Latest / What Comes Next with Arun / Don't Just Say No: Rebuilding Loan Underwriting with AI | Robert Stewart Jr.

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Don't Just Say No: Rebuilding Loan Underwriting with AI | Robert Stewart Jr. · What Comes Next with Arun

0:00
SPEAKER_01: Most organizations are not behind on AI.
0:03
SPEAKER_01: They are behind on the thinking required to use it.
0:06
SPEAKER_01: I am Arnan Sipatnaik, ex-Microsoft Data and AI executive, CEO of Tipstora, and your host.
0:13
SPEAKER_01: This is what comes next, the podcast where we talk about building the kind of organization that actually wins in an intelligence-driven economy.
0:23
SPEAKER_01: Let's get into it.ai.
0:47
SPEAKER_01: Based in Alexandria, Virginia, Stewart is pioneering the next generation of AI-powered financial technology driving smarter, more accessible investment tools for entrepreneurs, businesses, and investors around the globe.
1:04
SPEAKER_01: Welcome to the show.
1:06
SPEAKER_01: You know, I we talked briefly.
1:09
SPEAKER_01: I might have mentioned, I wrote a book called Future Proof Your Business, where I talk about this framework I created called Urevable Advantage Cycle.
1:18
SPEAKER_01: It's a framework where I believe that any organization or any individual can go through these five stages and apply the strategy at each stage to go from you know ground zero to becoming the biggest company in the world.
1:33
SPEAKER_01: So it has these five stages find your NIS, diversify, build a platform, then build an ownership-minded team, and then invest in research and development.
1:45
SPEAKER_01: So I take the podcast through those five stages to see what you're doing at each stage, right?
1:53
SPEAKER_01: So let's get started.
1:54
SPEAKER_01: Like you know, you founded your company around this AI-powered financial investment called CRequity.ai, right?
2:02
SPEAKER_01: So uh walk us through what you were doing, what was your primary skill set, and what was your motivation behind creating this company, and then we'll talk more about now what the company actually does.
2:15
SPEAKER_02: Of course.
2:18
SPEAKER_02: I know we had a brief time there with your travel and stuff like that, so I'm glad we actually got that taken care of.
2:25
SPEAKER_02: You know, essentially, I basically found this company out of a challenge that I was trying to address nearly five years ago, which uh essentially, you know, I was in the real estate and investment side of the house.
2:37
SPEAKER_02: I was selling real estate and was originating loans.
2:41
SPEAKER_02: And I saw uh an opportunity in the market where um you kind of had acquisition people that were going out and finding deals and dispositioning deals, and then you had the kind of the draconian investor lending underwriting continuum that was very paper intensive, very manual, very laborious.
3:02
SPEAKER_02: And oftentimes the right-hand side and the left-hand side never came together except for at a closing table months and weeks later.
3:12
SPEAKER_02: So I saw an opportunity where you know you can both you can have the investor who has the nine to five, the side hustle, be able to utilize state-of-the-art technology to fulfill the gaps of underwriting, disposition, uh being able to look at numbers in real time and make it uh, you know, a tangible targeted decision if you know does this investment make sense for my overall objectives at this time, right?
3:38
SPEAKER_02: And there's a lot of you know nuances that go into that.
3:41
SPEAKER_02: But at the end of the day, just to be very clear, right?
3:45
SPEAKER_02: Amazon, Microsoft, uh some of the, you know, even Walmart, right?
3:51
SPEAKER_02: They started off with number one, there was a challenge that needed to be met.
3:55
SPEAKER_02: Number two, the need was there.
3:57
SPEAKER_02: Number three, nobody was fulfilling it.
4:00
SPEAKER_02: Number four, they just became, you know, the the best of what they do, right?
4:05
SPEAKER_02: I'm not saying that CR equity is the best in the world or anything like that.
4:09
SPEAKER_02: There are other solutions out there.
4:11
SPEAKER_02: What I would say is that we fulfill a niche that a lot of people for a long time, number one, I don't even think they knew was out there, and number two, we've been able to provide value in areas in which folks just weren't able to see, you know, through vision.
4:29
SPEAKER_02: So what we do is very simple, right?
4:31
SPEAKER_02: We take a very uh rote draconian process of being able to go out and find targeted debt and equity solutions for non-qualifying mortgage investments, and we put the non-tech savvy, the non-traditional borrower in position utilizing guardrails with AI and different technological solutions, uh, the ability to actually size up a deal, you know, manage the risk profile, get a term sheet, figure out if that works for them, and make an informed decision in a real-time environment, right?
5:06
SPEAKER_02: Versus send off a file and email and wait three to four weeks and then get a no.
5:11
SPEAKER_02: We provide transparency in that process, and we're able to provide real-time underwriting and decision making within moments versus, you know, days, weeks, and years.
5:20
SPEAKER_01: Yeah, I mean, you know, a lot of companies, even the traditional banks, right?
5:26
SPEAKER_01: Like when you go to buy a house, uh, that is something called as pre-authorization, right?
5:31
SPEAKER_01: So it's kind of like you know, you go to the bank and say, you know, I'm going to buy this house, it costs this much, so I need this much loan.
5:40
SPEAKER_01: And they pretty much provide the pre-authorization almost instantly, right?
5:47
SPEAKER_01: But the actual loan processing may take time, right?
5:52
SPEAKER_01: Now, the way you are doing, you know, uh crunching the numbers in real time and providing that kind of decision oddly, how different is what you are doing to that pre-authorization process?
6:06
SPEAKER_02: Yeah, so a pre-authorization process is pretty much a funnel that only about three to five percent of Americans can fit into.
6:14
SPEAKER_02: That's your 755 Co, 35 to 45% net liquidity, and significant project experience of similar size, scope, and magnitude type projects.
6:25
SPEAKER_02: That's less than 10% of the people that put an application on the system that will go through what you just described without any problems.
6:32
SPEAKER_02: I mean, it's it it and I'm not gonna throw any stones at Rocket Mortgage or Quicken, right?
6:39
SPEAKER_02: If if if you have a 750 FICO score and you're looking to get a second home or primary mortgage or FHA or conventional or VA, and you want to do it in 15 to 20 days, and you don't have any bankruptcy, low late pays, slow pays, and you have 10 to 15% of cash liquidity ready to go, and you can prove that, there's nothing better in the world than go to Rocket Mortgage or Quicken dot com.
7:02
SPEAKER_02: I mean, they can get your loan done in two days, three days, right?
7:05
SPEAKER_02: Because you fit into a really, really nice funnel, right?
7:08
SPEAKER_02: The difference between what we do and those processes is very simple.
7:12
SPEAKER_02: Unlike a lot of the times where you actually get a term sheet in a few minutes, and then the actual significant underwriting doesn't occur until actually your appraisal comes back.
7:22
SPEAKER_02: They say in the mortgage industry that the real underwriting does not occur until 72 hours before closing, and there's a lot of truth in that.
7:28
SPEAKER_02: Most of the time the file doesn't get picked up until you're well within the process, right?
7:34
SPEAKER_02: We use a Kaizen approach, which is a continual underwriting, a continual discovery, and a continual vetting process, both from the beginning throughout and all the way to the end.
7:44
SPEAKER_02: Utilizing multiple open source API and algorithms, we're able to give you an actual definitive decision on funding within moments versus having to wait to that last 72 hours to get an approval or decline.
7:58
SPEAKER_02: How we do that is we underwrite the file in the beginning and then ask for the stipulations to support the assertions of what we found in the beginning throughout the process.
8:08
SPEAKER_02: We also utilize parameters and various different algorithms that allow us to do things in parallel versus sequential order.
8:15
SPEAKER_02: So for example, given the example that you just said about coming on and submitting an application and getting a term sheet or getting a pre-authorization as you used it, right?
8:27
SPEAKER_02: What would happen from there in the typical process is someone would come in, they would put in very high-level information, get terms or whatever else, and then they, you know, would come back on another instance and submit substantiating documentation or actually fill out a full application, right?
