Louis Beryl was a entrepreneur at 11 years old. He would collect, clean and sell golf balls back to golfers, undercutting the prices at the local shops. His knack for identifying problems and introducing cheap, profitable solutions is evident in his latest startup: Earnest.
Founded in 2013, the financial startup is Beryl’s answer to the massive student loan debt crisis plaguing the millennial generation. Earnest offers low-cost personal loans and student loan refinancing to financially responsible individuals based on merit rather than credit score. The company uses technology to conduct hyper-personalized underwriting to determine someone’s financial potential.
“We’re building a modern bank,” said Beryl. “Our mission is better access to credit to millions of people at earlier ages and cheaper prices.”
Beryl’s background set him up for the task. After college, Beryl worked as a trader for Morgan Stanley, eventually joining Lehman Brothers about a year before bankruptcy. He then received graduate degrees in public policy and business from Harvard, co-founded a battery technology startup, and later joined Andreessen Horowitz where he focused on looking at new financial tech companies.
Earnest launched its refinancing program in January of this year. Since then, the company has grown, as has its reputation: Earnest is already the No. 1-rated personal lender on Credit Karma.
Earnest
What it does: Offers merit-based personal loans and student debt refinancing
HQ: San Francisco
Founders: CEO Louis Beryl and COO Benjamin Hutchinson
Founded: 2013
Funding:$32 million
Growth metric: It has doubled the overall value of student loans since it started. It doubled the size of its staff in the last six months.
How he does it
Growth doesn’t come without its challenges. Here’s some advice from Beryl on how to handle them
1. Do well by doing good
Beryl is all about putting Earnest’s customers first. Since the average student loan refinancing is 10 years, he sees his clients as entering into a decade-long relationship with the company.
“We think about doing a great job for clients every single day, but with the mindset that these people are going to be our clients for a long time,” he said. “So even if they ask for one thing, it’s not about that one thing. It’s about us making them happy for a decade.”
And as Beryl contemplates expanding Earnest to include a long list of financial services, the potential for these relationships to develop is great.
“We want our clients to be really happy,” he said. “We want to save them the most money possible and hopefully they’ll just do all their business with us.”
2. Put a strong focus on technology
The basis of Earnest’s lending practices lies in the company’s comprehensive data-gathering software. By looking beyond credit scores and W2’s, the company can determine financially responsible individuals to lend to.
“It’s takes the best software systems to do this,” Beryl said.
Also, with 90 percent of Earnest’s clients being between the ages of 22 to 34, a streamlined interface is important.
“We have a very digitally versed clientele. And what some people view as, ‘Wait I’m giving you access to my data?’ our clients are like, ‘This is awesome. It’s really fast, it’s easy, and when I want to switch something I log in and click a button,’” Beryl said. “We have no physical branches and we have no plan to do that. It massively lowers the cost of operations and that savings gets passed onto our clients.”
3. the long way Might be the best way
Though Earnest already has student loan debts in the tens of millions, this is a $1.3 trillion problem. And as Earnest continues to gain clients, the way the company deals with its processes has to grow to accommodate its expansion.
“When we do something, it’s not about how quickly we can complete a task,” Beryl said. “We have to expect that in a short period of time we’re going to have to do a hundred times as many of those. So when we think about completing any single task, we think about completing it in a way that we can do it a hundred times just as fast.”
While that’s always slower the first time, Beryl sees this as the most important cornerstone to the company.
“We know it’s going to take a long time to achieve our goals but that’s ok,” he said. “We’ve started small and we’re expanding.”