As Upgrade’s CEO, Renaud Laplanche enables the company’s mission of building an online and mobile banking experience that delivers exceptional value to its customers, including affordable and responsible loans and cards. In 2019 Renaud unveiled Upgrade Card, bringing installment lending to millions of retail locations.
Renaud pioneered consumer fintech over a decade ago, establishing personal loans as a mainstream affordable credit product for consumers looking for an alternative to high-interest credit cards. His efforts to reduce costs, improve user experience and transparency, and help consumers access more responsible credit products have set a standard for other fintech companies. Renaud ran Lending Club for over 10 years and took the company public, orchestrating one of the largest US internet IPOs of all times, raising over $1B in proceeds and valuing Lending Club at more $10 billion in December 2014.
Renaud was ranked #23 in Bloomberg Markets’ 2015 Most Influential List, an annual ranking of the World’s top 50 most influential leaders across technology, finance, and politics. Renaud was also recognized at the Clinton Global Initiative by President Clinton for expanding access to affordable and responsible credit. In 2014 he won the Economist Innovation Award in the consumer products category. He was ranked one of the top CEOs by Glassdoor Employees’ Choice Awards in 2015 and was named the “best start-up CEO to work for” by Business Insider in 2014. Renaud holds the Newport-Bermuda world speed sailing record.
Renaud holds an MBA from HEC and London Business School and a JD from Montpellier University.
How did you get started in this business?
I founded my first company Lending Club in 2006 based on the idea that consumer lending could be made more efficient by moving entirely online and automating many of the tasks that remain manual at traditional banks. The idea evolved into the multi-billion-dollar industry of online lending. In 2014 I took Lending Club public in the largest US tech IPO of the year, and in 2016 I co-founded Upgrade, a neobank that takes Lending Club’s concept to the next level, creating new credit products and adding payment, deposits and other banking products to provide a full-fledge mobile banking and credit experience to mainstream consumers.
How do you make money?
Upgrade earn fees from consumers for originating loans, and also earn fees from investors buying loans and card receivables, and from merchants in the form of an interchange fee when our customers use their card.
How long did it take for you to become profitable?
We became cash-flow positive 3 years after inception. Our high growth rate (triple-digit rate) tends to delay cash flow profitability, especially as we employ a large team of engineers who continuously work on developing and fine-tuning new products that will deliver future growth.
When you were starting out, was there ever a time you doubted it would work? If so, how did you handle that?
Definitely. This is a basic principle of innovation: it doesn’t always work out. What helps me overcome the fear of failure is the thought that innovation, and more broadly entrepreneurship, fulfill a social utility by testing new ideas and providing feedback to the world. Even failed idea are useful in that context, in showing the world the result of that failed attempt. That failure can help any innovator build up on whatever didn’t work and try something marginally different.
How did you get your first customer?
Our customers are all acquired online through the usual marketing channels (SEO, SEM, online display ads, social media, retargeting, etc…). What makes consumer credit interesting and challenging is that not all customers are created equal: credit quality and payment behavior are paramount. So instead of maximizing traffic, we attempt to optimize for credit quality by carefully selecting the right marketing channels and marketing messages that will drive the right behavior.
What is one marketing strategy (other than referrals) that you’re using that works really well to generate new business?
Surprisingly in this digital age direct mail (physical letters) tend to work fairly well. This is because the credit bureaus (Experian, Equifax, TransUnion) have good matching data between consumers credit report and physical mailing address, and not great matching between credit data and a consumer’s online footprint. So it’s often fairly efficient to initially reach out to consumers by physical mail before they enter the online or mobile funnel.
What is the toughest decision you’ve had to make in the last few months?
Letting people go is always the toughest decision. Behind every termination is not just a person but a family losing their livelihood. Yet, letting go underperforming team members is a necessary part of the evolution and growth of a business. Retaining underperforming employees is a disservice to their team members and also to themselves: everyone deserves to thrive, and if someone is underperforming it often is because the situation doesn’t fit their unique skills, and they should be encouraged to pursue a different path.
What do you think it is that makes you successful?
Success is all about teamwork; no one achieves great success on their own. Successful leaders are those who know how to attract, retain, motivate and empower great team members. But individual team members are not enough: in order for them to work efficiently as a team, they need to all push in the same direction, with the same intensity. This requires constant recalibration, sharing data and analysis and learning together as a team.
What has been your most satisfying moment in business?
For me it’s all about having an impact. The most satisfying moment is when our customers tell us what our products mean to them, and what a difference it made in their life. Fintech firms like Upgrade have a unique opportunity to change people’s lives for the better because credit and other banking products are so meaningful. Affordable credit can make all the difference in the world for a family and help them thrive, while irresponsible credit products like traditional credit cards can send them into a revolving debt spiral.
What does the future hold for your business? What are you most excited about?
We recently launched Upgrade Card, a more affordable and responsible card that helps borrowers pay down their debt and avoid the revolving debt cycle trap of traditional credit cards. The card is being widely adopted. with an annual rate of $500 million in new credit lines already being made available to consumers. I look forward to continuing growing that product, and we are also working on 2 new product launches this year including a full mobile banking experience.
What business books have inspired you?
I really like all the Malcom Gladwell books. I read the tipping point many years ago and since then have enjoyed the Outliers, Blink, etc. His latest book “Talking to strangers” has to me my favorite. I like how all his work is so well researched and all of his hypothesis and opinions grounded in facts and data.
What advice would you give to your younger self?
Be bold, take risks. I founded my first company at the age of 30; I wish I started earlier. It feels like I could have achieved a lot more than I did in my twenties. Being an entrepreneur is a wonderful life, you really have this feeling of changing the world, of doing things that have never been done before and maybe would never get done if it wasn’t for you. So I would tell myself to get going as soon as possible rather than keeping a cushy job for years.
Are you willing to be a mentor? If so, how should someone contact you?
Again it’s all about the people, about building a great team. There is a perception out there that great companies are built by great founder/CEO, and it is mostly incorrect. Steve Jobs and Jeff Bezos are clearly visionaries and great CEOs, but Amazon and Apple succeeded first and foremost because they built great teams. It’s a story that doesn’t get told enough because there is a press bias to interview the CEO and give him or her all the credit. Very often the reality is quite different.