8:43
SPEAKER_02: And then they would be asked for bank statements and tax returns and photo identification and then payoff statements and 10 or 12 other different items to prove who they are, how much liquidity they have, the experience, uh, what they're trying to buy, clear title, all these things that are required to close.
9:04
SPEAKER_02: We take the onus off of the bar because when you come on, you fill out a very simple application with 12 to 15 questions.
9:12
SPEAKER_02: You upload all those information or give us access to it via OpenAPI.
9:17
SPEAKER_02: We pull all that information, we build you a user profile, and then we measure that against objectable underwriting criteria right there.
9:26
SPEAKER_02: So we tell you right there, hey, look, this fits or it doesn't.
9:30
SPEAKER_02: Now, does that mean that you know it's a foolproof model and it's 100% bulletproof?
9:35
SPEAKER_02: No, sometimes we do get it wrong.
9:37
SPEAKER_02: We're pretty much about in the 90-95% confidence window typically.
9:41
SPEAKER_02: And what that means is that provided that the information that you've given us and given us access to, that you know, there's a 95% certainty that we're actually going to close the that loan based on the information given.
9:52
SPEAKER_02: That's different than what happens now.
9:55
SPEAKER_02: Now you just go off and you submit a term sheet on a JOT form somewhere, it goes into some silo system, some human analyst has to pick it up.
10:05
SPEAKER_02: If they're out on leave, they have a child, they get sick, whatever, your file is delayed, installed until someone either comes in, picks up that file, their replacement hired, or they come back to work.
10:17
SPEAKER_02: The difference between AI and a tech stack we have is it runs continuously 24 hours a day, seven days a week.
10:23
SPEAKER_02: I often come into the office or look at my phone over the weekend.
10:27
SPEAKER_02: There'll be seven, 10, 15 deals based on our placement and underwriting agent that's already screened those deals.
10:33
SPEAKER_02: And I can click approve and provide the workflow processing to the bar or to move through that workflow.
10:39
SPEAKER_02: It doesn't matter if it's Sunday night at 11.59 p.m.
10:42
SPEAKER_02: or if it's Monday morning at 0900, right?
10:44
SPEAKER_02: It operates all day long.
10:46
SPEAKER_02: So the what we offer is efficiency and gain through process automation and utilizing technology that's bounded by upper and lower limits almost like an integral.
10:55
SPEAKER_02: It's just it's done so in a process improvement type of environment that happens 24 hours continuously.
11:01
SPEAKER_02: Again, what I do is not magical.
11:04
SPEAKER_02: Uh it is, it is not, you know, I don't sit out here and, you know, I'm not like Tesla and creating flying cars and stuff like that.
11:12
SPEAKER_02: We don't do anything that's crazy.
11:14
SPEAKER_02: We just automate what we do and take work out of the system and provide transparency throughout the process, which believe it or not, is a very simple concept that has just been wildly successful because prior to us doing it, there were very, very, very few people that were doing it.
11:30
SPEAKER_02: And we've provided, you know, uh 40, 50, 60, 70% reduction in time.
11:35
SPEAKER_02: We've reduced cost across multiple types of loan products for clients.
11:40
SPEAKER_02: Uh our referral business is greater than 70 to 80 percent of repeat customers.
11:45
SPEAKER_02: We don't we don't have to advertise because of what we offer.
11:48
SPEAKER_02: And now we've uh created kind of a co-sharing third-party origination SaaS environment, lender servicing type of arrangement with multiple other lenders.
11:58
SPEAKER_02: They have products and services that they can't get to as far as deal flow.
12:03
SPEAKER_02: So they're willing to uh you know, for us to create our own AI underwriting engine and write on behalf for them to be able to purpose their capital against our requirements for our clients.
12:13
SPEAKER_02: So the platform is growing both on the front end from visibility, but also on the back end from capital providers.
12:19
SPEAKER_02: And uh, like I said before, I mean, I you know, five years ago, I would never have imagined that we would be, you know, where we're at today because it's a very, to me, it's a very simple concept.
12:30
SPEAKER_02: It's just providing transparency and people access to capital in real time, which you know you would think is something that's very simple, right?
12:38
SPEAKER_02: But it, you know, obviously we exist for a reason.
12:41
SPEAKER_01: So Yeah, exactly.
12:42
SPEAKER_01: I mean so are you actually a bank?
12:45
SPEAKER_01: Do you use your own funds to provide the loan or or do you connect people or you use other banks in the background to kind of get the fund?
12:56
SPEAKER_02: Both.
12:58
SPEAKER_02: Yeah.
12:58
SPEAKER_02: So uh we have our own balance sheet lending that we use utilize internally.
13:02
SPEAKER_02: Okay.
13:03
SPEAKER_02: And then we also have banks and and private credit funds that we uh work with as well.
13:09
SPEAKER_02: So it operates, you know, it operates in both ways.
13:12
SPEAKER_02: There are some deals in which fall outside of the scope of what we do, and then there are other deals that fit right nicely into that, and the ones that we can do internally, we take care of, and the ones we can't, we move forward.
13:25
SPEAKER_01: Yeah, that's you know, there are these like you know, search engine type of thing where you submit and then say you submit once and then you get multiple offers, right?
13:34
SPEAKER_01: So they're basically just you know giving you a shopping access to you know multiple lenders so you get to see what everyone is offering, and then you can kind of pick that deal that's good for you, right?
13:48
SPEAKER_02: So no, no, it is not like a marketplace.
13:50
SPEAKER_02: So we're not a lending tree.
13:52
SPEAKER_02: That's the that's an that's a strikingly difference.
13:55
SPEAKER_02: What we found out is that clients don't like being brokered and their deals shotgunned around to multiple lenders and credit beings.
14:03
SPEAKER_02: So like if you go to a if you go to a lending tree or if you go to one of these kind of like uh lending warehouse sites, there's a bunch of them out there, there's a disclosure that you're gonna sign that says, hey, we have the permission to take your information, basically shotgun it all over there.
14:17
SPEAKER_02: I don't know if you've ever used this before, but the experience on that is that a client who's shopping for investment uh type of funding, while they may end up getting their deal done, their credit score is probably gonna take a 50 to 60 point hit because each person or each entity, it's a siloed system, right?
14:36
SPEAKER_02: They may send your application out to 35 different lenders.
14:39
SPEAKER_02: Each one of them is going to do some type of credit wherewithal check, which includes most of the time a background and or either a soft pool, which doesn't, you know, have a hard inquiry.
14:51
SPEAKER_02: Some of them do.
14:52
SPEAKER_02: It's like 50-50.
14:54
SPEAKER_02: So if you have 10 lenders and five of them, 50% do hard, 50% do soft, before you even get a term sheet, you're seeing a 15 to 20% reduction in your you know your your FICO score.
15:06
SPEAKER_02: That creates a very, very, very, very poor user experience.
15:11
SPEAKER_02: Right.
15:12
SPEAKER_02: So we are inherently different in that area, and I want to make that key distinction is that we don't shotgun uh people's FICO out.
15:20
SPEAKER_02: We do uh with our proprietary software is we actually build an instance and a user profile that matches against our partner's underwriting criteria.
15:32
SPEAKER_02: In most cases, we have third-party origination or lending services, a type of agreements with those investors, and we underwrite and or close in our name on their behalf and assign that loan to them after closing.
15:46
SPEAKER_02: What that does is it allows the user to have one voice, one point of contact, one credit pool, one set of underwriting criteria, or multiple, but they don't see that.
15:59
SPEAKER_02: They don't experience the pain associated with that.
16:02
SPEAKER_02: And we have an algorithm that provides ease of use for that.
16:06
SPEAKER_02: So at any given time, your deal may come on our platform.
16:09
SPEAKER_02: There may be nine lenders that look at it.
16:11
SPEAKER_02: You'll never meet them, typically.
