Saturday Cup of Joe: a lending and tech(ish) newsletter
Saturday Cup of Joe #46 (originally sent out on 3/25). New look and feel. I’m working hard to make the email as easy as possible to navigate and read. I know not everyone is interested in all the content each week, but I hope there is value here on a consistent basis. After receiving some feedback about the white font on black background, I decided that I could do more with format and layout. I hope this is a nice change of pace for a while.
This week we look at:
- The widening gap between renters and homeowners (The Multi-verse)
- That time of year for articles on financial literacy (Got Me Thinking)
- Airbnb as your urban tour guide (A Look Ahead)
- Walking is the new black (Walk the Walk)
- Who exactly gentrified Detroit? (Viewpoint)
- Productivity, laziness as productivity, and work-life balance (Efficiency)
- Apprenticeships are playing the long game (Hard work)
- A consent order that actually worked (Sidenote)
- Thoughts, bonus and quote (all the way at the end)
The multi-verse of “Gap”: In the 1990s, it was all about Gap. Gap dancers. A Gap in every mall. I then came to know the term “Bridge the Gap,” referring to the shortage between the funds raised for an institution’s fiscal year and the amount needed to meet cost/expenses. I’m sure you’ve all been to a bridge the gap dinner or fundraiser at some point.
Apropos of nothing, I also saw a movie once called Mind The Gap. I remember it was artistic and independent and weird. 2004 Jeremy loved it. I wonder if it would have been a good idea to watch it before putting in this week’s email. Probably…oh well.
Speaking of gaps, there is also the more expansive kind. This decade has seen a widening income gap, a skills gap and a homeownership gap. The latter was the focus of an interesting article in Bloomberg about the rental market in Detroit as a microcosm of the country.
Sure, there are the studies showing that rentership is likely to “keep rising through 2030 thanks to demographic trends that include aging baby boomers who downsize into rentals.” That’s before you even get to changing housing trends. According to Trulia, “fewer than 1 million homes were on the market in 2017.” The lack of inventory makes it difficult for renters to buy. (Existing) homeowners and more and more corporations, however, are becoming landlords. Renting single-family homes may be the future. I should have waited to refine my failed Shark Tank pitch from last week.
Got Me Thinking: I got a call this week from a wealth manager who is cold calling employees of my company to drum up clients. I was polite. But I couldn’t resist asking about Wealthfront and these other algorithm investment platforms. And I was interested in his reaction. This was a recent college graduate making calls for his boss and moved the conversation to relationships and connection. He said all the right things. According to his view, there will always be people who want to do business with another person, even if it costs more. I’m curious if that’s true. If many consumers knew the delta, meaning the cost savings, by avoiding the sales person or account manager, would they still demand the personal touch? I suspect some probably would which is all the same for my point here. Most business people will tell you that “it’s all about people.” But that’s only in how the sale works, not necessarily what people want in every situation. If I felt more comfortable monitoring my investment portfolio, I might also feel more comfortable using an algorithm model to save money. My insecurity about wise (and timely) investing makes me more likely to trust someone else. But I tend to trust technology and have a strong desire to be cost effective. I wonder if the trend is that these types of services are needed because fewer and fewer consumers understand or can compete in the hyper-competitive markets today.
Whether it’s the focus on these new investment platforms, tax season or the fact that it’s been a few weeks without one, I noticed several articles this week addressing the lack of education around personal finance. The Wall Street Journal posed an interesting solution that requires college students to take a course in personal finance prior to graduating. And a blogger on Medium announced his app that helps parents teach their children about personal finance. I’ve been a recent critic of many of the disclosure regulations — at both the state & federal level — that do not actually meet consumers at their point of need. We’re not really leveraging technology to explain complex financial transactions. CFPB will tell you the new federal mortgage disclosures are “dynamic” and sure enough, the forms for home purchase loans and home refinance loans look different. But we’re just now scratching the surface of how videos, tutorials, pop-ups or chat can address real-time questions 24/7 in any big financial transaction. The bottom line for me is there remains real opportunity for financial literacy and improved disclosures, whether mandated or not.
A Look Ahead: Airbnb as more than a travel site. Airbnb as curator of experiences. Customized travel and experiences for the consumer. For instance, Detroit accepted 27,000 Airbnb customers last year, the most in Michigan. Detroit also has a growing reputation, beyond just the overall comeback downtown, that includes culinary destinations, musical sites & sounds, and even a boxing history that remains a strong tourist attraction.
