Foreign. Hey, welcome back to the podcast today! I Get to talk to two entrepreneurs, two people that have built some pretty significant businesses together. We want to unpack. Partnerships We want to talk about mortgage.

We want to talk about the future of where it's all going. Uh Carrie Armstrong and Greg Schwartz Welcome to the show! Great to be here! Thanks Tom Carrie I Could just see your brain spinning over there. all kinds of all kinds of goodness. So let's let's talk about partnering.

But first, for the people that don't know, you guys worked at a little company called Zillow help people understand what the two of you did at Zillow Carrie Starting with you? Absolutely! Uh so I was at Zillow for seven years and the biggest thing I did was changing the premier agent business which is the business selling leads real estate agents taking it from one where we dropped a lead into an agent's inbox to one where we facilitated a phone introduction to one where we need to date our tour so so some would call that as simple as you made that sound a tremendous amount of innovation. Things that other portals hadn't done before. What was the Insight that that caused you to think? we might want to make this a better experience? We reached a point where we knew that we were delivering a bad service to our customers. People who come to: Zillow In love with the brand from TV advertising in love with the experience on the on the portal and in love even with a home.

And then they'd be utterly let down when they reached out and they didn't hear back, which was what happened more often than not. or when they reached out and they heard back and they had a crummy experience and we knew we had to do something to fix that. Carrie It's so interesting as you say that. Uh, Greg and I have discussed that in my own business.

I Know every top team listening to this right now. You know they built these iconic Brands these these you know digital and personal reputations in the market as a real estate professional and then sometimes the handoff to their transaction coordinator. the handoff to their buyer's agent doesn't have that same experience so it sounds like same problem, you just solved it at a massive scale. yeah for two million customers a month? Exactly exactly.

But it's the same problem. every business has that problem. um, we just use. You need to use different techniques depending on how big of a problem it is and how how what your scale looks like.

Love it. Well, we may. we may come back to that one because that's a big one for everyone listening. Greg Going back to the original question: what did you do at Zillow You did a lot like Carrie What did I do I fall behind carrion and and gave speeches? No.

I did more than that. um hey I tried to bring empathy um for our partners for for for roasted agents and and Builders and the like I tried to make sure that uh, we didn't lose are focused on not just creating a high revenue or a high profit business, but on a longer term healthy business that grew with the ecosystem. Our partners growing with us and that was the greatest point of Pride was all these amazing businesses that individual agents started in. Those individual agents had enough business to hire an assistant and then a buyer's agent and then a showing agent did something.

They were team and they were a brokerage and they were dominating the world. And I don't say that as a joke. That's what my job was uh, was to look at the architecture of the whole company and make sure our partners were succeeding in a massive way. And if that happened, we knew we were going to be massively successful.

and and one would argue that all of that did transpire. So so congrats to you both, But it does lead me to the next question. Now you guys have created a new thing together. Tomo Network and I I Got to ask you, does the world? do we really need another mortgage company? Like really? Do we need another? Mortgage Company Gary Why don't you jump in? But this is our favorite question.

Um, have have you worked with many mortgage companies I Think the issue is not the number but the quality? Yes, Oh, we don't need another city mortgage company. I'll tell you that, but we do need a single great mortgage company. and that's what we're trying to build so more. Kerry Mortgage is such a commodity.

Like do we? Really, it's not. It's not like you know I Don't know I Don't want to say the experience is as bad as going to the DMV but it's close, but you don't have to do it all that often. It's like buying a house isn't that much fun. Finding a house.

Searching for a house is wonderful. The experience of doing the transaction is horrific, but we only do it I Don't know, three, four, five times, maybe in our lifetime. Do we really need innovation in this space? I mean I Would say that's all the more important because you don't do it very often and so you don't have any idea what you're getting into. And so you need a mortgage lender who's going to make sure that you do close on time.

that you do get a great grade that you don't pay for a crappy experience in the most stressful person in your life. Uh, the fact that it's infrequent doesn't make it unimportant at all. Yeah, I think that's a really that? Tom That is among our our most driving points at Tomo is folks tell us all the time I Feel out of control and those folks are both the real estate agent and the home buyer. Um, they feel fear like these are base human emotions when they think about the mortgage process.

