I ran across an old MRD for a mobile-optimized commerce platform that I created 18 years ago when I was at a two-bit startup, Cellmania. Impressive was my prescience, although the timing was more than a bit bulloxed from both technology (WAP phones over GPRS networks) and market (on the eve of the dot-com crash and 9/11) perspectives.
In retrospect, the use cases held up relatively well while the enterprise software-centric execution comes across as highly anachronistic. I had previously been shilling Sun OS products where, in deep denial of open source, we developed half-measures like Sun Community Source Licensing, which, akin to Gorbachev's policy of Glasnost, only highlighted our inadequacies. While we had the makings of a decent tech stack, we clearly hadn't picked up on the trend towards developer-focused execution.
A skill I evidently did bring over from my Sun days was the ability to market the road map. While the stack was mostly developed, the frills and support models were pure brochure ware.
As for Cellmania, the deep freeze post 9/11 put the place on a reduced footing. From that point, it survived for quite a while longer with a focus on a proto-app store concept until it was picked up by Research in Motion/Blackberry.
Thursday, January 17, 2019
Thursday, January 10, 2019
Is the Mortgage Market Failing the Self-Employed?
"The Continued Impact of the Housing Crisis on Self-Employed Households," recently published by The Urban Institute provides some eye-opening stats regarding self-employed households...
- 10.6% of 40-59 yr old households
- Median income 30% higher than salaried households
- Home ownership rate 16% higher than salaried households
- But are 9% less likely to take out a mortgage. a sustained divergence that has appeared over the past decade
The reasons given included higher income volatility, the lack of W-2 and other documentation standards. In other words, requirements baked into QM ("Qualified Mortgage") standards.
Wednesday, January 9, 2019
BCG's US mortgage industry whitepaper, powered by Blend
BCG's US mortgage industry whitepaper is worth a gander for its succinct delivery of the impacts of digital solutions in this space. Wielding my editorial prerogative, the keys...
"a minimum viable experience in order to get to the market within 6 months, making continuous iterations based on customer feedback"
"dedicated cross-functional team of sales, operations, technology, and compliance personnel working on design and implementation"
An intense focus on the customer experience
"one-third of applicants apply using a mobile device, and over 50% submit their application outside working hours"A product management approach to creating/maintaining solutions
"Ideating is easy, but implementation is hard.""a minimum viable experience in order to get to the market within 6 months, making continuous iterations based on customer feedback"
"dedicated cross-functional team of sales, operations, technology, and compliance personnel working on design and implementation"
A holistic view of the customer home-buying journey
"We will see many more digital transformations across the mortgage process and the home-buying experience more broadly." as both incumbents and emerging players try "to create end-to-end home-buying experiences for customers."- The challenge to the industry is that none of these are capabilities are inherent strengths, which brings us to Blend, the platform used by the paper's authors to extract some of the consumer insights.
- Blend has deservedly received a fair amount of press over the past 2 years, and has been at the top of the digital mortgage origination league tables. Dimensionalizing its share of the origination market...
- "the platform processes more than 100,000 applications per month and $1 billion in loans every day." This translates to roughly $360 billion in loans annually, the vast majority from the Retail channel.
- The Retail channel in 2017 (last full year data) accounted for ~$1 trillion in mortgage loans, out of a total market of $1.8 trillion.
- The Top 7 Retail players combined to account for ~$350 billion in mortgage loans in 2017
Friday, January 4, 2019
(More) millennial mismatching in housing finance
"Cheer up, millennials! It will become easier to buy a house... The snag? It’s because your parents are going to die" - The Economist (January 2019)
On the whole, a bit morbid even after considering the humor endemic at the grand old newspaper. Reality seems better, at least on this side of the pond. After a rather glacial ramp, home ownership rates amongst the cohort have picked up dramatically, to 47% for those between the ages of 28 and 31 according to a recent EY survey and in line with historical averages of recent prior generations. So, what's the big deal?
These rather sizable deltas cannot certainly cannot be explained away by income differentials. In fact, using a recent survey as rough benchmark, millennial incomes in the top states are less than 20% higher than incomes in the bottom states.
Yet, home ownership is typically executed using one a single dominant product - the 30-year fixed-rate mortgage.
For most of the past century, the 30-year mortgage has had a role in helping improve the economic well-being of the US consumer, but it doesn't take much to wonder if the disparities highlighted above will materially impact the prospects of large numbers of those just entering the housing market.
