Robert Leonard (03:32):

When in your time at Harvard, did the idea for your startup UpEquity come about? And where did the idea come from? Where did spark the idea?

Tim Herman (03:40):

I went to HBS knowing that I wanted to be a founder and had a different set of circumstances than a lot of the other students, because I was a bit older. Like I said, I spent 10 years serving in the Navy before I went back to graduate school. And so along with being older, I had a different set of responsibilities. I’m married, I had my older son already born and I had a son on the way by the time we left. And so I knew that if I wanted to be serious about entrepreneurship, I had to do it in a way that I could still put food on the table for my wife and kids, and make sure that I was providing for the responsibilities that I had. And so the approach that I took was I drew a line in the sand and I knew that if I wanted to be an entrepreneur and I wanted to be a founder, I had to get it done right away.

Tim Herman (04:23):

I had to get it done in a way that I could be funded by the time I left school, so that I could pay the mortgage as it may be. Now, I knew that I wanted to be a founder, but I wanted to found a company of consequence. What does that mean? That means I wanted to solve meaningful problems for our community that make our society better, and I wanted to do that in a large market. So you asked where the idea came from, it goes all the way back to when I was on active duty, when I was moving around the country and around the world flying jets, I didn’t feel like there were any avenues of wealth creation that were open to me and my family other than real estate investing. And so as we moved from duty station to duty station, my wife and I got actively involved in buying and selling single-family real estate, and we saw all of the reasons why home ownership is the cornerstone of the American dream.

Tim Herman (05:11):

We saw the security that it provides both emotionally and financially and physically. We saw the wealth creation that it can enable. And we saw all of the positive things it has for the community. So we really got passionate about home ownership and about real estate, but we also saw all of the ways that the journey to home ownership in society today is fundamentally broken. There’s this crazy statistic from HousingWire that says that one in three homebuyers say that the journey to buying a home is so stressful that it leaves them in tears. That seems not right, for most people, this is the largest financial decision you’ll ever make. It’s the only store of wealth that you have, it’s the aspirational purchase that’s highly emotional and it’s leaving one in three people in tears.

Tim Herman (05:54):

That didn’t sit right with me, and so if you go back to what I was saying, that I wanted to found a company that solved meaningful problems in large markets. I had this passion for real estate, and I had firsthand experience with how broken the process candidly is today. I just got obsessed with the idea and went and put it down.

Robert Leonard (06:12):

How hard was it for you? For those who don’t know you dropped out of Harvard Business School to pursue of the business. So how hard was it for you to do that? That’s a dream that a lot of people have is to go to HBS, and so it’s not that uncommon for people to leave, to do startups, right. And there’s some famous ones from Harvard, but nonetheless, I’m sure it still wasn’t an easy decision. So talk us through what you were thinking about what you considered and how hard it was for you to make that decision.

Tim Herman (06:36):

Well, it was easier for me to make the decision than it was for me to convince my wife or my parents, that it was a good decision, but like you said, there’s a pretty good track record of success of some of the folks that came before us, that helped with those conversations. And then there’s also this little known fact about HBS, which is, they figured out that it’s good for them, for entrepreneurs to drop out. So you never really drop out of Harvard, you just defer. So I get all this credit and you’re giving me all sorts of credit that Louis and I don’t really deserve, because if you leave Harvard in good standing, they’ll let you back.

Tim Herman (07:07):

And so we have five years that you can go back, that makes the decision very easy and I think that took a lot of foresight and support from the administration. So they actually let us live on campus for the year after we dropped out. Our professors ended up investing in the company and our classmates ended up joining. So we had an enormous amount of support from the Harvard community and we’re eternally grateful for that.

Robert Leonard (07:30):

So with that being said, do you plan on going back?

