Liz Gannes

Recent Posts by Liz Gannes

Former Google Exec Dave Girouard Starts a “Kickstarter for Young People”

Last year, Dave Girouard — then a big-time executive at Google in charge of Google Apps — got obsessed with an idea. Highly qualified young college graduates were settling for corporate jobs, when what they really wanted to do was be entrepreneurial.

Upstart CEO Dave Girouard

But unless these kids were lucky enough to have rich and supportive family members, they didn’t have enough job and life experience to get venture funding or a traditional loan — even at a time in their life that might be ideal for taking risks and living on ramen.

Yet there were very good ways to evaluate these people’s promise, based on things like their grades and scores. Google, after all, hires thousands of recent college grads — by now it has a sort of algorithm for figuring out who is likely to succeed. Could Girouard replicate that algorithm for young entrepreneurs?

That’s the premise of Girouard’s new company Upstart, which can be described as a “Kickstarter for people.” It’s a fascinating, if totally crazy, idea.

Backers — who will often be alumni from the same school — choose recent graduates to fund, rather than specific projects or companies. The basic agreement — don’t call it a loan! — is paid back over a period of 10 years.

In practice, it’s slightly more complicated, but let me give it a shot: A would-be recipient from a participating school posts a profile on the site. Upstart calculates that person’s expected potential income for the next decade, and allows him or her to ask for a maximum of 7 percent of it. Backers commit in increments of $1,000, and promise to mentor each of the young “Upstarts” they choose.

Then, recipients pay back the money on a monthly basis, with the amount figured based on their actual tax returns. In years where they make less than $30,000, they pay nothing. But if they happen to do very well, their backers won’t necessarily get rich(er) too. The maximum return is capped at 14.9 percent. Plus, recipients can buy out of their contracts at any time.

“Venture capitalists like to say, ‘we don’t invest in companies, we invest in people.’ But we’re actually doing it,” Girouard said in an interview last week.

He said he’s looking to invest in a diverse group, and would be disappointed if all the “Upstarts” created tech companies. What he wants Upstart to become over time is a social network for “mentorship at scale.”

Sure, people have tried versions of this wacky idea before — for instance, David Bowie sold the rights to his future royalties for a loan — “but no one has ever done it in the Facebook era,” Girouard contended.

Girouard was able to raise money for his own idea rather easily — $1.75 million from Kleiner Perkins Caufield & Byers, NEA, Google Ventures, First Round Capital, CrunchFund and Mark Cuban — and he left Google in March.

And, yes, Girouard did manage to buy the classy Upstart.com domain, which had been used by a dot-com-era PR firm. He now runs a small team of mostly ex-Googlers out of Palo Alto.

One 20-year-old early Upstart employee, Paul Gu, is a former Yale student who was was part of Peter Thiel’s 20under20 Fellowship, which rewards a small group of young people for entrepreneurial pursuits rather than going to college.

Gu had been independently working on an algorithm for expected income when he and Girouard were introduced. At Girouard’s request, Gu read Eric Ries’s book “The Lean Startup” on the plane ride out.

“I’m older than his parents,” Girouard told me, ruefully.

Somewhat fittingly, Gu is actually an “Upstart” in the first pilot program, and Girouard is his backer.


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— Gitesh Pandya of BoxOfficeGuru.com comments on the dreadful opening weekend box office numbers for “The Fifth Estate.”