- Jake, who has a background in tech, talks about his journey in the industry
- He started as a teenager and interned at Yahoo
- He later worked at Zynga before starting his own company, LendUp
- LendUp focuses on providing financial services to the 56% of Americans who don't have access to prime banking and credit services
- The company aims to help these individuals improve their financial well-being through safe and constructive credit products
- LendUp's mission is to align consumer success with the company's success and incentivize positive financial behavior
- The company serves a wide range of people, including those with income volatility, and aims to create a profitable business while improving customers' financial lives.

- The speaker enjoys being involved with customers to understand how the company's products are working and how they can be improved
- The company has a social mission to serve an underserved population and uses a modern technology stack to build their products
- They have implemented features such as algorithmic instant decisioning and instant funding, giving them an advantage over competitors who outsource their technology
- Compliance with regulations is a challenge, but they strive to go above and beyond compliance and have good relationships with regulators
- The engineering team is currently 60 people and they are focused on shifting towards a culture of craftsmanship and improving the quality of their products
- They have built a machine learning pipeline for data analysis and decision models, as well as a data infrastructure for accurate reporting in the financial services industry.

- The speaker discusses the importance of improving data infrastructure and data pipelines.
- They talk about applying gamification techniques learned at Zynga to incentivize responsible behavior in financial products at LendUp.
- The speaker emphasizes the value of a data-oriented culture in decision-making.
- The LendUp credit card product is described as a mobile-first product with unique features such as push notifications and real-time transaction approvals.
- The card product is currently in a closed beta program, but plans to open applications later in the year.
- The speaker advises young engineers to consider the context of their work and how it contributes to the business's goals.
- Mentorship is highlighted as valuable, with a personal anecdote about a mentor's influence and support.

- The speaker had a mentor who cared about their work and kept up with their progress
- The speaker tries to model their own mentorship and management style after this caring approach
- The speaker's dream for LendUp is to create an ecosystem of constructive financial products for consumers who have limited options
- They want to use technology and machine learning to customize paths for each customer and help them improve their financial lives
- The speaker envisions LendUp offering a suite of financial services similar to what Amex offers to wealthy business travelers
- They see a huge market for these services, with credit cards in the US alone generating billions in revenue
- LendUp plans to continue innovating and adding new products to their ecosystem.

- Jake, with a tech background, shares his journey in the industry, starting as a teenager and interning at Yahoo before founding his own company, LendUp.
- LendUp aims to provide financial services to the 56% of Americans without access to prime banking and credit services, helping them improve their financial well-being.
- LendUp uses modern technology to build their products, giving them an advantage over competitors who outsource their technology.
- The company faces challenges with compliance but strives to go beyond regulations and has good relationships with regulators.
- LendUp's engineering team is focused on improving the quality of their products and has built a machine learning pipeline and data infrastructure.
- They apply gamification techniques to incentivize responsible behavior and emphasize the value of a data-oriented culture.
- LendUp's credit card product is described as mobile-first with unique features and is currently in a closed beta program.
- The speaker advises young engineers to consider the context of their work and the business's goals and highlights the importance of mentorship.
- LendUp's dream is to create an ecosystem of constructive financial products using technology and machine learning, similar to what Amex offers to wealthy business travelers.
- They see a huge market for these services and plan to continue innovating and adding new products to their ecosystem.

Jake Rosenberg - https://twitter.com/rowborg - is the cofounder and CTO of LendUp (W12) - https://www.lendup.com/. They provide access to quality credit cards and loans without hidden fees or debt traps. Their customers are the 56% of Americans that have what is described as a “subprime” credit score, meaning they can’t be approved for credit by most banks.

Ali Rowghani - https://twitter.com/rowghani - is the CEO of YC Continuity - http://www.ycombinator.com/continuity/.

Thanks for coming back to YC and spending some time with us and spending some time on the mic.

I wanted to ask you a few questions about yourself, first of all.

You got started in this industry a long time ago as a youngster and have been at some interesting companies.

So tell us how you got involved in tech and where you've been and how you are today at LendUp.

So I was here during the first dot-com boom.

And when I was a teenager I was really interested in tech.

2 main areas actually were messing around with computers and video production.

