How did she do it? A Q&A with Judith Erwin, CEO of Grasshopper Bank

By Barbara Yastine, Managing Director of Golden Seeds

October 17, 2019

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Judith Erwin, CEO of Grasshopper Bank

Judith Erwin has experienced several firsts as the female CEO of Grasshopper Bank, a startup commercial bank for entrepreneurs and the VC firms that fund them. Grasshopper was the first bank chartered by the Office of the Comptroller of the Currency in the Northeast in over ten years, the ninth bank to receive a charter since the 2008 financial crisis, and the first commercial bank that plans to fully utilize digital banking in the commercial banking space. Barbara Yastine, Golden Seeds investor and former Chair & CEO of Ally Bank, sat down with this trailblazer to find out more about her path and what entrepreneurs can look forward to from this exciting women-led financial institution.

BY: Tell us about the origins of your company.

The name Grasshopper comes from Adm. Grace Hopper, a Naval computer programmer in the 60s and 70s who was part of the team that developed the very first computer language on which banking was built. In addition, grasshoppers can’t jump backward or sideways, only forward. We saw that as a metaphor for our company moving forward an industry that has been stagnant for years.

BY: What market need are you solving, and how is your approach different from how others have addressed this need?

Additionally, our business model allows us to underwrite a loan for less money than the big banks, so we are able to provide loans to companies that may not have a chance at being granted them otherwise.

BY: Grasshopper describes itself as serving the Innovation Economy. How do you define Innovation Economy, and what types and stages of companies are you targeting to do business with?

BY: What challenges have you encountered along the way? How have you overcome them?

As a startup, it’s a challenge to find great team members consistently. I’ve learned that there are people with a skill set for specific parts of your journey. I’ve had to learn how to know when to let them go and find new people based on the company’s next stage.

Finally, the licensing and approval process was also a long, expensive journey for us. I was the first bank to apply for a charter in 12 years at the Office of the Comptroller of the Currency in the Northeast so no one there knew how to do it, and they had never approved a digital venture bank before. We applied for the license in October 2017 and were finally approved in April 2019.

BY: What advantages does Grasshopper offer early stage companies?

We can also introduce them to potential investors like Golden Seeds because we have strong relationships with the investor world. We can help them choose a commercial real estate broker or an insurance broker. There are many ways that we can deploy our whole ecosystem for them.

BY: What products (both on the deposit/cash management side and the loan side) are you offering now and plan to offer? Should potential clients think of Grasshopper as a full-service bank?

BY: You’ve spoken about how Grasshopper tests new features with groups of customers every two to four weeks and get their feedback — “minimum loveable product.” Can you talk more about this? Can you share one of the most recent features you tested that was a success?

One example of this is when we introduced online account opening, which is very unusual for a business bank. In a seven-minute chat on your phone or computer, you can do everything necessary to apply for a business account. By the time you hit submit, everything like money laundering and background checks have already been done. Typically, you have to physically go into a branch and sometimes the bank asks you to bring your whole management team. It can take two weeks to get the account set up while they’re filing paperwork, conducting background checks, etc. CEOs shared with us that they needed a more efficient solution so we were able to provide it for them.

BY: What’s coming up next for your company? Any big milestones on the horizon?

BY: Grasshopper is a fully digital bank with no plans to open branches, other than some offices for loan officers. What advantages or disadvantages does this digital model bring to potential clients?

BY: What advice do you have for early stage founders about raising money, growing a team, fostering company culture or other issues you’ve had to address?

Be sure to ask for help. As a founder, I have learned humility. Developing my own network of other CEOs and professional women in other industries that I can turn to when I have a question or need help is really important.

Lastly, don’t be afraid to make the hard decisions. Being a CEO can be a lonely job and sometimes you have to make unpopular decisions because they are right for the company.

BY: Do you have any lessons learned that you can share with other startup CEOs?

Additionally, don’t let perfect get in the way of good. This has been something I say to myself five times a day right now!

BY: What role has mentorship (both as a mentee and mentor) played in your career?

BY: Tell us about your experience with Golden Seeds. How has the Golden Seeds network been helpful to you?