Which one of these is not like the other? Airport security, the DMV, shopping for a mortgage? Actually, they are all alike, in that they are cloaked in outdated processes that remind us of a time before the birth of the internet. However, which one of these should definitely not be like the other? That would be the mortgage shopping experience.
Unlike government-run entities, the private mortgage origination market should be lookingto provide an improved consumer experience. Unfortunately, this is an industry that has rarely considered innovation to be a core competency. Outside of Rocket Mortgage, there has been little movement from most large loan providers in the United States to innovate. Be it a lack of internal capability, a discomfort for change, or just a mentality of working within the status quo, mortgage providers need to start adapting to a consumer base that is beginning to demand a more agile experience.
What if overnight an old, stodgy mortgage lender could provide a native mobile mortgage experience that integrates all of the stakeholders in the process into an intuitive and easy to use app? It sounds like the answer to bringing the mortgage purchase process into the age of technology and mobility. It sounds like StreamLoan. Stephen Bulfer is a serial entrepreneur and experienced real estate expert that is investing in the future of mortgage technology. He and his team are out to reinvent the mortgage shopping experience with a beautifully simply mobile app that is the answer to revolutionizing an industry that has yet to shed its 1900’s imagery.
CL: Stephen, you are quite the serial entrepreneur, angel investor, real estate expert, and you have also seen your fair share of corporate experience. Can you provide an understanding of how your career has led you to this point?
SB: In high school my aunt and uncle gave me a Best Seller book for Christmas called “Rich Dad Poor Dad” by Guy Kawasaki, and I learned all about the notion of passive income, and being able to leverage capital. My parents came from deep education backgrounds with PhD’s and Master’s in mathematics and they were professors at the University of Minnesota. My aunt, and uncle didn’t even finish high school. I pulled from both diverse sets of experience.I was just inspired by this world of combining deep strategy, deep academics, as well as practical hands on building businesses and that kind of entrepreneurial spirit just stuck with me. I started to invest in real estate and ended up building a real estate investment trust nationwide without any formal training. I took that experience with me when I went to a joint program between Berkeley and Columbia where I studied the financial collapse between 2005 and 2007, and ended up publishing papers on the subprime collapse, which was fascinating. I built my technology know how at Deloitte where I worked with over 50 of the Fortune 500 companies before coming to Silicon Valley to start building companies. I loved building high performance teams under 20 people, going up against the billion dollar giants out there and crushing them. I participated in two acquisitions, selling two mobile collaboration security companies – one of the companies named Clementine to Dropbox, and the other company IonGrid to NetApp back in 2013.With some acquired capabilities and liquidity from the sales I got into angel investing to pay it forward and share my experience with other entrepreneurs, but I really missed the operating side of things. I took a look at who I was, where I’d been and knew my next challenge was to tackle real estate and mortgage tech. So I began to build the StreamLoan team and product in stealth mode, and we brought the product to market last year (2016) with some of the largest loan providers in the nation.
CL: For those who don’t know, can you define StreamLoan as a business?
SB: We are a SaaS and mobile company that simplifies the entire home purchase process with a set of powerful back office workflow tools, overlaid with a beautiful native mobile experience that everyone can participate in.
Whether you’re a realtor, lender, home buyer, inspector, attorney, appraiser, accountant or a provider of title, trust, notary, or insurance, you can interact with our mobile application – helping to move the home purchase along faster, better, and cheaper.
The StreamLoan offering comes down to three key building blocks. Those are collaboration, automation of workflow, and transparency. So how do we accomplish that?
We have a product called the StreamLoan Financial Passport, which you can think about as your financial DNA as a borrower. It includes your assets, income, taxes, liabilities insurance information, and so on. Built into this passport is a dashboard that allows for all of those required documents to be shared collaboratively and processed automatically across all of the involved stakeholders.
The next important piece to making StreamLoan a powerful tool is we have built in a high level of transparency. That means, for the real estate agent they have total visibility to be able to track the deal and understand where it’s getting stuck or where the potential client might lose the opportunity to buy if they don’t make a move.
We sell this platform, which is equivalent to Quicken Loans Rocket Mortgage into the rest of the lending landscape including Independent Mortgage Banks (IMB), credit unions, and depository banks.
CL: Can you talk to your contrarian view that a native mobile experience is the right experience for the mortgage industry?
SB: Number one, mobile devices have really become the window to getting anything done. You think about mobile banking 20 years ago, if you ever thought about trying to do a transaction on a phone people would be like, “You’re freaking crazy. Depositing a check or selling a share of stock on a phone will never happen.”
Once you’ve experienced the Apple effect, the Uber effect or any of these other experiences that allow you the freedom to manage your life stuff on the go on your phone, you’ll never go back. The 90 million plus millennials now hitting their early 30’s, are starting to build families, and purchase their first homes, and they are expecting a mobile experience.