Tim Herman (07:33):

Unfortunately, I don’t plan on going back. I really, really enjoyed my time there, like I said, it was one of the most incredible and enriching experiences of my life, learning from the best professors in the world and more importantly, forming deep relationships with the most talented, most interesting people that I’ve had the chance to spend time with, which were my classmates. But we’ve built a life here now, we’re fully dedicated to the company. And as much as I would love to go and sit in that classroom, we’re onto the next adventure and to the next phase of life.

Robert Leonard (08:05):

One of the big values that people get when starting a company after leaving HBS or any school like that, Stanford, anything really along those lines is that they have that on their resume that they went there, and of course investors typically would prefer that over somebody who doesn’t have it. Right. So do you think you still get the value of that when you go to pitch to investors, even though you didn’t finish, you still can say, I attended half of HBS?

Tim Herman (08:28):

Yeah. I think that that matters when you’re raising the first round. But I think that by the time you’re raising your second or third or fourth round, it doesn’t matter where you came from, it matters the points that you’re putting on the board. It matters, have you built real technology that is helping people, have you built a product that people love and are you out there building the company that’s executing against that vision? And so I certainly think that being at Harvard helped us get into Y Combinator, being at Y Combinator and dropping out of Harvard helped us raise that first seed round. I think it would be disingenuous to tell you that those things weren’t helpful, but I think at some point you have to graduate from resting on your laurels and looking at the places that you come from and what matters is what’s the business that you’re building? And are you building a great product that people love?

Robert Leonard (09:17):

A lot of people try to build projects or side hustles or businesses on the side of while they work or even go to school sometimes. So why did you feel that you had to drop out? Why couldn’t you just build UpEquity while you were in school? I believe you had just a year left, so why couldn’t you just finish out the year and build the business as well?

Tim Herman (09:35):

Yeah, that’s a great question. There’s two, I think equally important answers. The first answer is that we were looking at the opportunity and we realized that we had a small window of opportunity, where the stars had aligned perfectly and that we had to give it everything we had while that opportunity existed. The thing that Louis was my co-founder and I, we looked at other and we said, “Listen, Harvard will always be here this opportunity won’t and we need to give it everything that we can.” And the reason that I say that this is a fleeting opportunity is we’re building on the backs of a lot of companies and entrepreneurs that have come before us, that give us a window and time to really reinvent the mortgage industry. There’s a lot of technological innovation that has happened over the last 10, 15, the product that we’re building would not be possible without those technologies being available.

Tim Herman (10:25):

They also won’t to be as powerful without the macroeconomic trends that give rise to the need for an all cash offer. And so the first piece is that this is such a massive opportunity and a product that is needed from our society, that the time had to be now and we had to execute against it. Now, the second part about why could we not do that as a side hustle is this is a very complicated business, and it’s a very complicated industry. It’s a $4 trillion industry, it’s highly regulated that has a massive amount of inertia, entrenched interests, and legacy systems, and having to navigate through all of those pieces is just not something that we could do in a part-time basis.

Robert Leonard (11:08):

You mentioned earlier as part of your military career, that you were flying, what I would probably consider to be very dangerous jets. And so you have this history or background of taking real risk. You have your life on the line where you have real risks and to a much lesser extent, I have a similar experience with racing motocross, we put our lives on the line every time we throw a leg over the bike. And for me, at least that has made a big impact on how I approach risk in other aspects of life like business, investing, things like that. So I’m curious if your risk endeavors in the military have had an impact on how you risk with entrepreneurship and what that has formed for thoughts for you.

Tim Herman (11:47):

That’s a really interesting question, a really interesting corollary. I think that one of the things that flying jets in the Navy teaches you is that there’s no such thing as eliminating all of the risk, right? The goal is not to make these risk free endeavors. The goal is to mitigate the risks and to take smart and calculated risks, right? The only way in the jet to make sure that you eliminate all the risk is to never go flying. And if you never go flying, then you’re not accomplishing the mission. And so that is a particular approach that I have taken to business decisions and to leadership decisions at the company. The other thing that I find really interesting is like you said, when you throw a leg over the bike, or when I strapped into a jet, every day you were taking a risk that you actually could not come back from that mission.

