Leaders in Lending
Leaders in Lending

Episode · 1 year ago

Accelerating Auto Lending Through AI w/ Val Gui at Upstart

ABOUT THIS EPISODE

Consumers are more comfortable buying online, even big ticket items like cars. A significant impediment to ecommerce in the auto industry is securing the loan and creating a frictionless digital experience.

In this episode, we interview Val Gui, Vice President of Automotive Lending at Upstart, about trends in the automotive lending space and get some insight on how he forecasts the future of the industry.

What we talked about:

- Increased awareness about automotive lending to financial institutions

- Consumer expectations for digital experiences

- Reshaping the ecommerce mentality in the auto lending space

- Trends for the next 3-5 years in auto lending

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Consumer expectations have really changed in terms of how they want to engage with, you know, all of the different companies in their lives, and a big part of that is wanted to go to do things digitally. You're listening to leaders and lending from upstart, a podcast dedicated to helping consumer lenders grow their programs and improve their product offerings. Each week here, decision makers in the finance industry offer insights into the future of the lending industry best practices around digital transformation. In more let's get into the show. Welcome to the podcast and thanks so much for joining us. Thanks, Jeff. Happy to be here. Yeah, I've been excited to have you on. So I know we're really pushing into the auto lending space and I thought it was just an interesting area to explore overall. And you know we've known you for a long time. You and I met many, many years ago. I hate to do the math on it, but you were really before joining up start, to lead the charge into auto lending. had been involved in the automotive space for quite a while. Can you give you a little bit for the audience of your background in the kind of auto industry in general before coming here to upstart. Yeah, Ye, absolutely, and it's something like nine years. Jeff, I've done the math for better for to the math close in it on ten, I guess. Yeah, but what we actually met first time when when I was working at my first drop our college, which was actually at the retail side of on the onmotive space. So I worked for a large, probably held dealership group in Michigan and you had come out with day to talk about upstart. Yes, it's just started it and we're building it out. That's when we admit and I was hired in out of school to work for the steel ship group. Basically back then it was a pretty large it's thirteen, fourteen stores. Now it's like thirty three, thirty five store. So it's grown. But back then they're trying to sort of consolidate a little bit that the management because it was sort of very distributed, and so I was brought in to help do that and I've done and have had almost every position at the deal of ship from selling cars on the floor because the you know, the owner of the company was like you're not working for me unless I know you can sell cars. And so I walked in on the first day you know, fresh graduate degree in economics from University of Michigan and he's like go sell cars. That's were not impressed. I was pretty shocked. I did not know that's that's what was going to happen, but that's okay. So I did that for a number of years, finally running the east coast for them, so about about six dealerships and then came out here to California, do the SF area and started company down to motor space and worked on that for about five years raise some money for it. It was on mode of market place, focus on financing. So I've been in a space for for a little while and it's the the bulk of my career. Interesting. What was it like selling cars? Was that? That sounds like an interesting they've got the old saying that everybody should be a waiter for for a year because you kind of learned what the services industries like. I might take is you kind of everybody ought to have a sales job for a year because you learned so much about human motivations and how to convince people of things and how people interact. What was it like actually being on the floor selling cars? It's hard for me to imagine. I mean that's that's that's exactly it. So once I got over the stock of it, and really not during the time, but looking back, it was probably the best thing that could...

