The Exchanges

Q So how did that product roadmap evolve from the first GPLP fund to what's happened since?

A I think they evolve along a number of dimensions. So one of them is around scale. So the first fund was twelve million dollars. We've had days now where we've deployed that much capital. That fund lasted us the first year plus. One of the things, even as we started to grow, which was another chicken and egg problem, is as we'd start to talk to people who had the capacity to write hundred million dollar types of checks or more, and we've had some write even bigger checks, they'd say, well, if I commit to you, I need to put this money to work, and you've shown no proof that you actually could go deploy this amount of money for me. And I'd say, well, it's pretty difficult for me to prove that I could deploy a hundred million dollars if I don't have a hundred million dollars. The second one I would say is around financing. So historically, what makes the mortgage world work is the availability of warehouse financing and of securitization, which allows for both investors to seek a levered return and also through the securitization market, be able to achieve some level of liquidity so that they can take that capital back and in many cases, then go recycle it and redeploy it. So for example, our first fund, there was no warehouse facilities available. People hadn't heard of the HEI industry, the home equity investment industry, and we were literally seven years away from there being a…

AI assessment note: “I think they evolve along a number of dimensions. So one of them is around scale.”

Q Why don't you take me back to your path that led to where you are today?

A Interestingly, I would say I started my career before college. I did well in school. I got into some good colleges. They're expensive. Even after with financial aid and loans and grants and all the things we knew was going to be super tough. So the summer before I went to college, I was just trying to get whatever job I could make the most money. I wound up working in a trucking company that delivered office furniture. I thought it was pretty cool. At the time, I was viewing it as, oh, I'm getting paid really well to get in shape, lift credenzas, and put them on trucks, and it was hot, and it was New York City. It was not a glamorous job, but I wound up having a meeting with one of the companies whose furniture they delivered. The dealer of office furniture. And I said to the owner of the office furniture company, I said, Hey, I'm delivering furniture. It's fine. But is there anything I could do here in the office? And he said to me, well, no, the only job we have open right now is a commission based sales role. There's no training. There's no salary. There's no draw. There's no nothing. We sell to companies here in Manhattan. You're a high school kid. And I said, great, I'll take it. So I would argue that my real career and understanding how do you build relationships and how do you think about customers and value proposition and delivering started back then. I spent the first…

AI assessment note: “Interestingly, I would say I started my career before college.”

Q It's amazing, Jeff. Before we go, I want to make sure I get to ask you a couple of fun closing questions. What is your favorite hobby or activity outside of work and family?

A I'll preface by saying I am not a particularly gifted basketball player. I've always loved playing basketball. I played a lot when I was a kid. I was an adequate intramural level basketball player just to set the expectations. But my favorite thing to do is I blow off steam by shooting free throws. I find it so relaxing. I still am baffled why I cannot get myself to shoot a hundred percent because it's the same motion and nothing's moving. And unlike Steph Curry, I'm not shooting after running 48 minutes up and down a court with defenders on my back. I'm just standing there shooting free throws, but I would say that is my favorite individual thing to do.

AI assessment note: “my favorite thing to do is I blow off steam by shooting free throws.”

Q Once you got that infrastructure part squared away, so you've got that regulatory piece, you've got the structure, How did you solve the chicken and egg problem?

A In general, the way you solve a chicken and egg problem is you ratchet up the chicken and the egg a little bit at a time until they're almost exactly at the same place at the same time, and then metaphorically close on both of it in a synchronistic way. That's conceptually how you do it. In practice, what we did was we put our money where our mouth was, which we took some of our own operating capital in the beginning, And we made the first set of investments with capital that we had raised into HomeTap, which not only strengthened our systems and got the kinks out, it also helped us prove out the value proposition to homeowners, got us talking to homeowners, understanding what they like and didn't like, and not just that the product was the right product, but the way we delivered it was in a way that was easy for them to understand and transparent and clean. One of the really interesting lessons that I've definitely learned over the last seven coming up on eight years Is that for a business like ours, you have to think about your value proposition and who your customer is on the capital side, like a product roadmap. It evolves over time and what your value proposition is on day one and who that value proposition resonates with on day one is different than what that looks like in year three and in year five. And now in our case, coming up on year eight. So in the earliest days, …

AI assessment note: “In practice, what we did was we put our money where our mouth was”

Q If you break down what you've had to do beyond culture and then team into the practical aspects of building this platform, what have you had to build along the way to operationalize this so you can continue to solve the chicken and egg problem?

