Co-founders: Jennifer DeAngelis, MBA 19 and Lea Yanhui Li, EMBA 19
Jennifer DeAngelis presenting at TechCrunch Disrupt. Photo credit: David C. Hill.
When Jennifer DeAngelis worked in digital media, she kept hearing from clients concerned about trust issues: brand owners felt that influencers didn’t do enough for the amount of pay they received. Influencers said brands expected too much for the pay they were willing to give.
“On top of that, there was the issue of fraud: influencers buying followers to attract brands,” she said.
DeAngelis thought she could offer something better. She connected with Lea Yanhui Li, EMBA 19, a former Oracle software and technology engineer, and together they created SuiteSocial—an online marketplace that influencers and brands can use to collaborate. Using artificial intelligence, SuiteSocial helps brands find relevant influencers for their online campaigns and empowers influencers to promote their talents and assess a fair payment for their posts.
DeAngelis knows how to think and act as both a social media influencer and brand strategist. When she was 21, she vlogged about her Peace Corps experience in Albania on YouTube. After her video received more than 100,000 views, she realized that she had a knack for creating engaging content. She previously worked creating digital campaigns for Hilton Hotels & Resorts, The Four Seasons, and Bass Pro Shops. Today, she is considered a “micro-influencer,” someone who has 10,000-30,000 followers on her social media platforms.
At Haas, she took Entrepreneurship 295 and Network Effects with Lecturers Kurt Beyer and Prashant Fuloria, which gave her the confidence and business acumen to develop SuiteSocial.
Along the way, she sought advice from mentors, including Michael Wilson, eBay’s employee #5, and Rhonda Shrader, executive director of the Berkeley Haas Entrepreneurship Program. It was Shrader who encouraged DeAngelis to participate in the LAUNCH Accelerator Program, where she won $10,000 in seed funding. Thereafter, DeAngelis won $5,000 from the Trione Student Venture. Soon, she plans to begin fundraising for more capital.
Co-founders Lea Yanhui Li and Jennifer DeAngelis at Techstars LaunchPad Propel Day.
Since launching SuiteSocial, DeAngelis and Yanhui Li have acquired five clients, including credit card company TomoCredit, on-demand car rental startup Kyte, and New York-based barbecue restaurant, Smok-Haus. (TomoCredit and Kyte were founded by current and former Haas students.)
TomoCredit’s CEO Kristy Kim said SuiteSocial has been a great platform to promote her credit card. “Thanks to SuiteSocial, TomoCredit was able to find the right Instagram influencers to work with.”
Ultimately, DeAngelis’ wants SuiteSocial to be a one-stop shop for content creators and brands. “We want to be so much more than just matching brands and influencers,” she said. “We want to be the platform destination where brands and influencers can go and fulfill all their business needs, replacing traditional agencies.”
Face-to-face meetings between mortgage officers and homebuyers have been rapidly replaced by online applications and algorithms, but lending discrimination hasn’t gone away.
A new University of California, Berkeley study has found that both online and face-to-face lenders charge higher interest rates to African American and Latino borrowers, earning 11 to 17 percent higher profits on such loans. All told, those homebuyers pay up to half a billion dollars more in interest every year than white borrowers with comparable credit scores do, researchers found.
The findings raise legal questions about the rise of statistical discrimination in the fintech era, and point to potentially widespread violations of U.S. fair lending laws, the researchers say. While lending discrimination has historically been caused by human prejudice, pricing disparities are increasingly the result of algorithms that use machine learning to target applicants who might shop around less with higher-priced loans.
“The mode of lending discrimination has shifted from human bias to algorithmic bias,” said study co-author Adair Morse, a finance professor at UC Berkeley’s Haas School of Business. “Even if the people writing the algorithms intend to create a fair system, their programming is having a disparate impact on minority borrowers—in other words, discriminating under the law.”
A key challenge in studying lending discrimination has been that the only large data source that includes race and ethnicity is the Home Mortgage Disclosure Act (HDMA), which covers 90 percent of residential mortgages but lacks information on loan structure and property type. Using machine learning techniques, researchers merged HDMA data with three other large datasets—ATTOM, McDash, and Equifax—connecting, for the first time ever, details on interest rates, loan terms and performance, property location, and borrower’s credit with race and ethnicity.
The researchers—including professors Nancy Wallace and Richard Stanton of the Haas School of Business and Prof. Robert Bartlett of Berkeley Law—focused on 30-year, fixed-rate, single-family residential loans issued from 2008 to 2015 and guaranteed by Fannie Mae and Freddie Mac.