16:14
SPEAKER_02: You'll never get nine inquiries on your phone saying that nine to fifteen different people pulled your credit, and uh you won't have all these telemarketers calling you about why didn't you close with us, refinance with us in three months, shopping, sending your data out, making money off of the data that you really didn't give up from.
16:32
SPEAKER_02: Like you don't have to experience any of that, right?
16:34
SPEAKER_02: So there's a there's a huge inherent difference between what we call I I would say that's the late 90s, early 2000s way of technology, right?
16:43
SPEAKER_02: Where you just kind of had a SharePoint site, you go in, you submit your file, it replicates, and then multiple lenders pick it up.
16:51
SPEAKER_02: That's not automation, that's not intelligent software, and it's definitely not what we've built.
16:56
SPEAKER_02: And if we had done that, I don't really see.
16:59
SPEAKER_02: I mean, there's a there's a couple different competitors that I can list that actually have that now.
17:05
SPEAKER_02: And one of them is a multi-billion dollar company that's headquartered out in Arizona.
17:10
SPEAKER_02: They're one of the largest uh commercial real estate brokerages out there.
17:14
SPEAKER_02: They have a repository and some season information.
17:18
SPEAKER_02: They have manual folks that allow you to submit your deal, and then they have a team that goes in there and almost like the 1950, 1960 AT ⁇ T, you know, bell south switchboard where you call in and they ask you where you want to call and then they pair you with a person kind of thing.
17:35
SPEAKER_02: It's very similar to that.
17:36
SPEAKER_02: We don't do that, and that's that's not that's not the business we're in, nor is it the experience that we want to purport to our clients.
17:44
SPEAKER_02: I would say that we were built because of that pain, and we've become successful because of the continuity, right, and the streamlining of processes.
17:53
SPEAKER_02: So, yeah, we're not we do all that work for the client.
17:57
SPEAKER_02: We provide them with the best deal possible.
17:59
SPEAKER_02: Sometimes that's on our balance sheet, or sometimes that's with our partners, but at the end of the day, really the only time the client knows that we didn't do it internally is when they get their loan servicing document 30 days after we close the deal, or at title when they're notified that the loan documents come, you know, have been assigned to a to a different lender or whatever.
18:21
SPEAKER_02: So we we work, I work very hard for that because that experience is very important to me.
18:26
SPEAKER_02: I've been in, you know, I have been the recipient of, you know, told that terms are going to be this, signed up, got all the way to the end, and then you know, I got earnest money that's at stake.
18:38
SPEAKER_02: The day before closing, I find out that the terms are not what they're supposed to be.
18:42
SPEAKER_02: I get the closing disclosure statement.
18:44
SPEAKER_02: The lender's different, the interest rate's different, the leverage is different.
18:49
SPEAKER_02: Now I need to bring$20,000,$30,000,$40,000 more closing than I had thought about a week ago.
18:54
SPEAKER_02: Yeah, it's just a bad experience, man, and we we really don't want to purport those things.
19:00
SPEAKER_02: So I do a really good job of having that transparency both to our partners, but also to our clients, so that we're echoing the same message consistently throughout the process, if that makes sense.
19:10
SPEAKER_01: Yeah, yeah.
19:11
SPEAKER_01: So, like, did you work in underwriting for other other lenders?
19:17
SPEAKER_01: Did you have an educational background in it?
19:20
SPEAKER_01: How did you learn the process?
19:23
SPEAKER_01: And when you went out to kind of build this software, you know, did you use any of the open source software that was already existing that kind of uh was already doing it and you tweaked it or you built everything from scratch?
19:38
SPEAKER_01: Can you walk me through like you don't have to give away your secret, but can you walk me through like, you know, uh how did you come up with, you know, because the underwriting is a very complex.
19:48
SPEAKER_01: I mean, most banks do it in a batch manner for a reason because because you know those old uh you know mainframe systems they still exist for a reason because this process is pretty complicated.
19:59
SPEAKER_01: And and you know, the for large bank that like, you know, why uh you know rebuild something that's still working, right?
20:06
SPEAKER_01: So the the the process is pretty complex, and that's the reason why there are very few vendors who kind of provide that, right?
20:13
SPEAKER_01: Yeah, I mean that and that's a that's a great point.
20:16
SPEAKER_02: Yeah, that's a I'm glad you mentioned that.
20:18
SPEAKER_02: I actually had that experience this morning.
20:21
SPEAKER_02: There was another, we'll get to that in a little bit, but yeah, so I'm a I'm a voracious reader.
20:28
SPEAKER_02: I'm also uh a Kaizan person.
20:30
SPEAKER_02: I always believe in bettering yourself or understanding.
20:32
SPEAKER_02: So the answer to your question is no.
20:36
SPEAKER_02: The underwriting engine that we have built is a hundred percent custom.
20:43
SPEAKER_02: Why did I do that?
20:44
SPEAKER_02: I did it because I have been on the receiving end of a very draconian and wrote no.
20:52
SPEAKER_02: It's easier for an underwriter to say no.
20:55
SPEAKER_02: Mainly because if you say no, you don't get fired.
20:58
SPEAKER_02: So, because of that, what I did, I was in the military, right?
21:01
SPEAKER_02: So I was in the Air Force, and we used to do this thing called objective-based war planning.
21:08
SPEAKER_02: So we want to take this hill over here.
21:11
SPEAKER_02: We know that we need this hill for X, Y, and Z objective.
21:15
SPEAKER_02: This is what the reason why we need it, and then we work backwards.
21:18
SPEAKER_02: So I knew that I wanted a platform that delivered a term sheet in less than five minutes that was actionable and provided a 95% success rate and satisfaction rate.
21:28
SPEAKER_02: That's where I started.
21:30
SPEAKER_02: Who funds it, what type of assets it's for, where that location the assets, that's stuff I can figure out later.
21:38
SPEAKER_02: But my goal was to take the pit out of people's stomach to put fifteen thousand dollars into an appraisal and then get 72 hours before a closing and figure out that their deal has fell apart because of something that they could have caught day two, right?
21:56
SPEAKER_02: But it was never disclosed to them.
21:58
SPEAKER_02: Right.
22:00
SPEAKER_02: That's what we want to, what we have cured, right?
22:03
SPEAKER_02: And from there, everything else kind of falls in line, right?
22:05
SPEAKER_02: But I knew the so I picked a process, I picked the major challenges and pain points, and then I designed a system around that.
22:13
SPEAKER_02: So from there, how do I design underwriting criteria?
22:17
SPEAKER_02: Well, uh, I went out and I got probably 30 to 40 gigs of best practices, lessons learned, mortgage, non-QM, FHA, GSC, conventional, VA, F, just the whole shoot and match of how to underwrite these deals.
22:37
SPEAKER_02: If you talk to any of our 200 semi-brokers that are registered on our platform, they will tell you that our underwriting rivals Bank of America.
22:46
SPEAKER_02: We have on par probably the best underwriting in the country.
22:49
SPEAKER_02: The difference between what we do is we just don't say no.
22:53
SPEAKER_02: We provide you with the conditions and how to cure that, either with templates, we do an inquiry on the issue, we figure out how to address that problem, which is something that you don't usually get.
23:07
SPEAKER_02: So we don't sacrifice compliance, even though our mortgages or our lending notes are non-QM, they still have background checks, they still have minimum FICO, they still have experience verification, they still have liquidity verification, they still have first lien mortgages.
23:27
SPEAKER_02: Because at the end of the day, we sell these notes to banks and private credit institutions.
23:31
SPEAKER_02: They have to conform.
23:32
SPEAKER_02: They may not be on the same level as Fanny and Freddie, and I would argue that with our underwriting, the way we write paper, in my opinion, again, for what it's worth, is better than some of the agency documents that I've seen, right?
23:47
SPEAKER_02: And so to answer your question, I created my own custom underwriting system that provides tailored underwriting based on conditions provided that are at or above industry best practices and standards and continue to be that way because of how we built the software.
24:07
SPEAKER_02: So how do we do that?
