He Built LendingClub To A $10 Billion Business, And Now His Latest Company, Upgrade, Is Valued At $6.3 Billion

In the dynamic world of entrepreneurship, few stories are as captivating as Renaud Laplanche’s journey. From the picturesque streets of Paris to navigating the entrepreneurial waters in the South of France, Renaud’s experiences have shaped him into a serial entrepreneur with a remarkable track record.

This blog post explores the fascinating tale of building and scaling multiple billion-dollar companies.

Listen to the full podcast episode and review the transcript here.

Parisian Roots and Southern Adventures

Born in Paris, Renaud Laplanche’s early years were marked by the city’s scenic beauty. However, in the slower-paced life of the South of France, he found his footing.

Spending four days at school and three days out on the water, Renaud developed a unique frame of reference and perspective, blending business and law—a combination that would later prove to be instrumental in his entrepreneurial journey.

Lawyer Turned Entrepreneur

Contrary to the stereotype of bored lawyers seeking an escape, Renaud enjoyed practicing law. His five years at the top law firm, Cleary Gottlieb, provided a comprehensive overview of various businesses.

The experience, he notes, equipped him with valuable insights into different industries, founders, and executives—a foundation that would serve him well in the entrepreneurial landscape, specifically an investment firm or a consultancy.

The experience also gave Renaud a sense of what works and what doesn’t. He could be creative and solve problems by being a veritable toolbox, choosing the right tools, or crafting the ones he needed.

Sometime in 1999, the law firm offered Renaud the opportunity to spend six months to a year at the New York office and work with a US-based partner.

The Leap from Law to Entrepreneurship – Building MatchPoint

In the US, a pivotal moment arrived. Renaud, contemplating leaving a well-paid law job, saw the opportunity to venture into the booming tech landscape. He admits that the shift of careers was a significant pivot from the legal side of things to start pushing paper.

The shift from a cushy law job to assembling IKEA furniture in a tiny office above a 24×7 McDonald’s marked the beginning of a rollercoaster ride in the entrepreneurial world. Renaud founded Match Point, an enterprise search engine, identifying a gap in search capabilities within law firms.

Renaud recalls meeting with his co-founder in New York, who was just finishing his Ph.D. in artificial intelligence and information retrieval. Since Renaud’s business idea was about technology, they teamed up to launch the company.

Selling MatchPoint to Oracle

At the time, Microsoft and Oracle were investing in search technologies, and Google and Internet search engines were becoming sophisticated.

Professionals absolutely had to have the ability to work inside a firewall and seamlessly, easily, and quickly retrieve the information they needed to do their jobs.

Since the big software companies were investing in search, MatchPoint had two bidders and was ultimately sold to Oracle. Renaud recalls that the technology was great, but they lacked financial stability and hadn’t raised adequate funding.

Renaud reflects on the decision to sell, emphasizing the benefits of being part of a larger software powerhouse. The experience, though challenging, provided critical lessons in resilience, adaptation, and the importance of financial stability in the tech industry.

Renaud also learned a lot about the full business cycle, starting from building, scaling, and exiting. He reveals how the company headquarters was in the World Trade Center in 2001. They not only lost the office but also technology and paperwork, which necessitated rebuilding and regrouping.

Fortunately, MatchPoint didn’t lose any employees to 9/11, but it slowed down the economy and took nine to 12 months to recover.

However, the company scaled quickly for the next two years and grew to the point where it integrated with a 30,000-employee company with a very different work environment.

Lending Club: Pioneering Fintech

The birth of Lending Club in 2007 marked a turning point in Renaud’s career. He has an interesting story to tell about founding the company. It starts with Renaud discovering that he was paying an 18% interest rate on his credit card balance but earning a 0.5% high yield on his savings account.

That’s when he came up with the idea to create a marketplace that would essentially shortcut the banks, cut out the middleman, bring both sides of the marketplace on one side, and put people who need the money on the other side.

