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

Saturday Cup of Joe #147.

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Friends & Colleagues,

Week 147. As I think about my personal motto “Answer well,” this week a blessing in disguise. On one hand, it was a busy week with high expectations throughout. On the other hand, I asked for big challenges and a big stage…and I got it. This week required all my experience and skills. I spent each day focused on how to move our business forward, how to help our business partners and how to advise the companies and boards I represent. Honestly, it doesn’t get any better than that. I didn’t have a chance to work out and a few nights I didn’t get home until late, but I felt engaged in my work and my contribution. Isn’t that the goal? As you consider your week, your team and your goals, how do you think about it?

My week got me thinking about how I was able to bring all my skills to bear and drive our business forward. Between that and spending time with my daughter and her class, it was an ideal week.

Bill Emerson, former CEO of Quicken Loans, likes to say that there’s no such thing as work-life balance. There’s only life balance and we all have to figure out how to make it balance.

How are you handing the market and the New Year? Have you met with your team about 2019 goals?

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As seen on Instagram @inqlife

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I spent some time this week researching and listening to interviews with Jim Collins. Jim Collins is the author of Good to Great and Built to Last the leadership and business organization books. In this interview with Tim Ferris, Jim digs into some of the lessons from his books. For instance, Jim has a chapter in Good to Great on the “flywheel.” The flywheel is the powerful cycle of production that drives your business. In the interview, though, Jim further clarifies what he meant by “flywheel” to articulate how we should each think about this cycle.

The most productive flywheel is one where the company has identified the activity that leads to the product or result that ensures a successful business. In other words, it is not enough to simply solve a problem or lower costs to consumers. A company’s activity must create the conditions that make success guaranteed. Ensure the inevitable result of your work is the outcome that creates the next result and so forth. For example, a company or entrepreneur should consider what activity triggers the most benefit to clients/customers. Adding value will only spark more business or more interest. As a case study, consider Amazon. Amazon’s flywheel is to provide a low cost option for buyers, which will in turn attract more sellers, which will use competition to drive down cost, which will bring more buyers to the marketplace, which will in turn attract more sellers, and ultimately cultivate an efficient site with the highest number of visitors. The idea is not to mimic someone else’s flywheel but rather be unique in your own.

Another great lesson from Jim Collins is around luck. Luck or random advantage is the same for every participant. The difference is the exploitation or the acceleration off the luck. In other words, every founder or new business is looking for timing and luck, but the business that use luck as an accelerant (versus just getting notice) are the difference between good versus great.

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During the Jim Collins podcast linked above, Jim mentioned another principle that is worth highlighting here. I’ve written before about ready, aim, fire, aim, fire, aim, fire, aim, fire. In the podcast, Jim is suggesting a different and more effective approach. Instead of building your business to be able to attempt and respond in real time, Jim recommends testing market theories with “bullets” toward your target before confirming “line of sight” and “firing” a “cannonball” that makes the biggest impact. For example, many companies that Jim’s team studied appeared to have these moments of brilliance or moments of innovation. The reality is that was only the insight from the outside. Once Jim and his research team got inside the companies, they realized that there were months of build up to what appear to just “come out of nowhere.” For instance, a company that is innovating and growing in a healthy way would fire “bullets” out into the market to confirm a strike or confirm a success against a competitor. Only then, would a company load up all the ammo and all the power to fire against the competition or against the industry.

So as you consider your business, your organization or your team, what is your “cannonball moment” where you would be willing to jeopardize all your gunpowder to fire on the competition? The bullet is the equivalent of the test balloon. Once the bullet is a confirmed hit on the target, though, the company should deploy the cannonball or all the fire power against the target. Are you ready or able to fire?

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“An option to come back has negative value.” — this quote, also from the Jim Collins interview above, is more applicability to those with creative pursuits and innovative pursuits. The idea is — if you leave yourself an out, you will likely use it. So, whether product innovation or writing a book, hedging with a safety net risks your whole vision and your whole outcome. Don’t do it.

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Atop the Fisher Building in Detroit.

