20VC Raising $150m, Meeting Yuri Milner & Revolutionising Mobile Finance with Sasha Orloff @ LendUp

In this episode of "20 minutes VC," host Harry Stebbings interviews Sasha Orloff, CEO and co-founder of LendUp, a fintech company providing loans and credit cards. Sasha shares his journey from working in venture capital at Citigroup to founding LendUp, driven by a passion to offer credit-building opportunities to underserved communities via mobile technology. He discusses the challenges traditional banks face, such as outdated software and changing consumer behaviors, and how LendUp's innovative mobile-first approach and features like instant loans and customizable credit card controls cater to the needs of the underbanked. Sasha also touches on the importance of execution, the value of learning from failure, and the potential for startups to collaborate with banks to better serve changing customer needs. He emphasizes the significance of ruthless prioritization and maintaining company culture through growth.

• Sasha Orloff is the CEO and co-founder of LendUp, a fintech startup.
• LendUp offers online and mobile personal loans and credit cards in the United States.
• Previously, Sasha worked in venture capital at Citigroup's corporate venture capital arm.
• LendUp raised $150 million in funding from notable investors including SV Angel, Yuri Milner, Susa Ventures, and Google Ventures.

"So joining me today, I'm thrilled to welcome Sasha Orloff. Sasha is the CEO and cofounder of Lendup, a fintech startup offering online and mobile personal loans and credit cards in the United States."

The quote introduces Sasha Orloff and gives an overview of his company, LendUp, highlighting its focus on fintech and its service offerings in the personal loan and credit card sectors.

• Sasha moved from New York to California, leading to his job at City Ventures.
• City Ventures was one of the first bank corporate VCs in Silicon Valley.
• Sasha observed two types of venture capitalists: deal flow-driven and hypothesis-driven.
• Sasha spent 18 months at City Ventures looking for a company that could help Americans build their credit score and access credit.
• He decided to become an entrepreneur due to his passion for the idea, the realization that anyone can be an entrepreneur, the pride associated with even failing as an entrepreneur in Silicon Valley, and major shifts happening in the United States.

"I was fortunate enough after spending about 15 years in financial services to have my wife move me from New York back to California because she just wanted to be here and got a job at city Ventures."

This quote explains the personal circumstances that led Sasha Orloff to move to California and join City Ventures, setting the stage for his eventual entrepreneurial journey.

"What I was thinking about was, what are the things that I care about? And I just wanted to learn a lot more and ended up trying to chase this idea of a company that could help the other half of the world or the other half of the United States build their credit score and get access to credit."

Sasha discusses his motivation to find a company that could assist people in building credit scores and gaining credit access, reflecting his personal interests and goals during his time at City Ventures.

• In Silicon Valley, failing as an entrepreneur is often seen as a valuable learning experience and can be a source of pride.
• Entrepreneurs who have failed are appreciated because they learn a lot through the process of failure, which is considered more valuable than just contributing to another company's success.

"It is. Now I have to speak sort of within the realm of Silicon Valley, because that's where we are. But I think, and I see now, as a CEO of a fast growing company, that I like entrepreneurs, even if they failed, because you learned so much through the failing process, even more so than, I think, just being a contributor towards the success or just another company."

Sasha Orloff expresses his view on failure in Silicon Valley, emphasizing that failing can be a significant learning experience and is valued, especially in the context of Silicon Valley.

• Leaving a well-paid, comfortable job in VC to start a company is daunting and scary.
• The first day of entrepreneurship is described as the scariest, with concerns about financial security and future income.
• Despite the fear, the commitment to not fail and make the new venture successful is strong.

"It was scary. I have to say. As much as you build conviction on an idea, that very first day is probably the scaredest I've ever been in my life."

Sasha shares the fear he experienced when he decided to leave his VC job to start his own company, highlighting the emotional challenge of taking such a significant risk.

"Okay, how am I going to pay rent? What am I going to do? Am I ever going to get paid again? Then the second day you realize, all right, well, you've given up your job, you got to make it work. And I don't like failure, so I'm just going to do what it takes to make this successful."

Sasha reflects on the initial concerns of financial stability when starting a new venture and his determination to succeed, demonstrating the mindset required to overcome the challenges of entrepreneurship.

• The speaker had a strong belief in their business idea and decided to start it themselves.
• The difficulty in finding someone else to fund and execute the idea led the speaker to take action.

"I had so much conviction about this idea and I just couldn't find somebody that I wanted to fund to start it. So I threw my hat in the ring and decided to give it a go."