And so the 2 companies that I really wanted to work for when I was a teenager and that I applied to summer internships for that I really was excited about were Yahoo and Pixar, which obviously your background in Pixar.

And Yahoo ended up contacting me about a summer internship.

I was 16, and I was looking for a summer internship.

And So Yahoo ended up contacting me about being a production intern, so just coming in and doing anything they needed.

My mom actually drove me to the interview because I was 15 and a half.

I had my learner's permit, but I didn't have my license yet.

By the time I would get the job, I would have my license.

So my mom drove me and then waited outside while I interviewed with some of the early people at Yahoo.

They were about, at the time, they were 65-ish people.

And so they were, When I interviewed, they were still private.

By the time I joined that summer, which was the summer of 96, they had gone public with 80 people and 1.6 million in revenue or something like that.

So I ended up being a production intern that summer and worked on cold calling to try to get listings for Yahoo Classified's cold calling car dealerships and getting them to export their cars in Excel and stuff like that, and then writing Perl scripts to munch the data and load it into our database.

So I immediately got just thrilled and excited about what was going on with tech and with the web and wanted to be a part of it and sort of took off from there and never looked back.

So went back to Yahoo the next few summers as I graduated from college with a degree in CS.

And then went and joined full time and was there for about 8 years, building a bunch of different products, eventually working my way up to a more senior sort of architectural position there.

And then after that I moved on to Zynga, where a friend of mine who was a product manager was building out a team that was building infrastructure for all the games.

So it was building out shared messaging and communications infrastructure for the scale of Farmville plus Cityville plus Mafia Wars plus Words with Friends.

Doing a lot of user-to-user messaging and the gifting system and email system and things like that.

Really fun as an engineer to work on very, very high throughput, high volume applications.

And really enjoyed that, was there for a couple years through the IPO, and then started on LendUp.

So my brother and Sasha and I embarked on that journey.

Great, so tell me, so you'd been an engineer at startups and seen 2 amazing companies scale.

You saw 1 IPO inside the company, and obviously Yahoo was kind of a legendary company for a long time and still a big company today.

What sort of told you, hey, it's time to start a company?

Was that something you always wanted to do, or did Sasha convince you to do it?

So I always was interested conceptually in doing it, but I was never actually steeped in startup culture.

Even growing up here, I was at what became very rapidly a big company.

By the time I joined Zynga they were 300 something people so never really was you know I was a big fan of Paul Graham and his essays but never really got into following startup culture and so was never sort of reading blogs about how to be an entrepreneur or anything like that.

I was pretty focused on the technical craft and improving my technical skills.

And so when Sasha sort of came to me with his ideas around what we could do to reinvent financial services with technology, I got pretty excited by it.

I got pretty excited by the impact potential, by the technical challenges involved.

But it was definitely a little bit of a leap of faith.

It was not something where I was a little bit used to being at companies that had a little more structure, had a little bit of a safety net.

And so I knew it was something I had always thought about and wanted to do, but it was definitely a little nerve wracking to make that leap, for sure.

So 1 of the things, among many things that's special about LendUp is the strong mission, the sense of purpose that you guys have.

Can you talk about that and talk about how that pervades the culture of the company and the types of people who

And I mean, that was the thing that eventually did encourage me to make that leap.

Financial services has such an incredible impact on so many people, and by making even small improvements to some of these products, you can really impact people's lives in a very positive way, especially in the parts of the market that are underserved or poorly served.

So for context, so LendUp is essentially a company that is creating socially responsible financial services products online focused on the 56% of the United States that doesn't have access to prime banking and credit services.

So that means essentially since 2008, there's been a huge move based on a number of different factors in the market and regulation that have created a lot of financial exclusion.

That it basically meant that there are a lot of people who don't have access to traditional credit products.

And LendUp is trying to fill that gap by offering online personal loans and credit cards and continuing to build more products as we build out a whole ecosystem for that group.

And these are people who have potentially poor credit history and don't have access to banks and credit unions, and therefore need alternative products.

So just to put a point on that, I think what you just said is 56% of Americans don't have the ability to get loans at reasonable interest rates or credit cards that perhaps at all.

Right, and that 56% number is the FICO cutoff of 680 or below, which is what banks would consider subprime.

Right, And so you guys are focused on that population.

