Upstart CEO Dave Girouard on the future of lending and what he learned from Google about company culture

Upstart CEO Dave Girouard left his high-profile post after eight years to no only play his hand in the financial technology game, but to change the way that game was played by bringing artificial intelligence and machine learning into lending. As former President of the Enterprise department at Google, Girouard saw exponential growth at the tech giant that he’s now seeing in his own team.

Ladders spoke to Girouard to find out how he went from managing a team of 1,000 employees to a team of 10, and how he continues to adjust as his company grows.

What inspired you to leave Google and found Upstart?

“I was at Google for eight years and I was president of a fairly large division … the cloud application part of Google … if you’re familiar with Gmail and Google Docs, etc. I had grown that to quite a large business and a large team. But really, I decided that I wanted the experience of starting my own company and I had some pretty good success at Google but was naturally curious about whether anyone could have done it because Google was in such an amazing growth mode at the time.

“So it was a challenge to myself to go out and start at ground zero and build a company from scratch. So then I came upon the idea that became Upstart. I viewed my experience at Google as pretty incredible, but at eight years I felt like it was time to put a bow on that and move onto the next thing … and that became Upstart.”

How did you come upon the idea?

“It wasn’t anything particular … really just through conversations with people about access to credit and such. I didn’t come from any sort of financial services or lending background, but the basics of what we do and the intuitive opportunity we saw was fairly obvious that modern technology and modern data science could improve access to credit. Of course, the basics of why access to credit matters are fairly obvious even if you’re outside the industry.

“It was a little happenstance in the sense of, I wasn’t born to create this company, per se. It was only through seeing an opportunity where the types of technologies that we were building at Google could be deployed into a new industry where there was an enormous opportunity for improvement, particularly around access to credit.”

How did you know you were ready to take on Upstart full time?

“I went through a process of several months where I was evaluating the concept on my own time, still at Google, and not sure if I wanted to pursue it. I was confidentially sharing the idea and thoughts with some friends, but I was running quite a large team … probably more than 1,000 people at Google … so I didn’t have the liberty of spending a lot of time on it nor talking about it broadly, but enough so where there was a three to six month period where I was thinking about it and evaluating whether it was something worth doing. And then there was a point where the bit flipped and I became pretty sure I was going to pursue it. At that point, it was just a transition.”

Upstart increased its number of employees by 50% so far in 2019. Has that kind of growth changed things at the company and for you as CEO?

“Yea, for sure. I came here accustomed to leading a quite large team, so for me, the biggest change was when I had zero employees or even when we were five or 10 employees … that was, to me, the thing that was a completely new experience.

“Now Upstart is in the range of 250 employees and so to me, this is still a quite modest size compared to what I was managing at Google. But generally, any company as it grows or doubles in size, you have to adjust your plan and rethink almost everything … from how you onboard employees, how they come up to speed, your communication with employees. So I think there’s a natural change that any founder or CEO has to go through for a company that’s scaling quickly. Managing and leading a company of 1,000 people is pretty dramatically different than one with 10 people.

“I generally had the benefit of already having built and led a fairly large team. That was an advantage. A lot of founders come in and they didn’t have the opportunity to do that before building their own company so they have to learn as they go. At least that dimension I have some history in.”

Did you find it harder delegating with a small team?

“I’ve always been one that’s very close to the details in our business from the very first days. I kind of recall the joy of actually having people that could take things and run with them … that I didn’t actually have to be involved in every detail. That was probably not that far after the founding of the company when all of a sudden I had some cofounders with me and early employees and things were just happening without my direct involvement and for me, in that point in time, it was exhilarating.

“It’s a little bit what it feels like to lead a team and build a company, whereas the first days it was really just me doing everything myself or just a couple of us. So that transition to me was a great feeling. In a place where I knew what to do, once I got to the point of having a critical mass of a team working with me.”

What has been the most surprising aspect of being CEO of Upstart?

“One thing I would generally say is, I was in a very different business at Google … these cloud applications … compared to what we do here, which is really a lending technology platform … but I’m always struck by how similar the jobs are. Even though the industries are different, the technologies are different, but the basics of building and leading a team, creating a plan, setting a strategy, trying to reinforce the culture, the job in many ways are surprisingly similar.

“I would also say that even when I went from managing a very large team to managing a tiny team, the jobs still felt like it had more in common than they were different. I still feel like, at least how I operate, I still needed to think about what we want to do next, I still needed to work with the team I had to get their thoughts and ideas and formulate a plan. It is very different to manage a 10 person team versus a 1,000 person team, but I’m struck by the similarities more than the differences.”

Do you think the Fintech industry is just starting to realize the power of AI?

“For sure. I think that Fintech, or financial services, generally are amongst the most heavily regulated industries in the world, probably along with healthcare and that means that new technologies have to walk a very narrow path, and a very careful path, from a regulatory perspective.

