Dave Girouard is founder and CEO of Upstart, a crowd funding platform that enables soon-to-be and recent college grads to raise capital in exchange for a small share of their future income over a five- or ten-year term.
Previously, Girouard was president of Google Enterprise. Over a span of eight years, he built Google's billion dollar cloud apps business worldwide, including product development, sales, marketing and customer support. He also worked as Senior Vice President of products and marketing at Virage, a pioneer in video search technology. Girouard started his career in software development with the Boston office of Accenture before moving to Silicon Valley to work as a product manager at Apple.
I had the opportunity to interview David Girouard.
Please tell me about Upstart and why you decided to leave Google to start the company.
Google is an amazing company and I had eight great years there, so it wasn't an easy decision. But Upstart was an idea that I couldn't get out of my head. Eventually, I decided that, as great as Google was, there was something more I wanted to do with my career. I'm a believer that you regret the things you don't do, more than the things you decide to do.
What lessons did you learn at Google and apply at Upstart?
I learned that having an extraordinary team is the single most important predictor of success of a new venture. Google has been able to accomplish the unthinkable in its 15 years (cars that drive themselves?) because [CEO] Larry [Page] was committed very early on to hiring the best people in the world. I've taken that to heart, and the quality of the team at Upstart gives me a ton of confidence in our eventual success.
Please tell me about the 170+ Upstart profiles and backers who have invested more than $2 million to date in those upstarts. What kinds of demographics are represented?
Upstarts tend to be people early in their careers who discard the traditional and safe path to do something extraordinary. About half are entrepreneurs who have no interest in the treadmill of corporate America. Others are using Upstart funding to take coding courses to better align their skills with the economy in 2013. The common theme is that upstarts aren't sitting back and waiting to see what comes their way. They are people who are proactively making something important of their lives. And they're willing to take some risk to do that.
Backers are a varied lot. They are successful entrepreneurs who know what it takes to succeed, and they like the idea of investing in people rather than businesses. It's both a smart investment and allows it them to participate in the success of the next generation. There are also lots of professional investors who are Upstart backers. We're finding that backers increasingly come from all walks of life, which is great since they all have something different to contribute to their upstarts.
What are the general trends you are seeing in entrepreneurship today? How have the trends changed over time?
The U.S. went from an economy of entrepreneurs 100 plus years ago to a nation of cubicle dwellers, where we sold our time to the man and relied on others to figure out the rest. Now that trend is reversing. We're becoming a nation of entrepreneurs again.
The idea of a safe corporate job is a thing of the past. But the good news is that millennials don't want those jobs anyway. The majority want to run their own business someday. We aren't just talking about venture-funded startups, but all flavors of businesses. One of our upstarts opened an ice cream shop in a developing neighborhood in Brooklyn. Another is a West Point grad opening up a digital dentistry practice.
Which aspects of a startup are of most interest to venture capitalists? What should entrepreneurs stress during their pitches?
I'm no expert in pitching to venture capitalists. Plenty of them told me, "No thanks!" I think the simpler the pitch, the better. If you need tons of slides filled with data and charts, you might just be hiding something. The best entrepreneurs have discovered an essential truth that they're obsessed with. And they have an indefinable but easily identified quality that suggests they will stop at nothing to bring their vision to life.
Please share some Upstart success stories and failures that provide learning opportunities.
In the beginning, we didn't really put enough thought into our hiring processes. We were so small that we figured it didn't matter. Each of us would meet every candidate and figure it out. But candidates actually sensed a lack of methodology that didn't reflect well on us. We fixed that pretty quickly.
I also learned that even in very small companies, the need for leaders to focus on communication is paramount. I assumed that because we all sat around one room getting Upstart off the ground, that a proactive effort to communicate with the team wasn't necessary. I was wrong about that one.
On the positive side, we've built and extraordinary team by focusing on raw potential, as well as cultural fit, at the expense of direct experience. If there's any advice I'd give to a new founder, it would be find people that fit well with your team, and who have the aptitude and attitude to take on whatever comes their way. Focusing too much on specific work experience can often lead to bad hiring decisions.
Have any funded upstarts' trajectory surprised you? If so, how?
For sure. We've only been funding upstarts for a year, and we already have dozens of great success stories. A Stanford business school grad building Google Glass apps for healthcare, an MIT engineer creating a new climbing shoe based on her dissatisfaction with existing available choices, an entrepreneur building a vibrant community around classical music events in Boston and a MBA who turned down a lucrative consulting offer got his e-commerce company seed funded by Google Ventures. Seeing upstarts do things they otherwise couldn't have done is what Upstart is all about.
What makes a startup innovative?
Innovation comes from seeing a need or problem in the market differently than it's been seen before. By deeply understanding the need, it's possible to envision solutions that others haven't considered. The last Google t-shirt I got while working there came directly from Larry Page, and it said "I have a healthy disregard for the impossible." I wear it to this day.
What is Oregon's "Pay it Forward, Pay it Back" plan? How does a market-based approach to pay it forward better align interests and incentives of students and the schools they choose to attend?
The Oregon pay-it-forward plan suggests that students shouldn't pay tuition, but instead will pay 3 percent of their income for 20 years after graduation into a fund to support the next generation of students. This is a great idea - very much aligned with what we're doing at Upstart – but they need to be careful in how they design the details of the program. If everybody pays the same 3 percent, then those students likely to be high earners will choose to fund their education elsewhere. That's what economists call "adverse selection."
If, instead, the percent you paid were somehow tied to the income you're likely to earn, based on the school you attend, your area of study and your academic performance, incentives would be aligned all around. Any plan that allows schools to continue to raise tuition, to saddle their students with debt that isn't likely to be affordable based on the student's academic prospects is a plan that needs to be rethought.
What were the best lessons in entrepreneurship that you learned as a student and as an employee at Google?
At Dartmouth College and University of Michigan Business School, I learned that the first step is always the hardest. Whether you're thinking of an engineering problem set, term paper or starting a company, there's so much fear and trepidation about getting started. But you just need to dive in and make it happen.
What I learned about entrepreneurship in my years at Google is invaluable. The first and most important lesson I learned was about the importance of speed and taking calculated risks. The difference between a startup and most large businesses (a few like Google being exceptions) is the speed at which decisions are made. The other important skill I learned was how to get a team involved in and bought into a decision without sacrificing materially on the speed those decisions are made in. The other huge lesson for me was that a single all-star is worth more than 10 good solid team members.
Can entrepreneurship be taught?
I think it can. Though that doesn't mean that universities are necessarily in the best position to deliver those lessons. There's no single formula for building a new business, but there are certainly frameworks and concepts that can significantly increase the likelihood of success of any particular startup. I think the "Lean Startup" concept that Eric Reis wrote about is a great example. Universities may well have a role to play, but only if their faculty have themselves walked the lonely road of an entrepreneur.
How much time should starting entrepreneurs spend on improving existing models, industry networking, general management, fundraising, etc?
There's no universal answer to that question. I find that getting coffee with really smart people who know something I don't know is always a great use of my time. I did it daily when I founded Upstart, and still do so several times a week. But I have little tolerance for sitting at conferences listening to a speaker. If you're at a crazy early stage startup, it feels to me like a sub-optimal use of your time. If there's a great speaker, better to send them an email and see if you can buy them a coffee.
Lisa Chau is the Founder of Alpha Vert, a private consultancy focused on social media and cross–platform marketing. Previously, she spent five years working for her alma mater Dartmouth College, as assistant director of alumni affairs and assistant director of PR for the Tuck School of Business. She has also taught at MIT, and guest lectured MBA and undergraduate courses in e-business strategy at Baruch College and The New School.