The quote highlights the speaker's strong belief in their business idea and their proactive decision to start the company themselves due to the lack of suitable funders.

• Execution is critical in differentiating successful startups from mere ideas.
• The importance of a focused and dedicated team is emphasized.
• The speaker learned the value of ruthless prioritization and laser focus from observing peers.

"I think it's all about execution and there's a bunch of good ideas... but it's the team that executes on it and makes that idea a reality important."

The quote underscores the significance of execution over just having a good idea, and the role of a committed team in making an idea successful.

• Young entrepreneurs have fewer personal responsibilities and lower living costs.
• Personal circumstances like having a supportive spouse can ease the financial burden when starting a business.
• Joining Y Combinator provided focus and energy from being around young, dedicated entrepreneurs.

"I see now why so many entrepreneurs are so young... It does get harder the older you get... I definitely had a little bit of an easier start than some for somebody at 35 starting it."

This quote reflects on the advantages of starting a business at a younger age due to fewer personal and financial responsibilities and acknowledges the speaker's relatively favorable position when they started their business.

• The primary takeaway was the focus on writing code and talking to users.
• Y Combinator helps startups avoid distractions and concentrate on what matters most for business growth.
• Regular check-ins at Y Combinator keep startups accountable and focused.

"The biggest takeaway... write code and talk to users... YC is really good at helping you focus."

The quote emphasizes the core activities of building a software business and the role of Y Combinator in maintaining focus on these activities.

• Y Combinator provides resources to handle incorporation, employment agreements, and fundraising.
• The program culminates in a demo day that connects startups with potential investors.
• The speaker's responsibility includes raising capital and building a team.

"They give you all your incorporation paperwork, employment agreements, convertible note and fundraising, and they keep you laser focused for three months."

This quote explains how Y Combinator supports startups by handling administrative tasks, allowing them to focus on product development and user engagement.

• Early-stage investors were chosen for their expertise and ability to contribute to the business's growth.
• The speaker sought out angel investors with relevant experience and skill sets.
• As the company grew, they looked for impact investors focused on customer and social justice, as well as traditional venture capitalists.

"So at the very early stage, what I looked for was what were the skill sets that we were going to want to have around the table... we really wanted to sort of round out our angel investors at a really early stage with people that brought perspectives that were going to help us succeed."

The quote highlights the strategic approach to selecting early-stage investors based on their skills and potential contributions to the company's success.

• Sasha Orloff discusses the benefits of early-stage funding, highlighting the enjoyment of meeting many angel investors.
• Early stages had lower pressure due to the small team and no salaries being drawn.
• The early stage allowed for the selling of a big, aggressive vision.

"My favorite though was the very early stage, getting to meet so many angel investors that were just incredibly accomplished in their own careers, whether as entrepreneurs or executives or as just career vcs."

This quote emphasizes the positive experience Sasha had during the early funding stage, particularly enjoying the networking aspect and diverse perspectives gained.

"The pressure was also a little bit lower because it was just me and my stepbrother and a friend and we weren't taking any salary."

The quote reflects the lower financial stakes at the early stage of funding due to the small team size and lack of payroll expenses.

• Early stages are challenging due to lack of traction but also allow for selling the vision.
• LendUp's vision was to enable credit building through mobile phones, which was revolutionary.
• The vision aimed to bridge the gap between the banked, unbanked, and payday markets in the U.S.

"It's harder because you have no traction, but it's easier because you have no traction. You get to sell the vision of what you're trying to accomplish."

Sasha explains the paradox of early-stage funding where the lack of traction can be both a challenge and an advantage when pitching a company's vision.

"A huge vision that we thought everybody in the United States deserved the ability to build their credit directly from their mobile phone with a few swipes of their thumb."

This quote outlines the ambitious goal of LendUp, aiming to revolutionize credit building in the U.S. through mobile technology.

• Banks outsource software, leading to slow changes and a lack of unique product features.
• Customers, especially younger ones, prefer mobile banking and do not want to visit branches.
• Increased regulation post-2008 financial crisis has led banks to add more processes instead of leveraging software for efficiency.
• Banks are at a disadvantage in serving the underbanked due to a shrinking middle class and their focus on higher-income customers.

"Banks in the United States, and I think all over the world, outsource their software. And that just gives them a couple disadvantages."

The quote highlights a fundamental issue with traditional banks' reliance on outsourced software, which hinders their ability to quickly adapt and innovate.

"We build from a mobile first perspective, and we don't have any branches. We're fully digital, and we build all of our own software."

