Some thoughts on Upstart

Upstart is selling more than the basis on which others take financial risk, if that weren’t enough.

I started a position in Upstart after already having been looking for a company in hyper growth that was selling an AI driven solution. Being AI driven has been important to me for some time because proprietary AI has an inherently self perpetuating first mover advantage elevating it to the likes of the Strong Network Effect as far as Moats go, IMO.

Since being introduced to Upstart by GouchoRico here on this board and then being recommended in April at, I’ve come to appreciate why Upstart has a unique ability to efficiently ride the wave of adoption for AI driven lending. Upstart is the first mover here. They’re not displacing an old standard or disrupting an incumbent per say. Although the demand for lending to those with a sub-par FICO was there, Upstart is what is creating most of the market they’re selling into by actually eliminating this old standard.

Upstart is making personal loans available to people never considered to be part of the total addressable market based on the old standard. In addition to vastly increasing the Total addressable Market for personal loans, Upstart is reducing interest rates for borrowers and reducing default rates for lenders. Upstart is doing this while improving the experience for both. Upstart is also showing when borrowers are likely to miss a payment or pay off early, again increasing the profitability but also the predictability for the lender.

After reading the experiences of customers, like Rob here…, I have reason to believe that S&M at Upstart is tied into the AI/ML and is automated creating a type of Blitzscaling…. Am I being hyperbolic here? Or might I just have to get used having more than 30% in one company.




You are correct about the AI related to their S&M. From their opening remarks in the Q1 2021 earnings call:

“And third, we upgraded the models that underpin our marketing acquisition program. That means for every dollar we spent on marketing, we brought incrementally more consumers to the platform and to our bank partners.”

“AI has almost unlimited potential in spend targeting, life cycle marketing and even content generation. Applying AI to our customer acquisition efforts is a relatively new area of investment for us, and we expect it will be a significant source of growth in the future.”


BlitzScaling very interesting article. It also may provide background on why some investment analysts have trouble pricing, evaluating, Saul stocks.