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How To Bet Money On Your Future Success

timothy posted about a year ago | from the show-your-work dept.

Businesses 188

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.'"

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188 comments

This is the dumbest idea (5, Insightful)

h4rr4r (612664) | about a year ago | (#43206913)

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 (5, Funny)

fustakrakich (1673220) | about a year ago | (#43206927)

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

Re:This is the dumbest idea (5, Interesting)

h4rr4r (612664) | about a year ago | (#43206953)

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 (2)

HeckRuler (1369601) | about a year ago | (#43207689)

I like it. A place for old cynical bastards to laugh at young entrepreneurial types.
We can call it BeatDown. That's right, the startups get beat down.

You put out a beatdown of 1/100th of his "predicted value" in 10 years and someone buys that, giving you that money.
You agree to buy one 1/100th his company worth of shares in 10 years and give it to the investor.

If the startup goes broke, you owe nothing. If they turn into the next facebook, yer SCREWED. (Buy hey, that's pretty rare)

Re:This is the dumbest idea (0)

Capt James McCarthy (860294) | about a year ago | (#43206951)

Agreed. A true student loan is not a bad thing since you can write off the interest paid. And they are very low interest loans as well. Great idea for "Upstart" though to get sure fire stock in a potential company in the future. But dumb if you are the student who just graduated.

Re:This is the dumbest idea (1, Insightful)

h4rr4r (612664) | about a year ago | (#43206965)

Want to pay my Wife's?
7% interest is not low.

Re:This is the dumbest idea (0)

Anonymous Coward | about a year ago | (#43207559)

Yea, but you are probably ignoring what you get back come tax time? I know my school loans don't look too low on paper either (6-9%), but after taking the tax deductions, I'm really only paying about 1-2%.

Re:This is the dumbest idea (1, Flamebait)

BitZtream (692029) | about a year ago | (#43207207)

Please never talk about school loans again. You have no fucking clue.

Writing off interest means you take a minor deduction on your final earned income, that means you get to save about 5% of the interest paid. Its not like you get it all back. You get a TRIVIAL amount of it back. They haven't been low interest in years, not since a BS became the new GED. Secondary education is a business, not a public service.

Non-payment of them stays on your credit record forever. You may be able to cheat yourself into government forgiveness ... which means I pay your fucking loan instead of you paying it your self.

God I wish idiots who make stupid fucking statements about school loans would be hung up and shot. School loans are good for banks, no one else, you're an idiot if you don't understand that.

Re:This is the dumbest idea (0)

Anonymous Coward | about a year ago | (#43207285)

Are new loans really not low rate? I have some federal loans (admittedly many years old now) that are at about 0.25% and 0.5%. I think last year I paid 10%, that sucked.

Re:This is the dumbest idea (1)

Stiletto (12066) | about a year ago | (#43207471)

Mine were pretty close to 7%, fixed. The federal ones are cheaper, but not everyone qualifies for them, and they only cover a limited amount of your costs.

Re:This is the dumbest idea (5, Funny)

Anonymous Coward | about a year ago | (#43207225)

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.

Re:This is the dumbest idea (-1)

Anonymous Coward | about a year ago | (#43207455)

Definitely possible. www.mrmoneymustache.com

Re:This is the dumbest idea (0)

Anonymous Coward | about a year ago | (#43207643)

Whereas one of my 20-something co-workers used to drive his F40 to work every once in a while in the summer. But that wasn't at a government agency.

Re:This is the dumbest idea (0)

Anonymous Coward | about a year ago | (#43207265)

you're smart but...you've got some big student loans hanging over you.

I do not think that word means what you think it means.
Sure, student loans have become something of a tradition in this country, but they're not a necessity.
I got my BS in 1998, having paid every dime but a $1000 scholarship from money I earned myself, working crap jobs like custodian and tutor.
Now I have no debt but a mortgage with less than ten years left.
Graduating with a buttload of debt may be lazy, but it ain't smart.