“For sure I think the first place something like AI had an impact was elsewhere, right? It might be in shopping experiences, it might be in language translation or voice recognition … there are just other places that there’s less regulation that the technology really took off more quickly. Having said that, the impact of AI in Fintech has enormous potential and companies like Upstart are figuring out how to navigate the regulatory environment and to bring the benefit to banks and other types of financial institutions. I think that’s finally happening and it’s taking some time, but it’s becoming clear that the impact of AI in financial services will be enormous.

What’s the most important financial services industry trend to watch right now?

“There are many people at the metal level, at the broad technology level, there’s perhaps never been anything as impactful or important as AI, even if you go back to the cloud computing era, the PC era, etc. There seems to be a general consensus that the opportunity for pretty radical change in AI is dramatic and there’s a lot of hopes, as well as concerns, about that.

“I would definitely say that that translates very directly to the business of banking and lending in particular, where we play, because the improvements that are possible, the improvements to loss rates, the improvements to lending efficiency, that AI offers are so dramatic that we’re 100% confident that it will be the basis to almost all lending in the world within 10 years.”

Upstart has been in business about seven and a half years, right? What are you most excited for at the company right now?

“Yea, we’ve been in business for about seven and a half years. I think the company’s gotten to the point where the maturity of its AI models has really arrived. It certainly takes a while, both to build them and to have enough data to train them and I’d say in 2019 it’s become clear that our models are in full stride. They are working extremely well and they’re learning very, very quickly.

“So that really explains why our business has, as of right now it’s more than doubling year on year. We’re a profitable business. We have in the range of a million dollars in revenue per employee, which is pretty extraordinary. And all of that is because our AI models are creating a very differentiated business and its because it beginning very quickly to show up in our results.”

How would you describe your company culture? What makes it special?

“In many ways, a bunch of us who started the company and were here early came from Google, so in some sense, we inherited some of Google for sure. If you worked here and worked at Google, you would definitely see some echoes of how we do things, how we make decisions, how we manage the company.

“Having said that, I think Google was far from a perfect company. I would say we have a little less of the alpha-engineer edge that Google had where I think there was always a sense that engineers run the company and most of the rest of the company was there to serve them. Here, we don’t have that at all. I think there’s real respect for all members of the team and all functions of the company working together to create a great business. So I think there’s a little edge to Google that I think is not present here, but at the same time the quality of the team and really having the best among the best here is something we definitely share with Google.”

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Has your experience at two major tech giants influenced the way you manage and direct your company culture?

“Yea, certainly. I was at Google in the formative years when it went from private to public and went through its massive growth. There were about 1,500ish people when I got there and there was probably 50,000 when I left. I really learned so much, particularly from Larry (Page) and Sergey (Brin), and also Eric Schmidt, because they just always thought differently about almost every question the business faced. They never took what somebody else was doing as the right way to do something. They always wanted to question it.

“That sort of curiosity and interest in trying to build something new and different … over my years at Google I definitely began to appreciate that it’s what made Google the company it is today, which is one of the most valuable companies in the world. So I definitely brought that here in the same way that I like to rethink almost everything that we do in the industry that we work in and think about, can it be done in a better way?”

What advice would you give to someone interviewing at Upstart?

“One of the things we share publicly, it’s on our Careers page, are our values. So we talk a lot about what makes Upstart special. These are values that we put together literally in the first year of the company and even though we reviewed them and thought about updating them, we found them to be as accurate today as they were in 2012. So if you’re interviewing here, first of all, see if those values resonate with you.

“If they don’t, then this may not be the best place for you. If they do, then it’s probably worthwhile to think hard about why they resonate with you and what sort of company you want to join. That’s probably the best thing somebody could do in terms of coming in here and having great conversations and figuring out if this is a place that makes sense for you.”

What are those values?

“One of them that we talk about a lot is ‘make every second count.’ We definitely are a culture where we realize that moving quickly, making decisions quickly, is enormously important.

“Another one is ‘make clever use of numbers.’ We’re definitely a quant-like company who really likes to think hard about the math and the science behind something and how it can be done better.

“Another one we have is ‘do the right thing, even when it’s hard.’ Companies take shortcuts to growth, shortcuts to big numbers in ways that are not long-term successful. We’ve never chosen to take those paths. Sometimes we do things that are right for the business long-term, but they’re not as much fun in the short term.

“Another one is, ‘don’t assume it can’t be done.’ I think this one is a little bit inherited from Google, which is really like, don’t just look at something and say ‘oh that’s never been done before … it’s impossible.’ So really think hard about the underlying premise.

“The last one I’ll share is, ‘be smart, but know you might be wrong.’ That’s a way of saying, we really want to hire incredibly bright people who have confidence in their ideas, but at the same time, people that realize they’re not always right and there’s always another valid opinion out there that you should listen to.”

Is there anything else you want people to know about Upstart?

“We are hiring a lot, both here in the Bay Area and our second headquarters, which is in Columbus, Ohio. We’re hiring Software Engineers and Data Scientists, as well as operational people in both of those locations. So we grew 50% and we’ll probably grow another 50% the rest of this year.”