Loan officers and real estate agents are sales people, they’re out connecting with these millennials in the community where things actually happen. That’s the argument for mobile. It’s a faster, better, cheaper experience that is more in line with expectations of how things are done in other categories. There is a reason Uber doesn’t create a web app and push it out because they know it’s not a great user experience. In fact it sucks – we have all experienced this I’m sure.
For that matter, the business partners we have want the presence of a mobile app in the app store. It’s a branding thing. For many millennials the feeling is if I can’t go and search and find you on the app store, you don’t exist.
CL: At its core StreamLoan is about transparency, automation and collaboration. What are the greatest challenges that you face in trying to execute on those goals?
SB: Each one of those themes requires deep experience in the industry around workflow, process, and how it ties into all these different organizations. The user experience implications of each move we make has to lead to a product that is so simple to use despite the immense backend challenges. We thought that version 1.0 of our product was simple and we got beat up. Then we issued version 2.0, after we had brought in designers from DreamWorks out of Hollywood and other folks and despite it being stupid simple, it’s still not simple enough. That’s just the user experience perspective, but it begins with that.
At the end of the day we are faced with a big data problem overlaid with significant security hurdles. Acquiring this type of data, and ensuring users have connectivity to access all of these different types of data across insurance, banking and everything else is an immensely huge challenge to solve. Fortunately, I and several members of my team have experience working in highly regulated industries. In my last startup, we sold into many scary three-letter branches of the government and I had spent time out there at the White House and Executive Office, myself advising the government on infrastructure, and security.
Adding to these challenges, I haven’t even mentioned the transformation taking place in the industry. Back in the late ’90’s, companies like SAP, Oracle, and then later like Salesforce were bringing about major avalanches of transformation. Businesses were rebuilding and re-engineering their processes and workflow around the tech and that’s happening now in the mortgage industry. We’re influencing and working with the leaders, CEO’s and their organizations of multibillion-dollar lenders to reimagine how they should work. It’s not easy. Part of it’s about tech and part of it’s about process re-engineering and change management, which is difficult for some of these larger organizations.
CL: Do you have any thoughts on incorporating AI and in this case I would think some form of ANI capabilities into StreamLoan as you continue to build the product out further?
SB: It’s an interesting topic and it comes up in all of the discussions with executives from top lenders that we work with. The way we think about it in the short term is incorporating chat bots. We already have a “Slack-like” chat product built into our system with all of the policy management and role base security embedded in it.
As we look forward there will be opportunities to provide really intelligent response mechanisms to bring the borrower through the journey with an AI/Machine Learning (ML) assisted experience. Roughly 70% of mortgage transactions are straightforward enough to program the journey with ML. That frees up the rest of the lending team to really focus on the more complex transactions.
We are also starting to embed AI/ML into our service offering to provide recommendations for other products or refinancing options. We already have a number of smart engines that are running in the background that look out for opportunities to recommend a refinance. Our lenders and real estate agents love it because it’s a chance for them to sell additional products to the customer and stay relevant and engaged with their clients over time – beyond a one-time transaction.
CL: Can you speak to the typical size and type of institution that you’re typically working with?
SB: The core customer is one to ten billion dollar independent mortgage banks (IMB), also known as a non-banks, homebuilders with internal IMBs, and credit unions. I would say to some extent the depository banks as well, though they seem to move a little bit slower, but they’ve also had their lunch eaten market share wise – just look at the numbers. IMB’s have more than 50% share of the market up from single digit percentages a decade ago
It’s important enough to say again. In just the last seven to eight years, the IMB’s have taken over more than half of the mortgage market share now, which is pretty incredible. Small organizations aren’t really interesting to us from a revenue or engagement perspective if we don’t get the economies of scale. We can deliver a self-service option to them however, the larger IMBs think they can do it themselves, or they just want to do everything internally, but many are failing miserably and they’ll come back at some point to tech focused innovation firms like ours.
We have the right answer and solution to make that entire journey for all those players successful.
CL: Does StreamLoan actually speed up the overall mortgage process? If so, by how much?
SB: First of all, the CEOs of the lenders we work with are telling us that efficiency and productivity are the clear focal point of StreamLoan. On average we are reducing transaction time by 50% or more from a typical 30-45 day process down to 15.
For many of these lenders mobile doesn’t exist today, even digital is not completely there, so for an organization to be able to turn on the light overnight, literally is pretty incredible. When you measure the ROI of StreamLoan, it’s a big deal. We aren’t talking about a six month or a year implementation, we are talking about serving customers that day.