Walk the Walk: Literally. Walking is the jam. Not only is it good for your heart, but it makes you happier too. Walk(ing) the line. Now, that’s an entirely different kinda walking. Meredith and I picked an apartment right on Detroit’s Riverwalk so we could walk right out of our building onto the Riverwalk and it’s been great. We’re moving a few blocks away soon, but the year we spent on the waterfront has been made better thanks to the walking. One thing American cities are working hard to bring back is walking. Here’s a list of 50 reasons why your city should embrace walking. Or, if you don’t live in a city, feel free to visit us here in Detroit and we’ll make sure we walk the river.
Viewpoint: Detroit & gentrification. My best friend Brad used to say, “I gentrified Detroit.” It has the immediate sting of controversy but he once explained it to me this way: “Everyone thinks they are the last authentic resident in a place. Everyone who came after ‘me’ came to a different place or for a different reason.” It’s not a new conversation or one unique to Detroit. It did, however, rise again this week as Detroit continues to build and sell luxury condos downtown. The economic resurgence is churning and starting to restart the downtown business climate — everything from office space to bars & restaurants. There’s a fear that new development pushes residential rent prices beyond what local residents can afford. Though there’s “limited evidence of widespread displacement,” the plans to push economic growth into all parts of the city is just beginning. How well or how quickly it spreads may make the difference in Detroit’s narrative. (Lucky to have a front row seat).
Hard work: 5 million apprenticeships. Not internships — apprenticeships (there’s a difference). In previous Saturday emails, I suggested that Trump should have or could have listened more closely to the tech community. Here, Trump apparently got the idea for 5 million apprenticeships from Marc Benioff at Salesforce. Either way, it’s a great idea. Not just for skilled trades, but for all types of experience. Since experience is the key to better decision-making and building confidence, the best ways to get experience quickly are internships and apprenticeships. I had a presentation this week on building better relationships and we talked about personal networks being critical to success. You’ve heard me say it before but it bears repeating: it’s not who you know that matters but what you know about who you know. But I digress. If an expanding personal network while gaining experience is key to setting up future work or opportunities, then the point is to be side by side working with people that can help you succeed. How’s this for an organization that teaches skills and expands networks? MissionU steps in, in lieu of college, to train analysts in data analytics and business intelligence and only makes money if you succeed. After the yearlong training, MissionU shares in the starting salary (up to 15%) the first 3 years assuming an income over $50K per year. Interesting stuff.
Efficiency: I wanted to provide these article but given the topic, here it goes:
- How to Make the Most of Your Workday — valuable info for all types of different personalities and work situations. Takeaway = small incremental changes over time lead to big results; don’t dwell on slip-ups — just do better tomorrow.
- Michael Lewis’s laziness ensures whatever he is spending time on is valuable. Takeaway = don’t underestimate the value of downtime or free time with no direct goal.
- Work, sleep, family, fitness or friends. 5 aspects to your life. Do you really have to pick only 3 to ensure success? Someone in Silicon Valley is trying to convinces us — yes. Takeaway = no.
Sidenote: How certain spending policies & procedures around the crisis have “enriched” the big banks. Interesting “rub” in this one. Large banks have consent orders requiring that they spend money to either a). slash their own customers’ mortgage debt or b). invest in future mortgages by lending or making credit available to those who do lend on home loans. The result is the banks can make a profit by issuing restitution under the order. Flashy headlines aside, consumer advocates agree “there is some real social utility to it.” Doesn’t that make it the ideal arrangement?
Today’s Thought: Trust but verify. This is great corporate speak. What makes it great is that it is simultaneously catchy and helpful. What makes it corporate speak is that it does not give any detail or nuance to otherwise delicate topics. Let’s break it down. Trust lays the foundational assumption that we all work together and we all inherently start from a place of trust. But implies that trust does not alleviate a manager or leader from the responsibility of whatever has been delegated or given to someone else in the organization or on the team. That’s fair. Verify is a nice way of saying “I’m watching you.” Or better yet, “don’t be offended when I’m required to check up on whatever we both believe is your responsibility.”
Unfortunately, it can also be a cop-out or crutch when we look back on a situation that where we did not manage close enough to the details or where we did not have enough visibility into what was going on. If a teammate doesn’t do their job, your boss might end up saying “trust but verify, right?” I think it’s a decent enough organizational tool to provide cover for leaders that want to delegate and keep close tabs on someone but it has limitations. As leaders, we cannot alleviate our responsibility to help out younger teammates or more inexperienced leaders who need to know how to execute a “trust but verify” model inside complex organizations like our businesses. There are still a lot of internal politics, personality conflicts and general efficiency considerations when trying to be a “trust but verify” leader. I always try to keep in mind that a concept can be simple — trust but verify — without being easy.
Quote: “Problems are welcome…but solutions are required.” — Jay Farner, CEO, Quicken Loans