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

Friends & Colleagues,

SCOJ94. 94 weeks in Detroit. One exciting aspect to my weeks lately has been improving time management and productivity. This week included a strong balance of work, leadership development, networking including my first meeting with the Detroit Fintech Association, some calls to colleagues and friends in the industry and annual reviews with my team. I find that when the day is filled with a variety of different activities and requires that I utilize different skills throughout the day. The days go by quickly and I leave the building feeling accomplished. The only things that suffer are my email inbox and a full night’s sleep. I’m going to work on the sleep thing next week (I promise, Mom!). Next week is also when HMDA filings are due, so I think the sleep will be after that. But things are moving quickly and that’s invigorating. Bring it on!

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The Detroit Riverfront from the East Side

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Redfin released a survey indicating that homebuyers might not be as deterred by rising interest rates as many feared. In fact, until average rates exceed 5%, most buyers were not going to change their home shopping behavior. Even over 5%, only approximately 33% of respondents said that they’d slow their search or in some cases, cancel, their search based on rising rates.

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ProPublica published a review of the State of the CFPB. One interesting excerpt: “I’m really passionate about my work and the people we serve,” said one CFPB attorney. “I’m going to try to stick it out. I recall something Cordray said: This part of the agency’s history is as important as the rocky beginnings. We have to be able to survive changes in administration.”

Included this week:

· Of Interest — Homeownership report finds new financial incentives in the American Dream

· Power of storytelling — One tweet costs Snap Chat ~$1.3B

· Valuable Lesson — Avoid the Pyrrhic victory

· Random blog of the week — Beware how your beliefs cloud your judgment

· NextBelt — VC investors visiting the #NextBelt

· Millennial minute — Tech savvy lawyers and millennials needed in many tech businesses

· Quirky Story, Today’s Thought & the Quote

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Detroit, MI, USA

Of Interest: “Homeownership is still financially better than renting,” according to an analysis done by Laurie Goodman and Christopher Mayer. The Urban Institute republished Goodman and Mayer’s research from the Journal of Economic Perspectives. Here’s the thing: They are right; I know they are right. Laurie Goodman is one of the preeminent housing policy and housing trends economists and experts in the country. Yet I always take issue with these types of conclusions as lacking sufficient data or context for the data. For instance, the study used Zillow data for the comparable cost of rent. There are often a variety of affordable rental options that never make it to being publicly listed or are often found on sites like Craigslist. Were those values included as well? Next, Goodman & Mayer looked at what a homeowner “would have paid” to rent a “comparable property.” The analysis removed all the costs of homeownership, such as: operating costs, maintenance costs, property taxes, homeowner’s insurance, capital expenditures and annual mortgage to determine the property’s “cash flow.” What I never see covered or accounted for in this type of analysis is the time, effort and energy spent on the house. Do, for instance, the operating costs include mowing the grass, making small improvements to the home, fixing the toilet, etc.? I always wonder why the renter doesn’t get value from the time not spent on odd jobs around the house? Money and energy spent on the house is not money and energy spent creating, producing, investing, inventing, or, yes, relaxing.

At the same time, it’s not all about money & value. I believe the benefits of homeownership are largely emotional. Buying a home is part of a story, a narrative that the homeowner is telling themselves and their family. Commitment to a place. Commitment to a community. Making decisions and choices about every aspect of the home. Making memories at holidays, special events and random Saturday afternoons that will last a lifetime. This is why people should be encouraged to buy a home. Goodman & Mayer barely mention the emotional commitment aspects at all. For instance, the article says, “The returns on homeownership are not just financial, of course. Homeownership provides a stable place to live and an inflation hedge because mortgage costs are generally fixed while rents tend to rise with inflation.” The irony, of course, is that of the two “not just financial” reasons mentioned — one is financial!

Our industry needs to let go of the obsession to make the homeownership decision a good financial decision and simply tell a better story. Tell the more accurate story. Homeownership may be a good financial decision; in fact, the longer you stay in the home, the better it tends to be. The real reason, however, to buy a home is a home is a character in your story. It represents your commitment to the community and will be the backdrop for your family’s stability and celebration for years. The reasons to buy versus rent remain many but require better storytelling as opposed to better statistical methodology.

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Power of storytelling: Anyone who doubts the power of perception, the power of how we perceive ourselves, the power of story, even the power of peer pressure, should pay attention to what happened to Snap Chat this week. On Thursday Kylie Jenner tweeted that she hasn’t been on Snap Chat in a while, and the stock fell 6.1%. That’s $1.3B, that’s billion, with a B. Snap Chat was not necessarily going strong to begin with this week. The stock was downgraded by one analyst earlier in the week. Yet it’s important to note the fact that investors would react so strongly to celebrity sentiment, especially one lukewarm celebrity tweet. It goes to show how delicate social brands remain and, not for nothing, how these platforms may be overvalued.

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Valuable Lessons: Pyrrhic victories can be avoided. Too often in business we lose sight of the war and focus only on the battle. It takes discipline, clear vision and some guts to stay consistent to the long term principle. It’s easy to forget the overall war when the smaller (seemingly unfair) battles are at stake. Farnam Street posted a defense of the long view and how to overcome the temptation to win the battle at the expense of the war.

