Saturday Cup of Joe: a lending and tech(ish) newsletter

Friends & Colleagues,

SCOJ74. Week 74 and another week #InTheD.

Down Woodward Ave. to the Detroit River


Ryan Holiday published an interesting interview with the authors of Blue Ocean Strategy and Blue Ocean Shift. The article covers the book, the research and the publishing industry. What was new to me was the view into academic and business school books. There were a variety of lessons, but the takeaway for me was the keys to lasting impact: 1). Relevance — a powerful idea with universal appeal. 2). Actionability — useful tools and practical processes for organizations. 3). Rigor — based in research and empirical findings.


Included this week:

· Of Interest — CFPB weighs in on eClosings

· Amazon HQ2 UpdateHere’s a full list of Amazon HQ2 prospects according to Inc. (53)

· Millennial Minute — Two competing Harris Polls focus on millennials

· Walk the Talk — Advice from Facebook’s star product manager

· Not-so Quirky Story — A complex story on American tribalism

· Today’s Thought, the Quote and bonus

Sunrise over Belle Isle

Of Interest: CFPB published a blog post on eClosings that covered some interesting territory. As an advocate for electronic closings, the CFPB sees the benefits to the consumer as ease of understanding, ease of access, and decreasing the pressure to review certain documents.

The CFPB found consumers involved in a 5-month pilot program a few years ago, to be:

1. There is a lot paperwork to review at closing

2. I’m having trouble knowing who can answer my question

3. The whole process is painful and overwhelming

I agree with the Bureau here. eClosing and technology, generally, help consumers better understand the transaction and reduce (some of) the stressors in a closing.

Perhaps the biggest revelation was that 80% of Americans now live in a jurisdiction that accepts eRecording. Given those figures, a surprising number of Americans now have access to the fully electronic mortgage process.

Just in time, Rocket Mortgage partnered with Titlesource & Pavaso to ensure that anyone within that 80% can select their preferred method of closing.

Amazon Update: With the proposal deadline only 2 weeks away, the Amazon HQ2 sweepstakes are heating up. Social media buzz and published articles are increasing daily. Everyone is taking a different approach. Some publications are trying the objective, academic approach. Others are trying the counter-narrative and counter-counter-narrative approach. Still others the aloof & mocking tone.

Detroit has done well on several fronts. Interest across social media has been expanding. Detroit is a legitimate top contender. Second, more research & due diligence has shown that Amazon is focused on the bottom line and ensuring economic value in the selection. That breaks in Detroit’s favor as real estate and cost of living make Detroit and the entire #NextBelt a favorable location.

One aspect of this story that I did not anticipate was how much the way Amazon HQ2 was covered would tell us about a particular publication or city. For instance, Anderson Economic Group ranked Detroit at the bottom of the list of potential sites. What Anderson does not realize is how much has changed since they last looked at some of the cities in their analysis. My immediate thought was Moneyball. Anderson is still using antiquated stats to analyze 40,000 more employees in Detroit given the way the city looked a few years ago. Home runs & RBI. Vacant land & public schools. Instead of the hits & on-base percentage that make Detroit a great value. Cost of commercial real estate & access to next generation technologists. What Anderson does not understand is how Amazon’s decision to commit would change the next 2–3 years in the city. Infrastructure. Transportation. Development. It’s impossible to look at an old model of Detroit, try to apply new tech workers in the city and then make a determination of what environment is the most conducive. Detroit would respond and look different in 2019 than it does today. Luckily, Amazon is a forward-thinking organization that can apply data in a future state instead of looking backward.

Other states & cities, like those profiled in New Jersey, are mortgaging their future just to be in the conversation. Hoping to overcome other deficiencies, New Jersey pledged $5B in tax incentives & other perks to lure Amazon. For a bottom-line focused organization like Amazon, it’s a worthwhile strategy. The trouble is the proposal does not envision a future of creative problem solving. Throw money at the problem and make massive problems that either expire (at some date in the future) or will need to be renewed at a cost so high the state never actually sees the benefit of the new economic growth.

So it begs the question, is it worth it? Just like the Anderson Economic Group only looked back to get their economic statistics, Professor Jeffrey Dorfman also missed the forest for the trees in his analysis on Dorfman argues that the economic math between what a city will spend or give away in attracting Amazon versus the upside of revenue and economic activity after the fact makes it a net loss to these municipalities. I couldn’t disagree more. This narrow view of value limits the analysis. Dorfman leaves out ancillary service providers to Amazon, support services companies, restaurants & bars, visitors and the public relations boost to the region. There is a significant upside to being seen as a “winner” for future business opportunities. Dorfman factors in none of that and merely measures incentives & giveaways versus the added burden of 50,000 employee/residents. Dan Gilbert likes to say that no one factors in the ripple effects that making a decision will have. Here, you cannot evaluate the current economic environment against a future that includes Amazon because you don’t know how the choice will influence the environment as well.

Amazon footnote of the week: The Wall Street Journal speculated this week whether Jeff Bezos’s homes would play a role in selecting the next headquarters. Honestly, that seems to go against everything we’ve learned about Amazon & Bezos thus far. Practicality, profit and efficiency are the name of the game. Nevertheless, it is interesting to see the Kalorama neighborhood of DC, 2 homes in Beverly Hills, 2 homes in Medina, WA, 4 apts in Art Deco on Central Park West, and a ranch in Van Horn, TX (300,000 acres). As a result Bezos is #25 on the list of largest land owners in America.


