that for a while, and then I tell myself, 'Why the hell aren't you doing those things?

- "Every thoughtful leader can do their best to manage themselves first. If you really try to bring out the best in yourself, you'll realize that there's always an alternative approach to any situation."

Resources worth sharing: 

• A fan-favorite manifesto: Speed as a Habit.
• A steal-worthy rubric for evaluating executives.
• A plea for entrepreneurs to sharpen up their writing skills.

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