...have happened, because out of sales is sort of one of the one of the more unique sales positions where you get a lot of reps. you talked to multiple people every day and when you when you first start, you screw up a lot. You say dumb things, you say the wrong things, you don't say know your products very well, but you you have an opportunity just minutes later to start over again and try again, and so you end up getting a lot of reps at and I think that it probably makes some some pretty good sales people. You learned very quickly what kind of what you mentioned like. How do you like to people? How do you understand what their prolems are? How do you know how do you position this vehicle that they're that they're looking to buy in a way that they understand how it's going to help, you know, solve their problems or, if they're making an aspirational purchase, how that's, you know, going to add value to their lives. All those things that translate really well to to all sorts of sales. Yeah, so what drew you to the autospace? Are you like, have you always been a car guy? I mean, what brought you into going into work for a dealership out of college? What was your what's how did you do that, make that call? I mean I grew up in I grew up in Metro Detroit, so I didn't have a choice. And water everyone was involved in the auto destry in some way. Yeah, like any on where you go, everyone was involved in the autostree in some way. I had, you know, uncles and cousins that were working in the in the out on the street for either manufactures or suppliers. Certainly you saw a lot of people that were very into Detroit muscle and we have a lot of things in Michigan that are, you know, tied to Automobi history, and so it was sort of a natural pull. I've always been pulled to that as well and sort of leaned into it. And so, you know, when the opportunity came up to, you know, to go to this dealership where I thought there was a lot of opportunity to learn something very quickly and really get into understanding sort of management very, very quickly. It was almost a no brainer for me. Wasn't what I expected, but at the time I thought that was making that the right choice and it was the right choice. Say, I learned way more at that, at that role, than I think I would have at, you know, any sort of more traditional job. Interesting. Well, so you know, you came up start with the really the goal of launching an automotive lending business here. We didn't have one when you came. We had aspirations and I remember the conversation with a want something like let's hire somebody really smart and scrappy that knows the space and they'll figure out what the heck did do and drag us into it. And that ended up being you in I'll the start has launched into the automotive space in the refly category, which is not the biggest category of lending, is actually quite a small piece of the automotive lending space, and I want to get into why that is in a minute. The first what was it about the refinance space that made that appealing to you as the place up start should really use to enter the market? Yeah, that's a great question and you're right. I mean automotive refies, you know, sub five percent of the of the outer landing space. So it's pretty small. But what's interesting is that, you know, for many, many years consumer awareness that autorefly was even a thing has been very low, but in the last three four years it's grown significantly. What's more interesting is that the number of refly loans haven't kept pace with that awareness. So interesting. And so when we really look at okay, yeah, so when you look at like what's actually going on here, you see that, you know, where refight is offered today, if you go through the process, there's either, you know, a...

...lack of savings or there's a lack of convenience. It's very hard to get a refi load in most cases, or maybe that the rates are compelling and you know what upstarts really good at making things more convenient and using the underwriting to power dictional savings. So I thought it was a good way to enter into the market which is, you know, the auto markets very large, but it's also very nuance and complex, as many different iterations within the auto market, and I thought it was a good way to enter it, to to sort of play to to our core confidences as a company makes said sick to what you're good at in terms of how you enter new space. I was really intrigued by this comment that consumers typically haven't been aware. I mean, I know that obviously mortgage refly is something most people are aware of if you have a mortgage. I think there's a growing awareness of credit card refinancing in the form of personal loans. But why do you think historically consumers haven't been aware of this concept of refinancing and all alone, and why do you think you made the comment that it's been shifting and there's more awareness in the last couple of years? What do you think is driven that shift and awareness for consumers from being less aware for whatever reasons, and to being more aware of this as an option? Yeah, I'll also this the second question. First, the awareness has grown because out of debt has increased. If you look at the both the price of cars and how much how much people are actually barring to find ance their cars, it's been on a steady climb up and so it's becoming a bigger portion of sort of wallet share for consumers and has been over the last you know, basically since, Oh, wait, when the market started recovering, and so now consumers are are thinking more and more about, you know, how do I say money? How do I increase my sort of monthly cash flow? Is Sort of how consumers tend to think, and so now autowe fights is is sort of one of those options, and that's, you know, that's one of the reasons why it's become a category where consumers actually starting to think more about it. It's just that the product offerings haven't haven't kept pace. That's fascinating. So why do you think that is the me? You said the product offerings haven't kept pace. It does seem like when I look at most lenders, banks, credit unions others, don't really offering this product, and I'm curious why you think that is, because it seems like most banks get into the mortgage refive space. The idea of refinancing the the second largest, you know, loan that typically people get also a secured loan, the kind of thing banks typically want to do. Why have they not been in that space more actively? I think I think there's that. There's a couple of factors. So one, it's a bit of a chicken neck problem a lot of lenders. Do you have this as sort of a product of convenience where you know maybe a borrow will come in and ask and ask for it and they'll go through the process and doing it. They don't actively market it, partially because they haven't necessarily had success with it in the past, and so it's hard to sort of take that leap and say I'm going to go all in on this or really try and focus on this without having without really knowing if you're going to successful at it. And I will say that, you know there's a caveat. There are some some lenders out there, especially on the Credit Union side, that, I mean, really crush us. We're talking about billions of dollars with the auto refy on an annual basis. HMM, and do a really good job, but I think it's a very small portion of them and it's hard to really get into that that space. And the second pieces, you know,...