Re:This is the dumbest idea (3, Interesting)

h4rr4r (612664) | about a year ago | (#43207319)

In 1998 maybe that was possible, go look around what tuition costs these days.

The university I attended charges something like $33,000 a year. A relatively cheap state school might go for $10,000 a year. Still not the kind of money a minimum wager earner is ever going to have to spare.

Re:This is the dumbest idea (0)

HornWumpus (783565) | about a year ago | (#43207571)

I've read enough of your posts to say: You deserve your money back.

Re:This is the dumbest idea (2)

h4rr4r (612664) | about a year ago | (#43207621)

Go troll someone else.

But I am flattered you think so much of me that you spent your time to say that.

Re:This is the dumbest idea (1)

Stiletto (12066) | about a year ago | (#43207575)

On the other hand, if someone does have the potential to make it big, it is in this company's best interest (and some would say society's in general) to "invest" in the person. It could end up paying off much better for everyone than the typical 9-to-5 job.

1. If you're deep in debt, your only real option is to do whatever it takes to get a steady, safe job that pays cash and lets you pay off the debt. Your "take home" after debt and living expenses is close to zero.

2. If you aren't deep in debt, but don't have the capital to start your own business, you still need to rely on working for someone else in order to live, but you might be able to chance working at a smaller company for some equity or something. Your take home is likely positive, and there's a little up-side if you luck into a company that does well.

3. Only those who both aren't in debt and have a butt-ton of capital have the option of doing their start-up. Your take home depends entirely on good luck and your ability to execute your business. Sky's the limit.

These guys are just trying to figure out how to move people from groups 1 and 2 to group 3, and then take a cut of the difference. Makes sense to me. I know if I had the capital, I'd start my own business in a heartbeat.

Re:This is the dumbest idea (0)

Anonymous Coward | about a year ago | (#43207655)

If the person was a she instead of a he, and reasonably attractive according to my preferences, I would "buy" the person and effectively wipe out their debt. At this stage of life I could use a slavegirl. ;)

Re:This is the dumbest idea (0)

Anonymous Coward | about a year ago | (#43207787)

The Debtors prison is coming back, mark my words.

I should really patent this idea, but.... (2)

Dareth (47614) | about a year ago | (#43206929)

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.

Re:I should really patent this idea, but.... (4, Interesting)

BitZtream (692029) | about a year ago | (#43207263)

That was my thought. Take out student loans, go to school, get one of these loans after you get out, use it to pay off your school loans, default on this new loan, wait for it to come off your credit record in 7 years. Far better than having that school loan that stays on your record forever otherwise.

This isn't gambling. (5, Interesting)

bsharp8256 (1372285) | about a year ago | (#43206947)

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.

Re:This isn't gambling. (2)

Stiletto (12066) | about a year ago | (#43207479)

You don't think you have to pay back investors? These guys are essentially start-up investors.

Re:This isn't gambling. (2)

rogueippacket (1977626) | about a year ago | (#43207499)

Because every recently graduated twenty-something truly believes their ideas alone are worth something (traditional investors will try to take 51% if they are), their academic pedigree automatically translates to a large income later in life (doesn't mean squat, you were lied to at a young age by your parents), corporate jobs are for suckers (whatever you do, don't learn from those who have been there and built a business before you), and you're entitled to your fucking money right-goddamn-now because an algorithm said you could cut it at Google. Duh!

Re:This isn't gambling. (2)

l0ungeb0y (442022) | about a year ago | (#43207503)

Because these guys act like a bank in that once you pay them off, they are are out of your hair for good.
Investors -- they stick around, can take control from you and even remove you from the company.

Frankly, I think it's better to get that loan that become some Angel Investor's Bitch.

A company already does this for Student Loans (1)

Anonymous Coward | about a year ago | (#43206949)

First Marblehead makes student loans using a huge set of heuristics based on whether someone can pay the money back or not. Why it caught my attention is they do it with customers that have no credit history, so nothing to base a loan off of except other data points...

