#1: Priyank Singh - Stilt - Y Combinator Alumni Interviews (YC W16)


Sabby - Hello boys and girls, ladies and gentlemen, this is Sabby and welcome to the first episode of Entrepreneur Gains, where I interview Y Combinator alumni. As a startup gets bigger, I think the founder's stories get refined to comply with PR. My goal is to bring out raw experiences of YC alumni, lessons learned from starting a successful or an unsuccessful startup. My goal is that you can learn from these smart human being's mistakes and skip years of trial and error. In this episode, we have Priyank Singh, co-founder of Stilt, which is a fin-tech startup focused on providing loans and credit to immigrants and the underserved. They have raised over 100 million dollars so far, which is long ways from like the first $5,000 they loaned out from their personal bank accounts. I started this episode by asking Priyank about the story he told me about raising his Series A with one month of runway left, and I did a very bad job of communicating it, but let's get into it.
I want to start with this story which you told me at camp YC, and I just loved that story because it's a classic YC story which was raising like it sorry if raising your last round and yeah so I want you to talk about that amazing story.
Priyank - From the beginning of time, through the model that we are doing is... people understand it, it is very intuitive, but when you go out and raise money, they start asking a lot of questions. At a high level, everyone believes like, you know what? Immigrants are very safe, very hard-working, they are coming to the US to build their life, but at the same time when it comes down to actually lending them money, there's skepticism, that oh you know, there's a flight risk, they can take money and go away. So from the beginning of time, we were always struggling with this force where we had to convince everyone like you know what, look into Bay Area, if you look around, you will find a lot more immigrants who have established themselves here in the US, who worked really hard to come here. We are actually helping these people on day one to fund their education, loan, or getting rent. So the one thing that aligned with us and with anyone when we reach out to them is like we try to reach out to people and when we tell them the story that we are helping an immigrant, they immediately can correlate with it because either they are an immigrant in the area or their spouse, their friends, their relatives, they know at least one person who is an immigrant and who has faced this problem of not getting proper credit or not having FICO or not having a credit score. So in the last fundraising, when we were trying to reach out to a lot of investors, we reach out to one of the funds. It's a streamlined venture. We were talking to.. and I told them the story, we met like a couple of years back and I was like telling him the story, like how we started, and I was like look I moved to the US, I went to Columbia University, I did not have enough money, I just came here like you know, I finished the first semester with my saving, and then I'll figure out the ways to survive, and I told him like I was lucky I got a scholarship and so on to survive and the moment I told him this he was like oh you know what I faced the same problem because when I moved to the US, I was not able to get enough money for my college, so I had to work like all the jobs here and there and try to figure out a way to survive here, and if something like Stilt had existed back then, I would have been like you know living a better life, and most of my life would have been different because we would have helped him from day one. So this story aligned and resonated with him, and he was like after that it became a little easier because our numbers speak for itself, you know out default is very low, our growth is good, customers are very loyal. Yeah, so that helped us to close our round.
Sabby - But I remember you guys were.. you said you guys were almost like done, like that's kind of what I remember the best part was, like what was it like one week left or something?
Priyank - It's always in our story like when you do fundraise, it's always like you know, last moment like how am I going to run the next payroll. We were very close to it, but I think being fortunate, as you know, we got the funding in the final round.
Sabby - Okay good man, that's always, I remember you telling me that, and you were like oh we're almost the last payroll, and I'm like, man, that would be stressful like thinking about and you guys, how many employees do you guys have? When you were raising, it was like last year right so.
Priyank - I think 10-11,
Sabby - Okay, okay, so stressful, so you said you came up with the idea when you came here yourselves or something you felt, obviously it was hard. Priyank - So that is very interesting the idea, how it came, so Rohit, my co-founder, you've met him, we were at Columbia together, and I came here in 2009, and he came here in 2010 so a year later than me, and he was doing couch-surfing in my apartment because he could not rent an apartment, he did not have a credit score, so that's how we met like, it has been a long time, about 9, 10 years and Rohit and I, moved in Bay Area like in 2015 we're trying to figure out a new business model, and I think in December 2015 we were like oh you know how we met let's start thinking like that and like oh you know what the way we met was like because Rohit was not able to rent an apartment because he did not have a credit score. And then we thought oh you know what, it's not just us, there might be more people who are facing the same problem. So we just whipped up a website over the weekend. Actually, Rohit whipped the website; it's like he's really hacky in that way. It was a very bad UI in the first version. Then so we just started as a hypothesis like let's see how many people are going to face this problem. We had this rule of thumb that we are not going to reach out to our friends, we are going to reach out to someone who we don't know so that there is no bias, so we wanted to get an actual customer.
Sabby - Love it.