I Feel like out of control if you're fearful sometimes feeling ashamed that they overpaid or got the wrong product. um, or had fees that were embarrassingly High Um, that's Grim's opportunity in a category that's 1.8 trillion dollars at the top money, but that's the U.S purchase mortgage markets like depending on the year 1.7 1.8 trillion dollars and there's very few folks that say they're satisfied. so that screams opportunity for for folks like all of us. So this is again your second.

Venture Together, you know. First at Zillow and now with this um, I'm curious. Carrie Like what's different about this? This is like a startup when you got to Zillow I Assume that you know they weren't public yet, but they were certainly on the path. What are you finding That's like most challenging now in a startup environment.

It's totally different. It's it's completely different. Um, you know where I I joined Zillow 400 people and I joined Tomo and it was just me and Greg and uh, you know you have an idea and you want to go try it and you look around the room and you're like I guess I'm gonna be the one trying this. We're about 100 people now.

Um, so you know, substantially bigger. There are more people to to go try things out, but to a certain extent it's still true. Um, everything is more precious. you know, You you, have, You have fewer people to check that execute things, and you you need to be vastly more focused on what opportunities you're pursuing in what way and how rapidly you're learning.

Is that a valuable opportunity or not? So Carrie What you just said right? there is a mic drop for every team team. Ridge broker, owner, husband and wife team. We're all fighting for. Like who's got the best idea? the limited resources.

Where do I put our concentration? how have you like, how have you found or what advice do you have around prioritization, right? Amy We're going into a New Year. Everybody's got new ideas, new ambition, the market is slowing and challenging, and yet we all want to scale and do better, but we only have so much time and people capacity. How do you prioritize? Yeah, I think the answer for us is probably knowing what success looks like and I think that's probably even more true for small businesses. Where it's it's not just Financial successes.

Also, how much of their life this consumes how much stress this puts on them. So I I would say for everybody, what does success look like and taking all those opportunities and comparing their potential to deliver that success. And then as you're testing them constantly weighing them against that criteria again, if success looked like I, you know if it's Financial Supply it's profitability. Success for example, Does this opportunity deliver that or does it deliver something else that's lower priority? Do I need to put it to decide? Um, so knowing what you're trying to achieve and continually evaluating the things you're doing and saying, are these the things that are going to make me achieve that success or not is the most important thing? Yeah, Go ahead.

Greg Good yeah. I Love this question. Tom But I saw this live and I'll never name names. but um, this is one of the most fundamental things in business.

What you focus on is what you have the hope to become and if you focus on the wrong things, you're cooked. I Saw Tom coaching an agent a friend and the friend wanted to expand their team. Maybe you remember this to an area they weren't currently operating in and you were ruthless in trying to convince them to focus on their core but which wasn't fully which wasn't fully owned before they started expanding to new areas and running after um, what they hadn't yet secured and and that is imperative? Uh, in how we think about the business. I Do a first principle exercise I Stare up, you know I Lock myself in a room, stare up at the stars in and try to figure out the fundamental truth from this thing.

Is it going to Advantage The business next? Is it the next most important thing for us to win at? And if it isn't I I Try to run away. Do you remember that moment where you were coaching that way? Tom I Do remember that moment. It's it's hard because again, we're in a new year and you guys have this new business and a 1.7 trillion dollar Tam right? So I would imagine Carrie There's a lot of shiny pennies and a lot of you know loan officers or sales people or you know Engineers coming in saying hey, we just had a client, they had this problem. hey let's go solve this at scale.

Let's let's you know, divert the title you know the ship to now going this Direction versus that direction I Think it's important for every owner listening right now. Like how do you hold the line and again, whether it's prioritization or Greg stopping and looking at the stars. How do you guys maintain the focus together? Uh, go ahead. Carrie tell us how we how we maintain it together.

