On Deck Follow Up — Interview with David Booth and Erik Torenberg

A follow-up to What’s On Deck for Business School in which Jake Singer interviewed On Deck CEO David Booth and chairman Erik Torenberg. It was the first of what Singer intended as a series of founder interviews in The Flywheel.

Summary

On origins, Torenberg explains the move from in-person dinners to an online community: the events did not compound, while cohort institutions like Stanford and Y Combinator do. He calls these “curation businesses” and argues their Moats are underrated, because alumni have every incentive to keep the credential and network valuable, though such businesses are very hard to start.

On expanding into many fellowships, Torenberg cites a lesson from Product Hunt, where he was the first employee: expand only into things the first product uniquely enables and that strengthen it. Booth frames it as supply and demand, with each new program bootstrapping supply for an existing one’s demand; founders need capital, so an angel fellowship follows, and angels want deal flow, which founders supply.

On prestige versus scale, Booth says On Deck accepted under 10% of applicants and that prestige works like a credential, but that many fellows join for co-founders and hires, which favors a larger network, so growth has to be measured against any drop in prestige. Torenberg points to program utility and who has done it as the sources of reputation.

On business models, Booth notes tuition is only about a third of Harvard Business School revenue, so fees need not be the end state. Both reject the usual alternatives. Booth calls an ISA a risky, expensive form of debt that invites adverse selection when offered beside an upfront price, working for Lambda School only because the earnings jump is so clear. On equity, Booth says taking it on sub-market terms is itself adverse selection, and Torenberg says equity would push them to favor the top one or two companies, whereas for a curation business alumni NPS “is all we have.” Finally, Torenberg describes hiring from the community as deliberate: they watch which channels fellows start, build services around them, and hire the person who started it.

Key points

• Communities that compound (cohorts, alumni) are hard to start and hard to disrupt.
• New fellowships are chosen to supply an existing fellowship’s demand, and vice versa.
• Prestige and network size pull against each other; selectivity is managed as the program grows.
• ISAs and equity were rejected on adverse-selection and incentive grounds; upfront fees align fellows to get value.
• Hiring from the community is part of the flywheel.

Connections

• The Flywheel · follow-up to What’s On Deck for Business School
• People: David Booth, Erik Torenberg
• Organizations: On Deck, Product Hunt, Y Combinator, Stanford, Harvard Business School, Lambda School, Flexport
• Concepts: Moats, Credentials, Income Share Agreements, Community, Flywheels