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How To Bet Money On Your Future Success
waderoush writes "Say you're in your early 20s, you're finishing college or graduate school, and you're smart but poor — and you've got some big student loans hanging over you. You're pretty sure that within 10 years you'll be selling your first startup or earning a high-six-figure salary. But you need some money *now* so that you can actually start the company, and avoid taking a corporate job. Shouldn't there be a way to calculate how much you'll be worth, and borrow against that promise of future success? Upstart, a new Palo Alto investing operation founded by a group of ex-Google employees, thinks the answer is yes. In a new spin on the crowdfunding model, the organization gathers data from recent graduates such as schools attended, academic transcripts, job offers, and credit scores. Its 'pricing engine,' based partly on techniques developed to assess job applicants at Google, determines how much each aspiring 'upstart' should be allowed to raise from investors per each percentage point of their future income. Upstart has already helped 35 young people raise amounts varying from $10,000 to $170,000; the upstarts, who must pay the money back over a 10-year period, say they're using the funds mainly to retire student debt or bootstrap startups. 'We can look at a 25-year-old and very quickly assess whether he or she would be successful at Google,' says Upstart founder Dave Girouard, formerly the head of Googles $1 billion enterprise apps division. 'My whole thesis was, if you could use the same algorithms to predict whether he or she would be successful beyond that, in the business world, that would be pretty useful.'"
The position this person is in is that they are mortgaged to the hilt, have no income and are too young to know what life is about and they want to borrow even more?
Why not just sell yourself into slavery?
I should really patent this idea, but what the hell.
Make sure you incorporate so that these are considered "student loans". Otherwise their next stop may be to a bankruptcy lawyer's office.
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
If someone is so confident in their startup idea, why not try to get actual investors instead of an "investment" you have to pay back?
This is just the next step up from student loans.
Must be getting a lot dumber. I'm willing to bet an insane amount of money relative to my income that the credit cards companies are FAR FAR better at predicting who to loan money too than any Googler. They have the advantage of having Googler level employees, years of experience, and financial greed driving them.
You can not predict what they will be worth in 10 years, they don't have any idea what they'll even like NEXT YEAR, let alone 10 years.
Once you get a little older you realize that the person you were when you got out of school is entirely different than the person you are 10 years later. Its well accepted fact that no one under 25 knows who they are, and no one under 30 is really sure who they are.
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I'm faced with a dilemma here: I'm an algorithmist, and believe most questions can be more accurately be answered, in the long run at least, by a well developed algorithm than even the most skilled human being. This should be a good thing, then, finding a better answer for funding projects, and accurately determining loans.
Where I became concerned, is that a lot of success is then predicated on some system determining that you'd be successful, and might therefor create a systemic problem sorting the undeserving into future success, by virtue of predicting it, and leaving those who have the spirit to succeed, but not the resources, to languish without recourse. It seems it could make the rich richer, and the poor poorer, even more than our current system, which already does so.
I feel this approach fails to account for its own effect upon the market. A world where you get divided into upper class and lower class on factors beyond your own control should scare just about anyone.
Brandon Chicotsky, an upstart educated at UT-Austin and NYU, is the founder of an “animate social marketing” business, BaldLogo.com, that offers advertisers the chance to emblazon their logos on the heads of bald men like himself. He’s using the $15,000 he raised on Upstart to wipe out half of his student debt, and says his backers have helped him review pitch decks and sent offers of future business partnerships.
Emphasis mine. Hey, good luck with that. I don't want anything to do with this. I have never lived beyond my means and while I've had to work my ass off these past ten years to pay off all of my student loans in two years, I've also saved up enough money to start a business. I'm waiting and testing the waters for customers because that money was really hard to earn so right now it's just $50 a year on a VPS and some slick coding on the side. Personally I feel this is a healthier safer model that will prevent me from flushing money down the drain but you're free to spend your money where you want. If I ever get revenue too large for me to handle on my own, I'll seek backing. I didn't even know "pitch decks" still existed ... I thought that was something they brought back for a TV show.
Have fun when that novelty wears off and it's synonymous with "douche" to turn yourself into a walking billboard (I thought we were past this, people, time to bust out my Member's Only jacket).
My work here is dung.
student loan interest is TAX DEDUCTIBLE
these crazy loans are not
the US has the lowest interest rates in a generation. smart thing to do is to consolidate your loans and lock in the low rates.
Someone at Google thinks that a) they have figured out a way to predict future success and b) this is the best way they can take advantage of that knowledge? Just... wow.
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See "The Unincorporated Man" by Dani Kollin and Eytan Kollin for a full explanation of this idea, and some ramifications. A bit hyperbolic (I think the authors have a bit of a libertarian streak) but a decent read.
Of course, the folks who created Upstart really are well-connected. And I'll bet if you were in that well-connected club and looking for the best and the brightest, you might call them up and ask them if they knew of any good people.
This is rank speculation, but I wonder if the backend part of this model is more like a high-priced HR staffing firm, so it boils down to identifying folks that can pass "Google" muster, hook them on some debt and then pump them out to high-paying elite clients. In addition to getting a placement fee they get a percentage of what that client pays over 7-10 years.
You're pretty sure that within 10 years you'll be selling your first startup or earning a high -six-figure salary.
Ya, many may be "pretty sure" of all that, but most are not that smart, inventive, resourceful, connected, and/or lucky.
It must have been something you assimilated. . . .
Having just graduated(assumption); are you arrogant and stupid enough to make this "bet" and burden yourself even further than ever before.
Losers are invited to line up at Upstart.com
Almost impossible to prove. Unless you posted your plan on /.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Really, that's all ideas like this are. Same with "startup incubators" and the like: They want the next Mark Zuckerberg to come to them with a great idea, work their butt off thinking they're going to become really rich, and instead make the investors really rich.
And in this case, because it's a loan, the would-be Mark Zuckerberg takes on all the risk, too. Heads, I win. Tails, you lose.
I am officially gone from
I was sure I'd be rich by the age of thirty, and several other people thought I would too. I'm a government code monkey at the age of 37. Thank God I didn't saddle myself with a 7% debt.
...
Okay, so I did sell a business or two, but once the IRS was done with that
If you figure they've been playing this game for companies, and companies are basically people now, it only makes sense to play this game with people.
Is it just my observation, or are there way too many stupid people in the world?
...that debt is to be avoided.
I am very small, utmostly microscopic.