Hard Work, Binary Risks and Persistence — the story of Stilt Inc.
Over the last few years, I went from being an international student on an F-1 visa to a founder of a Y Combinator-backed fintech company. I want to share my experience and our story of starting a company as an immigrant, including the challenges we faced and how we made it to where we are today.
Early Days & Moving to San Francisco
My co-founder Priyank Singh and I were a couple of regular international students a few years ago enrolled at Columbia University pursuing Masters degrees in Computer Science and Operations Research, respectively. At the time neither of us imagined that we would start a technology company in Silicon Valley, get accepted to the world’s most prestigious accelerator, and raise money from VCs. I didn’t even know at the time what it takes to build a product, get customers, start a company, register a company, hire people, how to pitch, how to raise funding or hundreds of other things that entrepreneurs do. We had only heard or read about these things but didn’t personally know anyone who had done it.
After graduation from Columbia University, I worked in New York at a credit data analytics firm called Argus Information and Advisory Services (now a part of Verisk Analytics). I worked with banks and other credit card issuers to build risk models for their credit card portfolios, help them better figure out ways to grow their markets and acquire more profitable customers. This was the first time I saw how large banks manage and mitigate risk. It was a unique experience seeing how much banks were against innovation — primarily due to regulatory risks. This prevented any innovation in credit underwriting. This aversion to innovation and reliance on credit bureau data stuck with me, especially because as an immigrant, I was left out of the larger financial system.
Why we started Stilt
Both Priyank and I had faced unique challenges as international students in the US. When I moved here, I didn’t know that I would need a credit history and 40x monthly rent as annual income to rent an apartment. I didn’t even know what credit history was. I was looking for apartments everywhere and thankfully I found Priyank. I got in touch with him and he rented me a room without a deposit or any credit check. That’s how we became roommates.
Priyank faced his own set of challenges in not having enough funding for the last semester of school and being unable to buy a car to get to work after he started a job at Microsoft. It may be difficult for US citizens to understand how gut-wrenching it is to come from a developing country and spend $50k accumulated from bank loans, your parents' life savings, loans from friends, on a first-rate education in the US — only to find out you don’t have enough money to complete your education. When Priyank joined Columbia University, he believed that he will be able to make things work, but nothing was certain. It was a big risk.
We want to reduce this pain, uncertainty, and difficulty faced by immigrants when they move to the US. My background in credit risk and data science combined with Priyank’s expertise in large-scale machine learning lent (pun-intended) itself to solving this problem. We are passionate about this endeavor because it’s is a personal problem we faced and see most immigrants struggling with regularly. So, we started Stilt.
Stilt is a fintech company focused on improving access to credit for immigrants. These include people who move from other countries and struggle in accessing credit services in the U.S.
Hard Work — Side Projects and Startup Weekend
For months, we worked late nights and weekends on building side projects that interest us. While doing one of these side projects, I stumbled on an old-idea I wanted to do during Columbia University. I wanted to help students like me get access to funds from other immigrant alumni currently working in full-time jobs. A non-profit where people would pool money to improve access to education. In turn, every person who uses the funds will contribute a portion of their future income to the fund after paying back their loan. This would build a strong network of international students from all over the world with a pay-it-forward culture.
I discussed this with Priyank and we both were excited to figure out a way to implement it. With our credit risk and data science backgrounds, we figured that we can create a new ‘credit score’ for these individuals. We could use public data sources to determine the quality of the individual and their potential future income.
While working on this “side project” we learned of a Startup Weekend event at Santa Clara University. We participated, built a team, and launched the product. As a part of the competition, we had to go talk to users. We talked to university students and iterated quickly based on their feedback. This was the first time we had built and tested something with a real set of users. The problem was real. Almost 100% of the students had faced challenges with accessing credit. They gave us valuable feedback on the product. No other experience can help you learn as quickly as talking to users. We built a working prototype and got signups. We also won the competition.
During the competition we got meaningful feedback from the potential target market, so we knew we had something that people wanted. We acquired more data, built an application flow and scored users. Despite this, we were still having difficulty proving our credit scoring model will work in the real world. We were running out of ways to make it work as a business. Priyank suggested that we use our credit score to lend money as a company. Priyank suggested that we lend from our own savings and offered to lend the first dollar.
This was a massive monetary risk. We had decided to lend our savings on the internet to strangers using our unproven credit risk model.
But we still went ahead, registered the company, figured out legal details and made a few loans of $5,000 each. We had hundreds of customers already signed up on the site, so acquisition wasn’t an issue. Our initial borrowers were so excited that they told all their friends about us. We quickly ran out of our savings.
It was almost impossible to raise debt capital from traditional funds and we were running out of our savings to lend. So, we raised money from friends on our personal guarantee. A few months in, we were responsible for about $500k we raised from friends that we lent to strangers on the internet trying to build a business.
A massive financial risk could mean that we will spend the rest of our lives to pay back this debt. But we decided to take the risk because we believed in our model (although unproven) and a problem that needed to be solved. The motivation for solving this problem excited us more than the fear of failure. Thankfully, things worked out and we returned all the money after we raised our first big debt investment.
A Little Bit of Luck
As we were growing, Y Combinator applications opened for their W16 batch. I never thought we’d be accepted but we figured it doesn’t hurt to apply. We prepared the first version of the application pretty quickly. The application process also helped us learn more about our business as we answered the thoughtful questions. The questions are simple and make you think — such as describing your company in 50 characters or less. It forces you to cut-down extra stuff to keep only the most important details. About 3 hours before the deadline, I saw a message by a YC alum on one of the Slack groups of Scale (a startup festival run by Jason). He offered to review applications before the deadline. I reached out to him and he helped us improve our application. Of all the requests he received, he chose 2 applications and one was ours. We submitted the application with his edits. A few weeks later, we received the invite for an interview. I couldn’t believe it. However, I had already booked tickets for a trip to India and was scheduled to fly out on Nov 6. The interviews were starting Nov 9. I spent a lot of thinking about whether I should interview considering the $1,000 it was going to cost me to change the flights (and the 1% overall acceptance rate wasn’t inspiring confidence). For a 10 min interview, that’s a rate of $6,000 per hour. But I eventually changed it to the night of Nov 9 (after the interviews).
YC told us that they call selected companies by 7 pm. I waited and finally got my boarding pass at 7:45 pm. I was going to security when I received the call that we got into YC. That was one of the best flights ever.
The biggest blocking factor after getting into YC was if we could actually attend it. Both the founders were on H-1Bs and couldn’t work for the company full time while on that visa. We had to quickly solve this problem else we would not be able to go through the program. That’s when we learned about “O-1” visa. It’s an extraordinary ability visa for people who have demonstrated outstanding ability in their field. We got recommended to a lawyer who had helped other YC founders. When we went to YC, we applied for O-1 visa pretty quickly through premium processing and received it in a few days. This was a huge binary risk that we couldn’t have solved with hard work. This is a challenge unique to immigrants starting companies in the U.S.
We are not objectively successful yet by any stretch of the imagination but subjectively, we have come a lot farther than when we expected. It’s always fascinating to look back on all the experiences, serendipitous decisions, risks taken, hard work, and luck that got us here.
It is surreal to see that we have built a strong team in SF and Delhi, served immigrants from 150 countries, disbursed tens of millions of dollars in loans, and it still feels just like yesterday. But we are still just getting started. We are focused more than ever to build the best company for immigrants and help them establish a bright financial future when they move to a new country, not just the US but anywhere in the world.