This ensured that all the loans in the pool were backed by the U.S. government and followed the same rigorous pricing process—based only on a grid of loan-to-value and credit scores—put in place after the financial crisis. Because the private lenders are protected from default by the government guarantee, any additional variations in loan pricing would be due to the lenders’ competitive decisions. The researchers could thus isolate pricing differences that correlate with race and ethnicity apart from credit risk.
The analysis found significant discrimination by both face-to-face and algorithmic lenders:
- Black and Latino borrowers pay 5.6 to 8.6 basis points higher interest on purchase loans than White and Asian ethnicity borrowers do, and 3 basis points more on refinance loans.
- For borrowers, these disparities cost them $250M to $500M annually.
- For lenders, this amounts to 11 percent to 17 percent higher profits on purchase loans to minorities, based on the industry average 50-basis-point profit on loan issuance.
“Algorithmic strategic pricing”
Morse said the results are consistent with lenders using big data variables and machine learning to infer the extent of competition for customers and price loans accordingly. This pricing might be based on geography—such as targeting areas with fewer financial services—or on characteristics of applicants. If an AI can figure out which applicants might do less comparison shopping and accept higher-priced offerings, the lender has created what Morse calls “algorithmic strategic pricing.”
“There are a number of reasons that ethnic minority groups may shop around less—it could be because they live in financial deserts with less access to a range of products and more monopoly pricing, or it could be that the financial system creates an unfriendly atmosphere for some borrowers,” Morse said. “The lenders may not be specifically targeting minorities in their pricing schemes, but by profiling non-shopping applicants they end up targeting them.”
This is the type of price discrimination that U.S. fair lending laws are designed to prohibit, Bartlett notes. Several U.S. courts have held that loan pricing differences that vary by race or ethnicity can only be legally justified if they are based on borrowers’ creditworthiness. “The novelty of our empirical design is that we can rule out the possibility that these pricing differences are due to differences in credit risk among borrowers,” he said.
Overall decline in lending discrimination
The data did reveal some good news: Lending discrimination overall has been on a steady decline, suggesting that the rise of new fintech platforms and simpler online application processes for traditional lenders has boosted competition and made it easier for people to comparison shop—which bodes well for underserved homebuyers.
The researchers also found that fintech lenders did not discriminate on accepting minority applicants. Traditional face-to-face lenders, however, were still 5 percent more likely to reject them.
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The Startup Roundup series spotlights students and alumni who are starting a new business or enterprise.
Federico Alvarez del Blanco, MBA 18
John Kim, PhD 18 (UC Berkeley/UCSF Bioengineering)
Hector Neira. PhD 18 (UC Berkeley/UCSF Bioengineering)
Robert Kim PhD candidate (UCSD MD/PhD, Neuroscience)
Busy surgical teams inadvertently leave an instrument inside a patient an estimated 1,500 times a year in the U.S. alone, according to research. Less frightening, but still problematic, is the considerable cost to hospitals that bring instruments into the hospital that are never used, but must still be sterilized or restocked—as well as delays that happen when the required instruments fail to make it to the surgical tray.
Solving those problems is the focus of Vidi, a fledgling company launched last November by Federico Alvarez del Blanco, MBA 18, and three other University of California graduates. “Tracking surgical instruments, is slow, manual, and error-prone,” Alvarez del Blanco says.
The team’s inspiration came while they were attending a workshop on visual recognition sponsored by information technology company NEC on the Cal campus. “We realized that the technology being used to develop self-driving cars could have wider applications in the medical field,” he says.
The heart of the Vidi system is a camera mounted in the operating room and connected to a computer. The system scans the surgical tray, recognizes the instruments on it, and keeps track of them. When the surgery is concluded, the system gives the team a readout of each item that was in the cart at the beginning of the procedure and lets them know if anything is missing.
The really difficult part of developing the system is training machines to correctly recognize hundreds of instruments, Alvarez del Blanco says. It’s similar to the technology self-driving cars need to recognize objects and react accordingly. That’s why Vidi team members have advanced degrees in fields such as bioengineering, neuroscience, and image recognition.
Although Vidi, which means “to see” in Latin, is very young, it has already gained a good deal of recognition. The team was awarded a Haas Dean’s Seed Fund grant last year; earned a second-place win at the University of California Big Ideas Competition in 2018; and won awards from NEC and the National Science Foundation’s I-Corps program.
Alvarez Del Blanco says his time in the MBA program helped him build the connections he needed to launch Vidi. “Haas has an interdisciplinary approach that gave me access to ideas and people across the entire University of California system,” del Blanco says.