24:09
SPEAKER_02: If you look, uh United Wholesale Mortgage wrote, I think back in May or June this year, and you can Google it, that they were going to have a$452 million write-off for not updating their underwriting criteria post-COVID, was what they said.
24:26
SPEAKER_02: So essentially they were given uh they were given exceptions for liquidity and some other things that, for all intents and purposes, you know, we were in a very bad spot five or six years ago.
24:38
SPEAKER_02: And mortgage crisis, you know, was in a was in a pinch to put money out on the street and really bring down inflation and and keep people in their houses because it was uncertain, right?
24:48
SPEAKER_02: So they a lot of the underwriting criteria became very loose, right?
24:53
SPEAKER_02: And as a result of that, there were a lot of mortgages that were that were bought and sold that probably should not have happened.
25:01
SPEAKER_02: Again, you know, it is what it is.
25:03
SPEAKER_02: Well, as a result of that, I guess either they were making so much money or somebody really wasn't keeping track of how they were underwriting files, they continued that process.
25:13
SPEAKER_02: And as a result, their foreclosure and default rate has eclipsed double digits in one or two quarters.
25:19
SPEAKER_02: I mean, they went from a sub-5-3% default rate, which is industry standard, right, to like 15 to 17 percent across a portfolio of notes.
25:29
SPEAKER_02: Now, when you have a a mortgage-backed holder that you know supplies 10% of the mortgages in the country, that's a problem.
25:38
unknown: Right?
25:38
SPEAKER_02: So you have a concentration issue, you also have a financial issue because they've sold these mortgages to some of the largest banks and private security firms in the world, right?
25:48
SPEAKER_02: And then you find it later on down in the process, and now you know you say, I'm just gonna correct it.
25:55
SPEAKER_02: We have access to hundreds, if not thousands, of pieces of open source data.
26:03
SPEAKER_02: So we've built several agents that do contextual and sentiment analysis.
26:08
SPEAKER_02: What does that mean?
26:09
SPEAKER_02: What that means is that whenever a United Wholesale Mortgage or Wells Fargo or Rocket Mortgage or Goldman Sachs, JP Morgan Chase uh decide to tighten up restrictions on their mortgage criteria or there's a shift in the market, that's flagged for me and for leadership for us to take a look at.
26:30
SPEAKER_02: I get a Slack message andor an email alerting me as to these changes in real time.
26:39
SPEAKER_02: Not I don't have to go and convene a board or have my credit committee or whatever.
26:46
SPEAKER_02: I'm getting notified that these things are happening.
26:49
SPEAKER_02: It actually says, Rob, we're flagging this for your review for whatever reason, a compliance issue, a legal issue, a contract issue, a banking issue.
26:57
SPEAKER_02: And I look at that and I say, okay.
26:59
SPEAKER_02: And then we evaluate that.
27:00
SPEAKER_02: We have a scorecard internally, and I say, We need to do an analysis on our underwriting criteria, compliance, to see if we're accounting for that.
27:09
SPEAKER_02: And then they'll come back and tell me, yeah, we are or no, we're not.
27:12
SPEAKER_02: And here's the vulnerabilities associated with that.
27:15
SPEAKER_02: And then I'll ask the question, you know, you know, when is the best time to do this?
27:21
SPEAKER_02: Is this a memorandum that we need to make you know, notification?
27:24
SPEAKER_02: Do we need to change the collateral on the website?
27:26
SPEAKER_02: Do we need to make changes in the underwriting back end?
27:29
SPEAKER_02: How do we need to account for these things?
27:31
SPEAKER_02: And these decisions are made in real time.
27:33
SPEAKER_02: You know, these are not like I gotta wait 30 days because I may do 15 mortgages in the time I have that meeting, and they end up, you know, having a significant default rate.
27:44
SPEAKER_02: So why is that why is that important?
27:46
SPEAKER_02: That's important because um we may not we may not ever get to the United Wholesale Mortgage.
27:51
SPEAKER_02: In fact, I I hope I never get to that level of of lending that just sounds terrible.
27:57
SPEAKER_02: Right?
27:58
SPEAKER_02: I rather do quality work and know when people buy our mortgage-backed securities that they are quality.
28:05
SPEAKER_02: We did everything we could on our end to ensure compliance throughout the process and handed them over a book of business that should perform based on what we feel as though is industry best practices, right?
28:17
SPEAKER_02: I don't know anybody in the industry, at least publicly or pub or privately, that does those types of things in real time.
28:26
SPEAKER_02: I don't know anybody in the industry that publishes their underwriting criteria for people to see it, for Google to pick it up in the AI chatbot, for people to copy it, for people to, you know, try to mimic it.
28:37
SPEAKER_02: I mean, I don't know any lender that puts their fee policy out for people to look at or their appraisal policy.
28:42
SPEAKER_02: Like I see, you know, your air independence, I see the bank security and anti-money laundering and all these things, but we provide that, number one, for transparency, but number two, to show people this is the keys of the castle, how you get along with us.
28:57
SPEAKER_02: Very easy.
28:58
SPEAKER_02: Follow the process, here's the forms.
29:00
SPEAKER_02: Nothing to hide here.
29:02
SPEAKER_02: No smoke, you know, no, no whatever.
29:06
SPEAKER_02: And and believe it or not, man, people really appreciate that.
29:10
SPEAKER_02: They they do.
29:11
SPEAKER_02: They, you know, I have people that send me, I've gotten some nasty grams.
29:15
SPEAKER_02: I've also gotten some things that I had no idea this is how this is looked at.
29:19
SPEAKER_02: Now when I submit, I know exactly how to put myself in position to be successful.
29:24
SPEAKER_02: Because we just provide people data.
29:26
SPEAKER_02: We provide people a process that they can be successful.
29:29
SPEAKER_02: And if they need a, you know, they have additional questions, they can schedule a call and we'll go through it with them, right?
29:35
SPEAKER_02: Again, I don't know what kind of impact that does on like you know the industry as a whole.
29:40
SPEAKER_02: I know that the 500 semite loans that we've done to date, you know, we've got a less than a 3% default rate on those.
29:47
SPEAKER_02: 75, 70, 75% of those people are repeat offenders, right?
29:52
SPEAKER_02: They come back for more.
29:54
SPEAKER_02: So, you know, for me, I think I'm doing okay uh from a guy.
29:58
SPEAKER_02: I mean, I literally took this from a kitchen table and said, you know, I want to do a hundred loans a year versus ten a month or you know, five a month or whatever, and I just got tired of putting a lot of time into stuff that just never funded, right?
30:14
SPEAKER_02: And to go from that to sitting here and having a conversation with you is you know, it's kind of surreal, you know.
30:20
SPEAKER_02: And I mean, am I proud of what our team does and what we do?
30:23
SPEAKER_02: Yeah, I think we have a kick-ass product product product.
30:26
SPEAKER_02: I think it's great, right?
30:28
SPEAKER_02: For some people it works, other folks don't.
30:31
SPEAKER_02: I get emails all the time.
30:33
SPEAKER_02: Hey, if I could add 15 meetings to your calendar a month to add deals, are you interested?
30:38
SPEAKER_02: Nope.
30:39
SPEAKER_02: 95% of the people we we do deals with, I never talk to, and I don't want to talk to them because you don't.
30:44
SPEAKER_02: Uh I'll tell you like this the thing that gets me about this industry and it never fails, and I tell my team this all the time, is like, look, if a guy wants to put a meeting on my calendar and tell me about his deal, he really doesn't have a deal.
30:57
SPEAKER_02: Because in five minutes with what we have, I'm gonna know for a fact that this guy is who he says he is and if he actually has a deal or not.
31:05
SPEAKER_02: We're gonna know.
31:05
SPEAKER_02: The numbers, they don't lie, man.
31:07
SPEAKER_02: Like it's it's one of those things where it's like indiscriminate.
31:11
SPEAKER_02: And even here's the thing with us is like, I'm I'm like your lawyer.