Priyank - So I think, so what happened I think, in 2015, I went into San Jose State University for career counseling; you know I have been working in the industry for long enough, and I was able to tell people how to do resume editing, how to prep for an interview. And you know when you do all those seminars and all the students come to you and ask like what do you do, and I was like oh, by the way, I have this company that is helping international students to fund their education and you know help them with their living expenses. So that's how, that was our initial customer base which we didn't realize, and the funny thing is like we went with it all these things, and then we were not able to figure out that capital because we needed money to lend out so for a while we like you know, we are not going to do this idea because we don't have enough debt capital. So we had a website, and people knew about the website through that seminar, everybody was talking to themselves and to each other. So and we had given our Google Voice number there which was given into my phone and Rohit's phone, and I remember Rohit and I, we were coding something for some business idea, and a random call came in about, hey do you guys still give out loans and we were thinking like why this call is coming to us, and we went back to our website, and then we logged in and we saw like 200, 300 people there. yeah and then we were still trying to figure out what should we do. Rohit's having more of a risk background from banking side, so he was like, it's gonna be very tough it's fin-tech, it's not tech, it's fin-tech which is going to be a lot more critical, and I was like oh you know what, let's try to do it. So I think I don't mention the first loan I gave out from my bank account. So I wrote a check; literally, I went and deposited in the bank account of a customer, and it was I think $5,000 cash and it was for living expenses, someone had moved, they just graduated from university. He was moving to New York, so I was like you know what, let's do that, so I started giving $5,000. Rohit put down his saving then we got money from Renu, Rohit's wife, she put down her savings and then you know we were in a lot of debt. Then we reach out to all the friends, we told them, look, give us money we'll use that money to lend out further, and we'll give you some interest on top of it. Then we needed more money from our friends, so by the time we reached Y Combinator interview, we were broke and under a lot of debt. Yeah, it was pretty interesting and stressful.
Sabby - I can imagine. Yeah, how did you, first of all, how did you find out about YC and what was your experience like? So we have all had interesting experiences. I want to know how was yours like?
Priyank - So everybody knows, whoever's working in the Bay Area and startups they know about YC. Rohit particularly is very studious, like he has gone through all the lectures, and he knows everything, and I also read a lot of books; we both have this in common. So obviously, you will see a lot about Y Combinator because of that. But Y Combinator application was more of a proof of concept for us. By going through that application, you can reflect on yourself and see what you are thinking about the business because most of the feedback and most of the application we saw is that. Like you know, how you are thinking about your business model, how you're thinking about its scaling, what you are doing now, what you will do later, and so on. So, we just applied, and we felt like lending is not doing amazing, so we might not even get it, but let's try it out and see what happens. We did not... I think we applied twice, in the first time, we did not get a call. The second time we got a call, and in terms of YC experience, it's pretty good. I think for us, we felt like we didn't have so much connection where you know we know an investor that community is very new at that time it was very unique for us you know one thing what we wanted to go to YC and you get the experience of what that community is. I think, now after so long, at this moment the value of YC is to have that friend circle, having that support group, I think that is way more valuable, I mean so valuable right now, it's just like I can talk to you, I can talk to other people about the company, product, growth, I know you follow all the chatter on that. Those sorts of things are most valuable. Also, people are really passionate about what they're building, even if you are hitting a wall, you see people around you, oh, you know this is so amazing, people are doing so much so we should too, it encourages you. It's more positive reinforcement for you. And of course, the advisers are good, mentors are amazing, but at the end of it is the support group I would say.
Sabby - I completely agree. I didn't for the first two years, I didn't go to any of the Camp YCs and stuff like that and I don't know why but the third year when I did go man, I was like what the, what am I doing! Why didn't I go like why didn't I make use of this amazing network, and even like that's why last year I flew in from Bali for like only three days.
Yeah yeah, it was just because like you know, you're like as you said, you meet so amazing people, and these could be lifelong friend friendships and these people are like doing amazing things and you can connect with them and talk to them and like anytime you need something you know, it's just an amazing community, and it's just like something I never like you know put thought about it before but it was such an no-brainer for me after but if you could go back and do it again would you change something like if you could go back and do like the experience for me, I'll give you an example by say this because with me, I kind of feel when we went to YC I was such a.. I was so amateur and so naive that I didn't really make use of it as much as I should have, you know what I mean? So If I would go back, I would, like yeah, change it and actually get every single value out of the amazing people who were around me.
Priyank - I think for you and for me both, there's so much pressure for growth you know, even if you wanted to, you'll be like Oh man! I need to grow fast. The demo day is about to come. We were already not sleeping, I'm pretty sure none of us were sleeping, so there's a very limited time how much you can do.
