Anna M. Counselman, Co-Founder & Head of People & Operations, Upstart was a featured speaker at this year’s SVF WiTF (Silicon Valley Forum Women in Tech Festival). https://www.youtube.com/watch?v=B9egRq4dwbE
In this post, I go over Anna’s speech while [commenting] on various points. I also explain why I don’t think all credit is created equal, touching on Upstart vs Affirm. Lastly, I try to link and make some connections between investing and personal experiences with intangible business metrics that could help us, as investors, identify good companies.
Here’s the WiTF summary in my own words along with [my comments]:
I grew up in Russian dreaming of coming to the US one day. After my mom won a green card, I came to the US when I was 12. I studied finance and entrepreneurship and I’m actually applying my degree in startup and fintech as opposed to most humans who never get to practice their actual studies.
I personally used credit cards to start my first business. I left Google to join Upstart back in 2012 to help provide access to fairly priced credit to more people because fairly priced credit provides access to opportunities.
[Emphasis on fairly priced here. Credit might be accessible to many folks who happen to have the right job, the right background, the right score, the right whatever. What about the rest of the world? Or do you think that every single person on planet Earth has access to credit?
When I was abroad for studies, I used my credit card to fund a small side business so I could afford my studies. That was the time when ready-to-use credit cards were given out in the streets. And that was my only option too. I couldn’t get a loan or anything like that. That endeavor worked out pretty well as I was able to pay for accommodation, tuition fees, and food for me and my then-gf. Now, as Anna mentions, coming from a different country always makes things even harder. And having access to credit opens up opportunities.]
Before we move on, I’d like to share my thoughts on why not all credit is created equal.
Just like good debt (debt that makes you richer) and bad debt (debt that makes you poorer) I believe there is good credit and bad credit. I already told you my little story about how I got through university by using credit. Now let me tell you another story of a very good friend of mine. While we were studying, this friend of mine, discovered casinos and online gambling. Long story short, he ended up losing all his money, his family’s money, his friends’ money, and then started borrowing from loan sharks. He dropped out of uni and to this day he still struggles with his addiction.
I’ll bring up Affirm and Upstart once again and please allow me to explain. Upstart’s CEO was once asked in an interview by The Motley Fool if they would offer a loan to someone who wants to try their luck on the casino. And the reply is that we do not want our clients to do such a thing. https://www.fool.com/premium/coverage/4056/coverage/2021/07/… Of course, who would have said otherwise, right?
If you take a step back, you can see that Upstart clearly wants to serve only the underserved, those who don’t qualify through FICO, or maybe they have a language barrier or whatever that might be. They understand that access to credit for some is already there, pretty fair and square. This is why they focus only on the rest. This is huge because as of today, that portion of people might have very few options — if any at all.
Now onto Affirm. I myself have (or had) another addiction. A watch addiction. I used to spend (and still do occasionally) several hours reading about horology. I’m not going to discuss that this hobby is expensive for something that is almost obsolete or that it makes for a lousy investment. Yes, even if you are into rare pieces your investment won’t grow as fast as hyper-growth stocks. (I personally sold almost my entire watch collection when I discovered investing and this board to raise funds. So, thanks for that.)
What does affirm have to do with this, you might ask. Well, every time I go onto a site to check out a new watch Affirm is there. Telling me that what I want can be mine today without having to worry about it. What’s wrong with that? Nothing. As long as you don’t overindulge in your spending.
But how many people would simply get something because they can? And how many would end up realizing that they bought too many things that they don’t really need once the monthly bills kick in? And the difference here is that all these things depreciate. You can’t change your mind and send it back. You can only sell, if possible, and take the loss or keep paying for something you don’t really need.
So, in my mind, there is a huge difference between all sorts of credit. Yes, all credit is borrowing money that you need to return back at a later stage but that does not make it all equal.
Also, do you really think that Upstart couldn’t come up with a BNPL product? They managed to solve a much bigger problem with much bigger numbers and they won’t be able to solve a much smaller problem? I don’t think so.