...the actual product piece of it, is actually really, really hard. When you refile alone, you're working not just with the previous leane holder to get that payoff. We're working with the different dmvs to actually get a new lean released and then and then place, and that's all happens on a state by state basis and it's really, really challenging to manage all of that complexity and that's that's one of the you know, one of the things that we think that we can we can bring the table and figure out in the traditional auto purchase law is are those things handled the dealership. But what makes that easier in the kinds of loans that banks are credit unions are doing at more scale today versus in this refly space? Why is that more challenging here? Yeah, yeah, and it's your point. That's that that's exactly it. So for indirect lending, which is the largest category of auto lending today, that happens, you know, with the the dealers sort of being intermediary between the financing Parunner, the banker, Credit Union and then the consumer, and that dealer really has responsibility to help close those loans. So they're very actively working with, you know, D Nv's, with the banks make sure to get the right stipulations, to get the paperwork paneled and all that at all that kind of work done and it makes it in some cases very community for the consumer, but a little bit easier for the bank as well, and so that's that's that's what happens with the rest of the market and teresting that's can't do that in a refile on they're not sitting at a dealer. So you gotta gotta handle it all, and maybe handle it all, in your case, without a visit to a branch, without a you know, a physical in person or action in the case what you're building here. Yeah, that's right and I think that's you know, that's that's a big piece of it. Right. Consumer expectations have really changed in terms of how they want to engage with, you know, all of the different companies in their lives, and a big part of that is wanting to go to do things digitally. I think the sort of threshold of maybe pain or friction that people are willing to take on now for some sort of outcome has been lowered because so many things have gotten so much easier. Right, you look at something like, you know, you want food at your door, great, go to door. You want to want something great, go to Netflix, Amazon prime or, you know, apple TV or six other things. It just gotten it's just gotten way easier and expectation is that, wait, why can't I do this for my for my adolane as well, I want to do this digitally. So you talked to a little about what the challenge is in building this product. I don't know if they were if you wanted to kind of enumerate what you think it really takes to be effective in the refly space, like what you really have to build and be good at in order to be able to build? I guess my senses, most lenders could do this, but the challenge would be being profitable, being able to effectively re underwrite a lower rates enough consumers like having it and having it be a successful, growing, large, profitable, you know, product line or two different things? What are the key elements you think have to be there to make, you know, the large, growing profitable part of that, of that business true, versus the product of convenience that's there on the branch if they ask for but not really something that you're using to grow a substantial portfolio? Yeah, this is this is a this is a great question and this is this is the crux of the challenge and how we think about building the product. I mean the first thing is the underwriting, right. You have to be able to underwrite accurately so you know which are the borrowers maybe they're, you know, maybe their current customers of yours, or or maybe you're going out and...

