From the ashes of COVID school closures, this Gen Z CEO built a thriving student-loan app

 

By Shalene Gupta

As a junior at Stanford, Harrison Hochman was sent home because of COVID. Many of his friends were scrambling to pay tuition because their family’s incomes had taken a hit. Yet it was easier to book a plane ticket home than to find a private loan. Hochman and two cofounders, Griffin Morris and Daniel Kahn, started Sparrow, a service that allows students to compare loans. Today, Sparrow covers over 8,000 schools and has raised $7 million. Hochman, 24, has been listed on the Forbes 30 Under 30 list. 

Hochman swears he stumbled upon entrepreneurship by accident. His parents are both lawyers and he’d always been interested in history. But then when he was a freshman at Stanford, Hochman learned that Zach Perret, the founder of Plaid, was coming to speak. He didn’t know exactly where, but he knew he wanted 30 minutes with him. At the time, Apple had just switched from USB ports to USB-C, and Hochman guessed that Perret would likely need an adapter to connect his computer to the auditorium. He went to the bookstore, purchased the adapter, found an auditorium that he thought was the right size, and sure enough, he found Perret—and got his 30 minutes.

From the ashes of COVID school closures, this Gen Z CEO built a thriving student-loan app\
Harrison Hochman [Photo: Courtesy of the subject]

 Hochman is a gifted storyteller who is generous with his audience—that is, easy to follow and pay attention to. Whether consciously or unconsciously, he separates his answers into one to three bullet points. He wraps humor and analysis into succinct anecdotes that make for perfect quotes. Between anecdotes, he spouts off dizzying amounts of minutia about the ins and outs of fintech. I lobbed off-the-wall questions at him just to watch the bright tumbling wheels of his mind spin. The answers he served up were always delightful. 

If we’d had more time, I would have thrown all the problems of the world at him great and small: How do we solve climate change? How do you select the perfect pair of pants? What does it mean to solve a problem satisfactorily? Sadly, he had to go: He’d just been invited to ring the closing bell for Nasdaq. 

From the ashes of COVID school closures, this Gen Z CEO built a thriving student-loan app

(This transcript has been lightly edited for clarity.) 

Fast Company: Tell me your founding story. You started in the midst of COVID.

Harrison Hochman: So COVID is raging. We have no certainty about anything. We don’t know if we’re going to be able to get back on campus. We don’t know if they’re going to drop the price of tuition, which many, many students pleaded for. There really wasn’t anything that was certain except for the uncertainty. And to fast-forward that story a little bit further, we decided to launch a peer-to-peer marketplace, connecting alumni to students. We thought, well, what better than to direct those donation dollars for the students directly? We tried launching that business; it was incredibly tough to scale because you have two-sided customer acquisition. 

FC: How did you make the leap from two-sided customer acquisition to a search platform for loans?

HH: So we took a step back, and I think we realized this wasn’t going to work when investors wanted to invest in our business but didn’t want to become lenders themselves. They said: We really like you guys. We like the team. We like the fact that you can build products. 

We realized students have trouble finding capital that does exist from banks, from credit unions, from state agencies. But at the same time, certain lenders who have tremendous savings don’t often see a ton of volume. Those lenders were credit unions, state-based agencies, ones that have absolutely or very little digital presence. We decided to try and digitize their loan application systems.

FC: What were some of the biggest challenges of doing this?

HH: The biggest challenges, first and foremost, our age. That might sound like an advantage in the world of startups and tech, when move fast and break things works. But when you’re in fintech or medtech, you can’t move fast and break things. You’ll get regulators calling you. For that reason, banks are incredibly, incredibly stringent on their compliance and who they work with. So the fact that we were young did not play to our advantage. 

The second thing is the actual technology. It took us 14 months to launch our first product. For over a year, we felt like we were walking through the wilderness with basically our word: We said, “We’re gonna launch this thing.” I swear, it’s just pretty difficult and tricky. You’ve got to integrate with the core banking systems of these banks. And you got to pull credit reports and parse them accurately and get pre-approvals. But believe us, we can do it. And so all the kudos and shoutout to the amazing team and Sparrow for really sticking with it through those 14 months. 

And then the final thing is understanding our messaging. I think that product market fit should actually be defined as a product-messaging market fit. You can have a great product, but if you don’t it in a way that resonates with your end user, it’s never going to stick. We saw some good initial traction when we launched, but we really saw usage when we figured out our message.

FC: What did you learn about messaging?

HH: Well, the average user only cares about three things max, but usually just one. Becoming maniacally focused on just that one thing was important. We were trying to do too much in the beginning. So we just narrowed. We said: We’re going to do one thing, but we’re going to do that one thing really, really well. And we’re going to let others know that we do that one thing really, really well. You had to focus your messaging on that singular KPI versus trying to boil the ocean. If I were to do it again, that’s what I would start with from day one.

An example of this was we built a ton of tools to help the borrower after they’ve been pre-approved to help understand which repayment plan was the best one. We built all these bells and whistles around it, like complex data visualization. But the core of our product is you can get an apples-to-apples comparison on loans. That’s it. That’s all people care about. They just want to see their total loan cost for one loan versus another, or they want to see their average monthly payment for one loan versus another. Just do that. 

FC: There’s so much you’ve learned in terms of perspectives and different stakeholders. If you had to design a program for entrepreneurs what would you do?