A I think one of the unsung strengths sometimes of a company like HomeTap is how much we do with respect to the use of data and technology to drive operational benefit and scalability. We have a pretty sizable product engineering design and data science set of teams. We do think about three constituents internal to HomeTap. One is our homeowners. We're trying to continuously think about building a user experience that helps them understand what they're doing, makes it easy to do it, interact with us well, puts as much work as possible on our shoulders and takes it off of their back and really be best in class in terms of a user experience. The second part is in order to achieve this kind of scale, you have to have systems and processes in place that allow for that you to scale without making mistakes. So we have built an enormous amount of operational technology to support the application process, the underwriting process, the signing and funding process. And then the third group that we think about in terms of technology and capabilities is the capital side. And a lot of that has to do with reporting and how we're able to move money back and forth and to give them an understanding of the size of their portfolio and how it's performing. Some of that now is an operational component. We've done just this year, multiple securitizations. There's now ratings in this industry, so the r…

AI assessment note: “We do think about three constituents internal to HomeTap. One is our homeowners.”

Q What goals have you set for what this looks like in the next seven or eight years?

A Well, I think seven or eight years from now, versions of home equity investments will be considered a mainstream product that people will think about when they're contemplating loans. It'll be like, oh, I could take out a HELOC, or I could do a cash out refi, or I could do an HEI. And so I think that we'll have done our job to help people educate and understand the pros and cons and let people pick the product that's best for them. I think that HomeTap, certainly five, seven years from now, we will be a multi-product company, so there'll be multiple versions of HEIs for different types of homeowners in different situations, and there'll be other non-HEI products that we offer to homeowners. Even today, one of the things I'm really proud of is our team built out something that we call the Home Equity Dashboard, and the Home Equity Dashboard is a product that we give to our homeowners, and it's tools to help you Think about your home and its value and how to finance it and what its future value will be. And there's tools to help you get the most out of your house. And there's more things and products and services that we plan to offer through that home equity dashboard, because the business is around the mission to make homeownership less stressful and more accessible. So our product team and our marketing teams, they have a long list of really interesting, exciting products and …

AI assessment note: “HomeTap, certainly five, seven years from now, we will be a multi-product company”

Q How do you think about where you sit today and where you're going?

A It has been a difficult journey to get to where we are today. So over the seven and a half years that we've been at this, we went through the startup phase, which is where most companies stumble. We then went through the pandemic, which every company obviously had tons of things to grapple with, but we went through the pandemic in a housing related business. So we had extra macroeconomic and housing things impacting us. We then went through a period of time where we had to live through The most rapid escalation of interest rates within a short fixed period of time than anybody had seen in our lifetime, which had tremendous impacts on the capital market. Some people's fear about the cost of housing and whether there was a housing bubble. So we've gone through three very, very tough periods of time in our eight year history. And what I would say though, as I look forward, we're just getting started. So we have shown ourselves to be able to be resilient. And when you look at the magnitude of opportunity there is to help homeowners through a variety of products for well-intended mission driven companies to help, by the way, that's just us homeowners. There's nothing that says it over time that we can't figure out how to do this for homeowners across the world. Homeowners, they need choice. The economy has changed. The cost of housing has changed. Our macro economy has changed. Affo…

AI assessment note: “And what I would say though, as I look forward, we're just getting started.”

Q So I'd love to hear some about that entrepreneurial run. What sector did you jump into after seeing a whole bunch of different stuff at BCG?

A So I'm at BCG. I'm part of their multimedia convergence practice area. And what that meant was there was this thing called the internet. People thought it was going to transform business models and the world, but it was still early and no one knew exactly how that would be. So I was working on projects where we were thinking about how technology and specifically the internet was going to transform business models. And I decided it was time to move on into more of an operating role. And I got introduced to the CEO of a very low tech insurance business. And I met the founder CEO and he was looking for a COO. And during the interview process, at one point he said to me, so why do you think you're qualified for this job? And I said, sir, I'm not. I don't think I'm qualified for this job. I don't know anything about insurance. I've been a strategy consultant for the last six years. I'm a smart, hardworking guy, but I sure you can find someone with insurance and operating experience and more domain expertise than I can bring to the table. And I appreciate you meeting me, but I really don't have a good answer to your question. And it was like a movie. He was like, that's the exact reason why I need you. I was like, wait a minute. So the reason why you want to hire me is because I'm totally unqualified for this job. And that was kind of it. He wanted someone from the outside who was go…

AI assessment note: “I got introduced to the CEO of a very low tech insurance business.”

Q So when you got ready to tie the laces back up, jump back on the court, what was the genesis of the idea you wanted to pursue?