Yeah, I think, well, there are two aspects to it. One is for the company, and one is for the personal side. And I think we would have it was a really good group for us probably for our product because it resonated with a lot of YC Founders, so I remember in my first session with Dalton and Aron, people reached out to us and like, oh you know what this is such an amazing problem I did not know why anybody has not worked on it. It was a really good positive reinforcement for us. Yeah I think I think in terms of experience, Maybe we could've worked on the product and should've gotten out more to get more feedback on that side from the company point of view. I think in terms of utilizing YC value, I think, we would have done more after YC rather than being in YC. if I think all the friends so we made it right like just being in touch with them like totally for me it's relatively easy because I'm an ester more of the founders lesson so I think what happened after fundraise or something we sort of got launched into like oh go and work on the company but after six months of that I went back into like reaching out to more friends and saying hey you know what are you doing after wisely it's just that that that part I think I will done more but and including my team you know all were like really yeah we're all gone man we stayed in this crappy s house man like it's crazy as another Felicia not
but we stayed in this image how where five of us what in this like so what happened is actually this should be another business for you we because we were from Canada and it's like I supply and demand problems when we got there we were looking for a house and wouldn't have a social social and social security number so in supply and demand problem so our landlord asked us for first month's rent last month's rent and security deposit and and there was no options were five people house right so and take it or leave it and and yeah I remember living in this crappy house I'm not joking there was mushrooms growing in our bathroom true story man not not the good kind the crappy guy but but yeah man it was such an interesting space like it humbles you definitely but we were so go go go and it felt like we had like we also didn't have a life but we felt like we felt like yeah it's like stuck in that sense you know like every day with like working and like full-on you wanted to impress the partners and you wanted to like you know do make the most of the experience but like it was not healthy at all but looking back I think was it an amazing time because it thought like I don't know personally I thought it was those stories I would remember it was pretty normal that I wouldn't remember the story you know what I mean like yeah and I think this is more of when you go into ICU like now I'm here yeah that's it the only way is like we can't go back now yep so that kind of pushes you more like okay now I'm NYC I have to be amazing and then everybody talked to they always say the same thing everyone's like asking themselves for the first month is like what did they make a mistake they problem I don't want to it up because they're probably like we got in by mistake what if the kicker's I thought it was only us but
the least I realized the everyone's exactly the exact same thing that was pretty neat kind of flying on when we applied for YC all right after the interview he's like look I don't know how the interview is gonna be I just want to go on vacation so when we had YC interview only in the evening of that yet flight booked for traveling and if you remember YC tell you result on the same day and we were waiting until 5:00, 5:30 6:00 and then he was like man we both are like okay it's not gonna happen now I like you have a safe crib and then I think at 6:15 I was entirely shocked then Roy was replied I called them and I by the way you going to YC like oh great by the way to shut down I understand off my phone because we are taking off now this one then we count out the next seven are so let's just say such an awesome it wasn't a great experience though definitely how what what would you say is the biggest challenge you face me startup it's a good question but the thing is the biggest challenge is changing and succumb in school make sense so as you remember during wisely and for a long time after bikes we were having problem in raising that capital you know because we need lot of money to deploy our product is money and because we are trying to prove something which has not been proven yet so there's a healthy skepticism about like they're you know the bending people ending so for so every time when we prove like when we lend out half-million dollar then we were able to raise so that was the challenge early on for us how to use all of that capital also in crushing pieces like in finance there is a regulation compliance being coming from tech those things seems it takes a while for you to get used to those things and there has not been what I have learned like an industry lot of people in FinTech but clearly they are putting a lot of resources like humans to do the job which can be automated so having that insight took me a while to get to that inside because the more I was talking to feel tactical they were going unavailable but it literally is no debt capital right now is product product product we need to constantly create on product make sure this is exactly what users are asking for that's why we are launching bank for immigrants because we know they're facing the problem so folks who are coming to us or you know Y Combinator and they can in a bank account we can pay the deposit so now I think a small about product equation and making things right and making sure is what we are looking for early days it was like more of how to raise that capital over we advice for people's if they want to get into startups that's the difference I think there are two things having a good co-founder on this end yeah the second because you know you're gonna go through ups and down the second thing is you should you definitely should like the idea on which you're working on because it helps you to be committed enough when you are facing difficulties let me read out the Lord of Investor we got think of this with equity capital and you know how the conversions are you talk to twenty or thirty and we were constantly talking to you could in which hand that investors so on an average you are getting rejected every day from someone so if and we really need about to handle that level of rejection more than that like you know because you have passionate about it you can come with a good product yeah just don't be biased on folks have this tendency we had to it took me a while we all have our own bias when we do so you want to make sure you are making this make sense so it's interesting but like is it how hard is it because you gotta like one you