1. Always zoom out to define the big picture. For example, if finishing a half marathon after a foot injury results in 9 months of recovery and no running, would it be smarter to walk off the course but be able to run again in weeks, not months?

2. Reiterate core principles often and reinforce goals.

3. Don’t calibrate off others. When others are panicking, demand calm.

4. Recognize when to give up.

5. Underdogs occasionally win and often put up a good fight. If you or your company are in the “power position,” evaluate the cost of the fight even if you expect to win.

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Random blog post of the week: As you know (or are reading right now), I post all my newsletters to Medium.com. I really enjoy the writing on the site and it reminds me of the site Salon.com, that was more popular about 10–12 years ago. In fact, my first blog, The Potter Political Pickle, was hosted on Salon.com and made the front page on occasion. This week, I came across a Medium post on “Unlock[ing] Your Beliefs.” My judgment for posts like this is whether I have 1 or 2 takeaways that I can put into practice. (If you expect too much, you’ll find it easy to criticize many of the Personal Growth or motivational writers.) As long as I can get a few nuggets of truth or helpful reminders, I’m happy. I’ve long been a fan of the philosophy of strong beliefs, loosely held. I like the story by Paulo Coelho in which a neighbor thinks her neighbor has dirty laundry only to find out her own window needs to be cleaned. How often does that happen within the subconscious assumptions we make throughout the day? The reason we shouldn’t value our beliefs too highly or rely too heavily on our own beliefs is how limited we really are.

As the author shows, “we don’t know what we don’t know.” Yet most people think they understand the world in more depth than they really do. It doesn’t mean we have to go around calling everyone out. Quite the contrary, it’s about listening more and defaulting to a benefit-of-the-doubt mindset in order to remove ego and instead focus on productivity. Likewise, willingness to challenge our own perception and consistently reflect on our own motivations and decisions is key. Try it this week. How often do you ask yourself, “What if I believed the opposite?” Or better yet, “What if I did the opposite?”

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Next Belt: We have a saying at Quicken Loans that “Money and Numbers follow, they do not lead.” This is never more true than in #NextBelt cities like Detroit, Youngstown, Toledo and Pittsburgh trying to attract venture capital funding for our startups. I think much of what keeps founders and investors out of the #NextBelt is simply not being familiar with the Midwest. The more tours, like the one mentioned in this article, and the more success stories coming from Detroit will only help our tech startups be taken seriously. Benzinga, Techstars and the Detroit Fintech Association are examples of others working to raise the profile of the #NextBelt startup scene from coast to coast.

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As seen on Instagram @puremichigan

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Millennial minute: If I was a millennial looking for a career in technology, it would still be somehow in cybersecurity. Yet, according to BigLaw & Bloomberg, we should be looking at how otherwise traditional careers need to be tech savvy. Lawyers do not have enough fluency in blockchain, artificial intelligence, and cryptocurrency/investing. That’s good news for Debbie Hoffman, who announced her new company, Symmetry Blockchain Advisors, to help companies navigate the choppy waters of technology that moves faster than the business. As the article said, “A lack of tech know-how by attorneys also can be “disastrous” for clients in complex situations, like a data breach.”

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Quirky Content: Way beyond the Next Belt. This week I came across a story that is a bit unusual but was really fascinating on so many levels. One level is the dramatic retelling of an obscure CIA mission that purported to be scientists mining the ocean floor for manganese but was really trying to bring up a Soviet sub that sank. Interestingly, given the idea of Pyrrhic victories, the article says, “The CIA official history asserts that the operation was one of the greatest intelligence coups of the Cold War, but it had cost vast sums and questions immediately arose about its value.” (Spoiler alert: The mission didn’t go as planned). On another level, the article details the now fast-paced and growing world of undersea mining. It’s now more than 40 years since that CIA mission, and realistic seabed mining is just about to take off. Our desire for heavy metals for electric cars, wind turbines, and cell phones has dramatically increased the incentives. It’s scary to understand the history of human beings mining the land — inequality, exploitation, environmental ruin — and then just to push ahead and assume we can maintain control when so many countries and private investors are involved. On some distant third level, I couldn’t help but notice the wild conclusions in the article itself. I found myself distracted from the story as I repeatedly encountered sentences like this: “While these might not be the most iconic symbols of conservation, they may later prove to have a key ecological role or even a medical application. Some deep sea organisms are known to have high levels of substances that may be useful in combating Alzheimers.” I’m not sure what data the author has or what substance is even being referenced. It was so hopeful that I became skeptical overall. In some way, that’s a good piece because it was layered and made me think. On another level, it doesn’t seem like we’re concerned enough about how messing with the ocean is going to get us in as much trouble (if not more) than trying it on land over the last few hundred years.

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Today’s Thought: Different. Better. Special. I heard this standard about how to look at creativity and what we produce. If it’s not different, better, special, then why do it?

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Quote: As seen on Instagram:

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Bonus Content: A future city? The tech savvy and strategic planning community of Gilbert, Arizona.

Continued success,

Written by

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

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