HH: Experiential learning. You can only read Lean Startup so many times; you can only watch YouTube circuits and listen to “How I built this” six or seven times in a row. But you don’t really learn until you got some skin in the game and it’s you making the decisions. That’s when real true learning comes in. 

If I were to craft an entrepreneurial program, I’d say let’s get these students starting in a low-stakes environment . . . the only real way to learn is through failure, so let’s let them fail with a safety net, allow them the flexibility to go out and try things, do expect them to fail, and then help them through the iteration process. I think Stanford actually does a good job of this. You can take certain amounts of leave to try things out and then come back to school if you decide that it doesn’t work out. But I’d like to see more programs, where they’re trying to incubate startups and having entrepreneurs from the Valley come in and mentor these young aspiring entrepreneurs as they’re trying to reach those heights.

FC: Speaking of mentorship, if you had a founder on speed dial, what would you ask them?

HH: I’d ask them what percent of their time they devoted to intellectual curiosity for the sake of curiosity versus for the sake of something greater? One of my favorite books is of all time is Leonardo da Vinci, by Walter Isaacson. Da Vinci was, first and foremost, a polymath. He had this level of intellectual curiosity that is chronicled in all of Walter Isaacson’s highlights of these historical figures.

Steve Jobs, for example: When he’s looking at the GUI interface at Xerox PARC, I’m sure it was for commercial application, but he was probably also genuinely interested in just the, you know, the next phase of user interface and design. What balance do they strike in their life? Is it 60/40? Is it 70/30? For myself, I find that it’s probably like an 80/20. Most of the curiosity that I have is just for curiosity sake. The books that I read, I don’t know some would consider them textbooks and bland, but I love them. 

FC: Okay, how do you explore your intellectual curiosity?

HH: First and foremost, I try and read a book a week. I love reading; it’s like my escape. I would say the second thing is conversations with those in tangential industries that are pretty much unrelated. In New York, where I live at the moment, there’s a tremendous amount of opportunity for dinner parties. And I might go to a crypto one, for example. Student loans is very, very far away from crypto. I don’t think there’s any real application in the next two, three decades, just because of how regulated it is. But I’m genuinely interested in crypto, and who better to hear from than the people operating it themselves?

The third thing is actually trying things out. When I was younger, I would take art classes. And I loved them. I love painting, I love sketching. It’s beneficial that I did do that because it now informs how we built Sparrow, and the design aesthetic and the brand appeal that we’re going for. 

FC: What have you sacrificed to make Sparrow happen?

HH: Personal time. Something has to go right? This this is, you know, I recognize that in 2022 there’s a huge emphasis for work-life balance, and we definitely try to strike it internally for all of our team. But for myself, I don’t count the hours that I work. I count the hours that I don’t work. My personal phone number is still the customer support line. I’m answering questions on Saturday, I’m answering questions on Sunday. I will be able to answer angry calls from parents saying, Hey, don’t worry, don’t get mad at us. We’re not the lender. But we can help you. 

The second thing, I think—and this is unfortunate but true—are the ancillary friendships. The ones that are true and you care about will always be important and foundational for mental health. But the fringe friendships were the first to go. 

The third thing is exploring intellectual curiosity and hobbies. I used to do so many things. I’m a marathoner. I love painting and writing. I still run and do these races, but everything else has kind of gone to the wayside. 

And then the final thing here is the opportunity cost for the rest of our team. We try and hire super, super talented individuals that are remarkably passionate about what they do. And I recognize their time is super valuable. And the opportunity cost for coming to work with Sparrow and on our team is incredibly high. And so it’s the least that I can do to give up my time to ensure that they’re successful. It’s not just my things that are going into the wayside. It’s also our teams and the opportunity cost of what they’re giving up to come and join us.

FC: What do you want out of the future?

HH: I think a successful future is one in which a student thinks of financing education as an afterthought. I have this vision of going back to Stanford and seeing somebody on their phone, in the coffee shop, paying for school. Now, just think about that setting. It’s relaxed. It’s conversational, there’s a dialogue, they’re on their phone. First, it’s happening through a mobile experience. And it’s done in a span of them getting into the coffee shop and leaving. We are so unbelievably far from that as a society, but we see ourselves as building the infrastructure to help the industry get there. So a world in which students—and not just Americans, by the way, globally, across the world—can access American higher education. 

A little quick digression on why that’s important to me: I want to give the credit to my parents. You know, I’m Jewish and a very important part of Jewish culture is education. It was a given for my parents to try and provide the best education that they could for their children. But for the majority of Americans and people outside the United States, accessing it is so unaffordable it’s disheartening. 

Personally, I’m here for life. I realize I’m 24, and I often get a critique that I can’t anticipate the future, but at this moment, at this time, I’m here wholeheartedly. This is such an important mission. The only way I leave is if they kick me out or if I’m not good for the company anymore. But I’m here for the ride. 

FC: And finally, any last thoughts?

HH: We walked through the wilderness for at least 14 months when we were trying to build this thing and at least another six until it really stabilized. We hear stories about companies like Twitter and Snapchat, where it was just lightning in a bottle and it worked. My response to that is, it’s such an anomaly. Don’t give up hope. 

The key to entrepreneurship is finding your why. If you can find your why you can get through just about any how. And if you then extrapolate that to circumstances, you know, How am I going to raise investor dollars? How am I going to build a world class team? How am I going to find product market fit? The only thing that shouldn’t change about your business is your why. You can change your model, your product, your team, whatever it is; the only thing it shouldn’t change is that why because it’s the North star. 

Fast Company

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