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Archive for April, 2008

True success exists only when you understand the “how?” and the “why?”

Wednesday, April 30th, 2008

This post was inspired by a great article written by Sean Hannon this week. In his article, which is focused on understanding investment results, he used this simple chart to illustrate the possible results of an investment (I have reproduced this chart with my own color-coding):

Sean’s point is that you should only feel truly successful about when you have a good outcome that is produced by a good process. If you invest in a stock on a whim and it happens to produce a great return, you should not consider yourself a great investor-you should think of yourself as a lucky gambler. Similarly, if you are using a proven system that works, and you get a bad outcome sometimes, you shouldn’t feel too bad. Over time the right process will produce good outcomes more often then the bad process.

This idea is common across many endeavors where the process to achieving results has a strong “luck” factor. Poker is a great example. If you have the best hand, correctly estimate your odds of winning, and bet big, you will still lose a significant portion of the time. Even a good process can produce bad results, in the same way that a bad process can produce good results.

Building your business to perform requires understanding how process and outcome are correlated in the long term and yet can produce totally inverse results in the short term. During the housing boom, the problem that many mortgage brokers, banks, and direct lenders ran into, was that they used a simplified lens to measure their success. They looked at the world like this:

It’s counter intuitive but the outcome is not sufficient to measure success. Plenty of banks, brokers, and lenders made a killing and subsequently lost their shirts because they were only measuring outcome, not process. Building a good process builds a framework to produce more good outcomes in the future. Building a business around good outcomes often produces a process that will produce fewer good outcomes in the future; it’s self defeating in the long run.

As a company that builds lead management software (LMS), we understand that helping our clients by providing best practices goes a long way towards making them successful in the long run. But beyond that we know we can help our clients by getting them to place an equal or higher value on their process over their immediate outcomes.

Lastly here’s the way that we see the world. :

We see four kinds of businesses. We try to push our clients towards a good process and good outcomes. Yet, we are never satisfied. Every company, across the board, can always be more successful.

Good times only get better

Monday, April 21st, 2008

The mortgage industry will get better.  In fact, almost everyone agrees that the mortgage industry will improve.  We have heard our President and economists claim our country’s financial health is stable but isn’t that kind of like saying “It can’t get any worse”.   Surely it can’t get worse, could it?  Are we somehow missing the signs of economic improvement?  Are we deaf and blind to the signals and signs of a recovering mortgage industry? 

Maybe we are missing signs of life from the mortgage industry.  For years those of us working in the industry knew the boom would come to an end, but we enjoyed the record revenues while they lasted. Overall there seemed to be little preparation for tough times.  Brokers, lenders, loan officers and everyone else involved accrued little savings and neglected long-term financial preparation.   The rapidity and severity of the meltdown has overwhelmed most institutions within the financial sector.  Wall Street is reeling and bad news it seems is reported almost daily. 

Today, the Saudi government decided hold off increasing oil production.  This will surely drive up the costs of oil.  With gasoline hovering ominously near $4 a gallon and food costs higher than the previous 15 years, recession is on the lips of most financial analysts.   I’ve even heard Jordan Sparks might have a debilitating vocal injury.  How do we keep our chins up when even our American Idol is in dire straits? 

I received my quarterly 401k statement and for the first time since the dot.com bust, lost money in every single category.  The relevance of the mortgage meltdown is finally hitting home.  Ok maybe I’m painting a darker picture then what it really is.  The coming presidential election could change the landscape overnight and save us all from the world wide meltdown, Right?  Well this time I am going to pay attention to the signs and signals. 

It’s time for us to reduce expenses, sell the extra car, put a little bit of money into the savings account and eat out less.  It’s time we all pitched in and started saving more, that might be the only thing that saves our big brothers in the financial industry.  If we all pitch in and save our money we can bail out the credit card companies, credit unions and Wall Street lenders.  Like an errant child who dropped out of college and just needs a parents hug of acceptance and forgiveness, it’s time to hug your Congressman. 

You really don’t need President Bush’s rebate check; send it back to Congress with a note offering thanks for a job well done.  Thanks for leaving us to our own devices.  We got ourselves into this mess; we might be the only ones who can do something about it. 