StreamLoan is also a recruiting and retention tool for lending customers. The smartest lenders that we’re working with know that there’s a war for sales talent so they use StreamLoan during recruiting to show candidates that they are investing in innovation. None of our competitors can talk about growing the business because typically their software is embedded only on the lender side, not on the customer facing side of the business as well. We can drive new leads and business like they have never seen before.
CL: Why do you make the borrower the focus of the business when the lender is who pays StreamLoan?
SB: This is where our other contrarian view comes into play. Unlike our competitors that put the lender at the center of the universe, we believe the borrower should be. We protect the data privacy, security and portability for the borrower, which is very different thinking. If you think about it, if the borrower wins everybody gets paid. And if they like the experience, they come back – and refer 10 of their friends.
Most of the available tools on the market today only integrate with one financial institution so if they want to shop around for a mortgage they have to restart the process each time they go to a new loan provider. If you don’t do it you miss out on the best deal, and if you do follow through it becomes a very lengthy and tedious process. Our StreamLoan Financial Passport addresses this issue and enables you [the borrower] to apply once with us and then we allow you to take that data and move it around as you see fit to find the best deal. Or if you choose not to share it, you just turn the valve off and don’t share the data. That’s a really big idea compared to how it is done today.
CL: What are you finding to be the main consumer needs in a user experience when interacting with the StreamLoan application?
SB: First, borrowers want a mobile experience that can move with them, and that only takes a few minutes of their time to aggregate their documents. Second, they want to be able to use those financial records over and over again to prevent having to replicate the process. That’s why we continuously refresh your financial DNA every day throughout the month. Lastly, we provide peace of mind around data privacy and security. Borrowers demand control of their data.
CL: One element of the value proposition here for loan underwriters is that you can help them grow their business. Has StreamLoan to date been able to prove out this value proposition?
SB: It’s early days for StreamLoan, but we are seeing that building out an organic marketplace of lenders with access to inventory, realtors with access to borrowers, and home builders with access to homes, affords us the opportunity to build a powerful bridge to connect all the stakeholders together to grow their business.
This bridge will be magnified when we publically launch our product called StreamLoan OpenHouse that connects lender property data to the realtors in a mobile offering. We can immediately provide the realtor with digital access to all of the MLS data on that property for them to be able to answer any questions that a borrower may have on the spot, be it an open house or wherever else. By answering those immediate questions about the property for the borrower at the point of intention, we provide structure to help complete the process more efficiently. Not to mention, we provide an alternative to these homebuyers from going back home to Zillow to do more research and becoming a potentially lost sale for the realtor or mortgage advisor they are working with. Further it comes back to a simple experience for the borrower – everything in one place, one app, on their phone.
CL: What slice of the process is StreamLoan monetizing or are you charging a license fee like a typical SaaS provider?
SB: We charge a couple different fees. We charge a transaction fee for all the deals that are done on our platform and then we charge a SaaS fee. We charge only the lender. Everybody else participates at no cost to them. We only get paid when we provide value.
CL: What does the customer acquisition strategy look like for StreamLoan? If you are working with companies processing billions in loans that would suggest this is a relatively large undertaking to make a sell. How are you managing that process?
SB: Across our executive team we have deep backgrounds in enterprise work so we have leveraged those relationships into several intros that have opened doors at the executive level. We’ve been fortunate to build a really strong investment team of real estate insiders on both the real estate asset side as well as the money side (e.g., private equity, hedge fund and mortgage banking). We also participate in key panels, consortiums, conferences, and industry events that we’ve been recognized in to help grow our name and reach.
CL: How are you managing adoption of technology across three stakeholders, that being the loan provider, realtor and consumer? Do you believe this can be a hindrance for growth or are the stakeholders recognizing the need to be digital?
SB: It all comes back to design. We’ve really designed the product to be beautifully simple. If you take a look at the alternative, it’s a disaster, which is a bit of a motivator for realtors to say, “Okay, I am going to download this new product to make my life easier.” I think there’s a general excitement in the community that there’s now a product available that saves time, and brings in more deals and money.
As long as we can get the lenders and realtors on board everyone else is more than happy to participate in this better process. It is not to say that everyone will be our customer but the value proposition is well understood by many.
CL: Having sold companies off to Silicon Valley before, do you look at building this product to remain a standalone or do you build a strong product that can then be integrated into a larger organization down the road?
SB: First and foremost I like to think about building value. Life is short so focus on solving really hard problems that are fun to tackle and do it with the smartest people that you enjoy being around because you’re going to spend a lot of time together. I’m very passionate about making this mortgage experience better. It’s such an awful experience that I’ve just wanted to rip people’s heads off during the buy side of deals. To be fixing this problem is really exciting to me.