A So I left Bain Capital to help turn around one of our portfolio companies. I wasn't yet fully committed to leaving Bain Capital because I loved it. It's a great place, but I was yearning for the operating side and liked being an investor, but would say I didn't love it. I just wasn't getting the emotional energy of what I get when I'm on the operating side. So I went back, worked inside this company. Thankfully things went well. We wound up getting it growing and profitable and it wound up being acquired. And then I decided not to go back to being capital because I thought I'm going to go start something else. And what I said to myself was if I'm going to go start something else at this stage, it can't just be like, oh, this is a good business idea that we can build and be profitable and Make some money for shareholders. I needed it to be that. I wasn't interested in building an unsuccessful financial company, but I more so really, really, really needed it to be something that I felt had a mission and soul to the business, where if I'm going to get up and work another 80 to a hundred hours a week, it's because I really believe in the mission and soul of what we're doing, as opposed to believing in, oh, if I work really hard, we're going to have a good financial outcome for people. So when you layer on three things, which was going through my mind at the time, which is one, it's…

AI assessment note: “what I said to myself was if I'm going to go start something else”

Q So when you were in that investing seat, what were some of the key lessons that you had from being an operator, being an entrepreneur that you felt you were able to help other entrepreneurs with?

A I think I still benefit from having seen this movie from three lenses is a CEO lens of an investor on the board lens. So seeing the same movie from a different camera lens really does shape your perspective on things. For starters, one thing that was very useful is that There's an empathy that you have for the team that I think you don't necessarily or really can't necessarily have if you've never been in their shoes. So I think that that was a really useful thing for me because when I would be trying to help or brainstorm or coach, I was drawing on actual similar challenges and opportunities that I had to deal with in my life. So I think that was helpful. And I think I got a little bit more credibility and benefit of the doubt. I don't think it has to be true, but I think there's often a lack of trust that can sometimes exist at the board level between leadership and the board. But the other thing that I worked really hard to try to get people to recognize is that just because you're the CEO doesn't mean you have to be the best at everything. And you have to recognize the fact that you ideally should probably be the best at very few things because you've managed to bring people in. Who are way better at those things than you would be. And so I think it helped me a lot in seeing really good examples and less good examples of just this idea of your job as CEO is to work for the …

AI assessment note: “just because you're the CEO doesn't mean you have to be the best at everything.”

Q So in that path when you went from a twelve million dollar fund and maybe helping your friend to 14,000 homes, what have you had to build to be able to make all that work?

A It's mostly about team. We've been very, very lucky We were able to recruit people early on who not only were fantastic when we recruited them, but who have developed over five, six, seven years into brilliantly talented executives. And those teams have been building out the organization more broadly. The most important thing you can get right if you're going to scale a business and continue to grow and be durable is culture. How could we possibly achieve any really important critical goals if we don't have a team that believes in our mission, that cares about each other, that goes the extra mile, that works through the startup phase, that works through the pandemic, that works through the Jerome Powell phase, that works through the crazy, turbulent political times that we live in. Because at the end of the day, even though it's hard and it's rough and it's long hours and there's stress, it's because they believe In what we're doing, and they believe in each other, and they feel committed to our mission and to each other. So if we get that right, it doesn't predetermine success, but it's absolutely a prerequisite to success. And if you don't get that right, you've got no chance. So I would say the number one thing is culture. Right behind that, I link that to having a team that replicates your culture, believes in that culture, and operationalizes that culture. So that culture …

AI assessment note: “The most important thing you can get right if you're going to scale a business”

Q How did you get from operating startups to the investment side?

A I started an internet company. That did pretty well. Honestly, maybe more a function of the time we got acquired. Then I started another technology company, which was an early mobile technology company. That business grew to be quite big over many years and also had a nice outcome. And being capital ventures was an early investor in that business. I had at that point just completed three back to back, really hard, long operating runs of building really early stage businesses. So I get asked sometimes from people thinking about being an entrepreneur, when's the right time to do it? And how do you think about it? Should I put away some money first? Should I go to business school? Those are reasonable questions that I had. And my answer is things change over time and the right time to do certain things in your career is not based on a premeditated timeline. It's based on the situation and circumstances in your life. So at that point in time, Had these three really great, but incredibly hardworking, tense businesses that every entrepreneurial business, you've got ups and downs and moments where you're like, are we going to make it? And then moments where you're like, wow, we're crushing it. And now you're not crushing it. And it's an emotional rollercoaster to sign up for this line of work. So I was tired and I had small kids and I was pretty burnt out and I had been working a hund…

AI assessment note: “I was tired and I had small kids and I was pretty burnt out”