Tim Herman (12:35):

And it teaches you a lot about yourself, about the things that you care about in your coworkers, your peers, your subordinates, your superiors. And what I talk to people in this company about is, listen, the things that we’re doing are not life and death, but we can still learn the lessons that were important at the boundary condition. The things that are important when you’re landing a jet on an aircraft carrier are equally important when you’re building a mortgage company, the way that you treat each other with respect, the way that you show up for the team, the way that you have intellectual honesty, the competence that it requires, all of those things are really important when you’re building a company. It just nobody dies if you fall short, but the lessons, I think cross the boundary.

Robert Leonard (13:20):

We’re here today talking on a real estate podcast because your business is in the real estate space. So tell us a bit about what the prop-tech market is for those who may have heard the term, but might not know exactly what it is. And then how are new technologies disrupting the prop-tech market?

Tim Herman (13:35):

Yeah, so I think that prop-tech and fintech have become somewhat of an amorphous term for any of the new generation of entrepreneurs who are applying technology to one of the last frontiers that hasn’t been really disrupted by technology, which is the real estate sector. That can broadly be residential real estate, it can be mortgages, it can be commercial real estate, it can be how do you rent something out? There’s a broad swath that this encompasses. Simply what the prop-tech industry is doing is it is delivering the convenience, the level of service, the frictionless experience, and the on-demand experience, that you’ve come to know and expect in every other aspect of your life, to those transformative purchases in your life, like buying a house.

Tim Herman (14:21):

One of the things that’s crazy to me is I was sitting in Boston and I could buy a car online, I could buy a mattress online, and I could have either of those massive objects delivered to me by 24 hours later. I don’t know what today’s supply chain issues, maybe 72 hours later, but a house still takes 50 days to buy, it takes 50 days to get a mortgage, and I’ll remind you, it leaves one in three consumers in tears. Why is it that the most important purchase that we’re ever making is taking orders of magnitude more in terms of time and frustration, as opposed to everything else that we can get on demand?

Robert Leonard (14:58):

Most people that are going to buy homes these days think they’re just competing against people in their local communities who are trying to buy the same home as them, but in reality, that’s not actually the case. Sometimes these potential homebuyers are competing against financial giants like BlackRock and hedge funds. Talk to us a bit about what these large institutions are doing in the single-family space and how that’s evolving.

Tim Herman (15:21):

Yeah. So I think to understand why financial institutions have moved into the single-family real estate space, you have to understand the underlying macroeconomics, which are essentially the supply and the demand. We have under built single-family housing in this country over the last 20 years to the tune of about five and a half million units. So we have a supply constrained environment. Now, if you add to that, that there is a coming wave of demand from millennial homebuyers. The way that we talk about this when we’re talking to investors or talking internally is we don’t believe that millennials are any different from any of our previous generations. We’ve just delayed the traditional hallmarks of adulthood. We’re getting married later, we’re having children later and we’re buying houses later. But to this point, millennials have the lowest percentage of home ownership of any generation in the past 40 years.

Tim Herman (16:10):

And we think, and we’re starting to see that changing, right? And so there’s this wave of demand that is coming into a supply constrained environment. And so there’s an opportunity that financial investors see where they can enter that market and enjoy the appreciation or in the cash flow from renting homes out. And so over the past 10 years, single-family housing has become an institutional asset class. Like you mentioned you have the Blackstones of the world, you have private equity firms, you have sovereign wealth funds, all buying entire neighborhoods with all cash offers, right? And so your first time home buyer is not only competing with a small time real estate investor, but like you said, they’re competing with the largest financial institutions in the world. And what we talk about here is that the average home buyer has over 40 times the net wealth of the average renter.

Tim Herman (17:00):

That means that our customers have the ability to pay for their kids college, it means that they have the ability to pay for unforeseen medical bills and to save for retirement. We’re trying to give people the ability to compete in that environment that you’re talking about.

