When Kalpesh Kapadia arrived in the United States in 1995, a lesson in the harsh realities of the American credit system left him determined to make a difference.

An overachiever in his native India, he found that getting credit in the U.S. was nearly impossible. “I was considered credit invisible by the financial system. And that stuck with me,” he says. Kapadia’s sister arrived in 2012 at the top of her class to study in California, but she couldn’t lease a car or get a credit card.

After graduating from the Tepper School in 1999, Kapadia worked as a highly regarded research analyst on Wall Street for six years before founding his own company, a hedge fund that invested in public equities in the U.S. and Asia. He did that for another seven years before founding Deserve in 2014.

Kapadia saw millions of international students or new workers who were in the U.S. And when he looked at the entire demographic of 18- to 29-year-olds — not just limiting his scope to immigrants — he realized he was looking at a potential market of 40 million people. He founded Deserve with a mission of creating a more equitable playing field.

In addition to providing credit, Deserve also strives to educate its customers about the monetary value of a good credit score and provides incentives for sound credit practices: movie tickets for a history of on-time payments, for instance.


What is your elevator pitch?

In Our mission is to provide value to deserving but underserved 18- to 29-year-olds. We provide access to their first credit. We don’t want to abuse that relationship the way banks do; we want to promote good credit behavior, such as making payments on time or making payments in full. Ultimately, we want to guide customers to building a positive credit history and a good credit score. In that way, they can become financially independent. We stress access, advocacy and independence.


What was the “aha” moment?

In When I first started the company, I spoke with all of the large banks. We had a lot of meetings, but there was no action. Then I said, “OK, let me talk to marketing folks instead of credit folks. They’re always looking for new customers.” When I talked to the marketing people, I discovered the amount they were willing to pay for bringing them high-quality new customers. If I were to own the customer and to act from start to finish, I could make about $500 per person, as opposed to $60 per person for bringing them to the bank. I followed the money, and that’s what caused me to act on that business model.


What skills did you have to learn to get this off the ground?

The classic MBA training: business education that I received in corporate finance and quantitative analysis, as well as my years of experience on Wall Street, and understanding how money works, if you will. I put those together with my ability to raise money and come up with a business model that has predictive value.


What were your pivotal moments?

That realization that we were going to work directly with the consumer and not marketing, that was one; expanding beyond the original niche of international students to all 18- to 29-year-olds; rebranding the company to Deserve. These were all small steps, but there’s a lot of work that leads you to these moments.


How about growth?

Audience and market expansion is a way of growing the business. I have a framework for how I run the business as an entrepreneur: I am the founder who had this pain point. Mark Zuckerberg couldn’t get a date, so he sat in his dorm room and came up with Facebook. Travis Kalanick and Garrett Camp couldn’t get a cab and started Uber. It’s the point of asking: Is my problem experienced by others? I started to realize as I acquired customers that this problem exists for many young people. If you don’t use or build credit, you don’t have credit. Then I applied data, science and technology to scale the business with the help of money and smart people around me to determine if I’d create positive ROI on it.


What skills did you have to learn to keep things moving?

Persistence — people call it grit sometimes. That’s not something you learn in school. It’s determination to solve the problem and build the company. Learn to take rejections well, because you are going to be rejected. You have to have optimism that things will work out, and they do, if you keep plugging away. Those are things that formal education doesn’t tell you. [An MBA] is an insurance policy that you’ll get a certain amount of compensation, but it doesn’t guarantee success. To me, it helped to have the ability to take calculated risks and adjust as I was faced with new information.


What is next for your company?

I think there are something like 550 million credit cards out there, and consumers average 3.2 cards per adult. It’s a large market. It’s like rungs of a ladder that we climb. Maybe there is a product outside of credit cards that fits naturally. For example, we’d like to offer credit cards like a banking or checking account that doesn’t charge you several different kinds of fees. Why should you pay to keep your money somewhere?


What key piece of information gets overlooked when getting started?

Test your conviction. If I give you a rational reason to avoid quitting your job and starting a company, and you still want to do it, it means you really want to do it. That’s important, because there will be times when you feel like quitting. So if I can convince you before you even start that you shouldn’t do it, then don’t do it, because you will quit when it gets tough. Ideas die in people’s minds. I’ve had Carnegie Mellon students call me. When they do, I will not respond the first five times they call. I know it may sound counterintuitive, but I’m testing their conviction.


How did business school help shape your company?

Coming here from India and going to college, sitting next to American friends who had financial aid while I had to pay the full boat, even though we had the same seat and got the same jobs — it made me think: There is a gap here. I didn’t have access to financial resources that people take for granted. You have to fight for it. A business degree helped me get a job and access the CMU network that served me very well. It all helps — my friends, my fellow alumni. It was a combination of multiple things that made a difference.


What is the best advice you have received?

If you don’t ask, the answer is no. People are afraid of asking. If you ask, you have three possible outcomes: maybe, yes or no.


What “big ideas” would you like to pursue next?

In There is clearly an opportunity to build a bank for the future. A lot of big bank infrastructure is rooted in the 20th century, and more than half of young people have never visited a bank.

Money is a digital product; I mean, who carries cash with you? There are stores in New York and San Francisco that don’t even accept cash. There are 35,000 bank branches in the U.S., and they’re going the way of the brick-and-mortar store, à la Blockbuster and Sears.