There also needs to be an economic incentive so choose big markets that have hard problems to solve in areas that you have outside insights or can build a core around, which we do. Then of course, I look at making the company interoperable. I have no interest about running this company for 20 years and as a standalone. It is and will be valuable to many different potential acquirers. We’ve already been approached by a number of players. We are not looking to sell the company today but there’s always a number – and more importantly, a partner to help realizing the vision faster.
A sale only makes sense when it works for the founding team, the employees, investors, and the product strategy. You will obviously loose some control, but you don’t want to see your whole vision and culture blown up. Again, life is short. If you get tied up for a couple years based on the acquisition deal, you have to live with that and that’s a chunk of your life. So you really have to consider all the factors when deciding the best direction for your company down the road.
CL: Can you speak about your experience as a part of Batch 18 of 500 Startups, and how that has helped you to further develop StreamLoan?
SB: I met Dave McClure back in 2008 at a party when I first moved to San Francisco through mutual friends and really liked him and his approach to growth hacking and marketing. He introduced us to the head of the the fintech track at 500 and what they were doing in sales, marketing, and his KPI driven growth hacking mentality and really appreciated his approach. Through introduction I met, Sheel Mohnot who runs the new Fintech Fund of 500 Startups that is $25,000,000 – we agreed this was the right time for a partnership.
We were excited to get involved as one of eleven selected globally in the Fintech program. Though we didn’t necessarily need mentorship, there’s always more to learn and more people to meet, so that was beneficial. We also have zero sales and marketing experience on the team so it was helpful to have our eyes opened to how to incorporate these functions into our existing capabilities.
It was like a platinum experience within 500 Startups, which is already one of the world’s top couple accelerators. The new Fintech group is pretty sophisticated, and has a lot of experience. Most have been founders multiple times and have had exits. We also met some investors on demo day that ended up getting involved in our current seed round, that was valuable. And we had an opportunity to build some very valuable relationships as well.
I became friends with another of the Batch CEOs who is also in real estate technology and he and I share leads with one another. He made an extremely valuable intro in the home builder space, which is why we were in Orlando talking with a substantial real estate digital partner. So the experience I have to say was valuable from several perspectives and also helped us to build some meaningful brand equity.
CL: Are you looking to raise a round of seed funding and if so what would you be using the money for to build out StreamLoan?
SB: We raised the pre-seed round last year. We’re in the process of closing another seed round of funding and then we will raise our series A towards the end of 2017. The goal with those funds is to continue to deliver on a great customer experiences, and make sure our product is successful in the market. We will accomplish this by investing in R&D to build out new product features and capabilities. We can accomplish this by investing further in people.
The Minute Rundown with Stephen Bulfer
CL: If you could provide one lesson to someone considering starting up what would it be and why?
SB: One choose your founders wisely. It’s as important a decision as marriage. Many companies fail because they don’t have this kind of founder trust. My co-founder and CTO, is someone that I have perfect compatibility with in terms of experience, skillsets, trust, and perspectives. To start building a culture with that as the seed is critical for success. Make sure that you know that you’re complimentary to each other as you build a team, hire people and such.
Then something more tactical would be just really do it for the right reason. Focus on solving problems that you care about. Don’t think about the money, think about creating value and making an impact.
Third, I would say, startups are hard. Make sure you constrain the problem sufficiently that you can tackle it. Some folks over scope. Startups need to be really good at something specific and that’s how you win. That’s how you have a team of 10 or 20 people and can compete with a Google, Facebook or any of the other smart, larger companies.
CL: If you could mirror yourself after one founder who would it be and why?
SB: I was fortunate enough to have Elon Musk as a mentor through a previous company and got to know him a bit. He tackles problems most people would say, “You’re freaking crazy.” He is re-imagining whole industries, and he has the technical capacity to make these ideas real. I think there’s something to be said for having been in the trenches, and been an engineer that knows how to build stuff.
I see myself as a guy who can roll up his sleeves, and try to tackle trillion dollar industries in a reimagined way, by leveraging my past experience. I’ve been in the trenches in tech, and in real estate. I’ve seen everything from fixing broken toilets to trying to get financing deals done. That experience is helping me to shape StreamLoan.
Just as Uber is bringing mobility to the cell phone, and Robinhood is bringing investing to the mobile phone, StreamLoan is now bringing the mortgage buying process into the mobile age too. The millennial generation is ready to start their lives as grown adults and the home buying process better meet their expectations of what financial processes should look like.
StreamLoan is proving that the mortgage experience should live on our phones that have increasingly become the central hub of our connected lives. Stephen and his team are clearly on their way to impacting an old school way of doing business with a more efficient and sensible solution for the 21st century.
Impacting trillion dollar industries with breathtakingly simple user interfaces is how all the tech giants win. StreamLoan has their eye on the prize. Stay tuned.