...trying to find finding new customers. which are those customers? Are Borrowers actually, you know our good credit risks and and should get a lower rate and you get to give them a good rate. You have to make that offer compelling to them so that they even engage there for refly, unlike something maybe like credit card refinance, someone is already paying for that vehicle, they already have that payment into their monthly cash flow and so there maybe isn't as much of a sense of urgency as what something like credit card, where you know that payment is just increasing us, they're adding more to their credit card debt to refice it, to make a really, really compelling offer. But then the second pieces is really tied to the convenience aspect and providing internally. Get to have operational efficiency, to be able to do this in a way where it's both very, very easy for the consumer, the borrower, but also for yourselves, streamlined in such a way that you can ahould be profitable with it, because there are there are hard costs associated with underwriting, there is dmv fees, there's registration fees, there's others things that sort of go into it, and so that operational efficiency is really really critical and if it's something that you don't necessarily do today, it's hard to build that operational efficiency for free thigh. That's going going back to one of your earlier questions. You know, why isn't this whisness bigger and or why don't, you know, banks credions get into it more aggressively? You have to build out, you know, like the whole different sort of confidency. And then the last piece is, you know, is marketing and targeting. How can you really intelligently find which borrowers out there, especially if they're not, if they're not your your current customers, you can actually mark it to so that you can give them that, you know, those better rates and, you know, actually close them with that operational efficiency. And that that's really where comes in and that's that's our view of how to make this really, really compelling. Yes, kind of three big things, I guess. Targeting the right people, being able to make them a compelling off for and then being able to close it quickly and easily without incurring too much expense internally. Now you know you when you build that an upstart, you know, and I should hit highlight it, you know, for our bank partner. So this is like a product offering we have for for banks and credit unions. So not just, you know, an upstart internal thing. But one of the things is interesting to me is you kind of started with a foundation from personal loans, right. So we there was a large personal loan infrastructure to do the unsecured loan and I'm curious how much of that is transferable. How much? I mean, obviously there's no like transferring of a lean title and the concept of a personal loan. Yeah, but there's a risk underwriting. It's not exactly the same, but it's similar. How much did you borrow? How did you think about where you start fresh, where you build upon, you know, upstarts history and and how much you could borrow from the existing infrastructure to build out this new product area? Yeah, since this is a this is a great question and sort of like starting at the top. The philosophy of how we want to build a product between personal loans and auto is the same. Probably not like a broken record, but it's really about that convenience with the with the underwriting, and so that's that's the Lens that that we look through, but when we actually start to build the product, we start to see differences. Right, there's a there's a massive difference between personal loans and auto because without at being a secured loan, you have the asset, you have...

...the lean. You have to actually close that, and not just that, but we have to do things like, you know, verifying shurance, and so when we make this process and understand you know, we want to make it super frictionless for borrowers. We want to have that same instant concept that we have in personals today. We want someone to come in to the website, apply and get to signing a promisory note at an agreement to get funding, all within one session without having to provide any additional information. That is how we want to do it. But it's much harder in an auto that than it wasn't in personal loans, and so we have to well, it's not actually the necessarily much harder. We have to think about it differently because there's different things that we have to verify and understand, and so, you know, basically we did is we took our instant model and we applied the pieces that were most applicable to to auto, and now we're building on top of that to modify in a way that really fits to Otto, because things, certain risk factors, are not really important an auto, but there's other respectors that are there new for Outo, and so we're trying to think as much as we can, you know, without taking a whole sale, because it just it just doesn't translate that quite that well. Yeah, and then you know, the the consumer behavior is a little bit is a little bit different as well, and so that turns into something like something like marketing, right. I kind of mentioned it as one of those the three pillars of building out this successful program even the way that we have to look at borrowers and and how we market to them. It is different from personal loans because now you know they have something to compare to. They know that they have another stain Moan in front of them exactly, and so that's what we have to really focus on. The baski one of the things there's this interesting question, I think in the tech world, but as it applies to financial services products, is a bit different, which is how early do you launch? Kind of the question of never let the perfect be the enemy of the good where I like, how do you think about? You know, you want to get two levels of instant that we have in personal but, like you probably don't have that today, I'm going to guess. And how do you think about when it's the products is close enough and how valuable it is to be in market and learning from actual experience in launching for that purpose? And then, and then how you think about when the product scales are just I think that whole question of when do I launch, how much do I expect, how do I grow and learn from being in market versus designing in a vacuum, is a really interesting one. I'd love for you to talk about that a little bit, because I think you guys have done an interesting approach and pretty effective at doing that. So I just wanted to kind of touch on that a little bit. This is a great one because this is, in my mind, it's a risk question and this is an area where we have to partner very, very closely with our legal compliance teams to help them understand what is it we're trying to do, what is we're trying to learn, and so that they can give us feedback on what risk is present here, if any and so, you know, when we thought about launching in general, my mentality is launched as quickly as possible because when you're building in a vacuum you're not getting that real role feedback of, you know, what the consumers actually care about. You think you understand the consumer behavior we live we learned a lot since we launched about how different comes outo consumers are from...