31:15
SPEAKER_02: Tell me everything, right?
31:17
SPEAKER_02: Just give me all the good, bad, and the ugly.
31:19
SPEAKER_02: Because if there's a legal way that we can get it done, we'll do it.
31:22
SPEAKER_02: We'll do the deal.
31:23
SPEAKER_02: It may be ugly, man.
31:24
SPEAKER_02: That thing may be ugly and it may, it may look like you may want a ham sandwich, and that thing looks like a uh a cob salad when it comes out.
31:33
SPEAKER_02: It may be nothing what you want, right?
31:35
SPEAKER_02: But you'll get your deal done.
31:36
SPEAKER_01: Yeah, no, speaking of legal, uh, you hit on an important point.
31:41
SPEAKER_01: Compliance is a big part of financial services industry, right?
31:46
SPEAKER_01: This is, you know, financial services is probably the most regulated industry, uh, next to probably healthcare.
31:52
SPEAKER_01: You know, and one of the reasons why I have seen financial services companies are kind of slower to adopt newer technologies because they have to go through that strict compliance.
32:03
SPEAKER_01: So by the time all the checks are met on a technology, it's it's kind of like two year old.
32:09
SPEAKER_01: Right?
32:10
SPEAKER_01: So for you, like you know, building this financial product, you might have had to go through meeting those compliance requirements, but and yet you were able to kind of stay on the cutting edge, you know, build something that kind of outdoes anything that exists in the market.
32:27
SPEAKER_01: So walk me through like what was that process like, you know, how did you figure out that you are uh, you know, your technology is compliant with the industry regulation, and how do you continuously like to stay compliant and yet make sure that you are using the best that technology has to offer while meeting those compliance guidelines?
32:49
SPEAKER_02: It's very simple.
32:50
SPEAKER_02: Everything we do is compliant from day one.
32:53
SPEAKER_02: We just don't, we don't do anything, we don't issue any paperwork, we don't issue terms that are not compliant, you know, everything fits within some type of you know initial compliance check, secondary compliance check, and um Yeah, so like the uh what system do you have to get that compliance check?
33:13
SPEAKER_01: Did you like get a some kind of open source compliance tool?
33:18
SPEAKER_02: Uh well, so so okay, in our in our industry, right, so you know, in telling the some inside baseball, right?
33:26
SPEAKER_02: Compliance is really what you make out of it, right?
33:30
SPEAKER_02: Because here's the reason why I tell you that.
33:33
SPEAKER_02: Okay.
33:35
SPEAKER_02: Compliance is a it is 100% on the risk of the lender.
33:42
SPEAKER_02: All right.
33:43
SPEAKER_02: So what we do, we are a third-party originator.
33:47
SPEAKER_02: Long story short, we close the deal on our internal warehouse line of credit, we sell that note to third-party like note purchaser, right?
33:56
SPEAKER_02: That can be a D Paven, 80 mortgage, Torock, that can be uh, you know, a Carrington, Varis, uh Aspire.
34:04
SPEAKER_02: These guys all buy DSCR and different types of mortgage-backed securities, right?
34:09
SPEAKER_02: The risk associated with that is if it's not fully compliant to what they deem secure, you know, eligible to be securitized, you just bought yourself a bad mortgage that you're not gonna be able to get rid of.
34:22
SPEAKER_02: So, how do we do that?
34:25
SPEAKER_02: Well, internally we have a two-gate process where we have our own underwriting criteria, and then we have the criteria of the what we call takeout eligibility layer, TEL, which is the note buyer, the person that's gonna end up with the mortgage-backed security.
34:40
SPEAKER_02: In order for us to move forward with the deal, it has to conform to both our internal criteria and also their criteria, and there has to be this Venn diagram that kind of happens like this where it overlaps.
34:53
SPEAKER_02: If it doesn't happen, we don't do the deal.
34:55
SPEAKER_02: So I just told you really like inside baseball secret.
34:58
SPEAKER_02: Most people don't operate like that.
34:59
SPEAKER_02: They go and they close the deal and then they worry about trying to find a note buyer for it after the fact.
35:04
SPEAKER_02: There's there's a lot, you can do that.
35:06
SPEAKER_02: There's a lot of risk with that.
35:08
SPEAKER_01: We don't do that.
35:09
SPEAKER_01: Yeah, that's true.
35:10
SPEAKER_01: That's one of my core philosophy.
35:13
SPEAKER_01: You know, if you want to be innovative, default to open, right?
35:17
SPEAKER_01: That that's one of the mantra I follow.
35:19
SPEAKER_01: This is the last question I'm going to ask about uh your operational aspect of the business, then we'll move to the uh next stage.
35:26
SPEAKER_01: You know, you you are you built this on a cutting edge, right?
35:30
SPEAKER_01: So when you went out to make the technical decision, did you make the decision yourself?
35:35
SPEAKER_01: Did you hire a technology firm?
35:38
SPEAKER_01: Did you hire your own uh tech team?
35:41
SPEAKER_01: And you know, as you were building, like did you build the AI layer first?
35:46
SPEAKER_01: Did you build uh you know the like the data design first?
35:50
SPEAKER_01: Like how walk me through your technical decision-making process.
35:56
SPEAKER_02: So I I started off on I built the initial kind of a web interface myself.
36:03
SPEAKER_02: I had some free help from friends of mine when I was a you know, I was a an officer in the Air Force, I had a lot of tech officers that I I worked with that helped me kind of get the initial structure.
36:12
SPEAKER_02: Once I knew I had something, I hired a a small team of independent internal guys, and then from there, once we started actually generating revenue, I I brought on an NSERP, in-sourced talent.
36:25
SPEAKER_02: And now uh all of our talent is done internally.
36:28
SPEAKER_02: We don't have any third-party contractors that work for us because of the risk of intellectual property theft and compromisation, stuff like that.
36:36
SPEAKER_02: So it's kind of a natural maturation where it started off, I got to where I could go and I figured out you know where my limits are, and then I moved up from there and kind of went through the process, and now I have a you know a team of 17 people primarily in the tech space that do all of our upgrades and and it's and everything on the platform, if that makes sense.
36:56
SPEAKER_01: Okay, yeah, yeah, it makes sense.
36:57
SPEAKER_01: Yeah.
36:58
SPEAKER_01: So let's move to the next stage, which is diversify that some of the things you already mentioned.
37:03
SPEAKER_01: Like your product is you know, is a lending product primarily around the mortgage industry, but you mentioned something important that you give explanation about why the underwriting fails, right?
37:20
SPEAKER_01: So I see that as kind of like another application or another product in itself that people could use that to proactively kind of monitor their uh you know financial health or uh you know borrowing capability to say, you know, I at any given point what might get them rejected on a loan so they can proactively kind of start taking care of it, right?
37:45
SPEAKER_01: Do you see your product being used or in derivative of it as being used as you know, people proactively kind of building their financial health?
37:58
SPEAKER_02: Yeah, I I you know that's a great question.
38:00
SPEAKER_02: I say our product in about 12 to 15 other areas, you know, to be honest with you, that we can actually make a positive difference in people's lives.
38:10
SPEAKER_02: I don't know if you've ever read a book.
38:12
SPEAKER_02: Jim Collins made this book a long time ago called Good to Great.
38:17
SPEAKER_02: And what it talks about is that you know, you can go off and you can do a lot of good things, but really to scale to a billion-dollar corporation, you really need to uh, you know, be in a uh you need to just focus on the things that you're great at, right?
38:32
SPEAKER_01: Yeah.
38:33
SPEAKER_01: So you know, one of the things that my book talks about is is that yeah, you need to have the thing that you are great at, so that can be your core, but then you also need to create branches which are different ways your core is applied, and those branches help you diversify, minimize risk, and yet strengthen the core.
38:55
SPEAKER_02: Yes, that's correct.
38:56
SPEAKER_02: Uh, and you're 100% uh correct with that, is that uh we're at a place now where I believe we can actually start exploring those things to be able to look at other things that add value.