If you’ve ever had dealings with a law firm, you’ve probably gotten a detailed bill with line items for everything from reviewing files to drafting documents to answering emails. While it may seem cut-and-dried, billing clients is actually a burdensome, error-prone task that costs law firms potentially billions in wasted time and lost revenue, says Kourosh Zamanizadeh, MBA 18, co-founder and COO of Ping.
A Berkeley Haas-nurtured startup, Ping uses artificial intelligence, machine learning, and cloud computing to automate legal billing. The software tracks, stores, and analyzes the time attorneys spend on a case, and then creates client-ready bills. It’s early days, but Ping has already attracted significant funding from top-tier venture capital firms (a public announcement is pending), along with a $5,000 grant from the Dean’s Seed Fund. It was named “Legal Tech Startup of the Year” in 2017 by the American Bar Association.
Ping has landed its first large client, Mishcon de Reya, a London-based law firm employing more than 800 people, says Zamanizadeh. Ping has already run a successful pilot and the firm has committed to expanding it company-wide within the year. Zamanizadeh also expects to start trials with a number of other global law firms later this year—a business expansion that will require a larger technology team.
Zamanizadeh and co-founder Ryan Alshak met while undergraduates and fraternity brothers at Cal a decade ago. “We always dreamed of starting a company together and decide to take the leap in 2016,” he says. “We both left our careers and just went for it.” The startup team has a deep lineup of relevant talent: Alshak is a former lawyer; Matt Bordas and Janesh Gupta are software engineers; Eric Zaarour is a designer; and Zamanizadeh has experience in business development and investment management.
This is the second startup for the five-member team, who made an earlier, unsuccessful attempt to build a company around an app for exchanging contacts. The team hit upon the idea of focusing on legal technology and they were accepted by Skydeck, the accelerator run by Berkeley Haas, the College of Engineering, and UC Berkeley, where they had a home base to develop their idea further.
“The startup ecosystem at Berkeley has very much matured since Ryan and I first met as undergrads. It’s truly world-class,” says Zamanizadeh, who credits Skydeck Executive Director Caroline Winnett and Ikhlaq Sidhu, chief scientist and founding director of the Sutarja Center for Entrepreneurship & Technology, for their extra support. “The environment has been very empowering and the help we’ve received couldn’t be any more genuine.”
Efficiently buying and selling bitcoins and hundreds of other cryptocurrencies is not a problem most people have. But as these hypermodern currencies become more of an investment and less of a curiosity, investors will need a simple way to manage their crypto-portfolios.
That’s the market Dustin Seely EWMBA 18, co-founder of Cryptonite, is going after. “We’re going to give investors a way to invest in the entire cryptocurrency market in one place, and do it in U.S. dollars,” he says.
Seely and co-founder Michael Brenndoerfer met in a Berkeley Haas entrepreneurship class, and then took the new, multidisciplinary “Blockchain and the Future of Technology, Business and the Law” course last spring, where they learned more about the technology underlying cryptocurrencies. Their young company was awarded a Dean’s Seed Fund grant and is expected to go live in the fall.
The cryptocurrency market is volatile and expanding, with a market cap of about $250 billion in mid-July (down from a peak of more than $800 billion in January). Although bitcoin is the most valuable and most widely known, there are now more than 1,600 cryptocurrencies sold on almost 12,000 scattered exchanges, according to CoinMarketCap. What’s more, many of those exchanges do not accept dollars, so doing business with them requires buyers to slog through complicated, multi-step trading procedures. Buying a cryptocurrency called Zilliqa, for example, means buying a bitcoin in dollars, and then using the Bitcoin to purchase the Zilliqa, Seely explains.
Cryptonite will serve as a middleman between investors and other exchanges. Account holders will be able to buy cryptos in dollars without dealing directly with other exchanges, and manage their portfolio on a mobile device, Seely says.
At the moment, cryptocurrencies are only lightly regulated, but Cryptonite is preparing for the future. “Securities regulations are coming to the space and we welcome it,” Seely says. “Regulation will give further legitimacy to the market and we can use it as a competitive advantage when we become fully compliant.”
Ashley Lannquist established herself as an up and coming fintech leader well before she crossed the stage at commencement at the Greek Theatre last week.
Aside from penning a popular blog about blockchain, serving as co-president of the Haas FinTech Club, investing in more than a dozen cryptocurrencies, and consulting and interning in the industry, Lannquist, MBA 18, is now deeply involved with a new global blockchain venture backed by some of the world’s largest auto companies.
Earlier this month, she helped launch the Mobility Open Blockchain Initiative (MOBI), a consortium aimed at developing applications for blockchain in the auto and related industries. She was also appointed to the board of directors of MOBI, which is backed by BMW, Ford, General Motors, and Renault, as well as an A-list group of suppliers, consultancies, and technology companies.
