FacebookTwitter

Hi! My name is Chris Luke, and I just failed my unsuccessful Upstart campaign

on Jun 21, 2013 in Blog | 1 comment

Share On GoogleShare On FacebookShare On Twitter

upstart startup

I’ve always been obsessed with working at Google someday. So naturally when I heard about former Google executive Dave Girouard’s new company, Upstart, I was intrigued. Upstart is a funding platform much like Kickstarter, but for people rather than companies or ideas. “Backers” can invest money into you, for a small percentage of your annual income over the next 10 years. Backers have the option of investing money only, or make an offer of funding along with an offer of mentorship. I don’t know if it was the clean website design, the impressive profiles of the company supporters, or the inspiring text beckoning me to sign up… but I did. “I have potential!” I cried, and I quickly went about setting up an account.

Right from the start I felt special, which I think is Upstarts best quality. After making my account, I received an email from Cindy, an Upstart Operations Manager. She was excited that I had made an account, invited me to arrange a time to speak by phone with any questions I had. The next day, I was still bewildered by the fact that I was talking with someone on the phone from Upstart. Have you ever received a phone call from any company you made an account with? Again, the personalized service made me feel special, which makes anyone happy inside!

Cindy was enthusiastic about Upstart and my plans to create a profile. She offered advice, tips, and took as much time as needed to answer my many questions. Cindy seemed genuinely concerned about my success.

After scribbling out what I thought would be an appealing profile and providing the necessary documents proving I was who I said I was, I submitted my account for review. Surprising me again, I received an email from Cindy, providing feedback and advice about how to make my profile better. I made some revisions based on the insights, and my profile was ready to go.

I was approved to raise $10,000 in funding for a small percentage of my annual income over the next 10 years. I then received another email with tips on “what to do now.” Advice on sharing my profile, garnishing my own funding through accredited investors I might know, and a request to not contact the registered backers directly.

It should be noted that according to Upstart’s homepage, “More than 7 of 10 published upstarts fund successfully,” which seemed like good odds to me! Within a week I had my first offer of $1000 from a Google VP. As I eagerly looked over the offer, I was disappointed to see the words “Funding Only” (no mentorship) tacked on to my offer.

paul chris luke upstart fail offer

I should take the time to explain how my situation is slightly different from the “norm” in terms of most Upstart profiles. With the benefit of working full time during college and scholarships, I had zero debt. In fact, I had been able to build up a small amount of savings as well. After speaking with some already funded Upstarts, I realized the decision to accept funding was usually a mathematical choice for them. They had college loans or other debts to pay off, and the Upstart payback rate was lower than their loan interest rates. As such, it made sense to accept the funding, pay off the debt, and pay a lower percentage to these Upstart backers over time. I was not in that situation. I was less interested in the money I could gain from Upstart; it was the network of backers providing mentorship, guidance, and help in my journeys through the oft confusing world of start-ups. In my eyes, I saw that potential network as an invaluable source of knowledge, and I was willing to give up some of my income for that!

Those details considered, I wrote up a nice note to the Google backer and declined:

I sincerely appreciate your interest in me and my idea. I congratulate you on your position at Google (I have been applying for every product manager position available there!) and the myriad of successes you have had there. The primary purpose of starting this Upstart was to find some mentorship and guidance. Indeed, the development of this product would most likely go well beyond the $10,000 cap I have. I actually have quite a bit of my own capital to jump start the product. While I appreciate your financial support, I must decline in hopes of gaining a mutually beneficial relationship with an investor and mentor.
I can’t thank you enough again. I’ll keep applying to Google Product Management and maybe we will get to work together again in the future!
Love,
Chris Luke

As time would tell, I would be writing a lot of those types of notes over the next few weeks. After my first decline I received an email from Cindy asking about my reasoning behind the choice to decline. Again, Upstart seemed begging me to succeed, and I felt special.

Later on, I received an offer from David Croson, a business school entrepreneurship professor, an investor, and all around good guy. More important than his credentials, the offer came with that golden phrase, “Funding plus Mentorship.” I eagerly accepted his offer.

paul chris luke upstart accept offer David Croson
As the time for my campaign to expire drew near Cindy contacted me again. She told me they would like to help with my campaign, and would more than match any offers I accepted going forward. “They really want me to succeed!” I thought. Again, I felt special. Unfortunately, I didn’t receive any more offers after that email. When I logged into my profile today, I was greeted with the following failed attempt text:

paul chris luke upstart fail

Why do I think I failed? Most certainly it was not because of lack of effort from the Upstart Team. First and most importantly, I declined a lot of offers. I knew the ramifications of doing so, and even told Cindy in an email that I knew I would most likely fail my campaign if I continued that behavior. Too late I realized (due to a personal Google+ hangout with Dave Girouard and company), that accepting many upstart offers up front can spur your profile to be more popular and thus gain more exposure/backing. In the same venue, I learned that successful Upstart’s “Tend to have a lot of hustle, they get their own backers.” I think I had less control here, I don’t happen to know many people who qualify to be an accredited investor (must make more than $200,000 per year or have over $1,000,000 in assets). There wasn’t much I could do in ways of hustle in that respect, and due to the discouragement of reaching out to backers already approved my “hustle” opportunities were vastly limited. In the same meeting, I learned that sometimes backers who choose “Funding Only,” can later become mentors. In retrospect, if I had known all these things I probably would not have declined so many offers. Regardless, the hangout was inspiring, and I felt that if anything, I would love to meet Dave in person and ask for a job.

So, am I crushed that I failed? No! As stated above I didn’t need the funding,  but it was a wonderful journey to embark on. At every turn I felt inspired by Cindy and the Upstart Team. Even without a successful campaign, I leave the experience stirred to do better, to truly pursue my passions and dreams, and work towards my ambitions. Although such motivation could never be quantified by the algorithms used to measure my potential by Upstart, I find such encouragement delightfully invaluable. I will always be grateful for the opportunity that was given to me…

My name is Chris Luke, I just failed my unsuccessful Upstart campaign, and I couldn’t feel more special!

1 Comment

  1. Hi Paul – your insight is wonderful. Thanks for taking the time to write it! Just a few thoughts I’d add: most upstart candidates really value the potential for advisors or mentors, so that’s quite common. We thought long and hard about whether backers should have the option to invest “passively” or anonymously. We decided to allow them to do so, mostly because we have yet to define what it really means to be a “mentor” in our system. It’s a term with a fair bit of baggage, and can definitely cause lots of potential backers to participate in Upstart. I am hopeful that when we begin the build the next phase of our product (focused on the communication aspects post-funding), it will become apparent that anybody and everybody can be a “mentor” with very modest commitments to engagement. I hope that we’ll decide to actually eliminate that choice in making offers at some point.

    Thanks for participating in any case. As I mentioned on the Hangout the other day, we aim to let people fund again, in case you decide it makes sense!

    Best wishes to you.

    Dave Girouard

Leave a Reply