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.'"

Comments

This is the dumbest idea

[h4rr4r]

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?

Re:This is the dumbest idea

[fustakrakich]

I'm in a bettin' mood. How can I short this guy?

Re:This is the dumbest idea

[h4rr4r]

You sir are brilliant.

The other upside to this is to pay off your student debt and then file bankruptcy. Surely this debt is dischargeable unlike student loans.

Re:This is the dumbest idea

[Anonymous Coward]

When I was in my late thirties, a young (around 24 years old) programmer smugly and condescendingly told me that by the time he was 30, he'd be "retired and on a beach somewhere". It was quite insulting.

So I sighed loudly and said "When I was your age, I said the same exact thing." Then I looked around, held out my arms, and said "So, how do you like your future? It's not bad, there's a pension at some point."

This was at a government agency, where careers go to die. He turned white as a ghost and changed the subject.

This isn't gambling.

[bsharp8256]

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.

Google employees

[BitZtream]

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.

Wow

[sootman]

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.