Wow! Did we do the right thing exiting Upstart when we did?

The ultimate question for a Sauldom discussion is not what will they do…but what are they doing.

Right now they are NOT a company that is growing, nor are they a company making good money. Can they? Yes, I believe they can eventually. I used to work at the Federal Reserve, and I have ALWAYS said this company is in a difficult field getting banks to change. That is why I was excited about the auto lending and the other avenues. Eventually it will find its footing.

But is it currently a Sauldom stock. NOPE. And even after I held on for too long (but making option money), I knew it wasn’t a Sauldom stock…at this time.

On this board we don’t invest in a future story. We invest in the stocks that are making us money now. All the rest is lost money in the meantime.

I need more quarters of positive news before I take money out of… SNOW, NET, S, CRWD, or others to put it here.


But it’s not just trust that they need for this business model…

It’s ironic: Upstart doesn’t want to be a bank, but without someone “being a bank,” Upstart doesn’t have a business. That’s more than needing your customers to trust you – that’s asking your customers to do the thing you don’t want to do yourself – something that must be done for your (Upstart’s) own business to survive and thrive!

Upstart doesn’t want to lend, but for Upstart to succeed, someone has to lend. Just strikes me as a weird business model.


PS – I just saw this, but the main bank Upstart depends on, Cross River Bank, appears to have run into FDIC scrutiny: FDIC consent order with Cross River Bank indicates heightened scrutiny of bank-fintech partnerships | Consumer Finance Monitor


I agree with DL Buffy. This is not a company for us to be discussing on this board. When I started this thread it was just as a shocked exclamation. I hadn’t been following it since I exited a long time ago, and to see figures like revenue down 67%, fee revenue down 63%, transaction volume down 78%, operating income a loss of $132 million for a company for whom total revenue was just $103 million.
Adjusted EBITDA a loss of $31 million, down from a profit of $63 million a year ago. What a total disaster!

That’s all I was saying. I had no intention of starting a thread with over 20 replies. Let’s let it drop here unless you have something that you absolutely MUST say. For that I’ll leave it open another day and then close the thread.



But don’t all our SaaS companies do that? Take on tasks that companies would rather have someone else take care of for them? Cybersecurity, data management, back office finances, etc. Software as a Service. Upstart offers a service—credit risk assessment. It’s true that it’s a service only needed by lenders and if there were no lenders they wouldn’t be needed. But it’s been a few thousand years now and the industry is still around.

I can’t speak for Cross River Bank, but one of the things I’ve always appreciated about Upstart is that they went to the regulators first—even before they went public. They are exposed to the risks of any of their funding partners, but they have been intentional about keeping regulators and those representing underserved communities in the loop.



I guess I feel like Upstart is fundamentally different, but I’m not explaining it very well, so maybe I’m just wrong. I was trying to say they depend on transactions between third parties. It’s not like they’re selling chairs to the bank, or pens, or calculators. They’re not even selling advice or software that the bank can use. They’re selling credit risk assessment, as you say, but on a transaction-by-transaction basis. They’re also providing leads.

All that is true, but I suppose it’s not unique to Upstart. Shopify and Global-e make money when third parties transact. And certainly other companies sell leads (not that they’re companies you’d want to invest in). I guess I don’t see what the massive upside is with Upstart…lending doesn’t seem like a super growthy industry, and their innovation (while cool tech) doesn’t seem to be a game changer for driving revenue…just seems to potentially save lenders money, so that’s a valuable niche.

Saul is right, we should probably just leave it here. Sorry my thoughts weren’t as additive as I’d hoped.