Robert Leonard (17:15):

When I saw that your company can turn everyday homebuyers into actually cash buyers. I was really interested in that, it seems like an interesting concept. So talk to us a bit about how you guys are able to do that.

Tim Herman (17:28):

The thing that you have to understand about how we’re able to do that. Because there’s a couple companies that do it, and we say that they are treating the symptom, which is, they’ll give you a pile of cash and buy a house, they’ll charge you a little bit. It’s essentially a bridge loan or a hard money loan. We’ve taken a completely opposite approach, which is we’re curing the disease. The disease is the fact that a mortgage takes so long to be originated. And what we realized is that if we can predictably originate mortgages with a high degree of accuracy and speed, then we can actually give away cash offers for free. And so what we realized is that with a cash offer, a traditional cash offer, if you have a million dollars in the bank and you want to go buy a house, there is still an escrow period.

Tim Herman (18:10):

It’s typically 10 to 20 days because as a buyer, even though you have the cash, you want to probably make sure there’s not a hole in a roof or crack in the foundation, and you certainly want to make sure that the seller has the title of that home that they’re buying, right? So there is still a time period between when you get under contract and when you close. And what we realized is if we can know that on the day of closing, we’re going to be ready to place a mortgage, we can go and make a cash offer, get that under contract and we can do that for free.

Robert Leonard (18:40):

Does this program only work with normal homebuyers, your first time homebuyers or traditional homebuyers, or does it work with investors too?

Tim Herman (18:47):

It works for investors too. Anybody that can qualify for a Fannie Mae, Freddie Mac loan, or a jumbo loan that fits in underwriting criteria as a Fannie Mae or Freddie Mac loan can qualify for this. The people that don’t qualify for this, this is not a fix and flip product, it’s not a hard money loan, it’s not a tear down, but it’s a pretty wide swath of society that we can help achieve the dream of home ownership.

Robert Leonard (19:12):

Given that you’re using Fannie and Freddie, is it pretty similar for underwriting as other than the speed, but in terms of the requirements, is it pretty similar?

Tim Herman (19:22):

I would say that you could think of it as being exactly the same, no overlays, exactly Fannie and Freddie guidelines. We’re just saying that we have the ability because we’ve built the technology to fit you into the Fannie and Freddie guidelines in a quicker, more accurate way. And by the way, one of the things that doesn’t always come through with this discussion is that leads to a much better consumer experience. I alluded to the fact that one in three homebuyers is left in tears. That’s because there are so many unforeseen obstacles along the way. There’s so much stress. We remove all of the stress while also giving you more purchasing power, more negotiating leverage, and a better experience.

Robert Leonard (20:02):

Does your technology help take out a little bit of the human aspect of this process? Because I’m a real estate investor, I’ve also purchased my own homes and I’ve done roughly 12 to 15 purchases and sales myself. So time and time again, humans will lose documents, they’ll forget that they already received documents from me, they’ll forget that they already at… All these different things that just technology could make it so that that doesn’t happen. And all of those issues that happen, of course just extend how long things take. So I’m curious is that the type of problem that your technology is solving and that helps make this just quicker?

Tim Herman (20:35):

Yeah. 100%. There are things that we will need humans in the loop for quite some time, and that’s because some of the underwriting has gray areas, where judgment needs to be applied, and as good as artificial intelligence is, it’s not to the point that it is capable of making judgment calls to the Fannie/Freddie guidelines. But the problems that you’re talking about, either lost documents, repeat requests, or really what happens is because it’s such a manual process is you upload all these documents and it sits in an in-box on a processor or underwriter’s desk until they get to you in the queue. Three days later, when it’s finally your turn, they look at it, they probably make a mistake, they miss something and they send you a bunch of requests. It takes you three more days to respond to those requests, and then you’re at the back of the line.