Millennial Minute: In this week’s millennial poll, NerdWallet & Harris found almost half (48%) of millennials plan to buy a home in the next 5 years. Almost as many Americans (44%) believe you still need a 20% down payment. Millennial home owners as well as those who responded they plan to buy homes are relying on personal savings for the down payment. Fewer said their spouse or partner’s savings would be all or part of the down payment. Only 14% of millennials will rely on gifts.

Other highlights from the survey include — 35% of millennials cannot afford where they want to live & 19% said their student loans were the obstacle delaying homeownership.

Speaking of down payment, an amazing 90% of millennials said they’d be willing to make sacrifices to save for a down payment, including forgoing a vacation, or delaying a wedding.

Some are looking to other sources for a down payment. Tip of the cap to CMG Financial who rolled out HomeFundMe which allows people to provide gifts in the way of cash toward your down payment. Certainly there are questions around the ability to repay and other risk criteria if you are getting extra money to afford the house, how are you going to ensure payments, maintenance and upkeep stay within budget? Those are real concerns for underwriting but any new ideas that push the envelope and get us to rethink housing finance or test our assumptions are positive for the industry, in my opinion.

In related and conflicting news, another poll — this one by Realty Mogul/Harris — found that 47% of millennials would continue renting if it meant allowing small luxuries like eating out, gourmet coffee, etc. I don’t know how this jives with the 90% ‘willing to make sacrifices’ from the other Harris poll. (Editorial comment — doesn’t Harris have some responsibility in this to make sure the polling is consistent / calibrated properly?)

As I’ve written before, renting is about freedom and flexibility and homeownership is about commitment and stability. Flexibility to explore or move for a job opportunity. Commitment to a community & place. According to this “other” Harris poll, millennials were 50–50 on buying a home versus spending money on travel & experiences.

Honestly not sure how to reconcile this polling, but my takeaway is this means that no one really has a clue, yet, what this generation may do. Indecision, volatility and uncertainty — whether personal, political or economic — could also explain why millennials vary widely in their responses.


Walk the Talk: Valuable lessons in both leadership and self-management from Fidji Simo, THE product manager at Facebook. Here were my takeaways from the deep and specific profile of Ms. Simo. Simo understands how to manage multiple projects and responsibilities without diminished focus and value because she is able to spend time prioritizing her strategic vision. For instance, she spends 30–60 minutes a week simply laying out a clear intention for how to maintain focus and align her activities to her vision. Lastly, once she commits to something, she backs it up with action.

Time → Clarity → Priorities → Focus → Action!


The Not-So-Easy to Classify Story: New York Magazine ran a story on Tribalism this week. For a variety of reasons, I couldn’t resist sharing it. First off, I am in the midst of Tribe by Sebastian Junger which came recommended by a brilliant friend and digs into fundamental human belonging questions. Second, of the books I read, loved and still remember from college is The American Jeremiad by Sacvan Bercovitch. Assigned reading in American Studies 101, Bercovitch handles Puritanism, manifest destiny, and American exceptionalism. Third, and finally, it seemed particularly relevant at this moment when issues of identity, race and competition are boiling hot. For instance, the Radiolab podcast More Perfect restarted its analysis of interesting, influential Supreme Court decisions. A recent episode profiled The Dred Scott Decision. If you doubted whether race remains an issue, check out the episode. In Dred Scott, the Chief Justice Roger Taney wrote the following statement: “the black man has no rights which the white man was bound to respect.” The phrase is stunning in its wrongness even for that time. The podcast is fascinating in its complexity. On one hand, the producers make it seem as if the descendants of Justice Taney are implicated somehow in their forefather’s bigotry. Almost as a proxy for how all white people are supposed to feel today. On the other hand, the episode highlights the depth and power of racism.

The New York Magazine piece is long & comprehensive. The author has to balance his own experience & politics, the delicacy of historical events and the potential to trigger the outrage culture on both sides. Nevertheless, I felt it was worth passing along as identity politics and tribalism continue to bring up the big questions of our time. According to Sullivan, “successful modern democracies do not abolish this feeling; they co-opt it.” Using individuality & forgiveness to build a new tribe or at least tone down attempts for lesser tribes to take over. “Tribalism only destabilizes a democracy when it calcifies into something bigger and more intense than our smaller, multiple loyalties; when it rivals our attachment to the nation as a whole; and when it turns rival tribes into enemies.” I think Sullivan is right here. We’ve lost perspective on “the whole.”

The Sullivan piece cites a “Monmouth poll [that] recently found that 61 percent of Trump supporters say there’s nothing he could do to make them change their minds about him; 57 percent of his opponents say the same thing. Nothing he could do.”

Again, regardless of your politics, there was a lot in this article that made me think.

Candy corn & Halloween

Today’s Thought: I had dinner this week with a friend who has recently taken on a big role at a major company. He moved up quickly at the company and succeeded by focusing on two things — people & value. His advice hit home with me and I wanted to pass it along. Bet on yourself and don’t hedge your answers. People look for clarity and respond to directness. Advice like that can be difficult to turn into action but many of us have that moment when we simultaneously notice something is missing in a meeting/discussion/project, feel the urge to speak up, and don’t. Next week, consider those moments carefully and try to speak up next time. I’d love to hear any examples where it worked or didn’t work. Let me know.


Quote: “Nothing in life is as important as you think it is while you are thinking about it.” — Daniel Kahneman


Bonus Content: In my office we like to say “words matter.” I was helping out a friend with a wedding toast and ended up down the YouTube rabbit hole of wedding toasts and spoken word poetry. I’ll spare you the details, but here’s an old spoken word poem that I still appreciate. Yes, it is as awkward to watch spoken word as you are imagining. It is thoughtful and interesting; but if you get easily self-conscious you may want to skip this link.

Continued success,

Thinker, curious leader, once an attorney…always trying to answer well.