Dave Girouard, CEO and co-founder of Upstart and former President of Google Enterprise, shares insights on starting and growing Upstart, the challenges of fundraising, the successful pivot, and his management philosophies. He emphasizes the importance of believing in the product, shares helpful frameworks for startup leaders, and discusses managing the executive team.
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Quick takeaways
Building a motivated team without external validation is challenging, but focusing on building a good product rather than getting caught up in valuation hype is crucial.
The successful pivot of Upstart from income share agreements to a direct lending model highlights the importance of careful decision-making and adaptability in achieving company success.
Dave Girard's struggle in fundraising for Upstart resulted in the positive outcome of raising less money, forcing the team to be resourceful and build the company without excessive funding.
Deep dives
Challenges of Building a Startup Without External Validation
Building a motivated team without external validation is challenging, especially when other companies are making headlines and raising large amounts of money. The speaker recounts the struggle of getting the team to focus on building a good product rather than getting caught up in valuation hype.
The Successful Pivot from Income Share Agreements to Consumer Lending
The podcast episode highlights the successful pivot of Upstart from income share agreements to a direct lending model. The co-founder and CEO, Dave Girard, shares the challenges they faced and the careful decision-making process that led to the pivot, ultimately resulting in the company's success.
Lessons Learned in Fundraising and CEO Role
Dave Girard reflects on his experience as a CEO and the challenges he faced in fundraising. He acknowledges that he struggled in raising funds for Upstart and did not enjoy the process. However, he also highlights the positive outcome of raising less money, as it forced the team to be resourceful and build the company without relying on excessive funding. Additionally, Dave shares his management philosophy of focusing on exceptional executive talent and empowering them to make decisions, while also acknowledging the importance of his role in observing and guiding the company's direction.
Building the Company: Trust, Luck, and Regular Check-ins
The podcast episode discusses the early days of building the company and highlights the role of trust and luck in the process. The founder describes how meeting the right co-founder and having similar ideas led to a rapid formation of the company. Regular check-ins, such as coffee shop meetings and walks, played a vital role in keeping the founding team connected and in tune with each other. Despite the odds, the three founders came together and built the company successfully.
The Central Thesis: Deliberately Differentiating in a Commoditized Industry
The podcast explores the central thesis behind the company's success in a challenging industry. The founder emphasizes that lending was considered a commoditized business, and others believed modern technology couldn't make a significant difference. However, the company had a strong conviction to create a dramatically better product using cloud computing and data science. They maintained internal conviction and didn't rely on external validation, even in the face of criticism from the industry and investors. The founders' humility and confidence in their unique approach contributed to the company's success.
Today’s episode is with Dave Girouard, the CEO and co-founder of Upstart, an AI-powered lending platform that recently went public. Before founding Upstart, Dave was President of Google Enterprise, and spent 8 years building Google's billion dollar cloud apps business.
Here at First Round, we first came to know Dave when we invested in Upstart’s seed round back in 2012, and we’ve found him to be one of the most tenacious and focused founders we’ve ever backed. In today’s conversation, Dave gives us an inside look at how the business was built and what other startups can learn from its early days.
In addition to unpacking the initial idea and subsequent business model pivot, Dave gets into what it felt like flying under the radar of Silicon Valley, why he “sucked at fundraising,” and how he and his co-founders have stuck together for almost a decade.
From his “Are you Airbnb or Paypal?” test and why you should look at your career in landscape mode, to the three mental models he leans on to manage his psychology as a founder, Dave shares helpful frameworks that any startup leader can learn from. We also dive into his “management by exception” philosophy, what he learned from Google, how he runs his leadership team, and why he leans on references, not interviews, when hiring execs.
You can follow Dave on Twitter at @davegirouard and you can read his First Round Review articles that we mentioned in the episode here: