One of the biggest names in the fintech space participated in our most recent Q&A feature. Renaud Laplanche, the co-founder of Lending Club and more recently Upgrade, answered questions about what it's like to be an entrepreneur several times in a competitive space. Read on if you want to pick the brain of an established fintech industry veteran and learn how Upgrade is changing the game in consumer credit and financial education.
Discussing Entrepreneurship in the Fintech Space
Q: What was your initial inspiration for starting a company like Upgrade, a personal loan provider, but not a peer-to-peer marketplace?
A: Starting Upgrade stems from my passion for innovation and building credit products that help consumers build a bright future. We launched Upgrade only a year ago starting with offering personal loans, but that is only the beginning. My vision is to build an entire suite of credit products that provide long-term value and help consumers access more affordable credit.
Today, we’re offering personal loans and credit monitoring and credit education tools, and we’re excited to announce our next product – Personal Credit Line. Although not “peer to peer,” Upgrade remains a marketplace, with individual borrowers on one side and institutional investors on the other.
Q: It looks like you co-founded Upgrade with a total of 6 co-founders. How has starting Upgrade been unique from a team building perspective?
A: One of Upgrade’s biggest strengths is the team we’ve built – from the founding team, broader leadership, and beyond. The leadership team we’ve assembled brings experience across multiple credit products and credit cycles, so they understand the complexity of consumer credit through several economic environments.
That experience, combined with the talent we’ve attracted across engineering, marketing, customer service, legal, and compliance enables us to have the speed and strong execution that is important to our growth and long-term success.
Over the last year we’ve on-boarded more than 250 team members across our three offices – San Francisco, California headquarters, Phoenix, Arizona operations center and Montreal, Quebec, Canada development center. It has been an incredible year, especially looking back at the team we’ve formed.
Q: How did the challenges of starting LendingClub compare to the unique challenges of starting Upgrade?
A: The challenges are quite different because the launch of each company stands about decade apart, so the landscape is very different. For context, in 2006 the first iPhone had just been released, online shopping was just becoming a real thing, and people had never lent money to another person online! We had to simultaneously build the infrastructure and drive adoption for an entirely new concept.
Fast forward to about a decade later, we’re back with new technology, a wealth of experience, and a strong track record which enables us to turn a great idea into a product faster, engage key partners, and develop stronger processes across risk and compliance. At the same time, the industry has matured, and the competitive landscape has broadened to multiple online lenders. Consumers’ expectations about experience have changed too.
Q: What was the most valuable lesson you learned while starting LendingClub? And how has that influenced the startup phase for Upgrade?
A: Hiring and developing talented people who are passionate about working together to build great products and experiences is what really powers any business’ success. That was one of the keys to success during my time at Lending Club and will also be one of the keys to Upgrade’s success.
What Upgrade Offers
Q: Beyond credit monitoring, how is Upgrade helping to educate consumers about their finances?
A: We believe helping people get smarter about credit can enable them to access more affordable credit in the future, and that’s why we launched Credit Health. Credit Health comprises of a range of tools that we think can help people understand their credit profile and what they can do to improve it. In addition to credit monitoring and alerts we offer Credit Health Insights - a library of educational articles and videos. Credit Health also features a credit simulator that gives you customized advice and tips tailored to your unique credit history. We haven’t seen other credit monitoring platforms offer this the same way we do.
The credit simulator pulls information from your credit report, so it can use your personalized information to help you visualize how different scenarios and actions may impact your credit. For example, you can see how your credit score can change if you open a new credit card, pay off an existing balance, or take out a personal loan. We think this will help educate people on how their behaviors can impact their credit score – good and bad – and in turn can help them make smarter decisions that will enable them to achieve more affordable credit in the long run.
Q: Do you use Upgrade’s credit monitoring tool yourself?
A: Yes! Credit Health is really a tool that is useful to everyone. I encourage our team to be regular users of Credit Health and share feedback so we can continuously make adjustments and improvements to the experience.
Q: Could you elaborate on this new line of credit product from Upgrade? How does it differ from a personal loan and credit card?
A: Personal Credit Line is an entirely new product that’s never been offered to consumers in its exact form before. It combines the benefits of personal loans and credit cards: the responsible credit features and predictability of a fixed rate installment loan, plus the flexibility and on-demand benefits of a credit card.
With a Personal Credit Line through Upgrade, you have access to funds up to the full amount of your credit line, and you only pay interest on the amount you choose to borrow each time. You get the flexibility, convenience, and control to access your credit line any time you want to use money from it. Each time you borrow from your Personal Credit Line, the rate and loan length of each advance is fixed so you can budget for predictable monthly payments for a set time. In contrast, borrowing with credit cards is open-ended with no set pay-off date. Credit cards typically also have variable rates that can increase and sometimes come with high recurring fees.
Q: If you’re willing to offer a type of line of credit, then are credit cards on the table for future Upgrade products?
Q: One of our goals is to deliver more access to affordable credit wherever and whenever credit-worthy borrowers need it. Adding a card – either virtual or physical – to our Personal Credit Line product will better enable us to do that and something we see doing in the future.
Expecting Growth in 2018
Q: Can you share Upgrade’s expectations for growth in 2018?
A: Upgrade is currently doing about $100M a month in originations and we’ll likely do more than $2 billion this year.
Upgrade is a personal loan lender that also offers free credit monitoring. One of their basic tenets is to provide access to both credit as well as education in order to help consumers understand both their options and credit potential. More recently, Upgrade launched a new, hybrid personal credit line product, merging the best of both credit cards and personal loans.
About Renaud Laplanche
Renaud Laplanche graduated from HEC London Business School back in the mid-90s. He started his first company, MatchPoint, as early as 2000. Continuing with that trend, Renaud co-founded LendingClub, one of the first online lending marketplaces in the United States. Now he is currently the CEO of Upgrade after a successful start in 2016.
Author: Andrew Rombach
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