Tim Herman (21:23):

Even if you respond immediately, the difference is we’re using cutting edge technology to be able to not rely on a human being, to process those documents. Our technology actually reads the documents that you uploads, it extracts the relevant data, it stores it in the [inaudible 00:21:42] centralized place and it understands how the data on the documents that you sent interact with the Fannie and Freddie guidelines.

Robert Leonard (21:50):

So with humans still in the loop, does that mean that you don’t have fully automated underwriting? You still have human underwriting.

Tim Herman (21:57):

What I would say is that anybody that is telling you that they have completely removed the human being from the underwriting is probably being a little bit disingenuous. The way we look at automating underwriting is how does the business and the consumer get the vast majority of the value? And so our goal is to take an underwriter who previously could have done 10 loans a month, and make it so that they can do 200 loans a month. We want to take all of the time consuming, low value decisions out of hands of an underwriter of a human and leave them only with the most important decisions. And what that does is functionally allows us to get all of the value from automating it because we can still pay somebody to do those high value processes.

Robert Leonard (22:44):

I like the idea of automated underwriting, I like technology, I like streamlining processes, things like that. So I love the idea of it, but when I think about it, I just get a little worried that it could lead to something like 2007, 2008. Obviously it’s fundamentally different issue there, but it’s still this issue where you could have a formula or an algorithm that could potentially go haywire and lead to some bad loans over a significant period of time that could be an issue. So it’s interesting to see where the underwriting automation will go.

Tim Herman (23:13):

Yeah. I think that’s a reasonable and rational fear that you have. And I don’t know that you get a whole lot of value to the customer for going that last half yard. Right? I think that most of the value for the customer and for the business comes from the efficiency gains that you can give the human underwriter.

Robert Leonard (23:33):

Because the underwriting itself isn’t actually that time consuming. I was an underwriter, not for mortgages, but for consumer loans and actually doing the underwriting for the loans themselves. Mortgages are of course, a little bit more complex, but nonetheless, the underwriting itself is not that time consuming, it’s everything else that goes along with it.

Tim Herman (23:50):

So if you can have the technology present a complete package with 95% of the check marks already ticked off and you can have a human being review it and apply some judgment to it. You can make that decision much more quickly and cheaply on a unit basis.

Robert Leonard (24:08):

You mentioned you guys are able to offer these cash buyers programs for no fee. So how do you guys make money? What is your business model?

Tim Herman (24:16):

We have to talk about this with respect to all of the regulatory compliance issues, right? Is to be very precise, we charge a fee for the cash offer, unless you choose to use us for the mortgage. If you use us to originate your mortgage, then we will waive that fee and we have incredibly competitive interest rates. You could think of us as having the same interest rates as a local credit union. And the reason that we’re able to compete on interest rates is because we’ve removed a lot of the production costs from producing a mortgage, and we can pass those savings on, in the form of competitive interest rates. But yeah, we make the money the same way any lender does, which is on the interest rate that you end up paying.

Robert Leonard (24:58):

And do you guys get a kickback from Fannie or Freddie when those loans are purchased?

Tim Herman (25:02):

So I want to call it a kickback, but the way that the mortgage industry works is that an originator very rarely keeps those loans on their books for years. And so what ends up happening is that we, or really whoever you get a loan from will sell that to an aggregator or sell it directly to Fannie Mae. And so that is how an originator makes their money is that they get a fee for selling that loan as opposed to any residual income from the interest payments.

Robert Leonard (25:33):

Anybody listening to this show that has a residential mortgage is probably dealt with their mortgage getting sold at some point. I know for me, a lot of my debt is commercial mortgages, but the ones that are residential I’ve had, they’ve all pretty much been sold. So that’s a very common, like you said, practice in the industry.

