Before CommonBond went on to disrupt the student-loan market, the firm's founder was dealing with his own loans at the Wharton School.
"I had to pay my way through B school 100 percent with student loans," recalled David Klein, cofounder of the online student-loan lender, who attended Wharton in 2011-12. "When it was time to take out my loans, I realized that the rates were too high, the customer service was poor, and the process was confusing. I knew there had to be a better way."
Founded in 2011, the firm has funded close to $1 billion in student loans and helped thousands of members with lower interest payments. The lender, which competes with San Francisco-based SoFi, recently launched an employer platform called CommonBond for Business, which enables employers to contribute to employees' student loan payments every month.
"One of my biggest learnings from my [Penn] Wharton Entrepreneurship experience was to just 'go with it,' " Klein said. "You won't know if it works until you do."
The New York-based start-up is one of the latest high-flying ventures to take flight from Wharton, long known for finance and accounting. The school's Venture Initiation Program, established in 2001, now helps more than 50 student-founded companies annually across sectors from biotech to restaurants.
At Wharton, CommonBond used a data-based approach to validate its model. Klein and his cofounders surveyed the first-year class to learn that getting student loans was not a pleasant experience. With this data, the company got its first round of financing from Wharton alums and piloted first at Wharton.
"Within 24 hours of launch, we already had $2.5 million worth of loan applications," he said. "More students wanted these loans than we had funding."
CommonBond relied on the Wharton network for more than just financial resources. Klein recalls a key conversation he had with Warby Parker co-CEO Neil Blumenthal on incorporating a social mission into a for-profit business.
The online lender has since donated over $400,000 to fund the education of thousands of children in need. Klein and his team also found their law firm through a referral from another Wharton alum, Rohan Deuskar CEO of Stylitics, which compiles a digital version of your closet.
While much of the focus in start-ups centers on founders, the managing director of Penn Wharton entrepreneurship, Clare Leinweber, believes that the first hires play an equally critical role in shaping the company. The joiners, as she calls them, use the tools of the Venture Initiation Program to enter the start-up community.
"Joiners aren't afraid to dig in to solve problems and are just as tolerant of risk as founders," she added.
In fact, CommonBond has recruited at least one Wharton MBA intern each year for the last five years. Klein is pleased by the quality of interns and hopes the trend will continue.
Even with such success, Wharton emphasizes acquiring life skills over financial results, especially with student entrepreneurs. The program was designed to help students finish their degrees and get practical experience in start-ups, Leinweber said.
"Our primary mission has always been educational," Leinweber said. "Even if the students don't succeed in building a successful business, we're satisfied if they learn the essential skills it takes to thrive in this environment."
Part of this learning is realizing how to engage with customers early on to build a company that addresses a significant need, as Warby Parker and CommonBond did. Knowing when an idea just isn't working is also important
"The entrepreneur is confronted with difficult choice when things don't work out," she noted. "Ultimately, we want to empower our students to make these personal decisions with maturity and confidence."