We're focused on that population and giving them safe, constructive credit products, and then tying those credit products together using incentives and education and gamification to essentially help them improve their financial well-being by incentivizing the right behavior.

We set the products up so that when they succeed, we do well as well.

So going back to your original question about the mission, that was the big insight that Sasha had that really set the company up to be mission-oriented, which was that we could create a product where the consumer succeeds when we succeed, and we align those incentives together so that the consumer can go through multiple different products in the ecosystem, continue to grow.

We can educate them, bring in financial services education, and incentivize the best possible behaviors to help improve their credit score and get them access to more money at lower interest rates, and basically just help them improve their financial lives and have a long-term relationship with that customer, and have a good relationship with that customer over the long term, and create a profitable business at the same time.

And by doing that, we could force a lot of the incumbents also to change the way they view this market and the way that they treat the market, which is in many cases not constructive to the consumer's financial health.

I've seen some of the customer testimonials, your customer testimonials.

Can you just describe the type of person that you serve, the type of problems that you help them with, just so the listening audience has a sense of that.

I think people's natural instinct is assume you're dealing with low-income consumers.

And it's actually, it affects income volatility.

It's just a rising problem with the nature of our economy, moving towards a service and information-based economy, the gig economy coming up.

We see a lot of significant income volatility.

Huge percentage of our customers have income fluctuations of over $200 a month.

And that makes it really hard to budget, really hard to plan.

And it actually affects a wide group of people.

So it may not be the person that you might have in mind.

So we refer to it as the emerging middle class because it really is a huge percentage, as I said, 56% of the US.

We spend a lot of time, actually, I personally like to spend a lot of time in our servicing center and listening to calls.

Because I feel like, for me it's personally just really inspiring, first of all.

I get energized every time I go in there.

It's exciting to see the way that the customers love the product and are excited about the opportunity.

When you give somebody a chance that they may not have had that other companies wouldn't take a chance on them, the level of commitment and loyalty that it generates is just really amazing.

But in addition, I like being in there because I see how our products are working, whether they're resonating with consumers, what features we need to be building, what servicing tools we need to be building for our customer service account managers to see if we can improve their efficiency and make their job easier and better as well.

So it's just a really great experience to go in there and hear from the customers and learn about it.

But as I said, a lot of them are struggling with income volatility, And they are looking for ways to smooth out sort of their financial lives.

And that is the common thread that we see a lot.

So you mentioned 1 thing that motivated you to start a company was the incredible social mission of serving an underserved population.

And the second thing was the opportunity to build your own technology and do this in a different way than the traditional financial services industry did it.

What have you guys built and what's different in terms of the technology stack?

Yeah, so we sort of approached the problem as my background, as I said, is distributed system web application engineer.

This is actually my first foray into financial services and I've had to learn a lot as I went.

But we approached the problem from first principles.

How would we want the product to work And how would all the systems that support a credit product work in real time, and can we build all that infrastructure on a modern technology stack, right?

And by doing that, we've been able to have a bunch of firsts in terms of customer features and enabling them to use the product.

So for example, we were the first company that had fully algorithmic instant decisioning where someone could apply online for 1 of our products and instantly know whether they got approved for the product or not, and we did that fully across the board.

We were the first lender to roll out instant funding so that we could deploy capital to people's bank accounts really rapidly when they needed it, which is a big deal for our customer segment, who are trying to deal with emergencies that may arise or, again, trying to smooth out their financial lives.

Coming at it from first principles and building everything real time allows us to make sure all of the systems that we have that support those products can work in concert.

What we've seen is that competitors oftentimes are buying their technology from vendors.

They think of IT as sort of an outsourced function in the business.

And that gives us a huge advantage because we have the ability to completely customize our tooling, Our efficiency, as I mentioned, for our account managers is much higher than our competitors.

We have a fully in-house decisioning system we can tune to take advantage of new data sources to roll out new machine learning models as quickly as possible.

And in addition, the data pipeline is a huge part of that.

We have a holistic view of how all those systems are working in real time and offline for analytics.

And 1 of the first times that I realized that LendUp was gonna be really successful was early on when we were starting out, I had a competitor call us up and want to talk potentially about an acquisition, potentially about a partnership.