The Enterprise Platform Battle is Joined… by Intuit.

Wednesday, April 16th, 2008

The enterprise platform space has been crowded for a long time, but Salesforce’s AppExchange platform model has been allowed to reign relatively freely, until recently. Today Erik Schonfeld blogged that Intuit has announced that they are opening their Quickbase platform to developers for small business applications. Intuit joins a growing list of enterprise platform contenders including big dogs Google and Salesforce. Read the article here.

So what? Well here’s the what. Competition in this space is very interesting because of three main factors:

1. As the competition and interest in “cloud” application platforms increases, and the number of big players increases, the more development interest will be generated overall. Why? If the largest and most successful software companies are getting into this game, it’s going to be a game worth playing for many developers. The ability to reach large customer bases, almost overnight, will be irresistible for many.
2. As the number of competitors increases it creates confusion in the marketplace as developers are unsure which platform will best suit their objectives and their target market. This is especially vital in the B2B world as business systems are often asked to smoothly integrate with one another. Suddenly the risk of being on the “wrong” platform is increasing drastically.

3. The “closed vs. open platform” factor. The interests of the developers and the interests of the platform-hosting companies are almost diametrically opposed, even thought they can profit from the same customers. Developers benefit from easily portable platforms where they could host their aplications on any of the platforms, quickly transition from one platform to another, and potentially run the same application on multiple platforms. In contrast, the platform-hosting companies want to lock in their developers and create a closed system, where by it forces users and developers to stay loyal to it’s platform-otherwise the model self-destructs.

How will it all shake out? How does this news impact the Lead Management space? Time will tell.

Zillow Mortgage Marketplace – The future of mortgage leads?

Wednesday, April 9th, 2008

For those who missed it, the outrageously well-funded online real-estate “start-up” Zillow opened the doors on its Mortgage Marketplace this week.

It’s a very interesting model and one that has the potential to cause a mini-revolution in the mortgage lead industry. Why? Primarily because they are handing out free leads to almost anyone who wants them. This is how it works:

For the lender:

  • The lender signs up and pays a $25 sign-on fee
  • Zillow verifies that the lender is bonafide
  • The lender is ready to start receiving “free” leads


For the buyer:

  • Complete an online form
  • Start receiving quotes from lenders by email


So why is this revolutionary, apart from being free? First off, the consumer is anonymous. This means the lender is quoting purely based on the accuracy of the information the buyer submits which for many brokers is going to be a fruitless exercise – how many times does a consumer inaccurately quote their credit score? Anonymity does have the advantage that the buyer cannot be inundated with calls. Conveniently for Zillow, the only way for a broker to contact them is through, uh… Zillow. Secondly, the lead is available to a huge number of lenders (over 1,000) which will inevitably drive high levels of competition. Finally, just like with eBay, the consumer gets to rate the buyer and every other potential customer can then see that broker’s rating.

So will Zillow Mortgage Marketplace be successful? I think moderately so. After all, after just 3 days, Zillow already has over 1,000 brokers registered and has generated 7,894 leads. However, I definitely do not think that the model will replace the current online lead generation model. Zillow will be good for consumers; it will drive super-low quotes. Unfortunately, this model probably favors a broker without much of a real-world reputation. Someone who is prepared to bait and switch an aggressive quote for a realistic quote and that can take a hit on their reputation if the scorned consumer gives them a bad rating. But we shall see. This type of innovation has transformed the travel and hotel industries among many others. No doubt a segment of the market will also be attracted to this model in the mortgage space.

The cat’s out of the bag: Ed Ojdana joins the Leads360 Board

Wednesday, April 2nd, 2008

Today we announced that Ed Ojdana, the former CEO of Experian Interactive and founder of ConsumerInfo.com, has joined the Leads360 Board. We are excited to have Ed’s considerable experience and insight to guide us. Click here to read the press release or click here to download a pdf version.

If you are attending Leadscon this week, don’t miss Ed’s keynote address tomorrow. We’ll see you there.