39:08
SPEAKER_02: I mean, when you you know, when you talk about adding value, right, it and you know this by being in technology, it's not it's not just throwing up some some graphic user interface and doing some testing, right?
39:21
SPEAKER_02: It doesn't it doesn't work like that.
39:23
SPEAKER_02: Anytime you stand up something, you've got in a complete entire life cycle.
39:27
SPEAKER_02: If you want quality, now there's a bunch of people out there that develop a bunch of shit.
39:31
SPEAKER_02: They just throw stuff out there and and listen, you know, to be honest with you and and and to be transparent, when I went to the Inc.
39:38
SPEAKER_02: 5000 uh, you know, last year, I didn't go this year, but when I went the last year, you know, it it was okay.
39:47
SPEAKER_02: It was okay from a perspective of there were a lot of companies that did a lot of cool things there that they had shit technology, but they had the best marketing in the world.
39:57
SPEAKER_02: Listen, I learned a lot there.
39:58
SPEAKER_02: I was like, man, you know, they there's guys in my left and right that have 10 times revenue that I did at that point.
40:03
SPEAKER_02: Terrible technology.
40:05
SPEAKER_02: Would go, like literally be telling me about how great their stuff is.
40:08
SPEAKER_02: They go to the bathroom and we, you know, we break at lunch and I download their app, and they're, you know, the UI experience I had was not what they told me that I was gonna have.
40:17
SPEAKER_02: And I learned that I was like, man, you know what?
40:20
SPEAKER_02: I've got a slow down to speed up.
40:23
SPEAKER_02: I would rather have one thing that does something very, very well, and it takes me 10 years to come out with the second version or three years or whatever.
40:33
SPEAKER_02: And it was people like, damn, this guy is slow as hell for coming up.
40:36
SPEAKER_02: But what I would I want to be that guy that has the Ford pickup truck of the tech industry.
40:40
SPEAKER_02: Hey man, look, these guys don't come out with a new model every five years, but when they do, it's quality, and I'm gonna buy this thing that's gonna last forever, type thing, right?
40:48
SPEAKER_02: Or I'm gonna come back to customer loyalty.
40:50
SPEAKER_02: That's important for me, right?
40:53
SPEAKER_02: I'm a black kid, poor kid from Alabama, right?
40:57
SPEAKER_02: I I I've done more in my life, I've made more money than I should.
41:02
SPEAKER_02: I'm here for the rest of the days, I'm on this earth to add value to other people's lives.
41:06
SPEAKER_02: So to answer your question, is yeah, there's a there's a whole list of things that I want to license and forward-deploy our technology for, right?
41:16
SPEAKER_02: I think that's gonna come in due course.
41:19
SPEAKER_02: I think that if you go out and Googled us uh three weeks ago, we entered into a third-party correspondent relationship with Redwood Trust and Corvest.
41:30
SPEAKER_02: That is a huge uplift for us.
41:32
SPEAKER_02: To me, you know, that's a that's a New York stock exchange company.
41:36
SPEAKER_02: That's the first that we've done publicly.
41:38
SPEAKER_02: That's probably going to uh provide us with a hundred million dollars of originations per month between now and the end of next year because of our technology and and being able to robustly get through these deals.
41:51
SPEAKER_02: That in itself is going to you know springboard us to other opportunities.
41:55
SPEAKER_02: I have no doubt about that.
41:57
SPEAKER_02: But I'm I'm really focused on growing the technology organically where it's at, right?
42:04
SPEAKER_02: Taking opportunity when it presents itself.
42:07
SPEAKER_02: And then in the process of that, we do do small pilots and testing.
42:11
SPEAKER_02: For example, like right now, we just last year I had a broker portal.
42:16
SPEAKER_02: I was so busy, I had to shut it down.
42:19
SPEAKER_02: I literally cut it, I shut it down.
42:20
SPEAKER_02: I we just I couldn't get to our normal business.
42:23
SPEAKER_02: I number one, I was not gonna go hire 45 account executives to run.
42:27
SPEAKER_02: I just, it was too much.
42:29
SPEAKER_02: So what we ended up doing is I learned a lot, right?
42:34
SPEAKER_02: And I created AI agents that really focused on compliance and underwriting.
42:39
SPEAKER_02: Now, we only have 220 licensed or brokers that are in that portal versus the 2,000 we had last year or whatever.
42:47
SPEAKER_02: But the deal flow is consistent, the deal quality is consistent, we're closing transactions that actually get put through the funnel, which is what we want.
42:56
SPEAKER_02: I'm not running the platform rugged.
42:58
SPEAKER_02: I'm also not spending hundreds of thousands of dollars a month on AWS space for ghost deals that we'll never fund that that shouldn't be there in the first place, but people are looking at the two to three percent broker fee that they would get versus the quality and continuity of putting things to this, which is why the platform exists, right?
43:16
SPEAKER_00: Yeah.
43:17
SPEAKER_02: So to answer your question is yes, I'd see f 10 to 15 different applications of this.
43:24
SPEAKER_00: Yeah.
43:24
SPEAKER_02: Right?
43:25
SPEAKER_02: But at the end of the day, it's like, you know, if it ain't broke, don't fix it.
43:29
SPEAKER_02: Number one.
43:30
SPEAKER_00: Oh yeah.
43:31
SPEAKER_02: And then number two, let me just have fun where we're at.
43:34
SPEAKER_02: And it the the stuff that we're supposed to be doing is gonna naturally put itself in front of me.
43:38
SPEAKER_02: We're gonna solve that and do that.
43:40
SPEAKER_01: That makes sense.
43:40
SPEAKER_01: Yeah, yeah, that's right.
43:41
SPEAKER_01: I mean, you first you got to strengthen the core, and then you move to it.
43:45
SPEAKER_01: That's kind of that's why these are in stages because they build on top of each other.
43:48
SPEAKER_01: And you already hinted on the next thing, which is platform, right?
43:52
SPEAKER_01: So you you have a product, but the difference between a platform and a product is that a platform allows people to build.
44:00
SPEAKER_01: On top of it, right?
44:01
SPEAKER_01: So you mightn't yourself not launch a product to help people improve their financial health.
44:09
SPEAKER_01: But since you already have the technology of giving people the reason for why they might not get a loan, right?
44:18
SPEAKER_01: You know, somebody else building a financial health app could, you know, use your API to get that information.
44:28
SPEAKER_01: So you become the platform.
44:30
SPEAKER_01: And you know, even though you are not launching the other people who are launching the product, they could just use your information via API, and you know, they could be in a running that own up, but still running on your platform.
44:44
SPEAKER_02: Right.
44:44
SPEAKER_02: And we do that, we do that now.
44:45
SPEAKER_02: Uh we do that, we do that in a way now where we're able to, believe it or not, take advantage of that process now.
44:52
SPEAKER_02: So it does, we do kind of quasi-do that now, you know, that that we're doing.
44:57
SPEAKER_02: So it does, it does work.
44:59
SPEAKER_02: We do have that.
44:59
SPEAKER_02: We are doing pilots on that.
45:01
SPEAKER_02: There is a there is an inherent need for people, you know, we get questions all the time to expand the technology.
45:06
SPEAKER_02: Like I was telling you earlier, we have another AI company that provided me with an opportunity, if you will, to work with them.
45:15
SPEAKER_02: I, you know, I do a lot of due diligence because I I do I do enjoy what I have, right?
45:20
SPEAKER_02: I like what I have, but I just don't want to get into bed with with bad people.
45:24
SPEAKER_02: There's a there's a story behind that.
45:26
SPEAKER_02: We can have a volume two of it if you want.
45:28
SPEAKER_02: But at the end of the day, you know, it it it's it's one of those things where you just as you as you start to scale and grow, you got to be very careful who you get in bed with because you don't know a lot about them, and and that could cost you a lot, right?
45:44
SPEAKER_00: Yeah.