And they wanted to learn about the risk management infrastructure we had built, the real-time decisioning system.

And this was a pretty big competitor doing like a billion dollars a year of originations.

And I was thinking, man, what am I going to tell these guys about risk management that they don't already know?

And we got on the phone with their chief risk officer.

And the first question he asked me was, when you make a loan to someone, how do you know they don't already have a loan out with you?

So I genuinely did not understand the question.

But he meant it because his customer relationship management system and his underwriting and decision management system didn't talk

And so that was a moment where I was like, whoa, we're going to kill these guys.

We have infrastructure that can communicate, can adapt in real time, and can really help our customers succeed in ways that they're just not able to.

And so that was a moment where I knew that we could align the mission that you were talking about before in terms of helping the customers do better with efficiencies in the business to make something that was effective and scalable and sustainable as well.

So financial services, banking, lending, et cetera, is highly regulated.

It's regulated at the, I think, at the federal and state level in complicated, different ways.

How much does that hamper your ability to build what you want to build on the technology side, or what unique challenges does that create for

Ryan Seilhamer Yeah, it definitely creates some unique challenges.

So, you have to start with every product that you build.

Compliance with all those state and federal regulations is table stakes.

And we have a value at LendUp, set the new standard where we say we want to go above and beyond being compliant, which is the base that you have to do to meet the requirements of the law, and set a new standard for our customers, our partners, and our regulators.

But there is a base level of certain statutes that you must comply with.

So in certain areas, and some of those statutes are written for an era of pen and paper or brick and mortar.

So what we've done is try to establish really good relationships with all of our regulators so that we can have real-time conversations and say, hey, we want to do this thing.

And create a good two-way communication so that we can try to innovate.

But there's also plenty of room for innovation within the bounds of what the statute provides.

And there's also an opportunity, I think, from a competitive advantage perspective, to do the compliance better through technology.

So automating a lot of the compliance validation and automating a lot of the infrastructure that we use for reporting.

So we've been able to get some leverages against other because the compliance affects everybody in the market, not just us.

And by using technology we can actually view that as an advantage.

Yeah, so we are 60 engineers, roughly, and growing fast, so hiring as fast as we can.

And what are the most interesting problems you're working on today on the engineering side that you're psyched about?

So I think 1 of the things we're doing internally is for a long time we were moving really fast, building technology really quickly.

And we're trying to just shift the culture just a little bit towards 1 of craftsmanship.

1 of the big, the 2 big engineering values I think are really critical for a strong engineering culture are pragmatism and craftsmanship.

And pragmatism is about thinking about what you build in the context of the business and making sure that you are building things that are relevant to the business.

And craftsmanship is about building things well and building them right and having pride in what you're building on a regular basis.

And those 2 things sometimes feel like they can be at odds, but I actually don't think they are most of the time.

Most of the time, being pragmatic about what you choose to build and then building it really well are not in conflict.

But I think we needed to, at LendUp, really think about, We spent a lot of time thinking about how we could get to market quickly, how we could build the products and test things very rapidly.

And we're trying to build more of a culture of craftsmanship within the organization.

And that means shifting to, every time we build something, thinking about how does it work really, really well for our customer.

It happens as your organization scales, and you have more to lose and more to think about as you scale your company.

And It's something that is really critical as we get to the next level, because our products are not something people use casually.

They affect their lives in a very real and genuine way.

They have a huge impact on their daily lives.

And so if they don't work really, really well, it can have a really deleterious impact on our customers.

And as I said, when I'm in the call center talking to customers, if something doesn't work right, I see how it affects them on a daily basis.

And so it's become really important that we improve the craftsmanship and quality of what we do every single day.

So that's 1 of the cultural shifts that we're making.

In terms of the technology challenges specifically, there's a huge machine learning pipeline that we've built that has to do with taking all the data that we collect on consumers, behavioral data, credit bureau data, everything else that we collect, and enabling our data science team to analyze that, experiment, and build really powerful decision models.

Models around fraud, models around risk management, and just really helping improve our ability to identify customers, the right product for the right customer at the right time.

So that's a huge challenge that we're always working on and always improving that real-time machine learning infrastructure.

And then I think 1 of the other big ones is how do we build a best-in-class data warehouse and data infrastructure.