As a result, people who have funds can enter into credit agreements and make personal loans. Investors could earn much more than 0.5%, and borrowers would pay less than 18% in interest. Lending Club paved the way for a whole fintech revolution in 2007.

From IPO to Exit

Renaud discusses the hurdles faced, including regulatory uncertainties and the challenge of building trust in online financial transactions. After extensive discussions with the SEC, they shut down the Lending Club platform for six months to register the entire program as a public offering of securities.

Renaud also realized that despite unsatisfactory customer experience and customer satisfaction, banks are more adept at establishing trust. People may not like the bank but trust the institution with their money. That’s the trust Lending Club had to work very hard to build.

Lending Club’s IPO in 2014 was a moment of pride for Renaud since it was one of the biggest IPOs of the year. It was also a great branding opportunity for a consumer company and aligned interest between retail shareholders and the customers.

Eventually, the company reached a valuation of $10B. However, a public disagreement with the board about compliance issues led to Renaud’s departure. Undeterred, he saw an opportunity to apply the lessons learned.

Launching Upgrade

In 2016, Renaud launched Upgrade, a neobank offering a range of financial products. The emphasis on trust-building and customer-centric approaches has propelled Upgrade to a valuation of $6.3B. Upgrade’s success lies in its focus on being a multiproduct platform from the outset.

Renaud identifies the mistake of remaining a monoline company for too long with Lending Club. The new platform offers mobile banking, credit cards, personal loans, home improvement, and auto loans—a holistic and affordable approach to customers’ financial needs.

Renaud talks about the several advantages they have, like a higher line on the credit card and lower rates on their loans. That’s because they have more data, which gives them a better understanding of customers’ lives so they can underwrite and service them better.

Upgrade makes money by levying fees on customers and loan buyers with capital-light businesses. They originate loans and balances and sell them to banks, credit unions, and asset managers. Essentially, Upgrade is a platform with professional investors but not in the retail marketplace.

To date, Upgrade has raised $587M and is reported to have a valuation of $6.3B. Their labor-intensive operations are set up in low-cost locations with a core engineering team in San Francisco. Renaud also explains that Upgrade has a great talent pool and a loyal customer base.

This time around, Renaud and his co-founders have retained control and voting rights over the company to maintain operational decision-making with the founders.

Storytelling is everything, which is something that Renaud Laplanche was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see it here), where the most critical slides are highlighted.

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Lessons for Aspiring Entrepreneurs

Reflecting on his journey, Renaud emphasizes the importance of surrounding oneself with the right team. From co-founders to early employees, aligning visions and skills is crucial.

He also stresses the significance of learning from previous experiences, adapting strategies, and staying true to the core values of building trust with customers.

Conclusion

Renaud Laplanche’s entrepreneurial journey is a testament to resilience, adaptability, and the pursuit of innovation. From Paris to the forefront of fintech, Renaud’s story inspires aspiring entrepreneurs to embrace challenges, learn from experiences, and build ventures that stand the test of time.

As he continues to navigate the ever-evolving landscape, Renaud remains a beacon of entrepreneurial wisdom.

Listen to the full podcast episode to know more, including:

• Renaud Laplanche’s journey from Paris to the forefront of fintech exemplifies the evolution of a visionary entrepreneur.
• Renaud’s unique combination of business and law laid the foundation for his ability to navigate diverse industries successfully.
• The shift from a top law firm to founding MatchPoint showcased Renaud’s willingness to leap into entrepreneurship and assemble IKEA furniture in pursuit of his vision.
• Lending Club’s success provided crucial lessons in resilience, financial stability, and the importance of trust in the fintech landscape.
• Renaud’s recognition of the monoline mistake at Lending Club led to Upgrade’s multiproduct platform, offering a comprehensive suite of financial services.
• Building trust with customers is Upgrade’s hallmark, with Renaud emphasizing the importance of being a reliable partner in their financial journey.
• Renaud underscores the significance of assembling a skilled and aligned team, learning from past experiences, and adapting strategies for sustained success in the entrepreneurial realm.

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