Google employees (5, Insightful)

BitZtream (692029) | about a year ago | (#43206961)

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.

Re:Google employees (3, Insightful)

jeffmeden (135043) | about a year ago | (#43207133)

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.

The thing is, a credit card company is really only trying to find and/or convince customers to borrow to the point where they have too much debt to fully repay at any point in the near or medium term, and then charge just enough interest to keep them paying instead of filing for some sort of debt relief or bankruptcy. To think that credit card companies are in the business of only giving credit to those most worthy/capable of repaying is to completely miss the nature of the global banking/debt industry. Quite the opposite, if you are in a position to easily repay credit card debt you aren't a sought after customer. The model for that is certainly different compared to one whose intention is to find candidates who will be relatively successful and capable of full repaying at some medium-term point (10 years) and yield a comfortably high return for the investors.

Re:Google employees (0)

Anonymous Coward | about a year ago | (#43207187)

Indeed, they do make some money off of transaction fees, but that's mostly gobbled up by rewards. I think the average transaction fee is less than 3% and my credit card gives me 0.625% of that back as rewards points, which means that for them to make profit on me, they're working with probably about 1 or 2.5% tops before taxes and probably closer to 1%.

In other words, people who pay their bills on time are probably costing them money over all. But, they need us in order to stablize their holdings.

Re:Google employees (1)

linear a (584575) | about a year ago | (#43207549)

In other words, people who pay their bills on time are probably costing them money over all. But, they need us in order to stablize their holdings.

Indeed. That's why the credit card industry refers to people who pay their bills off every month as "deadbeats".

Re:Google employees (1)

BitZtream (692029) | about a year ago | (#43207249)

Uhm, they most certainly only want to give loans to people who can repay it.

If you don't repay it, you wait 7 years and it goes away. That is not profitable for a card company. They don't want those people. They want people who can pay it every month.

Their goal is to find people who can pay it back, but have never learned self control and want to spend money before they get it.

Its not about 'need', its about greed. Its about wanting to put the cart before the horse.

It is most certainly not about finding people who will default on their loans, as you seem to think.

Re:Google employees (1)

jeffmeden (135043) | about a year ago | (#43207277)

Uhm, they most certainly only want to give loans to people who can repay it.

If you don't repay it, you wait 7 years and it goes away. That is not profitable for a card company. They don't want those people. They want people who can pay it every month.

Their goal is to find people who can pay it back, but have never learned self control and want to spend money before they get it.

Its not about 'need', its about greed. Its about wanting to put the cart before the horse.

It is most certainly not about finding people who will default on their loans, as you seem to think.

Nowhere did I suggest they were looking for people who were going to default, only those who could not fully repay... Big difference.

Re:Google employees (1)

h4rr4r (612664) | about a year ago | (#43207283)

I pay it off every month. Thus they earn no interest. How is that helping them?

Re:Google employees (0)

Anonymous Coward | about a year ago | (#43207547)

They get ~1% transaction fees. Assuming a 30day float that's 12% API, and they don't even lose most of that money at the start of the month.

Re:Google employees (1)

Anonymous Coward | about a year ago | (#43207295)

I read an article by a former credit card company executive about this once.

People who max out their cards and only make the minimum payments are called "revolvers" (and are sought after).

People who pay their credit card bills every month and don't run a balance are called "deadbeats".

If a client is a "deadbeat", they try to raise his credit and prompt him to spend more money. If it doesn't work, they eventually give up, and resign themselves to hoping he'll screw up later on.

I've been paying my full credit card bill every month for years now.

Re:Google employees (4, Funny)

SirGarlon (845873) | about a year ago | (#43207147)

If a company has 53,000 employees, they can't all be geniuses. I've encountered 3 Google employees in a professional setting and heard one reliable first-hand story from my wife. Out of that sample of 4, all the Googlers impressed me: two with their brilliance, and two with their stupidity.

To be fair, this is "crowdfunding" idea comes from someone whom Google spat out ...

