Credit is credit, right? Is it though?

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).

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.… 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.”… ]

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.]


When I go to take out a loan through UPST the it asks me how much I would like to borrow and then the next question is What’s your loan purpose. It is prefilled with pay off credit cards, or you can pick debt consolidation or student loans. How is this better debt?

If we are being honest this is just taking debt that could have been used for anything under the sun. Even debt that was run up at a Casino, or used to buy drugs. Honestly, I think if you are selling opioids it doesn’t really matter how you package it, it’s still opioids.



UPST does not present itself as a solution to change users’s habits or determine if its good or bad debt (i.e. how did the user end up in debt. Student loan is typically considered a good debt. The sad statistic that 40% of Americans does not have funds saved up for a $400 car repair expense (…). These are not tragedies in the current society.

So what does UPST present itself as:

  • Provide equitable debt to users who otherwise would not be able to receive funds OR provide debt at a much better APR based on the internal AI/ML metrics (i.e. secret sauce).
  • Can users abuse the loans - yes they can.
  • However it’s really important that the company is crystal clear about the type of company they want to establish itself as and the type of customers they want to serve.

Drawing a comparison to Facebook, over the multiple incidents over the last five years - IMO, it’s clear that the direction and culture set by management values the metrics most important to them even when the P/R may not align to the metrics.

What I have greatly appreciated about UPST’s leadership (Dave, Paul and now Anna)->each interview I have listened to or article I have read, the story is consistent amongst them and the type of company they are striving to be. I really do think UPST is a special company.

My only regret - I wish I had bought more before but I still plan to buy more at these prices.

Long UPST (~10%)



I’m glad you were inspired by Anna’s speech and by UPSTART in general. I am long UPST, 30%, my largest holding by far and the highest percentage I have ever held in my portfolio.

However, that leap to trashing Affirm was unfortunate. If you actually looked at Affirm’s mission, it’s to deliver honest financial products that improve lives. They, too, us AI/ML to offer credit to the underserved.

Both Affirm and Upstart are addressing the underserved market and as Andy says, credit is credit. In fact, they are both going after the credit card market, sort of. Upstart’s personal loans eliminate credit card debt and interest to the credit card companies. Affirms BNPL eliminates credit card debt and interest to the credit card companies.

And, make no mistake, Upstart is in business to MAKE MONEY for the banks and for themselves. Great that they have the altruistic goal too but if they have to choose, I think I know what it will be, and we love them for it. Here’s how I know: they raise their interest rate / origination fee if they think you will pay off early. If it was just to be altruistic they wouldn’t do that.

There is a dogfight going on in the BNPL space and every player has to “equalize” to gain market share because in the end there will be a few winners and the rest will die off. I’m uneasy with putting these BNPL into the bucket of sin stocks, just because people with addictions may abuse them. People with addictions will find a way to get money to feed their addictions, even if they have to steal it. I don’t think we should be using them as a model for discussing our companies. I can’t ask the board to stop doing something, like Saul does, but well, I think we should stop doing that.

I think Affirm is risky because the BNPL space is soooo competitive and there is no absolute moat. They are executing magnificently on their story but any bump could totally knock them off the rails. I believe that to be true of LSPD, too - very competitive space, and I think extending bicycle supplier-retail connections to clothing or others is a massive leap that makes a great story but I think pretty aspirational in reality. I’d want to see them do it with a less-hostage space before I back up that truck. However, I am happy to hold small-ish (compared to UPST) positions in both as I watch them execute nicely.

The big difference between Upstart and LSPD/AFRM is that I can’t see how UPST can stumble anymore. Once this snowball starts to roll down the mountain, even if the exact same AI comes out (say, from Zest, which seems to have a similar ML/AI but is executing poorly) Upstart will have the brand with the banks and that will be that. The competing AI/ML, even if it magically appeared, will not ever be better enough to overcome the Upstart brand. That’s what makes UPST so exciting.



The more I think about this the more it brings up my antennae. When people argue that their cigarette, their drug, their loan company is morally better it just makes me say Hunh? It’s just a very weird argument to make. I don’t know if they are feeling bad about their investment or if they are trying to pull the wool over people’s eyes. Now if they were arguing that their AI model or their product is better, well that would be a great discussion to have. But to say they are morally better? That is just weirdly subjective.