gotta like have enough money to like you know run the company at the same time you also need money to like give it to people and solve a slow process called the money coming back six years is that a traffic I mean I won't call it a chicken-and-egg problem in that sense or and early days it was when we were brewing the market right like I did not have enough money so there's a different ways you can short-circuit this thing so I didn't bail neon when we started our little town so we shot like six months to nine months we did not have to do one or two mine we got that fall into pain only one we are not right on so you can do six month nine months that helps you to come money will come but you're right for us it tells us challenge that you know we are raising money and we have to constantly deploy and make sure truth is that but the way it work is like you know you work with your investors you work with that investors and you set up the right expectation of them run like look this is the product this is how the money is going to come in give us this much and you know every month we'll get this free payment and so on so you do all the math but what happened like I say you is on twenty thirty million dollars unless if it's a line of credit you've been rotated multiple times it was every much you are getting some money back and you can write so monthly we deployment is what matters lot of time but yeah I mean the longer the loan term is that tough it is like if you looking to mortgage if you look into my industry like 30 years yes right well at the same time you know once we figured out all those things it becomes really good business because that's a defense ability of what we have been right now and being a start-up as on you have been it and I am doing it like I know how tough it is to raise that capital secondly I know how tough it is to can listen rich that you know what this is a right investment for you but if I loan are performing when if our customers are doing well it encourages and make sense and I was going to ask you this because I saw a crunch place and I said raise hundred and thirteen and a half million dollars so that's probably the loan money is that like most of it's a loan money which yeah also raised I guess yeah we we did raise equity I think a seven and seven now if I forgot exactly but rest of the money is that capital that we reach from multiple investors and again all the immigrants understand what we are doing so go and reach out to them like look people like you will you know of they are moving to us this is how they are doing they're really hardworking they really know the value of money at all so it helped us to remove that capital that's awesome and like yeah 100 million plus wholly next level it's awesome so haha say one understands a long way from $5,000 to okay I got one last question it's nothing I've always wondered about this but the regulations so like how does the regulation work in this industry because like you're you playing with real money here right there's like you asked him for like percentage and what if people don't pay and all that stuff how does the government regulation work and how hard was it to figure that out it was hard and this is easy but I think at the same time we have many good folks in my community lend up came out of Y Combinator Joshua Johnson he was formed Johnson is one of my alumni he healed us a lot and then you know they're like enough people were doing something along lending you can reach out to them and get but at the end of it to be honest like I ended up reading lot of law of government regulations so I did not know that for a long time but everything is online you can literally go and be New York logistics so because like early days within dot know it so we talked to some lawyers and you know how you do a shopping and all you ask Louis we want to do lending so they tell you the other things to worry about the video would be like lot of lawyers we note down what they are telling us and then we went out and did our own research early on or we started with New York so the way work is an average in US particularly if you are lending out money you need lending Rises and so you need to be litigated state basis all your bank charter we went through lending like sand salt and license respect you to do max and what they give you range of amount elation feel every component of the loan and you have to make sure that you are following that law and the other thing is like you know telling them that we are getting loans and we are not discriminating on lot of other factors we have to tell them and through it to them it's a long process but I think we have done it so many times we exactly you know how to reach out to them it all comes down to setting up right dialogue and so right expectation as long as you're open with them you tell them exactly what you are doing but definitely it's one of the thing which we picked up while working on the company it's a FinTech so there's a product and engineering and marketing compliance now now we have law firms with whom we work with yeah I like it I like it how again kinda we were talking about this and start where again how why we feel the importance of why see another example here like a game and he said that you know the network of friends it's so cool because like you know as you said there's so many companies who are in the same space and we had this local by the way for our company we found we when we were promoting we had one of the founders of previous company circle aqui you know like helped us out so much in like kind of like because he the exact same thing human college to college and you know does that is he being able to reach out to him and being able to talk to him like made like life so much easier because we have to figure it out ourselves in that sense the whole thing right so to advantage but like that's I think that's again one of the biggest values in my opinion of Isis walls people and like they're in the space yeah definitely I think you get six seven month and a lot of things as well so there are two three ways of learning right you read the book you'll learn from someone else expedient so you do things in YC you can just learn from someone else experience love it yeah awesome okay where can people find more about you and your company website still calm about me Moshe Leon well we are writing blocks and also you can read a lot of blocks on still possible pretty much not that popular on Twitter yet neither me neither I don't yeah yeah just swallows Tilton and I think we are very good in creating content in general for immigrant community so if you do any education content search that's the company is gonna be this is the first episodes only my mom probably listening to it so but but you know what she is also an immigrant so thanks Priyank, appreciate you doing this!