Re:Google employees (3, Insightful)

BitZtream (692029) | about a year ago | (#43207221)

To be fair, this is "crowdfunding" idea comes from someone whom Google spat out ...

I guess thats the point really, they were smart enough to get rid of them.

Re:Google employees (0)

Anonymous Coward | about a year ago | (#43207321)

People may be different 10 years on, yet that doesn't rule out the existence of statistical patterns that allow you to predict what the change will be at a better than chance level. That's all they need for this idea to possibly work out in theory, and I would be very surprised if there were no such statistical patterns.

Re:Google employees (1)

slashmydots (2189826) | about a year ago | (#43207477)

Credit card companies want someone who isn't going to easily and steadily pay the money back. They make money off late fees, finance fees, and perpetual interest.

Credit Card Industry Term - Deadbeat (1)

Dareth (47614) | about a year ago | (#43207657)

Credit card companies are looking for people with okay credit with okay reasoning skills and okay income who will pay the minimum payment.

They don't want deadbeats [about.com] who pay their balance in full each month.

Systemic Prejudice (4, Insightful)

i kan reed (749298) | about a year ago | (#43206971)

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.

Re:Systemic Prejudice (2)

h4rr4r (612664) | about a year ago | (#43206993)

We are already in that world.

The single biggest predictor of a child going to college or not is their parents income. There are lots of things like that.

Re:Systemic Prejudice (1)

alen (225700) | about a year ago | (#43207023)

how is this different than every other time in history?

even in the USA 50-75 years ago if you were born into the wrong family you had almost ZERO chance of going to college. even after WW2 and the GI BILL only a minority of people ever went to college

Re:Systemic Prejudice (1)

i kan reed (749298) | about a year ago | (#43207077)

Well, sure, I agree, but we've also made progress in the past 60 years. To institutionalize the problem is not a good thing.

Re:Systemic Prejudice (2)

hedwards (940851) | about a year ago | (#43207215)

Back then you really didn't need to. My dad got a job as a carpenter because at the time it was paying about 4x what he would have been making working his way up at an architectural firm.

These days, we've shipped most of the high paying jobs that don't require a college degree off shore and been importing college graduates to ensure the ones that do go to college can't make enough money to pay off their loans. Until labor laws and regulations are reformed to punish businesses that do that, it's going to be a real problem.

Re:Systemic Prejudice (2, Insightful)

Anonymous Coward | about a year ago | (#43207695)

even in the USA 50-75 years ago if you were born into the wrong family you had almost ZERO chance of going to college.

But back then you didn't need a degree to qualify for a job making coffee.

The more people who have qualifications, the more qualifications the HR industry demands. Pretty soon the coffee shops will require a PhD before they'll even look at your resume.

Re:Systemic Prejudice (2)

Hatta (162192) | about a year ago | (#43207437)

A world where you get divided into upper class and lower class on factors beyond your own control should scare just about anyone.

Welcome to Earth.

Isn't that called a "loan"? (1)

Looker_Device (2857489) | about a year ago | (#43206973)

And considering how generous Federal Student Loan terms are compared to regular loans, you would be pretty fucking stupid to "retire student debt" with this (especially at 7% interest).

Re:Isn't that called a "loan"? (1)

h4rr4r (612664) | about a year ago | (#43207011)

Why?

This is a loan you can get rid of via bankruptcy, unlike student loans. For a young 20 something bankruptcy is not that big a deal. They won't be buying a house for nearly a decade anyway, will want the freedom to move and likely have credit card debt to discharge if they can as well.

Re:Isn't that called a "loan"? (0, Interesting)

Anonymous Coward | about a year ago | (#43207131)

And considering how generous Federal Student Loan terms are compared to regular loans, you would be pretty fucking stupid to "retire student debt" with this (especially at 7% interest).

It's not 7% interest. It's 7% of future earnings.