45:44
SPEAKER_02: And and and reviewing, you know, kind of what they built, again, they're an Inc.
45:48
SPEAKER_02: 5000 company, tech company.
45:50
SPEAKER_02: They've done they've done a lot of business.
45:53
SPEAKER_02: Uh, I asked them, you know, some pretty straightforward questions.
45:55
SPEAKER_02: Because we have we have a, you know, we have a compliance engine that does background and looks into things with very simple keyword searches, right?
46:03
SPEAKER_02: I asked them some very simple questions and I got some answers back that, you know, if you if if you own and operate the company, it should be pretty, you know, standard set of answers, right?
46:12
SPEAKER_02: One of them being, you know, who who is their financial like service or as far as their deals as being a direct lender.
46:19
SPEAKER_02: And I got the response back, I'm not really sure if this is applicable.
46:23
SPEAKER_02: Let me go check internally.
46:25
SPEAKER_02: And I'm like, ah, you know, even if that is the case, right, which it's on their website, so there it, you know, but even if that is the case, do I really want to, you know, be working with a CEO that doesn't know his platform intimately enough to know who's funding his transactions?
46:41
SPEAKER_02: Because that's going to be a question that Arun, if you come on my platform, you may call me one day, be like, hey Rob, man, you know, thanks for funding my, you know, hotel down in Florida.
46:53
SPEAKER_02: Just, you know, how were you able to get such a great rate?
46:56
SPEAKER_02: Who, you know, what bank or credit union or whatever are you did you use for that?
47:01
SPEAKER_02: You know, we get that question all the time.
47:04
SPEAKER_02: People like to know, right?
47:05
SPEAKER_02: They don't necessarily want to go and circumvent or go around you go direct.
47:08
SPEAKER_02: Like some people do, right?
47:09
SPEAKER_02: That's just that's just part of the business.
47:11
SPEAKER_02: People just like to know.
47:12
SPEAKER_02: People are just real nosy.
47:14
SPEAKER_02: I can't go to one of my best clients, you know, if I got a guy that's worth 10 or 20 million and be like, I don't know.
47:20
SPEAKER_02: Let me let me go and I gotta go.
47:22
SPEAKER_02: That's not gonna be good.
47:24
SPEAKER_02: Like people don't like that.
47:25
SPEAKER_02: They don't, they just don't, that's not a that's not a comforting feeling, right?
47:29
SPEAKER_02: So for me, it's one of those things, if you can't answer basic questions, we haven't done a deal yet.
47:36
SPEAKER_02: I, you know, I'm not sure if that's really one I want to.
47:39
SPEAKER_02: Again, going back to your question earlier about, hey, could you take the platform and license it out and put it in different areas and let people use it in different yeah, that's this is one of those areas was like these guys have an automated, you know, deal routing system, but they're not very good in the underwriting thing, right?
47:56
SPEAKER_02: They don't underwrite, they just get a lot of deals.
48:00
SPEAKER_02: So I was thinking about, okay, they've got capital, they've got a system to kind of you know do marketing, we can kind of underwrite for them and put you know, put these pieces together.
48:11
SPEAKER_02: But if they can't answer basic simple questions about how they fund deals, I mean, how am I gonna be able to put together a process to underwrite to get them to the funding parameters of the people they don't know as funding?
48:22
SPEAKER_02: I mean, it just circle, you know.
48:24
SPEAKER_02: So it's just like, yeah, I'm a pass on that, right?
48:28
SPEAKER_02: And I haven't told them that.
48:29
SPEAKER_02: I mean, this literally just happened by six o'clock this morning, right?
48:31
SPEAKER_02: I'm just like, you know, I you know, but going back to it, right?
48:35
SPEAKER_02: It's one of those things where transparently, I mean, I I got an offer two months ago to buy the company at an eight-figure exit.
48:44
SPEAKER_02: And I just said no.
48:46
SPEAKER_02: It's not because I don't want the money, it's not because I, you know, I I couldn't do anything with it.
48:50
SPEAKER_02: I mean, hell, I of course I could, right?
48:53
SPEAKER_02: It's just, it's just not the right time for me yet.
48:55
SPEAKER_02: And uh, you know, that's just I'm just my work's not done here, and I I feel as though that, you know, this is when you asked me the question about, you know, did I go get open source information to build my platform?
49:10
SPEAKER_02: I looked at everything.
49:11
SPEAKER_02: I read everything.
49:12
SPEAKER_02: Right.
49:14
SPEAKER_02: The the code that was out there was so shitty that I just I couldn't use it.
49:20
SPEAKER_02: I I I'm a perfectionist, man.
49:23
SPEAKER_02: Like I I had to start from ground.
49:27
SPEAKER_02: The thing is about me as a CEO, I'm very much different than any other CEO you'll deal with.
49:35
SPEAKER_02: I'm never gonna ask anybody that works for me or under me to do something that I wouldn't do.
49:40
SPEAKER_02: I answer phone calls, I do deals, I look at every loan document before it goes out.
49:45
SPEAKER_02: That's just I'm just anal like that.
49:47
SPEAKER_02: That's what I do.
49:48
SPEAKER_02: But more importantly than that, I look at the code every day.
49:51
SPEAKER_02: I go into AWS, I go into GitHub, I look, you know, when there's an incident, I want to now, I don't want to know how long it took us to resolve that and what the experience was in the survey.
50:02
SPEAKER_02: I want to know what caused it.
50:04
SPEAKER_02: I want to know how we're preventing it, and then more importantly, I want to know the impact of the person to the left and right because that's important to me.
50:12
SPEAKER_02: Right.
50:13
SPEAKER_02: Something goes bad, I'm gonna be the one that's on CNN.
50:17
SPEAKER_02: Right.
50:17
SPEAKER_02: So, so you see what I'm getting that right?
50:19
SPEAKER_02: So, so it's it's very important to me to know, you know, for me to be able to put eyes on the solution because I'm gonna be the one that if something goes south, they're gonna look at me, right?
50:32
SPEAKER_02: So that's very important for me.
50:33
SPEAKER_02: Does that make sense?
50:34
SPEAKER_01: Yeah, of course.
50:35
SPEAKER_01: Speaking of being a CEO and working with people, that takes her to the next stage.
50:40
SPEAKER_01: Uh, you know, you have people, like uh I don't know how many employees you have, but then you also have partners, you have you have an affiliate program.
50:49
SPEAKER_01: How are you incentivizing your employees and partners and affiliates to kind of make sure that you know they work towards your best interest?
50:59
SPEAKER_01: Right?
50:59
SPEAKER_01: Uh you know, what is their performance evaluation and uh their bonus structure or their mode of compensation?
51:08
SPEAKER_01: Plus, like outside of employee, you also have partners and affiliates, right?
51:13
SPEAKER_01: People who work on commission for you to make deals for you, right?
51:17
SPEAKER_01: So, how are all these channels incentivized so that they work to your best interest?
51:24
SPEAKER_02: So that's a very good question, right?
51:27
SPEAKER_02: Uh I allow our staff to really pick their salary.
51:31
SPEAKER_02: I do.
51:32
SPEAKER_02: I say, hey, what do you want to make?
51:33
SPEAKER_02: They tell me what they want to make, and I really don't push back because I want the best people and I want them to stay as long as they want.
51:40
SPEAKER_02: So this year when we went through performance evaluation, I gave them my feedback and I asked them, you know, what do you want your salary to be starting, you know, November 1st actually is going to be the first time because we do it every September and then it closes out and then they have October and stuff like that.
51:54
SPEAKER_02: One of my uh best performers basically wanted me to double his salary.
51:58
SPEAKER_02: I think he was testing the water, but I, you know, I said, okay.
52:03
SPEAKER_02: I even told him, I looked at him, I said, Well, that's a very lofty goal.
52:06
SPEAKER_02: And I and I was curious, I was gonna probably end up giving him very close to what he asked for anyway.