...from personal loans, and so those sort of categories of learning are are absolute critical. You you can't do that, you know, while taking sort of undue risk. And so for us, when we initially launched this, we actually launched this in one state. We actually launched it under our own license, because that way it was upstart that was taking on the initial risk of, you know, the process as we were figuring things out. We won't extend that out to our bank partners, and then we didn't launch to bank partners until about six months later, once we worked out the Kings, understood what the challenges were and felt really confident that we had a you know, a real product that was had some level of maturity that mitigated the risk that the bank partners rule really care about. That came through, you know, the partnership with with our legal compliance teams and then even some of our big partners that were really, really open with us about whether it is that they're looking forward helping us understand what areas of risk that they want to make sure we've really covered as we got this to to start scaling. The other part of that your approach that I thought was really fascinating was a question of particularly the operational efficiency, the marketing targeting, that kind of like, can I be profitable in this space, and the idea of going out at a smaller scale and then growing as you reach a point where those things have matured in your ability to kind of, yes, turn the crank and then say, Hey, we're at a point where we can actually kind of turn up the dial now because the the execution levels higher. Talk a little b about how you thought about that. So I think that was a really interesting approach. In what I think so many, particularly lenders, I see, but there's a kind of the product goes out the door and then it is what it is and not as much of a focus on particularly the efficiency of a funnel which, for a product like this, yeah, can be the difference between losing a hundred bucks alone and making three hundred bucks alone, and one of those is good and one is bad. So talk about like what were you seeing when you first went out the door and then and how do you think about when it's time to actually turn up the crank and what the Delta is between the two? Yeah, that's a that's a that's a really great question and I think that the mentality we had through all of this, and I credit this to to upstarts culture, is that we think of almost everything is as being iterative. There's no final form, and so you know, when we launch this either on our own licenses in Florida or start expanding out to bank partners, the mentality has always been we want to get to market, but we know that a lot of that is going to be actual learnings that will end up pulling in. And you know, it's not just like we're going to put the the product out, see if it see if the winds or doesn't win. We're going to go out there and trying to figure out where it's winning, do that little bit better, figout where it's losing, put a lot of resources there to make sure that we start winning there, and so that's that's really how we started doing this. I mean when we started with the outer program the the conversions were certainly not where we expected it to be, a large part because there are areas within the product and the and the flow in the funnel that had friction. We didn't wouldn't initially expect right this. This is the sort of issue you mentioned of working in a vacuum. Yep, and it's so. It wasn't till we started having borrowers come through and getting feedback from them on Hey, you know, you wanted me to do these three things. You know, I dropped off at number three because it was the question was too hard to answer or something else going on. Great with to go back to the drawing board and say, is there a way that we can figure out number three with less fiction on the...