Bankroll 100 stereotypical liberal arts majors, all of whom wind up at McDonald's, and the investor gets back 7% of $15000/year minimum wage per grad. x100 grads = ($105K)

Bankroll 100 STEM grads, 50 of whom end up at McDonald's, 50 of whom end up making $100K/year, and the investor gets back 7% on about $57K/year per grad. ($402K)

Bankroll the same 100 STEM grads, 50 of whom end up at McDonald's, 49 of whom end up making $100K/year, and 1 of whom spawns a startup that gets a $10M exit, and you get about 7%*57K*99grads ($399K) + $0.7M (7% of the startup's exit) = ($1.1M)

The investor takes the risk that of the 100 STEM grads, they won't all wind up flipping burgers when their jobs are outsourced -- and other investors may very well be willing to bet on the 100 liberal arts grads, 1/4 of whom end up flipping burgers at $15K, but 3/4 of whom end up earning $80K as marketroids. ($446K)

Federal student loans don't take into account the expected value of a college degree. This system would.

Re:Isn't that called a "loan"? (1)

hedwards (940851) | about a year ago | (#43207257)

The difference is that the liberal arts majors have a better chance of getting and keeping a job than the STEM majors do. Considering that you really need a masters minimum to do much in those fields and the degree of specialization involved, you had better hope that the company you work for isn't interested in importing workers to fill those jobs and that you're not downsized. Otherwise, you're going to be at a significant disadvantage to liberal arts majors that didn't specialize to any meaningful extent and are more suited to changing careers on short notice.

I know that it's popular to bad mouth liberal arts majors, but the fact of the matter is, that specialization leads to rigidity and a harder time adapting as you haven't taken the course materials necessary to get a leg up on the competition.

Re:Isn't that called a "loan"? (1)

HornWumpus (783565) | about a year ago | (#43207721)

Liberal arts majors have specialized in things that don't require more then 6th grade math and 4th grade science.

I wouldn't brag on that level of versatility. Science and math are the course materials necessary to 'get a leg up on the competition'. Russian poetry? Not so much.

On the upside, you sure had fun in college didn't you?

I still find it amusing that the people who take no significant math or science are the 'well rounded' ones. Whereas the people who take some of everything are 'over specialized'. Compare the liberal arts coursework required of STEM grads vs. the math and science required of liberal arts grads.

I recall the liberal arts majors bitching about the engineering students blowing the curves in classes like econ. I distinctly remember being angry when the prof threw my score out of the curve. None of the other 600 people in that lecture deserved an A. I was smart enough not to say anything out loud.

Re:Isn't that called a "loan"? (1)

Stiletto (12066) | about a year ago | (#43207713)

I'm not sure how "cannot be discharged in bankruptcy" can be considered a "generous" term.

If I were 23 years old with $100K in student debt, I'd gladly exchange a non-dischargeable loan at 4% for a dischargeable one at 10%. Your payment goes from $1,000/mo to $1,300/mo, but that extra $300/mo is a price i'd be glad to pay for the option to default and have it wiped clean.

Hey Good Luck With That! (2, Interesting)

eldavojohn (898314) | about a year ago | (#43206987)

I looked in the article to see what fine entrepreneurs this company had helped out:

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).

Re:Hey Good Luck With That! (2)

h4rr4r (612664) | about a year ago | (#43207059)

For $320 you can put a crude image of a cock and balls on some guys head for 6 hours or any other vulgar thing you like.

I say we start a kickstarter to fund this.

Re:Hey Good Luck With That! (0)

Anonymous Coward | about a year ago | (#43207509)

If you took out student loans, you lived beyond your means.

Re:Hey Good Luck With That! (0)

Anonymous Coward | about a year ago | (#43207631)

If you took out student loans, you lived beyond your means.

You mean mommy and daddy's means.

For those of us that had to pay every cent of their education and housing on their own, if I had to save it all up before going to school I would have gotten my degree at 30 instead of 22. Thats 8 years of minimum wage instead of as an engineer.

why borrow to repay student loans? (3, Interesting)

alen (225700) | about a year ago | (#43206999)

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.