Tim Herman (25:49):

One thing, because this is something that has frustrated me personally, right? Is you get a mortgage from somebody you trust, it gets sold and then the servicing gets sold to somebody who has zero technology is mailing you just the worst junk mail. Eventually we’re going to take on the servicing and make sure that our customers have the same technology enabled white glove service, the entirety of the time that they have their loan. But like I said, at the beginning, it’s a complex industry, and right now we have to participate in the existing infrastructure.

Robert Leonard (26:22):

I got a mortgage one time and I did not like their technology stack, and I was super bummed about it. They were really reputable, so I was happy to get my words with them, but I was just not happy with their online platform. And so I was praying the whole time, I’m like, “I really hope this loan gets acquired.” Basically the exact opposite of what you were saying in terms of going from a good platform to a bad one. I was hoping to go from a bad one to a good one, and that’s actually what ended up happening. So I was a bit thankful for that.

Tim Herman (26:47):

That’s not the usual way that these things go.

Robert Leonard (26:52):

Yeah, definitely not the norm. But I suppose if you start with a crappy platform, you can’t really get worse, right? You can only get better. I have seen some offers to purchase property, carry less weight than others because of the lender that’s being used. Typically, with all L SQL, at least in my experience, if one lender is perceived as better or has a better reputation by the seller than the other person’s lender, they’ll typically go with the lender that’s better. So how does this impact a company like UpEquity who is relatively new in the space and likely isn’t known by the masses yet?

Tim Herman (27:25):

Yeah. So there’s a massive difference between the piece that you’re talking about, which is the relative trust that somebody has in a lender. What is even more disparate is the purchasing power you have with a cash offer compared to any lender, right? And so the statistics show that the cash offer is four times more likely to be accepted. And then it can actually drive a discount on the purchase price of anywhere from two to 5%. You have this massive advantage, if you have the ability to make a cash offer. And whether or not you have heard of UpEquity, or you have any idea about our great NPS scores or our massive five star ratings, we actually make a cash offer on these homes. And so we contractually obligate ourselves to purchase the home on the day that you expect it to close and we show a proof of funds.

Tim Herman (28:14):

So we do an end around of the issue that you’re talking about, where a seller or a listing agent hasn’t heard of us as a company, but they have a contractual obligating, a legal document that we will buy this house on the day that they expect to. And what we have found is our money is green and when we show people a proof of funds and when we sign on the dotted line this is a cash offer, that alleviates all of the concerns.

Robert Leonard (28:39):

So let’s just say, I’m going to buy a property or anybody that’s going to use UpEquity. Are they writing it as are not getting a mortgage and they’re literally writing it? If they had a million bucks sitting in their bank account and they were buying it with their own cash, are they writing it the same way as they would with you?

Tim Herman (28:55):

And so I want to be… Regulations and the program varies state by state. And so the underlying principle is the same, no matter what state you’re in, no matter what contracts you use, we always use the promulgated forms. So it’s the forms that all the realtors are used to using. And it’s literally a contract with our name on it, using our cash to close on whatever day you guys agree on.

Robert Leonard (29:18):

Interesting. So they’re not comparing one lender to the other because that’s not even really present?

Tim Herman (29:24):

That’s right.

Robert Leonard (29:26):

In addition to the cash buyer program, you have a buy before you sell program, that’s pretty interesting because it removes the buyer’s home sale contingency when buying a new property, which can be really valuable to a buyer. A lot of times sellers don’t look very positively on somebody who has a home sale contingency in their offer. So talk to us a bit about this program and how you’re able to offer it.

Tim Herman (29:50):

This is a pretty interesting one. And one thing that I’m really happy to say is that, we started the company about three years ago and for three years, I’ve been saying, this product really makes sense. This one does have some fees associated with it. The cash offer is no brainer, it’s free and it makes your offer more valuable and gives you a better experience. The trade up actually has some fees associated with it. The thing to say is our fees are about half of what our competitors charge because of the structure of it. The story that I’m about to say is that for three years, I’ve been saying, this is a great product, the fees make sense. Last month, I actually used the product myself to get my family into a new house.