...borrower side? And so going through that overtime is is sort of really critical and it goes back to, you know, the learnings that we had from from the personal loan program we know that friction is is really challenging for consumers and so we want to take a lot of those same concepts, like instant. But when we started in the auto program the instant approvel rate was almost zero. Now it's closer to, you know, fifty sixty percent, and so we made that sort of innerative improvement over time as we learned what things we can actually make better. I think that that concept of learning and the the magnitude there is really interesting, because you're not talking about a five percent delta or a ten percent Delta. You're really talking about the change in efficiency of the program that goes from money losing to money making and understanding how to get out market and and be willing to lose a little bit, maybe in the early days to get the learnings, but the knowledge that you, with the righted Rati, could get there. It's just a different mentality than I think many traditional institutions take to product development and it's, I think, critical to actually building something like this. So I wanted to kind of like that, I mean your point where. I mean we're talking about like order of magnitude difference between when we started to where we are now. And you know that's because we knew that when we started. I mean are sort of our affectations have always been really high of where this program can go, and they still are. But we knew that we wouldn't we wouldn't start there and it was going to be a process and it's still going to be a process. In the other part I always think about when I think about lenders is you talked earlier about kind of consumer awareness, and I actually think many lending products are traditionally pull products, their products at a consumer asks for it. I'm buying a car, I need a loan, and buying a house, I need a loan. And refire products are often push products, which means there's actual like marketing dollars going out the door to drive this. And in the case where you're actively soliciting and therefore spending marketing dollars, the conversion funnel matters so much more because you actually like you're spending dollars, not on a per barwer basis but writ large and then you've got to convert those dollars into enough loans to be profitable. And so I think that really for these kind of push products where your kind of actively soliciting Barrowers who didn't come to you asking for the product, the need to get that funnel right to be profitable it's really high and it's probably one of the reasons that those more push type products have not been as adopted by, you know, banks and credit used, because it's like you have to have the funnel right, whereas if you're a mortgage is somebody walks in the door, like your funnel efficiency limits your growth, but it doesn't hurt your I cannot mix in the same way that it does when you're spending millions of dollars to send direct mail or run digital advertising or something that you have to recoup in terms of your cost. That's exactly right. Absolutely without we talked a little all about refly, but I'd be remiss not to ask about the other larger portion of the automotive lending space, which is, you know, people buying cars mostly at dealerships, all though obviously there's also a person to person what do you see happening there? I mean most lenders that are in the purchase space are there through the indirect through a handful of kind of distribution partners into in dealership offers. I know, like the way I buy, everything is changed in the last ten years, so I'm curious what you see coming in terms of ECOMMERCE or different ways consumers are actually going about the purchase decision. You know what thoughts you have around how lenders need to be thinking about being there in the future, ways people...

...are going to be buying cars and how we can improve, you know, the lending experience in the context of new ways to purchase. Yeah, within auto for the last fifteen years everyone's been talking about sort of the ecommercification of auto and a word ECOMMERCE. Many, many years. I like it. It's if it isn't, I made it up. Yeah, printed it right now, put it in the old yeah, and everyone has sort of expected this to happen and it didn't happen, it didn't happen, it didn't happen, and then all of a sudden it did happen, and it happened with, you know, the players like the carbonas in the rooms of the world where, you know, you look at the biggest independent retailer, which is carmacs, they own somewhere in the order of eight or nine percent of the of the auto market and that mark is very fragmented, so that it's that's a month, that's that's a large percentage. CARVANA since they launched to now they're up to two and a half or three percent, and so they're pushing really hard into making e commerce a really critical point of engagement with with fires, to the point where car Max is now reacting. They just they just invested two hundred plus million dollars in creating a ECOMMERCE platform to sell it to other vehicles as well, so to compete with Carvana. And so consumers are are more aware of this and they are more used to buying things online, bigger purchases online cars, which is which is one of these things. And so that is a trend that has finally caught up with what people expected the future to be and it's moving quickly and, you know, for better for worse, things like Covid, you know, really push that forward even even more, and so a big part of that e commerce processes is actually getting that loan and so being able to provide consumers, dealers and consumers and the final consumers alone online with different vehicles, different deal structures to enable them to make an inform finals decision is the key and is part of the future that that we're seeing being built and we're building into that future. That that's part of why, you know, we acquired a prodigy, which is, you know, dealer software, digital retail software, dealers now understand this and they know that they have to compete with the carbon has, they have to compete with the car maxes that are going more, they called Amy Channel and more digital, and so, you know, software like product is going to support that and we're going to help build some of that support as well, and on the lending side, to make sure that our bank partners are part of that transition, part of that process, so that they don't miss out and get and get locked out of that very large part of the market. Yeah, large and growing, I think, as we all look at the consumer trends. The other thing that surprised me and I wanted to get your take on, was the challenges even in the current world of you know, I thought of like auto dealer to lenders through, I mean as a consumer right, it hadn't no clue who what the pipes were and how it worked, that there's really, you know, an opportunity to increase the flexibility dealers have. To look at your point multiple cars, multiple deal structures, that that's like. I did never really fully understood the pain points around the inflexibility of many of the systems that are utilized today for that. So I wanted you to talk about that. I feel like that's an area of consumer preference that's absent the even ecommerce versus walking into a dealer decision. That is kind of...

