Editor’s note: Craig Walker is a serial tech entrepreneur and an Upstart backer. He is currently the founder and CEO of Firespotter Labs, which won the 2012 TechCrunch Disrupt NYC Award. Google acquired Craig’s previous company, GrandCentral Communications. His first company, Dialpad Communications, was acquired by Yahoo!
I get asked a lot of times from potential investors and others that I meet whether I am an engineer or not. It's a natural question as it seems most every startup in the valley seems to be founded by one or more engineers and people naturally assume you might be one as well. Being an engineer starting a business has some serious natural advantages, namely, you can write your own code and get a product or application started or even completed all by yourself. But while that is an advantage, it certainly doesn’t mean you have to be an engineer to start a business, even a tech startup.
So, for a quick background, I was an attorney working in Palo Alto representing startups, VCs and tech companies at a big firm. I had a social studies degree from Berkeley, an MBA from Georgetown and a JD from Berkeley. The most technical course I took in any of those years was Physics 10 at Cal, which was casually referred to as “Physics without Math”. So by no means did I have any deep technical insights. But, in the end, this actually worked to my advantage.
I think there are times when too much emphasis is placed on “how” something is built or “how” something is engineered and too little emphasis on “what” is built. I know lots of great engineers who write perfectly elegant code, but ultimately develop a product that doesn’t resonate with users.
The nice thing about not being an engineer is that I don’t need to get bogged down in the details of “how”, and get to focus all of my energies on “what”. And for me personally, the “what” is the way more interesting part of the business. Obviously I need to have a skilled team of engineers to work very closely with me to build the “what”, but “how” they do it is up to them. I have no interest. My only concern is “what” gets built. This also is very liberating in that I’m somewhat oblivious to the engineering problems or reasons why something can’t be done. It gives me a sense that everything can be done, somehow, and that with enough effort and trying, we’ll figure it out.
Obviously, lots of great companies are started by engineers. I’m just saying you don’t have to be an engineer to be a good entrepreneur. The early team at every tech startup definitely needs product vision, great design and good engineering. If all these can be found in one person...amazing, but rare to say the least. Being the Product guy in that group doesn’t require an engineering degree and I’d argue you might be better off not having one. That way you can spend all your time focusing on what you want to get built and very little time worrying about how to build it.
Posted by Craig Walker, CEO of Firespotter Labs and an Upstart backer
Monday, September 17, 2012
Tuesday, September 11, 2012
Bringing Upstart to more campuses!
Since launching Upstart four weeks ago, we have been thrilled by how many people have contacted us about participating in Upstart, both as upstarts and backers. Given the high volume of interest, we have decided to open up our pilot program to 5 more schools where we saw the most demand: Berkeley, Harvard, NYU, Stanford, and Yale. We are excited to be able to bring our program to these additional campuses. We have already planned on campus events at many of our original schools, and we will evaluate doing the same for these new campuses as well.
We also plan to continue expanding whom our offering is available to. And, just like we are doing now, we will base our decision on what campuses to open our program up to based on the level of interest we see. So if you want to get Upstart at your school - spread the word and help us find interested upstarts and backers!
Posted by Jeff Keltner, Business Development Lead
We also plan to continue expanding whom our offering is available to. And, just like we are doing now, we will base our decision on what campuses to open our program up to based on the level of interest we see. So if you want to get Upstart at your school - spread the word and help us find interested upstarts and backers!
Posted by Jeff Keltner, Business Development Lead
Tuesday, September 4, 2012
An economists approach to Upstart
We often present Upstart as a way to free potential entrepreneurs from financial constraints to follow their passions. However, I tend to approach it from a slightly different point of view. I was an Economics and Computer Science double major in school, spent a bit of time at a quantitative hedge fund, and love to dream up and test trading strategies on my free time. Before joining Upstart, I was using my Thiel fellowship to examine the possibility of using equity instruments to fund an education. So, naturally, when I consider whether and why Upstart is a value-adding innovation, I like to consider the question through the lens of economics.
Most people are naturally averse to large financial risk. For example, very few people would be willing to bet their entire life savings in a coin flip game where the outcomes are double or lose-it-all. Mathematically, this gamble is “fair”, but most people would refuse to participate because the harm caused by losing their entire life savings would be much greater than the benefits brought by doubling their wealth. This phenomenon of risk aversion is a standard pillar of economics, and has been documented repeatedly in empirical research.