Sasha describes the competitive edge LendUp has by being fully digital and creating its own software, catering to the preferences of modern banking customers.

• LendUp offers rapid underwriting and funding directly through mobile phones.
• They have reimagined the credit card experience with direct connections to Visa and Mastercard.
• LendUp provides unique features like card control, budgeting tools, and spending alerts.
• These innovations are difficult for traditional banks to replicate, potentially leading to partnerships.

"We're the only lender in the United States where within three and a half minutes of not knowing anything about you, right from your mobile phone, we can underwrite you, make a decision, and put money in your bank account."

This quote showcases LendUp's innovative approach to lending, emphasizing speed and convenience for emergency financial needs.

"We rebuilt the entire experience for credit card, and we're the only direct connection to Visa and Mastercard directly to your mobile phone."

Sasha explains how LendUp has transformed the credit card experience, integrating it seamlessly with mobile technology for enhanced user control.

• LendUp sees opportunities for banks to serve changing communities better by collaborating with fintech startups.
• Banks can benefit from partnerships by adding new products designed for the underbanked.
• LendUp can assist banks with product development and partnering to serve their customers better.

"We believe that we can enable banks to be even more successful as their communities change. They should add products to their arsenal of offerings to their consumers."

The quote reflects Sasha's view that banks can improve their services and adapt to changing demographics by incorporating products developed by fintech startups like LendUp.

• Banks must adapt to the changing demands of consumers, with different needs for the banked and unbanked.
• The user interface (UI) is simplified for unbanked consumers who are not as familiar with financial products.
• For lower-income individuals, features like budgeting, savings, and credit score building are crucial.
• The product includes alerts and reminders for busy people with tight financial schedules.
• Speed and simplicity in the experience are emphasized to help users manage their money effectively.

For me, let's take a couple of years. Step back to when I was a VC and I was making pretty good money and working relatively minimal hours, my income vastly exceeded my expenses... But that's not the case for a lot of people.

This quote highlights the contrast between the speaker's personal financial comfort and the financial struggles of many consumers, illustrating the need for tailored financial products.

• The speaker is inspired by the book "Banker to the Poor" and works by Dan Arielli.
• These books have shaped the speaker's life and influenced his approach to financial services.

Favorite book is banker to the poor because it inspired my life and created this or anything from Dan Arielli.

The quote reflects the speaker's personal inspiration from literature that has shaped his professional journey and mission.

• Ruthless prioritization is essential for success.
• Observing economic cycles has taught the importance of focusing on business fundamentals for long-term sustainability.
• During booms and busts, maintaining a focus on time to profit, team scaling, and business profitability is key.

Ruthless prioritization is critical to success... If you're building something for the long term, as opposed to building something to get it acquired really quickly, focus on fundamentals.

This quote underlines the significance of prioritization and a strong foundation in business as a lesson from observing economic fluctuations.

• Strict hiring practices and a focus on objectives and key results (OKRs) help maintain culture.
• Team building activities and offsite events foster collaboration and reflection on company goals.
• Keeping everyone aligned on what the company aims to accomplish is crucial.

Very, very strict hiring. Focus on okrs objective and key results... Team building activities, fun happy hours, offsite events so that people build the collaboration with the team.

The speaker emphasizes the importance of selective hiring and clear objectives, coupled with team building, to preserve company culture during rapid growth.

• Sam Altman's blog/newsletter is a must-read for the speaker.
• Career highlights include meeting influential figures and achieving consistent customer growth.
• The speaker values customer feedback and the viral component of their business.

Career highlights... Meeting Yuri Milner and having him sort of say, this is it, let's go... Getting accepted to YC was the first moment that I was like, whoa, this actually could be something.

This quote captures the speaker's significant career moments and the affirmation of their business's potential and growth.

• The speaker aspires for LendUp to be recognized for serving the financial needs of the less affluent half of the market, similar to how Amex caters to wealthy travelers.
• The goal is to build a reputation for solving specific customer problems effectively.

When people start equating lend up... But for the other half of the market, that's my goal.

The speaker outlines their vision for LendUp to become a benchmark in financial services for the traditionally underserved market segment.

• The episode concludes with gratitude for the guest's participation and a look forward to future content.
• The host promotes following on social media and signing up for a newsletter for updates.

Thanks for having me... And if you love the show today, then you can follow me on Snapchat at htebings or sign up to the newsletter on the Twentyminutevc.com so you never have to miss an episode or an update from us.

The closing statements express appreciation for the guest's insights and encourage audience engagement with the show's future content.