...a place technology can improve the way lending is integrated into the car purchasing experience, because it is so often hard to look at different down payment amounts or different add ons at the end or different vehicles and have a good sense of the pricing because of the way it works. Yeah, yeah, that's a great question and I think a lot of that is there's actually, I think, maybe more complexity than than a lot of people think about that happens at the dealer as they're trying to work with both, you know, the bank and what's available there and the consumer that when it's actually buying the card and what it is that they want, while also making sure that they have sort of a place in that deal because for the deal themselves they're because they're, you know, the conduit between these two these two players. They have a lot of that control and they need to make sure they, you know, provide value to both sides while still getting little value themselves. And so it's actually a very complex optimization problem because, you know, to your point. There are many different factors, from things like trade in value and if that's you know, pods of equity or negative equity, how much down payment, what sort of products that the borrower, the consumer, might want, and then you know profitability for a one involved, for the bank and for the dealer, and that's that's a very, very complex problem and the structures today, the pipes and the rails that are currently out there, weren't really built to support that, certainly not within an ECOMMERCE paradigm. Are ECOMMERCE context and that's where a lot of the changes happening because, frankly, the consumers are coming in, they're much more educated and so they have a much better sense of the different lovers that are that are being pulled and they want to engage with the dealer on those different factors and the dealer has to have the flexibility to move things around and that's that's just that's just not available today. That that's part of part of what we're trying to build. That's really interesting. So look, just summarize for me, if you look out of the next three five years, what are the big opportunities that you know lenders who are looking at the automotive space ought to have their eyes on that you think are really the places to be investing? Yeah, a great question. I fundamental believe that we're going to see, and we're part of pushing this, the catch up between the awareness of automotive refi, people are trying to save more money, and then the size of the market that Autorefi is that it's been lagging. It's going to catch up and we're building the product to make sure that does happen. So we expect to be really big winners on as part of this and hopefully our bank barners as well. The second one is we just talked about the ECOMMERCE aspect of it. Auto sales is going more digital and being part of that is going to be absolutely critical to make sure that you don't get locked out and that is being powered by the technology and being able to have that flexibility and be able to provide different types of offer is going to be absolutely critical. And so you know, those two things right there we think are going to be very, very large. And then you know, the last pieces is actually really tight, to really tight to dealers. Dealer margins on the sales m historically had been getting more and more squeezed and so you know, things like back and products are going to be increasingly...

...important for them and consumers and more educated about what those what those back and products are, the vehicle source contracts, the gap insurance of such, and so being able to offer real value for those products is going to be critical both for the deal its continue some them, but also for the consumer that's that that's buying those and sort of is able to research those at a higher, higher level. Great, great advice on things to be watching for. All Right, VAL, we've come to the end of the interview here, where I like to do a little lightning round of three quick questions, but I have modified them for you because, you know, know, we got a say area of expertise here that I wanted to dig into. But let me start with one of my standard questions, which is what's the best career advice you've ever gotten? Best career advice probably take more risk in your career. Take take more career risk. You know, think twice before jumping to maybe the more the more traditional career path and maybe the career path that is a little bit less traditional in many cases. You know, there's there's just a larger upside there. Don't be silly about it, but definitely think twice before, you know, taking sort of the traditional I like that. I've taken several alternative paths in my career and every time, I think they felt riskier in advance and they felt in the moment of actually doing it that was a really interesting inside to go hey, yeah, like that, that seemed really risky and then after if I guilt, that wasn't that risk and those risks are where a lot of the best opportunities lie. I like that. Be Willing to take some re sorry. What's your best car advice? Your Car Guy and needs? I'm not a car guy, so I need some car vice. What's your best car advice you've ever gone I mean in terms of, let's say, making a purchase on a vehicle? I'll say like by pre owned all day every day. That's like value for money. That's that's what you're going to pry and get the most value. Two or three years old is where is where it's at. Two or three years yet to it because like the car still perfect condition, still our manufactors warranty. It might even even be certified pre owned. But the initial depreciation of the vehicle has already happened. There's there's a big depreciation. That the potty curve at a car. There's a big twenty percent drop as soon as you drop, you know, driving you car off the lot, and then it starts to sort of flatten out a little bit. You want to get it after that. That drops already happens. So grab somebody's driving off a lot and buy the car off on for twenty percent less than I just paid. I got it twenty percent right. Yeah, just funch, falling home and just fall home and here I got an offer. Friend back. Creep it on. Yeah, it might be a little creepy. It's just deal. are going to come to you stand in there outside the dealership, loot fall people home. What is your all time favorite car? This is a hard one for a car guy, but what's her you had to pick one, it's easy for me. Classic, Classic, and maybe a bit of a cheat, but the McLaren F one LM older car. It was for a decade the fastest car that consumer could buy, which is today like every year you hear again you faster car that the Fnlm was just absolutely incredible. The attention of detail. That vehicle was insane. The engine was encased in gold foil because it helped with the heat dissipation. It was like it just absolutely classic, incredible credicorless factor to I think. Do you think the gold foil was about the cool and the look or do you think it was about the heat assipation? Feels like it's a little yeah, it was a three seater because it...