Re:why borrow to repay student loans? (2)

h4rr4r (612664) | about a year ago | (#43207083)

When your income is low these deductions don't really help since you are already getting most of your money refunded.

Student loans are not dischargeable via bankruptcy though, and these loans would be.

Wow (5, Funny)

sootman (158191) | about a year ago | (#43207015)

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.

Venture Capitalism for People (2)

Overzeetop (214511) | about a year ago | (#43207783)

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.

Ever Read Sci-Fi (3, Interesting)

Anonymous Coward | about a year ago | (#43207029)

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.

Like a lottery. (0)

Anonymous Coward | about a year ago | (#43207041)

Wow. I cannot believe there are people willing to invest in early-20-somethings who think they're going to become rich, if only they had the resources. What ever happened to smart investments, or am I missing some other more subtle way to profit when 99% of their customers fail miserably.

What's the catch? (2)

ggraham412 (1492023) | about a year ago | (#43207055)

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.

Re:What's the catch? (1)

idontgno (624372) | about a year ago | (#43207407)

identifying folks that can pass "Google" muster, hook them on some debt and then pump them out to high-paying elite clients.

I think you misspelled "pimp".

In addition to getting a placement fee they get a percentage of what that client pays over 7-10 years.

In fact, I'm sure you misspelled "pimp", because that's quintessentially the pimpin' business model.

On the other hand... (3, Insightful)

fahrbot-bot (874524) | about a year ago | (#43207061)

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.

Re:On the other hand... (0)

Anonymous Coward | about a year ago | (#43207247)

They're all sure of it. But baristas have to come from somewhere...

Inteligence Test (2)

Anonymous Coward | about a year ago | (#43207081)

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

wish I had mod points (3, Informative)

raymorris (2726007) | about a year ago | (#43207343)

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 ...

Re:wish I had mod points (1)

Anonymous Coward | about a year ago | (#43207679)

I'm in my mid-20s. I thought I'd sell a business now and be rich too... but then I found ou that a normal company would pay me 6 figures to work just 40 hours a week and I'd have to incur no risk myself. Turns out I'm way too lazy to be rich, when upper middle is so damn easy.

Bitcoins as usual. (0)

Anonymous Coward | about a year ago | (#43207089)

Buy 1 BTC now, and redeem it after graduation! Trust me on this! I'm doing this my self and my tuition fees are "only" £9000 a year

So Bill Gates . . . . (0)

Anonymous Coward | about a year ago | (#43207113)

who dropped out of college and became the richest man in the world would have been worth . . . . .

So "success" is all about earning money? (0)

Anonymous Coward | about a year ago | (#43207119)

That's a great message you're sending the youngsters there.

Re:So "success" is all about earning money? (1)

rubycodez (864176) | about a year ago | (#43207271)

and biologically it's how many offspring you can have. socially, it's "power" i.e. how many other people's lives you can fuck up on a whim.

"I got the power, I got the money, I got the women".....

former coworker had a different version: "I had the power, I had the money, I had the women. Then the woman took all my money, and my power, and left"

Re:So "success" is all about earning money? (0)

Anonymous Coward | about a year ago | (#43207507)

Power, money and women ... the success of the barbarian.

Admittedly it is an anti-intellectual age, but fortunately not everyone's life is quite that pathetic. It's no surprise that the barbarians are the majority though.

Weaponizing man (1)

handy_vandal (606174) | about a year ago | (#43207123)

Shouldn't there be a way to calculate how efficiently a man can be weaponized -- through training, drugs, surgery, cybernetics, social engineering -- so the State can induct the best candidates into service?

(Nickie Haflinger [wikipedia.org], I'm thinking of you.)

Yeah mn (0)

Anonymous Coward | about a year ago | (#43207141)

You're pretty sure that within 10 years you'll be selling your first startup or earning a high-six-figure salary

Ahahahahhahahahahahahahah!

No. you're not that talented. really. You're not.

Because people like that don't think like that.

They do what they do. They create without thinking of rewards because they're better than us.