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Millennials and home ownership: Thank you to Bill Weber for the article recommendation this week. CNBC looks into millennial homeownership only to find that not only do millennials regret homeownership BUT on top of that, “roughly 1 in 3 millennial homebuyers took on a second job to save up for it.”

The hidden costs of homeownership (before just the time commitment) raise questions that anyone in the real estate finance and mortgage finance industries should be prepared to overcome.

For instance, why own a home before you are “settled?”

1. Moving sucks. Seriously. Flexibility and mobility are the dream. But move 3 times in 4 years and you are ready to invest in a home. ESPECIALLY, if that home starts to build equity as you live there. Rising home value markets are not necessarily the easiest to find but for many millennials it will still make sense to buy in your market.

2. Owning might be cheaper than renting. The monthly payment on a mortgage (assuming you can find the down payment) will actually be less burdensome than rent.

3. Lower down payment options continue to be available. 20% is no longer the standard. Options from 3%, 5% and 10% remain feasible.

4. It’s part of your story. Commit to a place, with less focus on how long you’ll be there and more focus on intent. If you are intentional in the commitment, it will be worth with. I know that sounds crazy but who doesn’t love a good story? There is a lesson and a blessing in each step. If you can find a mortgage program that fits your needs, it might be the experience to invest in yourself.

5. Obviously, it is still the best long term savings plan we have. You are paying yourself every month to “guarantee” a minimum return. Of course, nothing is guaranteed but holding value is at least likely to very likely. Do not focus or try to sell homeownership on some dramatic home value “win” unless you’ve found the next San Francisco. But it remains the way to get your principal (plus a few points, hopefully) back at the end.

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“I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.” -Abraham Lincoln

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I read this post and had a realization: Many of the Medium posts that I read or have linked to over the past 146 weeks have been about optimization. Optimizing your day. Optimizing your team. Optimizing your mindset. The reality is that not enough time is spent on getting everyone to just be themselves. Self aware. Comfortable. Honest. This is who I am and this is what I want to do. If you can skip all the reading (and judgment) and just focus on you, then you’ll likely be successful and happy.

There’s no special daily routine or no special sauce. There is, though, some power in being the most yourself you can be. I recognize that that sounds exactly like something one of these bloggers or Instagram gurus would say. My angle isn’t to get you to follow some account but encourage you to find energy and motivation in your unique set of skills. Your perspective cannot be replicated because only you have the life experience and thought process to draw the conclusions you’ve identified.

This week as you build your team, grow your company or expand a strategy, continue to double down on your perspective. That’s where the magic is and that’s where the fun begins.

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Communal Living: Have you ever wondered what it would be like to go back to the community of college? The group of likeminded people pursuing the same goals and outcomes? Is this a trend or a bygone?

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As seen on Instagram, follow Ashley C. Woods and @detourdetroit

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Bad neighborhoods: As you have probably realized reading Saturday Cup of Joe, I enjoy those areas where the conventional wisdom diverges from the data. “Bad neighborhoods” is a great example of how many people assume that most urban areas risk crime and problems. In reality, less than 1% of neighborhoods account for the reputation of some many more. Understanding the true risk is not popular or straightforward, but digging in tells the whole story. (!)

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Big break?

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Today’s Thought: Do not underestimate energy. One person, well-motivated, can make all the difference. We’re all balancing our own objectives with those of our leaders. Finding the way to pursue your own vision within the goals set by your leaders is the dream job. The last few weeks have been pure momentum for my team. Our energy and passion has driven our success and our morale. That said, vision is not enough to move the needle without technology and others participating in the growth/expansion. That’s where storytelling and energy can truly influence organizations. Use your story/vision/narrative to push your organization further. Don’t let bureaucrats and risk managers limit the outcome unless you agree.

The ability to see the future and also advocate for it is what separates some organizations from others. If a company is ultimately it’s people, then the ability to fight for your vision will actually determine your success.

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This is how SCOJ is typically written.

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Quote: “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” -Abraham Lincoln

Bonus content: Let’s get better at cooking steak, together.

Continued success and continue to answer well,

Written by

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

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