“We’re setting technology and data standards, and developing them with multiple hands on deck to address industry-wide problems,” said Lannquist, who serves as MOBI’s treasurer. “More than 70 percent of global vehicle production is represented in MOBI.”
Blockchain’s big auto move
Blockchain is one of the hottest areas of development in the field of financial technology, or fintech. Blockchain started as a decentralized electronic ledger system for transactions involving bitcoin, the leading digital cryptocurrency. The technology’s association with the cryptocurrency world has given it a dubious image in some circles. But proponents stress that blockchain’s underlying technology of transparent and secure digital records shared in networks of computers has the potential to revolutionize the economy.
In the automotive field, blockchain may someday be used to track auto parts through the supply chain, or to verify odometer settings and repair and maintenance records to stamp out fraud in used-vehicle sales, Lannquist said. Blockchain may also pave the way for decentralized ride-sharing apps, with drivers and riders using peer-to-peer technology instead of going through services like Uber and Lyft.
A South Florida native and former Florida state taekwondo champion, Lannquist arrived at Haas with her sights set on fintech. She was awarded the Haas School’s C & J White Fellowship based on her essay about wanting to help start a fintech club at Berkeley, which she proceed to do before she matriculated.
“She started that essay with a (William Gibson) quote that is strikingly prescient: ‘The future is already here — it’s just not evenly distributed,’” said William Rindfuss, executive director for strategic programs in the Haas Finance Group. “I’m incredibly proud of what Ashley has achieved as a Haas student.”
A digital currency investment pays off
During her first year at Haas, Lannquist joined Blockchain at Berkeley, a student-run organization drawing members from across the university. She took a blockchain course sponsored by the group called “Blockchain Fundamentals” and was hooked. One of her assignments was to open a cryptocurrency investing account and buy some bitcoin. The timing was perfect. Lannquist had started investing just before bitcoin and other digital currencies started their epic bull run.
The profits she pocketed paid her tuition and allowed her to cover the cost of an independent study on blockchain in Germany and Denmark last summer. While there, she wrote and published a three-part blockchain series on Medium, which is still widely read.
While in Germany, she met a blockchain expert working for Daimler, the German automaker, who introduced her to the automotive uses of the technology.
When Lannquist returned to Berkeley, Ronen Kirsh, Blockchain at Berkeley’s co-head of consulting, asked her to lead a project to help BMW develop its blockchain strategy. In that role, she met Chris Ballinger, CFO of the Toyota Research Institute in Los Altos, who asked her to help him organize an industry-wide blockchain consortium. Since last November, she and Ballinger have met monthly with automakers and industry startups from Detroit, Europe, and Japan, contacts that led to the foundation of MOBI.
Meanwhile, Lannquist also publishes a widely followed blockchain blog and advises a venture capital fund and a hedge fund on blockchain strategy. While at Haas, she initiated and helped teach a three-day executive education course in blockchain at the UC Berkeley School of Law.
These efforts have made her a rising star in the burgeoning blockchain community and won her a dream job. After graduating, she will work as a blockchain project lead in the San Francisco office of the World Economic Forum, the foundation famous for its elite annual conference in Davos, Switzerland.
There is no question but that diving into blockchain was a great career move. But for Lannquist, it was a natural progression. “I was just interested and excited about the technology,” she stressed. “It was compelling and I was excited to be involved with it.”
It’s easy enough to find a computer science class that covers the bits and bytes behind blockchain—the global digital ledger that’s linked and secured using cryptography. More difficult is finding a curriculum that tackles the potentially disruptive business, legal, and regulatory implications of the complex new technology.
That’s about to change, as Berkeley Haas in spring 2018 offers a cross-listed class to business, engineering and law students. Called “Blockchain and the Future of Technology, Business, and Law,” the new course will provide an overview of the technology behind blockchain and explore the huge range of current and potential real-world applications.
“Blockchain is one of the most significant technologies to impact business in many years, but there’s a lack of understanding about what it means to business and law,” said Haas Lecturer Greg La Blanc. “Engineering students think that money simply grows on bits, but have no idea what the business model is. Law and business students are confused about the technology.
The course is limited to 60 students, 20 each from Haas, Berkeley Engineering, and Berkeley Law. They’ll work in mixed teams of six to produce a proposal for a workable blockchain-related business plan by semester’s end.
What is blockchain?