We're not a bank, Jerry... (1)

HaeMaker (221642) | about a year ago | (#43207237)

Jerry Lundegaard: No, but, Wade, see, I was bringin' you this deal for you to loan me the money to put in. It's my deal here, see?
Stan Grossman: Jerry, we thought you were bringin' us an investment.
Jerry Lundegaard: Yah, right.
Stan Grossman: You're sayin'... What're you sayin'?
Wade Gustafson: You're sayin' that we put in all the money and you collect when it pays off?
Jerry Lundegaard: No, no. I- I 'd, pay you back the principal, and interest. Heck, I'd go one over prime?
Stan Grossman: We're not a bank, Jerry.
Wade Gustafson: What the heck, Jerry, if I wanted bank interest on seven hundred fifty thousand I'd go to Midwest Federal. Talk to Bill Diehl.
Stan Grossman: He's at Norstar.
Wade Gustafson: He's at -
Jerry Lundegaard: No, see, I don't need a finder's fee, I need a... finder's fee's, what, ten percent, heck that's not gonna do it for me. I need the principal!
Stan Grossman: Jerry, we're not just going to give you seven hundred and fifty thousand dollars.
Wade Gustafson: What the heck were you thinkin'? Heck, if I'm only gettin' bank interest, I'd look for complete security. Heck, FDIC. I don't see nothin' like that here.
Jerry Lundegaard: Yah, but I... Okay, I would, I'd guarantee ya your money back.
Wade Gustafson: I'm not talkin' about your damn word, Jerry. Geez, what the heck're you--
Stan Grossman: We’re not a bank, Jerry.

Silicon Valley echo chamber (0)

Anonymous Coward | about a year ago | (#43207251)

Want to be on the odds of getting funding if you aren't a graduate of Stanford, MIT or a handful of other name-check universities?

academic transcripts don't prove much and skills g (0)

Anonymous Coward | about a year ago | (#43207311)

academic transcripts don't prove much and skills gaps are condom with grads.

Just vulture capital by another name (2)

dkleinsc (563838) | about a year ago | (#43207317)

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.

Loans for the Creme of Mediocrity (1)

l0ungeb0y (442022) | about a year ago | (#43207429)

I wonder how much this company would have given young Steve Jobs -- a long haired Liberal Arts College drop out back from an Ashram stinking of Patchouli or Bill Gates, another drop out, but from a substantially more well regarded school.

Sorry, but good grades from big name schools does not equal stellar success. We see time and time again that it's the "unlikely underdog" or the free thinker not bound by mainstream convention that has what it takes to be the "upstart" that sets any entrenched industry or paradigm on it's ear. Not the "I got straight A's and was on the honor roll all my life and went to the best schools" type who are more often than not so beholden to established conventions that shaking up anything or taking really big risks would seem unthinkable, if not outright terrifying.

So would the guy who can't afford to go to a big name college or any college at all, didn't get those A's but has the creativity and drive to truly make something happen "if only he had enough money to get by on while he created it" even have a snow balls chance in hell with these guys.

I think probably not. That person would be seen as too risky, and having no "metrics" to indicate success. And that's the problem -- how can we quantify creative genius and identify the next Steve Jobs or Bill Gates?

Re:Loans for the Creme of Mediocrity (1)

the eric conspiracy (20178) | about a year ago | (#43207495)

I am sure this algorithm would include more than GPA.

Bill Gates would hardly need bank rolling from a 3rd party - mommy had plenty to borrow from.

Easy solution (0)

Anonymous Coward | about a year ago | (#43207445)

Just make college free for everybody, paid by tax dollars. If there isn't enough money, raise taxes.

Re:Easy solution (0)

Anonymous Coward | about a year ago | (#43207691)

Right, and when unemployment goes up increase the minimum wage.

This is so easy a Slashdot Socialist can do it.

Language abuse (1)

Marxdot (2699183) | about a year ago | (#43207719)

What on earth is "success" where there is no task or goal described? Please stop abusing language in this way.

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