Tim Herman (30:25):

I’m pretty happy and I’m ecstatic to say that even with perfect information, I still believe in the fee structure. What happens is we will make an offer to buy your existing home in a way that guarantees that you get the full market value and gives you a flexible closing date. And what you get to do with that flexible closing date is you can go out to the market and you can make a non-contingent offer on your next home. Because you know that we will come in and buy your existing home from you, the day you need it to close, so that you qualify for that next mortgage. Does that make sense?

Robert Leonard (30:58):

Yeah, it does. But what happens to you guys, if you’re stuck with all these houses?

Tim Herman (31:03):

That’s where we have to talk through the mechanics of it and how do we enable you to get the full market value while charging the least amount of fees. And it’s because we don’t take a position on the price of your home, we share that risk with you. And so the way that this happens is we’ll get your home appraised, we’ll buy it for 85% of that appraised value, and then we re-list it on the market right away. And whatever it ends up selling for, you keep the difference between the ultimate sales price and what we gave you upfront. So let’s ignore fees, let’s ignore title and realtors and our fee on this. But if it’s a $100 home and we buy it for $85 and it sells for a 100, you get that next 15 in when it sells. And if it sells for 110, you get the extra 25 and if it sells for 200, you get 115, right. You get to keep all of the upside. That’s the sales pitch.

Robert Leonard (31:56):

Yeah. It’s really interesting. I’m sure you’ve run worst case scenarios, or even back test, but how would something like this have maybe faired in a 2007, 2008 type scenario?

Tim Herman (32:07):

What’s interesting is in the 2007, 2008 type scenario, even in the worst housing markets, they collapsed pretty far over a period of six months or nine months or a year. The velocity in a week by week or month by month basis is not really that tremendous. And so entering it at an 85% value, there’s a lot of cushion there which limits our risk for the ability to have that resold. Our whole goal is not for these to sit on our books. Our goal is for you to resell and get that full market value within 30 days of us purchasing.

Robert Leonard (32:45):

So you guys don’t have any plans of trying to implement Zillow’s model of buying all these houses?

Tim Herman (32:51):

We do not. There’s a place in the market for the iBuying model. I think that it is a smaller market than most people assume. Because I think that as Zillow proved to do it, you have to either take an enormous amount of risk or you have to ask the consumer to part with far more of the value of their home than most consumers are willing to do.

Robert Leonard (33:15):

Where do you guys go from here? What is next for your company? And you just scale, you just try and get this instead of doing a hundred, you do 10,000 of them, or do you have other products and services in the pipeline?

Tim Herman (33:27):

I would say that we are not done improving this product. Right now, we can guarantee a 21 day cash offer. We want the only thing that slows us down to be the regulatory environment. So until we a cash offer with 10 days, we’re not going to stop building this technology to provide a seamless, frictionless on demand mortgage experience. And so we’re going to be scaling, we’re expanding geographically, we’re expanding the team, but we’re doing that at the same time as we’re constantly improving the product.

Robert Leonard (33:58):

I’m guessing you’re probably a reader and maybe I’m wrong, but given your background in the military, HBS, being a founder, a lot of times those types of people are readers. So I’m curious what has been the most influential book in your life?

Tim Herman (34:11):

So I have a fair bit of recency bias for this one. Yeah. I am an avid reader. What I’ll talk about is what is on my bookshelf right now, which is The Hard Thing About Hard Things by Ben Horowitz. I’m actually on my second run through it. So I read it last month and I’m rereading it and highlighting it and taking the snippets of advice. It’s changing the way that I do one-on-ones, it’s changing the way that I think about hiring, think about firing. For any founder out there, I would highly recommend The Hard Thing About Hard Things by Ben Horowitz.