Returning the the LendingTree data set, the differences in mortgage payments between those living in the top 5 most expensive metros and those in the bottom group are substantial - $28k v. $8k per annum using a 4.75% rate for illustration. And that's before accounting for the necessary down payment, which is 4.9x higher in the top group ($95k v. $19k).
When the average salaries even in the most expensive states are in the low $40k range, is it any wonder that "More First-Time Home Buyers Are Turning to the Bank of Mom and Dad?" But how about those who have no "Bank of Mom and Dad?"
Early last year, I penned my initial piece on Millennial Mismatching in Housing Finance. In the time since, the disparities have only become clearer.
On the whole, a bit morbid even after considering the humor endemic at the grand old newspaper. Reality seems better, at least on this side of the pond. After a rather glacial ramp, home ownership rates amongst the cohort have picked up dramatically, to 47% for those between the ages of 28 and 31 according to a recent EY survey and in line with historical averages of recent prior generations. So, what's the big deal?
General improvements mask different market pricing dynamics
LendingTree recently published a ranked list of the top 50 metro regions for millennial homebuyers as defined by new purchase requests from the cohort as percentage of total new purchase requests. Disregarding the popularity contest portion of the data set...- While "nearly one-fourth of all mortgage purchase requests in this period came from millennials," this list of metro regions encompassing 55% of the nation's population goes from 51% (Salt Lake City) down to 30% (Tampa).
- At issue is either the lack of millennial home shoppers outside the enumerated regions or LendingTree's customer acquisition strategy.
- We see a massive disparity between the requested loan amounts in the most and least expensive metros. The average requested by millennials in the top 5 most expensive metros is 3.3x that of a similarly populated group of the bottom 14 metros. ($457k v. $138k)
- Even if we let California, which accounts for 4 of the top 5 metros, secede along with New York City, we're left with a 2x disparity between the 7 top similarly populated non-CA/NYC metros and the bottom 14. ($276k v. $138k)
These rather sizable deltas cannot certainly cannot be explained away by income differentials. In fact, using a recent survey as rough benchmark, millennial incomes in the top states are less than 20% higher than incomes in the bottom states.
One-size-fits-all product amidst disparate needs
Most astute market actors would consider altering products to provide choices tailored to customer needs. KFC is renown for tailoring its menu to different tastes the world over. Domestically we even see this dynamic at play with mayonnaise.Yet, home ownership is typically executed using one a single dominant product - the 30-year fixed-rate mortgage.
For most of the past century, the 30-year mortgage has had a role in helping improve the economic well-being of the US consumer, but it doesn't take much to wonder if the disparities highlighted above will materially impact the prospects of large numbers of those just entering the housing market.
Returning the the LendingTree data set, the differences in mortgage payments between those living in the top 5 most expensive metros and those in the bottom group are substantial - $28k v. $8k per annum using a 4.75% rate for illustration. And that's before accounting for the necessary down payment, which is 4.9x higher in the top group ($95k v. $19k).
When the average salaries even in the most expensive states are in the low $40k range, is it any wonder that "More First-Time Home Buyers Are Turning to the Bank of Mom and Dad?" But how about those who have no "Bank of Mom and Dad?"
Early last year, I penned my initial piece on Millennial Mismatching in Housing Finance. In the time since, the disparities have only become clearer.
Tuesday, January 1, 2019
Predictions for 2019...
Since everyone and her mother has been putting forth predictions, allow me to jump into the fray with a few...
Consulting firms are the new "arms merchants"
In a world where commerce and tech has been weaponized, the major consultancies are becoming increasingly entangled in shadier aspects of the affairs of state. These firms are light years removed from their situation when I plied the trade at Arthur D. Little (the "World’s First Management Consultancy") in the 1990's. McKinsey, the alpha male of the pack, has grown ten fold in staff since those days and has come under attention for its international exploits. While the "arms merchant" label may be a touch melodramatic, it's not a stretch to suggest that these shops are the Bechtels of the next chapter of the Information Age.Cloud platform announces penetration by a "state-level actor"
In the aftermath of the Marriott breach terrifying travelers the world over, it’s only a matter of time before a major cloud platform confirms something similar for their assets. While corporate valuations will certainly suffer, this may also lead to a general reconsideration of the blithe acceptance of the off-prem/public cloud deployment model. Much like our current Cavendish monoculture banana bind, which may lead to yet another refrain of “We Have No Bananas,” heterogeneity, genetic or otherwise, would be a prudent course of action.
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