Anna’s speech continues:
At first, I was cleaning houses with my mom as I couldn’t figure out what to do, then after failing my first two startups, I joined a master card company which was a complete cultural misfit. After Google, I spent my first 8 years in Upstart in different modes and with all sorts of near-death experiences. I wanna share that with you as I don’t think we see a lot of honesty around how not linear things are. There are times where things go wrong, and I wanted to give you both flavors.
[Being honest is rare these days. What I like about Upstart is that they mentioned how they had to switch from their initial concept and they somehow landed accidentally on credit. As said by Girouard, “There were some subtleties to figure out and we did put a big hedge in there, but in any case, we moved very quickly — a few months later, the business had pivoted completely to go from this income share agreement to a straightforward loan product.” https://review.firstround.com/fresh-off-ipo-upstarts-ceo-sha… ]
Also, Anna talks about a cultural misfit experience. I really appreciate the fact that she acknowledges how important cultural fit comes into play in a successful company. As she is the Head of People, I can rest assured that she’ll onboard people whose goals and ambitions, as well as their personal targets, are aligned properly. It is imperative that companies realize that they are nothing without their personnel. If you are a CEO, business owner, or you manage other people regularly and you don’t understand that essentially you work for them and not the other way around you can close shop today as that will save you lots of trouble and money down the line.]
I (Anna) also want to share with you some of the most profound advice that I’ve received throughout the years:
- Take every opportunity to prove how good you are: it doesn’t matter how small or big a task you have, it might be just the way you write an email. Find a way to be useful before asking for more. Be good at what you do and do it quickly. Improve your skills and always be reliable.
[I like the fact that she focuses on getting things done well and on time. We want reliable people on our team. And who wish to keep improving. This is a company that disturbs everything we knew about credit. And I believe we still haven’t seen what AI/ML can do and how it can be applied fully. All those extra people being onboarded are not for nothing.]
- Raise your hand before you are ready: force yourself into taking opportunities. There’s never a perfect time to start something.
[We spoke again about urgency and speed on execution. But that makes all the difference in the world. We want people who are not afraid to push boundaries and try things out. We don’t seek people who wait for the stars to be aligned, we want doers.]
- Don’t leave before you leave: for moms to be, keep taking opportunities. When I asked Dave what my maternity policy will be if I leave Google for Upstart he said whatever is fair for a Series A startup.
[This shows that Dave right from the start wanted to be fair not just with potential clients but with team members too.]
- Figure out what growth feels like for you: take a step back when you feel overwhelmed. If I were replaced by a better person, what would he/she do. Quiet the part of your brain that keeps telling you that you are not good enough.
[Growth should not come at any expense. Efficiency is crucial too. Anna seems like a very down-to-earth person. I’m glad she’s a co-founder too. They each complement each other’s skills nicely.\
- You can’t grow one half of yourself faster than the other: have career as well as personal goals. Grow both your personal and career sides.
[Well of course a company is all about making numbers. Growing revenues etc. but we need to remember that actual people work to do these numbers. If their only motive is money, then that train won’t get that far for long. Growing personally can translate into bigger numbers too.]
There is no magic formula in life, no matter what success looks like for you, there’s no checklist that will keep you happy at all times. The magic is in enjoying the journey. Get in the game and don’t wait for the perfect timing.
[This reminds me of investing in stocks too. Every now and then I’ll hear someone say “I found out about this stock but was waiting for a pullback”. Or “I thought there was a crash coming”. Or that aliens were about to abduct us all and send us out to Mars. So, I didn’t buy. Or I sold and hid under a rock. Personally, I don’t check my portfolio very often. I don’t check stock prices very often too. Only when I have extra cash or when there’s a specific reason to do so. What I do though on a daily basis — or even 24/7 basis — is to follow what the companies I invest in are doing. I do that by setting Google Alerts on all the stocks I want to follow. This pulls out every piece of info available, including news, articles, alerts by financial puru gurus, and even posts from our board.]