Mortgage Industry Veterans and Startup Newbies: Learn to Collaborate

I was out in Silicon Valley a few weeks ago talking with several startup companies. The company founders were, in most cases, just as you might envision them: fresh out of school, passionate, energetic and ready to change the world – particularly in relation to the specific industries that they had targeted for technological innovation and disruption.

But whether it was the mortgage, automotive or finance industry that they sought to revamp with their technology, I noticed a trend with practically every founder I spoke with. They all had unwavering belief that through some form of technology innovation they were going to “completely and utterly change and disrupt an entire market.”

My response was interest, excitement and a desire to learn more! But my excitement was quickly tempered when I realized that the founder and the team had never worked in the industry they were planning on disrupting.

They didn’t have anyone on staff who was familiar with the regulatory and practical reasons that the industry they planned on changing works the way that it does. I certainly applaud companies like Zappos, Amazon and Uber, which took a new and innovative approach to serving their customers and changed the way we look at books, shoes and taxi cabs. But I am quite certain that all of these companies had at least one veteran on staff who knew a little bit about books, shoes and taxis.

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As industry veterans, shouldn’t we be concerned that companies with little to no industry experience are working to disrupt an industry that they don’t understand at its core? I am not one to shy away from “disruption,” and I encourage others to do the same. But we should be doing it with a combination of experience and innovation.

Having worked in the mortgage arena for the last two-plus decades, I can say with confidence that there’s more involved in upending an industry than just applying a new technology. This is particularly true for all heavily regulated industries. While it may seem to someone fresh on the scene that veterans of the mortgage industry are dinosaurs who are unwilling to innovate or try anything new, the fact is that there are some advantages that come with having been around an industry’s block a few times. Having a solid understanding of the industry can help you know what problems really need to be solved by technology, even within a setting of ample restrictions and regulations.

It is true that large, publicly traded companies will always struggle to be the innovators in their industry. Having established customers, solid bases of revenue and a disciplined risk management model makes it difficult to truly innovate. It isn’t for a lack of trying, nor is it because it’s run by clueless, risk-averse people. Without understanding all of the variables that affect the way the mortgage industry currently runs, it’s unlikely that an industry newbie can come in and effectively disrupt anything – at least not quickly or before they run out of money.

So that’s one side of the coin: a burn-the-house-down startup mentality that’s uninformed about the real challenges, regulations and nuances of the industry, which won’t get very far simply with a new technology model.

On the flip side, there’s a corresponding problem with industry lifers who have lived and breathed nothing but mortgage for the past 20 or 30 years. Perhaps we don’t really know it all – just like the technology “kids” don’t either. Perhaps it’s time we evaluate the “it has always been done this way” approach.

The better approach is for industry veterans who know the mortgage business inside and out to come together with the innovative and fresh technology minds. If we combine those equally valuable perspectives, then we’ll start to see real incremental innovation that can be totally disruptive – not necessarily overnight, but over time. When each side admits that it might have something to learn from the other, that’s when interesting things start to happen.

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We need to find ways to bridge this gap – to bring together risk-taking innovators with experienced and wise industry veterans. We need to break with convention to improve the experience and process. But we also need to do so with an understanding of what’s currently working, what hasn’t worked to date and why. We need to combine software breakthroughs with the actual shifts that are already underway in the industry and work at the intersection between knowledge and technology. We should apply awesome apps, platforms and software to the business to solve real problems. If you really want to be a world disrupter, that’s what it takes.

So I challenge you: Bring some young technology kids into your organization, and let them challenge the status quo or, better yet, give up that corner office, your executive assistant and that Armani suit. Trade it for a home office, a pair of jeans and – if you are from Texas – a pair of old boots, and join a startup. I did.

Jason Nadeau is executive vice president of Factom Inc.


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