AN IDEA HATCHED FROM A NEED
Beryl’s fervor and his boundless energy are incredibly contagious and engaging—even on a 30-minute phone call. Those qualities, coupled with a personal experience, are what led to Earnest. Despite graduating from Princeton and working for Morgan Stanley, when it came time for Beryl to pursue and pay for his Harvard MBA, he couldn’t find anyone other than himself to foot the bill—his savings weren’t large enough to pay for the degree out of pocket.
“I thought I was living financially responsibly,” Beryl says. “I had a 401k going, I was paying bills on time, had good jobs, a good education and was going to grad school at Harvard. But I still needed private student loans to pay for that education. School was expensive, and I didn’t want to liquidate all of my 401k.”
Despite good credit and savings, Beryl needed his mom to co-sign his student loans. The problem was, his mom ran a non-profit. Her social capital was high, but her monetary capital wasn’t. “We refinanced my mom’s house, and she lent me that money,” Beryl says. “I paid her back each month and I still continue to pay her back. The massive problem was, as a borrower, I was low risk, but the lenders viewed me as high risk.”
BIG DATA MEETS STUDENT LOANS
So Beryl and Hutchinson came up with an innovative way to evaluate the borrower—they used big data. Earnest uses an algorithm and 80,000 to 100,000 data points to lend money to students with little to no credit history. Earnest reevaluates creditworthiness but also takes into account digital bank statements, credit card history, and work pay stubs.
“We wanted to look at how we can use better software and all of the data we have and get to the heart of true riskiness,” Beryl explains. “What we look for is measurements of responsibility. Is your cash flow positive? Are you living within your means? Are you not accumulating a lot of credit card debt and paying bills on time? Are you not over-drafting your bank account?”
While Earnest’s competitors such as CommonBond and SoFi began their businesses with a focus on top business schools, Earnest will fund or refinance nearly anything that is considered education from elite MBAs to accredited undergraduate schools and most recently, coding bootcamps. Another differentiating feature is Earnest services the loans instead of using a third-party provider.
THE LURE OF THE STARTUP: NOT FREE LUNCHES OR PING PONG TABLES, BUT A CULTURE THAT EMBRACES CHANGE
But for the interns, what makes Earnest special isn’t just “next generation” banking techniques—it’s being a critical part of a culture that embraces change and impact. “It’s not about ping pong tables and free lunches,” Beryl insists. “It’s about truly making the world a better place and delivering value, and internally, for people being truly fulfilled with their work and doing their best work everyday and making value.”
Terraforte concurs. “I wanted to make an impact and add real value and at a startup you don’t have an option not to do that,” she says. “Earnest trusts their employees and it has a much better culture and work-life. I’ve spoken with a few of my friends from Wharton this summer, and I think I like my internship better than them.”
Robinov, who is originally from Israel and experienced her own failed startup there, wanted a Harvard MBA and an entrepreneurial experience to gain deeper insight into American startups. “One of the things I learned is, I like the culture and the work/life balance,” Robinov explains. “People are working very hard but they take the time to celebrate when a milestone is met.”
‘I’M AT THE EPICENTER OF FINANCIAL INNOVATION BUILDING RELATIONSHIPS WITH PEOPLE FROM ALL OVER THE WORLD’
Entrepreneurship flows through Silverman’s veins. The Aussie comes from generations of ventures going back to his paternal great-great grandfather who started a fishing operation that’s still running in South Africa. For him growing up, business “was the daily language” of his life. Stanford and Silicon Valley seemed like a natural fit. “I’m at the epicenter of financial innovation,” Silverman says excitedly. “I’m building relationships with people from all around the world.”
Silverman says one of the biggest disconnects between the perception of startups and his experience at Earnest is the illusion of an unstructured work environment. Working at Earnest is not even remotely like working in the chaos and frenzy of HBO’s popular Silicon Valley show. “From the CEO down to the interns, everyone in the organization is making sure they commit to a level of seriousness and commitment to detail,” Silverman believes. “You might think startups are unstructured, but they are absolutely structured.”
Certainly there is little reason for the Goliaths of business to fear losing out on all top talent. After all, there will always be intelligent and driven people—particularly those with huge student loans—seeking careers in established and traditional settings and companies. Still, at minimum, this influx of interest is altering the way career services departments are spending time and resources at top business schools.