UPST Trustpilot ratings

Investment Analysis Clubs Saul’s Investing Discussions
1

Long time reader, first time poster…

… so I know this company company is very controversial in our community, and doesn’t fit exactly into the framework of the most popular SAAS companies.

I am simplifying, but something I have learned here is that one of the main reasons our favourite companies have such great margins, DBNR rates etc is because they provide a product or service that is so overwhelmingly good, it becomes almost inconceivable that customers, either business or consumers, would stop using it, or un-subscribe.

On the Trustpilot “Best in Non-Bank Financial Service” category, UPST ranks 8th of of 232. More importantly, that is from 32,661 reviews. Of the companies ranked above it, the next highest number of reviews is 1737, nearly 19 times fewer!

https://www.trustpilot.com/categories/non_bank_finance?page=…

So UPST appears to have a product/service that delights their banking and auto partners, by delighting the end customers who use UPST.

My questions for the wonderful community I learn so much from here, are…

  1. Wouldn’t you consider this a very good, and important, indicator that they are on the right track?

  2. How much importance would you place on indicators likes this?

  3. Obviously management, execution, macro events etc have a huge bearing. But when it comes down it, isn’t my first observation of “having a product or service that is so overwhelmingly good, it becomes almost inconceivable that customers, either business or consumers, would stop using it, or un-subscribe” one of the most important?

Cheers

Mark

23 Likes
2

My questions for the wonderful community I learn so much from here, are…

1. Wouldn’t you consider this a very good, and important, indicator that they are on the right track?

2. How much importance would you place on indicators likes this?

3. Obviously management, execution, macro events etc have a huge bearing. But when it comes down it, isn’t my first observation of “having a product or service that is so overwhelmingly good, it becomes almost inconceivable that customers, either business or consumers, would stop using it, or un-subscribe” one of the most important? – Mark

1- Yeah, that’s positive.

2- Again, it’s positive… but what REALLY counts is the periodic reports of actual performance. To be more plain, the quarterly reports. Oh sure… you’ll see news from time to time about a company buying another company or trotting out new products (software in most cases on this board). That’s both interesting and useful… but only useful to the extent that the “new stuff” can be anticipated to add to that performance I mention. It can provide a smidge of insight to the likelihood/probability that the previously anticipated performance may be exceeded in some period in the future.

3- An interesting question! Theoretically, yes. However, as investors separated from actual use, we can only “ASSUME” just how good that good actually is. That potentially leads us back to your Trustpilot ratings. Do they REALLY show how wonderful the product is? I think THAT is where I would say “Hmmmm! Ratings are “jubilant”. And performance of the company is outstanding. Are the ratings a reason why the performance is excellent? Are these ratings made by DECISION MAKERS or are the ratings made by people who influence the decision makers? Probably.”

BUT… I invest on performance. The ancillary stuff (new products, ratings, etc) are “feel good” and provide some influence… but the company performance is king. That performance provides perspective on ratings. And complaints. And competition, etc, etc.

Some like the examine any and every detail that crosses their path. That’s fine if they like that. But company performance is the “North Star” upon which evaluations are made. Performance provides perspective and it provides insight on how much weight to give to those “any and every detail” things that cross our path.

Just my opinion… :slight_smile:

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

20 Likes
3

Thank you Rob

That is exactly the type of considered reply that makes this board so valuable, I really appreciate you taking the time to respond.

“Some like the examine any and every detail that crosses their path. That’s fine if they like that. But company performance is the “North Star” upon which evaluations are made. Performance provides perspective and it provides insight on how much weight to give to those “any and every detail” things that cross our path.”

I agree completely that quarterly reports showing trends of increasing improvements in all the important metrics are most important.

However, with this one it does seem to be delivering that performance quarter after quarter. But it is very young as a public company and difficult to exactly understand all the inputs, and I agree many get bogged down in trying to figure out the minutiae.

The ratings help give me reassurance that my conclusions from my research and conviction in the thesis is intact, and that as we get more quarterly reports, the numbers will confirm it.

Thanks again

Cheers

Mark

1 Like
4

Mm… I’ve been long on upstart for a while. Took out a loan just to see the process myself. Was just a 25k loan for debt consolidation. Didn’t get a great rate or anything but my credit is sub 700 anyways. Process was very efficient and took maybe 5 minutes max. Money was in my account in less than 24 hours. Left me feeling very good. (It allowed early repayment so I did just that shortly afterword).

Anyhow the reason I bring this up is that you are prompted to fill out a trustpilot review immediately after the loan goes through. If you really needed that money it must be a huge moment of relief and happiness. Surely prompting a good review. Not sure if they prompt you to leave a review if the loan is rejected or if you decide not to take the offerred loans for any reason. Also asks you to leave a review b4 any risk of delinquency or payments. So it would really have to be pretty painful (which I imagine obtaining in person loans to be) to garner a bad review at this stage. B4 this discussion I had never heard of trust pilot and wouldn’t have known to go there to leave a bad review of anything. Maybe yelp or reddit or something similiar.

Anyhow this is a long winded way of saying this is a mostly worthless metric to evaluate the business by. Unless the results are horrendous its hard to use the trustpilot data in any meaningful way. It’s a marketing device at best and if your using to say that upstart is going to kill it then you’re looking for confirmation bias. It’s that simple. B4 the upstart crash (which still seems pretty unjustified to me) there was plenty of posts about traffic from trustpilot and how this was a surrogate marker for how many loans they got etc etc. Everything looked pretty good until the earning report and subsequent sell off.

Anyhow I didn’t sell any and bought more recently. The concept is good. They are growing. They have more partners every month and have plenty of verticals to grow into. The day to day, and especially the trustpilot reviews, are just noise.

46 Likes
5

Anyhow this is a long winded way of saying this is a mostly worthless metric to evaluate the business by.

Customer satisfaction, trust and loyalty is hugely important especially in a touchless internet world. Ask Amazon. It helps with repeat customers.

Reviews are like advertising. Most people don’t think it applies to them and waste of time.
In aggregate they work pretty well and get the desired objective.

4 Likes
6

On the Trustpilot “Best in Non-Bank Financial Service” category

Trustpilot is less that trust worthy. Fake and invited reviews abound, and orgs can challenge and take down negative reviews quite easily.

Their system is easily manipulated. If you notice a Trustpilot logo on a company’s webpage, that is a clear caution signal. Don’t be taken in.

3 Likes