Blockchain is a decentralized and encrypted method of tracking digital assets. It’s designed to operate without any central company or government in charge, so that no single party can change records they didn’t create. Blockchain is often associated with digital currencies such as Bitcoin—but the technology covers far wider territory. Blockchains are being used to do everything from protecting digital identities in Estonia to removing contaminated turkeys from the supply chain in Texas—and it’s become a trendy investment in Silicon Valley.
La Blanc, who teaches finance and strategy at Haas, is the course co-founder, along with Adam Sterling, executive director of the law school’s Berkeley Center for Law, Business and the Economy, and Engineering Professor Dawn Song, a MacArthur Foundation Fellow. All three will teach during throughout the course, along with engineering post-doc Raymond Cheng.
Sterling, JD/MBA 13, who enrolled in La Blanc’s finance class as a Berkeley MBA student, said the two have stayed in touch, working on various projects since he left. The new course came out of a meeting the two held with Song. “We saw so much overlap in what we were doing,” Sterling said.
La Blanc said the 15-week course will include lectures on topics such as the history of money and currency, the founding of Bitcoin, and the stories behind the industry experts who are building cryptocurrency products. The course will include a variety of guest speakers.
Pitching to VCs
By the end of the course, each student team will create a blockchain-related business plan “that is technically feasible and regulatory compliant,” Sterling said. Members of the VC community will judge the students’ pitch decks and their computer code, as well as their legal memos.
Interest in the course and in blockchain across campus is strong. Blockchain at Berkeley, founded a year ago, now has 100 members and more than 1,600 people participating in the club’s events and activities, says Ashley Lannquist, MBA 18, one of the group’s consulting managers.
“Students see this as a very impactful emerging technology that will play large role in the future, and they want to understand it and effectively participate,” Lannquist says.
“Blockchain does have the potential to be a really disruptive technology for many industries,” Sterling said. “There’s a lot of excitement around the early applications, but we’re especially excited for the long-term implications and that’s what we want to equip our students to understand.”
Three years ago, Elizabeth Foster was a Peace Corps volunteer in Rwanda building a cooperative-owned business that helped farmers address malnutrition and unemployment.
Today, Foster, MBA 18, is among 12 first-year Berkeley-Haas full-time MBA students, six of them women, who recently received Finance Fellowships.
William Rindfuss, executive director of strategic programs for the Berkeley-Haas Finance Group, noted the increased number of women in this traditionally male-dominated area, as well as a growing number of students interested in entrepreneurial finance in this year’s recipient pool.
Other recipients of 2016 Berkeley-Haas Finance Fellowships include :
—Caitlyn Driehorst, Amanda Eller, Molly Brister, and Alvaro De Rivera, who, like Foster, received Entrepreneurial Finance Fellowships.
—Clarissa Berman, Diego Dias, and Maeyce Rebelato, who received Investment Banking Fellowships.
—Nathaniel Boersma and Jeff Oldenburg, who received Investment Management Fellowships.
—Francois-Jerome Selosse and Ashley Lannquist, who received CJ White Fellowships.
Finance Fellowships are awarded to students with strong career goals who serve as Haas ambassadors to alumni and the broader finance community. Recipients receive a cash award and priority enrollment for finance electives. Most importantly, they are paired with a mentor, often a Haas alumnus/alumna, who works in finance.
Foster is already receiving important advice from her mentor, Andrew Krowne, MBA 14, a principal at Dolby Family Ventures, who was also awarded a Finance Fellowship while a student at Berkeley-Haas.
“Given my social sector background, there’s a lot I’m trying to learn quickly, and he has been very helpful—whether he’s explaining the different kinds of funds to me or keeping his ear to the ground and telling me about opportunities I might not hear about,” says Foster.
Next year, Foster will serve as a principal of the Haas Socially Responsible Investment Fund. She is currently active with the Berkeley-Haas Net Impact Club and the Berkeley-Haas Finance Club. Foster and Boersma were also elected co-presidents of the Investment Club, and will take on those roles in January.
Selosse looks forward to working with his mentor, Haas alumnus Mike Pearce, MBA 08 and managing director of global investment at consulting firm Cambridge Associates. “He’s a very experienced and knowledgeable professional in the investment world who has already given me valuable feedback and advice.”
Caitlyn Driehorst is another MBA student benefiting from an Entrepreneurial Finance Fellowship to expand her career in fintech, an industry composed of companies that use technology to provide financial services.
“The mentorship is one of the most exciting aspects of this fellowship,” says Driehorst, MBA 18 and co-president of the Berkeley-Haas FinTech Club. “Since the fintech space is innovating and changing quickly, access to mentors who are currently in the trenches is so helpful for understanding how to think about my career after Haas.”