...was race style, so the driver would sit in the middle and then there's two seats behind him or her. So it was just like such a cool car. Have you driven such a car? Man? I know I wish. All right, added to your bucket list driving the to to. Many of them have been wrecked, unfortunately. I'm sure many of them have. At the speed doostics drive? Yeah, and then my last question. What's a bold prediction you have for the future? Can Be Auto, can be lending, can be random, whatever you want, but I want some that to hold your feet to the fire about one I when I bring you back. Oh, man, this one, this one is probably the harder one, for sure, particularly because I can you know, I could play this back to you in a year and see if you were right. Yeah, well, there's one but I actually don't know if I can say this at this because it's about upstarting. I don't know. I don't know if, like as a public company, if I'll get in trouble about this. I wouldn't mess with that. Is a public company. You want you don't want to be. You don't want to get in trouble with the lawyers and in a compliance seem you spent so much time building a good relationship with I know, I know, they'll get they'll get really mad at me about that. This is this is the tough this is the toughest one. I haven't, I don't put a lot of thought of this. Where's the future on this? Save the hardest for last. So I'lso to make an industry projection. I would say that within five years over thirty five percent of auto sales will be all digital. Five years, thirty five percent of auto sales. I'll that's a great prediction. I I'll tell you, val you did better than Paul, who did not see this question in the pre red list and did not come up with it on the fly answer. So I like your on the fly coming up with a with a bold prediction. I think the industry is perfect. So thanks a lot. This was a fun conversation. I'm glad we could find the time to make it happen and I appreciate your joining us for this. Likewise, Jeff, honor to to be on here to talk to you. Very happy to you to have been part of it all right. Thanks. Up Start Partners with banks and credit unions to help grow their consumer loan port folios and deliver a modern, all digital lending experience. As the average consumer becomes more digitally savvy, it only makes sense that their bank does too. Up Starts AI landing platform uses sophisticated machine learning models two more accurately identify risk and approve more applicants than traditional credit models. With fraud rates near zero. Upstarts all digital experience reduces manual processing for banks and offers a simple and convenient experience for consumers. Whether you're looking to grow and enhance your existing personal and auto lenning programs or you're just getting started, upstart can help. Upstart offers an into end solution that can help you find more credit worthy borrowers within your risk profile. With all digital underwriting, onboarding, loan closing and servicing. It's all possible with upstart in your corner. Learn more about finding new borrowers, enhancing your credit decisioning process and growing your business by visiting UPSTARTCOM Ford Banks. That's upstartcom Ford Banks. You've been listening to leaders and lending from upstart. Make sure you never miss an episode. Subscribe to leaders and lending in your favorite podcast player using apple podcast. Leave us a quick rating by tapping the number of stars you think the show deserves. Thanks for listening. Until next time. The views and opinions expressed by the host and guests on the leaders and lending podcast are their own and their participation in...

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