Many financial products exist to help people mitigate risks in their lives. For example, the most commonplace of these products, insurance, works by charging people money upfront to reduce their losses if something goes really badly. Yet, despite all the financial tools that exist, there is no good way to mitigate what is arguably the largest financial risk people face in life - career risk. There is tremendous variance in individual career outcomes - two people with similar grades in the same major from the same university can end up making drastically different amounts of money. Some of this variance is extremely difficult for an individual to control - for example, research has found that graduating in a weak economy can reduce annual income by up to 20% each year for up to 17 years.
Career risk is particularly severe for individuals pursuing non-traditional career paths like entrepreneurship. Many entrepreneurs devote years of their lives to trying to build a successful company, only to walk away with little or nothing when their startup ultimately fails. To make matters worse, aspiring entrepreneurs who are recent graduates of college or graduate school often have student debt. For them, attempting a startup may not only mean ending up broke, it might mean finding themselves in an ever growing financial hole with no ability to make their monthly payments. Through our conversations with students, we’ve found that all too often, that risk pushes them to give up on their dreams and instead go with the “safe route”.
We decided that it’d make a lot of sense for there to be a financial tool that helps people mitigate this overwhelming risk - that tool is Upstart. Just as most early stage startups wouldn’t use personal loans or the personal savings of their founders to finance their companies (excepting extraordinarily wealthy founders of course), we think that many people shouldn’t use traditional debt or their limited savings to finance their careers. Instead, by raising money in exchange for a small percentage of their personal income, ‘upstarts’ are able to spread some of their career risk across a pool of investors. If the upstart is extremely successful, than his or her investors share in the rewards. If the upstart does not make as much money, then he or she is allowed to make proportionally smaller payments.
Abstracted back to the theory of risk-aversion that we mentioned earlier: most people benefit from trading some “potential upside” to reduce their “potential downside”, which is exactly what Upstart lets the people who most need this (recent graduates) do. We hope that by giving young people a way to mitigate the financial risks associated with non-traditional career-paths, we can free them to pursue what they really believe is best for them.
Posted by Paul Gu, Product Manager
Most people are naturally averse to large financial risk. For example, very few people would be willing to bet their entire life savings in a coin flip game where the outcomes are double or lose-it-all. Mathematically, this gamble is “fair”, but most people would refuse to participate because the harm caused by losing their entire life savings would be much greater than the benefits brought by doubling their wealth. This phenomenon of risk aversion is a standard pillar of economics, and has been documented repeatedly in empirical research.
Many financial products exist to help people mitigate risks in their lives. For example, the most commonplace of these products, insurance, works by charging people money upfront to reduce their losses if something goes really badly. Yet, despite all the financial tools that exist, there is no good way to mitigate what is arguably the largest financial risk people face in life - career risk. There is tremendous variance in individual career outcomes - two people with similar grades in the same major from the same university can end up making drastically different amounts of money. Some of this variance is extremely difficult for an individual to control - for example, research has found that graduating in a weak economy can reduce annual income by up to 20% each year for up to 17 years.
Career risk is particularly severe for individuals pursuing non-traditional career paths like entrepreneurship. Many entrepreneurs devote years of their lives to trying to build a successful company, only to walk away with little or nothing when their startup ultimately fails. To make matters worse, aspiring entrepreneurs who are recent graduates of college or graduate school often have student debt. For them, attempting a startup may not only mean ending up broke, it might mean finding themselves in an ever growing financial hole with no ability to make their monthly payments. Through our conversations with students, we’ve found that all too often, that risk pushes them to give up on their dreams and instead go with the “safe route”.
We decided that it’d make a lot of sense for there to be a financial tool that helps people mitigate this overwhelming risk - that tool is Upstart. Just as most early stage startups wouldn’t use personal loans or the personal savings of their founders to finance their companies (excepting extraordinarily wealthy founders of course), we think that many people shouldn’t use traditional debt or their limited savings to finance their careers. Instead, by raising money in exchange for a small percentage of their personal income, ‘upstarts’ are able to spread some of their career risk across a pool of investors. If the upstart is extremely successful, than his or her investors share in the rewards. If the upstart does not make as much money, then he or she is allowed to make proportionally smaller payments.
Abstracted back to the theory of risk-aversion that we mentioned earlier: most people benefit from trading some “potential upside” to reduce their “potential downside”, which is exactly what Upstart lets the people who most need this (recent graduates) do. We hope that by giving young people a way to mitigate the financial risks associated with non-traditional career-paths, we can free them to pursue what they really believe is best for them.
Posted by Paul Gu, Product Manager
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