52:11
SPEAKER_02: Um but I asked, I was curious, I was like, so why do you feel as though your salary is double?
52:16
SPEAKER_02: And he told me he had he had his argument ready, which was good.
52:20
SPEAKER_02: So when it comes down to compensation, you you know, in the South, and I don't know where you're where you're originally from, but I'm from Alabama, so sorry if I'm country and uh a little slow on the uptake, but uh we have this saying down in Alabama, it's called pay once, cry once.
52:39
SPEAKER_02: Uh in the military, we used to call it the one three eight rule, but I'll tell you what it means.
52:44
SPEAKER_02: If you get it right, you it's a one it's a dollar for dollar.
52:47
SPEAKER_02: You you pay a dollar, you get a dollar's worth of work, right?
52:50
SPEAKER_02: You get it, you have to change course in the middle of an operation, it's three dollars for every one dollar you would originally spend had you got it right.
52:57
SPEAKER_02: And if you have to do rework, it's eight dollars for every one dollar that you would have done.
53:02
SPEAKER_02: What does that mean?
53:04
SPEAKER_02: That means, though, is that even though it's a it's hurts, right?
53:07
SPEAKER_02: It hurt quote unquote hurts your bottom line to spend money.
53:11
SPEAKER_02: It's a lot better to keep your folks, especially the good ones, happy and pay them what they're worth up front so they don't they never leave.
53:19
SPEAKER_02: Have an environment that you know challenges them to get better and to submit things to make the platform better.
53:25
SPEAKER_02: So for us, we have a base salary program, we have an annual bonus program, we also have an incentivization program for UI and UX.
53:33
SPEAKER_02: So if our client, if our if our if our partners or if our team members go into a situation, if they not only solve an issue that we knew about, but they're able to add value and they can document that, there's compensation for that.
53:46
SPEAKER_02: So we have people all the time that are trying to find things to make our life better and easier.
53:52
SPEAKER_02: I do that by design.
53:54
SPEAKER_02: It's not a lot, but I mean, over time it adds up.
53:57
SPEAKER_02: As far as our compensation for our brokers goes, you know, we have limits on that.
54:03
SPEAKER_02: We pay as a direct lender internally, which is, you know, it matches what we have.
54:07
SPEAKER_02: But if they want to, if they have an agreement with their client and they charge them 5%, which is somewhat usury, we have a disclosure statement for that.
54:15
SPEAKER_02: We pay it.
54:16
SPEAKER_02: I mean, if if the client's willing to pay and whatever, and that's what their agreement is, I don't count other people's coins, right?
54:22
SPEAKER_02: The broker and affiliate program is paid uh fee for service, so whatever the cost associated with whatever the agreement they have with their client on the end, happy to put that on the HUD and move it through the system.
54:34
SPEAKER_02: We don't really, you know, there's not a lot of oversight in that area.
54:38
SPEAKER_02: But when it comes down to paying people, you know, in the beginning, I built this platform out of my own pocket.
54:45
SPEAKER_02: So there were times where I had to eat a lot of ramen, a lot of rice, lost a lot of weight in the beginning.
54:51
SPEAKER_02: Um, but as a result of that, you know, we have a multi-million dollar performing platform.
54:56
unknown: Yeah.
54:56
SPEAKER_02: Because we have good people.
54:57
SPEAKER_02: So I mean, you know, the first couple of years it was helterskelter, but I think we're doing okay.
55:04
SPEAKER_02: Uh, you know, I I think everybody always wants to second guess the decisions that I do from an armchair and say, hey, you need to get these Fortune 500 folks in here and this C-suite and bring this CFO in from HP or wherever.
55:17
SPEAKER_02: And I'm just I built, we built this platform with a bunch of tech geeks and a lot of interns that have graduated now, and you know, we grow people internally.
55:26
SPEAKER_02: And one of our, you know, one of our summer interns from uh our last cohort is a is is majoring in the new, I think it's the second or third year, but she wrote me yesterday, and I'll get my fingers crossed for her, I think she's in her final interview to get into MIT's AI program.
55:44
SPEAKER_00: Okay.
55:45
SPEAKER_02: You know, we're not JP Morgan, we're not Tesla, but we got you know folks that are uh coming on board, providing us with value add support.
55:55
SPEAKER_02: Even when they're young in their career and they're getting accepted into, you know, Ivy League and MIT.
56:00
SPEAKER_02: I mean, that you know, that that was very, very rewarding for us is that you know, we try to make an impact in that area, and and she's a a brilliant young lady, so I'm wishing her nothing but the best.
56:10
SPEAKER_02: But you know, to go back to that, I I think we incentivize people from a a compens a compensation standpoint for sure.
56:18
SPEAKER_02: Um but it you know, it it it comes more than just putting money in people's pockets.
56:22
SPEAKER_02: I think you know, having a rewarding platform.
56:24
SPEAKER_02: A lot of the folks that are uh some of our team members that are here today have been with us from our infancy and they've seen the platform grow.
56:32
SPEAKER_02: And two of them basically told me, unless if I fire them, they die, they're never gonna leave.
56:38
SPEAKER_02: So I mean, you know, that's good to know that um that we have a good staff and that people are willing to stay with you because it, you know, as a company, you know, it it it goes up and down.
56:47
SPEAKER_02: Hopefully we're on the way up for for a long time.
56:49
SPEAKER_02: But there there have been times where you know we've had to have some hard conversation with people.
56:54
SPEAKER_02: But um, I think that I think we're in a good spot.
56:57
SPEAKER_01: Yeah, yeah.
56:58
SPEAKER_01: So last question uh before we wrap up, uh you know, you have already built this using the cutting edge technology.
57:06
SPEAKER_01: If you still had like unlimited funding, is there something in your wish list that you want to invest into research to build the next best thing or to make what you have even better?
57:20
SPEAKER_02: Yeah, I think for us is the access to capital.
57:24
SPEAKER_02: You know, we the way we built the platform is we have different tiers of doing deals.
57:30
SPEAKER_02: If we had more access to capital, we would be able to satisfy our partners more because we, you know, we have a mandate from a couple of our partners that they, you know, they want to do$50 to$100 million originations apiece through our system per month.
57:44
SPEAKER_02: To do that, you know, we need the front-end capital to be able to do that.
57:47
SPEAKER_02: So, you know, having an access to one to three to five hundred million dollars of of liquid capital from a w warehouse line of credit that'll allow us to realize that would really help us on the technology side and build out capability.
58:00
SPEAKER_02: But you know, there's you you have to again as an organic growth with that.
58:04
SPEAKER_02: There's also a cost for that.
58:06
SPEAKER_02: Right now, the company is in a good financial position because it doesn't carry significant amount of debt on it, is is very transactional.
58:13
SPEAKER_02: And as a result of that, we've been able to really do a lot of cool and awesome things.
58:18
SPEAKER_02: So I would just say, yeah, I mean, anybody out there that that you know has some some capital that they want to secure and put into our uh ecosystem and earn a return on investment securely, I you know, I would welcome that conversation.
58:30
SPEAKER_02: That's a kind of our next step at this point.
58:32
SPEAKER_01: Okay.
58:33
SPEAKER_01: That's a wrap on today's episode of What Comes Next.
58:37
SPEAKER_01: If this conversation gave you a new way to think about AI strategy, share it with someone who needs it.
58:43
SPEAKER_01: You can find everything I'm building at Ipsura.com, including AI certifications for you and your team.
58:50
SPEAKER_01: Connect with me on LinkedIn by looking up my name, Arnan Chapnai.
58:54
SPEAKER_01: You can find Robert on LinkedIn or visit his company site, cr equity.ai.
59:00
SPEAKER_01: Until next time, build the architecture and the advantage follows.
59:05
SPEAKER_01: So Rob, thanks a lot for the conversation today.
59:08
SPEAKER_01: It was great talking to you.
59:10
SPEAKER_01: Thank you.
59:11
SPEAKER_01: Yes, sir.
59:11
SPEAKER_01: Thank you.