1 of the things I've learned about financial services is just the amount and variance of the data is just really huge.

And the reporting, similar to the way the product works and when we're dealing with people's money, the reporting has to be dead on accurate.

So when I was at Zynga and I was looking at clicks or looking at behavior, as long as you were in a rough ballpark about how people were using the product, you could make decisions that were accurate about what to build next.

When you're dealing with financial and compliance reporting, every penny has to add up.

And so really improving our data infrastructure and data pipeline is 1 of the big things that we're working on as well.

But can you talk about what you learned at Zynga that you were able to apply at LendUp?

Well, the most obvious 1 is about the gamification piece, right?

So A bunch of the things that I learned at Zynga on how you incentivize behavior in short and medium long term incentives and goals, we applied to our financial products to try to help people use them as responsibly as possible.

For example, The way we tie our loans products together is that a consumer comes in and takes a short-term small dollar loan.

And then we immediately, once they've been approved for that loan and we deposit the money in their bank account, we give them the opportunity to participate in credit education.

And by participating in the credit education and by making their payments on time, they earn points, which then allow them to get access to larger dollar products at lower interest rates and with longer terms to help stabilize them.

So that entire incentive structure sort of came out of the gamification stuff that I had learned at Zynga.

I think Zynga had an incredibly data-oriented culture.

All the decision making was data-oriented.

Mark Pincus was very much a data-driven CEO and he culturally instilled that across the company.

So that's something we've tried to do as well.

When you're having a conversation about what you should do next, what you should prioritize, how to think about what to build, usually someone has data and someone may not.

And the person with the data can tell the story of why something is important, whereas the other person might just be telling their own narrative of where they think things may go.

It's always good to follow the data and let the actual data tell the story.

And so that's something culturally we've tried to definitely instill.

You guys, LendUp, has a couple of credit card products in the market today.

And they have some really neat features that maybe haven't gotten as much attention as they deserve.

Can you describe the LendUp credit card product and some of the features that I think are only available on your card?

We're really excited about the card product.

It's the next natural step in the ecosystem that we're trying to create, being able to graduate people from personal installment loans onto credit cards.

Revolving credit products are ideal for a lot of customers in terms of managing that income volatility that I mentioned before.

So we're really excited about that product and we're really starting to scale it.

We've done some pretty cool stuff with it.

So first of all, we're really thinking about it as a mobile first product.

With the loans product, the amount of interaction that you do with that product on a daily basis as a customer of that product is not that high.

Because you're coming in to maybe get an extension, make a payment, look at your balance, but it's pretty rare.

Whereas a credit card is a highly transactional product.

It's in your wallet, you're using it on a regular basis, you need alerts, it's a real-time product.

So we're thinking about that as a mobile-first product and built into the mobile app, we actually partnered with our credit card processor that we use for interacting with the networks.

And we injected ourselves into the authorization stream that happens every time somebody makes a swipe with 1 of our cards.

And what's cool about that is we don't just see the stream so that we can do things like push notifications, which actually has not really been offered in credit cards beyond the vertically integrated cards like MX and Discover.

There are no MasterCard and Visa cards that actually do push notifications.

You can get them through Apple Pay, but you cannot actually get them through the card issuer because they're not seeing that stream.

So we have push notifications, but not only can we see the authorizations as they happen in real time and React, but we can actually participate.

So we can approve or decline transactions in real time on behalf of the customer.

So what that means is we are experimenting with a bunch of really interesting features that allow people to set limits for what they spend in various categories or to create fraud prevention in terms of geofencing or geolocations where the card has to be within a certain distance of them, or they have to be in a certain area for it to work.

Their phone has to be here for the card to work, and it has to be within the location of the card.

So there's some really interesting stuff we can do there, and we're experimenting with those features right now.

We're rolling out that app as a beta to our card customers as we learn more about what's working there.

So can someone listening to this podcast get a lend up card?

So this year we're planning, we're hoping to open it up to open applications.

We're scaling it pretty significantly, but it is still a closed beta.

So let me ask you, what you described at the beginning of the podcast, you've been in this industry a long time.

You got involved when I think you said you were 15 and a half when your mom drove you to Yahoo for a, for an interview.

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Jake Rosenberg of LendUp with Ali Rowghani