Robert Leonard (34:42):

I think I have to give that book another chance. I listened to it on audible once, maybe a year or so ago, and it didn’t really click with me that well, I didn’t love it. So I think I got to go back. I’ve heard a couple people say that it’s a really good book, a couple people on Twitter have talked about it being really, really good. So I think I need to go back and give it another shot.

Tim Herman (34:59):

Listen, people have different experiences of entrepreneurship, different experiences of all sorts of things. What I would say is for both my co-founder and I, that book has resonated with us, particularly with the challenges that we’ve faced, with the experiences that we’ve had, it felt like he was writing it directly to us. Because from the outside, these things always look like the hockey stick. The all that people see from the outside is the tech crunch and announcements. Right. But on the inside of a startup, every day feels like a battle. Every day feels like an existential crisis. And it’s just how well do you manage that and get on to earn the right to fight the next battle?

Robert Leonard (35:35):

When everything’s an existential crisis, how do you focus on what is right? How do you focus on what is the most important thing? If you have 10 things going on, how do you choose what you need to work on?

Tim Herman (35:44):

Let’s be clear about your question, right? What is right is different from what is the highest priority. Right is a matter of having a moral compass, it’s a matter of living by your principles, it’s a matter of understanding that you have core values, right? And so we spend a lot of time, probably more than a lot of companies of our stage, talking about our core values and talking about the fact that we’re going to live by those every day, while we build a good company. In terms of prioritization, I think that candidly, you surround yourself with the smartest people that you can find and you let them help you with that. There’s that famous Steve Jobs quote that you don’t hire smart people so that you can tell them what to do. You hire smart people so that they can tell you what to do. I think my superpower here has been attracting world class people to accomplish this mission with me and then giving them the reins. And I’m very fortunate that I have a wonderful executive team who I can rely on.

Robert Leonard (36:36):

Before we give a hand off to where people can find you. I always like to wrap up the show by turning the tables and I let the guest ask me a question. So what question do you have for me, Tim?

Tim Herman (36:47):

So I think that starting a podcast, starting a media company is much like the journey towards a startup. So if you could go back and redo something in your journey to this point, what would it be?

Robert Leonard (37:01):

Honestly, I think I could come up with something if I had to, but honestly, I’m really happy with how things have turned out. And I’m not sure that I would go back and change anything really. I think maybe we could have a little bit more growth or maybe things could be a little bit better, but I’m really happy with things are at and how things are going. So I don’t think there’s anything I’d go back and change.

Tim Herman (37:22):

I think that’s a great answer, is a lot of this is about learning how to be happy with yourself and fulfilled with yourself and your team while always pushing for more. One of the things we talk about is being intellectually honest and hard on ourselves about the things that should be done better, while giving ourselves the grace to understand that we’re doing the best that we can. Or hopefully we try to be honest about that too.

Robert Leonard (37:44):

Yeah. There’s this interesting dynamic between being hard working and always pushing forward and trying to reach your goals, and also at the same time, realizing that you have enough and being happy and that extra zero or couple zeros in your bank account, won’t make a huge difference. Tim, I think a lot of people are going to be really interested in the loan products you’re offering and everything you guys got going on at UpEquity. So for anyone that’s interested in connecting with you personally, or finding out about what you, or guys are doing with UpEquity, where can they find you?

Tim Herman (38:13):

So upequity.com, it’s spelled how it sounds. Paul Graham has a good saying about domain names they have to be spelled how they sound and sound how they’re spelled so people can find you, so U-P-E-Q-U-I-T-Y.com. I’m also on LinkedIn, or if people want to send me an email, I’m Tim@upequity.com.

Robert Leonard (38:30):

I’ll be sure to put a link to Tim’s resources and website in the show notes for anybody that’s in checking it out. It’s a really interesting product and service, and I’m definitely going to be checking it out myself. So if you guys are interested in that, I’ll put a link to it in the show notes. Tim, thanks so much for joining me.

Tim Herman (38:44):

Thanks, Robert. This is a lot of fun.

Outro (38:46):

Thank you for listening TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.