Okay, for the record, like everyone's listening. you guys live in different parts of the country, east and west coast. You're not a couple I Deal with a lot of you know husband and wife teams most. Partnerships Carrie Don't really make it right.

Someone someone becomes too domineering. You know someone goes off the rails I Mean we see it all the time in business. YouTube This is like the second go-around How do you guys do it? How do you keep it going at this pace when you ask? Tom How is it different now than it was at Zillow Honestly I think the biggest difference is that my I don't my chair isn't Mr Greggs anymore. He's physically across the country um, three thousand miles away and the thing that we do to try to make up that distance is that we get on the zoom every morning 6 30 my time 9 30 Greg's time and we talk for an hour and all day long after that.

I've got a list of things I might want to talk to Greg about the next day and I think he's got a Post-It note that is the same um in Connecticut and we go through everything and I think we are really ruthless with each other about. We have lots of great ideas that aren't going to make a difference and we're ruthless with each other about gently gently asking questions that get to that answer. Is it going to make a difference? Um, recently I put together a list of things we had done in a certain area to try to fix a problem and it was really helpful because it was like wow, all those things seemed really good, but they're just small silly things and it really helped us identify other small silly things moving forward that we probably don't need to bother with. Um, because there's a lot of shiny pennies.

Like you said, they're they're everywhere. Here's the other thing. Tom in in a partnership and Carries I agree with everything Gary said is in business Partnerships or in life Partnerships Um, we debate out sometimes in an exhausting fashion what the right thing to do is I've I've never seen Carrie apply power to me or me to her if that makes sense. There's never a you are wrong I am right I will win because I will use more Force yeah, if one does.

added a Business Partnership the Partnerships kind of cooked uh there has to be a great deal of trust um, and respect and respect. incentives are aligned and if not, it becomes very very difficult. I haven't had that with curry I Was going to say I Think that's partially because we both just want the truth right in any in any conversation, we're not trying to figure out who's going to win, we're trying to figure out what is the best thing for us to do. and sometimes our points of view aren't the same and we acknowledge that and figure out how we're gonna, how, whether it's worth testing or not.

Um, and do we push forward with One Direction or the other? But really, we just want to know what's the truth and what's going to grow the business. So you said a word there, test and that comes up a bunch. Um I was thinking about I think it was a Saster conference uh Jack from Twitter was talking about when they were at their best versus I think potentially why he came back I Don't know if he said it exactly that way, but he said they had a culture of you know, eight to twelve tests happening at all times every single week. New tests innovating, improve the product, make things better, make it a better experience and he said.

and then that culture went away and the company became stale. right? And I think again paraphrasing a long story of why he eventually came back: How how do you guys view testing when it comes to product Market fit right when it comes to you know which products to to offer to Consumers What to say to Consumers What not to say to Consumers There's so many potential tests in a real estate agent's business, in a mortgage business, in any service industry where it could be you know, perceived as commoditized. So how do you guys manage that with great effort with great, great effort? He he Carrie does something that I think every business person should do and every business person can do when we're debating about home page language or offer language right or concepts. uh, care leads a process which just gets fast.

It feels it gets fast to survey research to consumers in a very inexpensive manner. We don't spend six months with a research agency. at a hundred thousand dollars, we spend almost nothing getting things on a Google form to Market Carrie Could you give like two seconds of insight? I Bet this would be. this is so valuable for the team leader listening right now.

please? Oh yeah, there's There's lots of different cheap ways to test. You know whether it's you know, recruiting people online to review a home page prototype and give your feedback you hear Tech You talk to 10 of them and you know what 200 would have said or um, you know, standing up a really crummy landing page um and seeing what the conversion is like with one button versus another button. Or Fielding a survey to all the people who you've worked with in the past asking them what should we? We're looking at these three things that we might want to build next which would have been valuable to you if we'd had it when you used us and and why. Um, people, people will tell you their opinion.

You just gotta gotta find a way to make it easy for them to answer the question and that really frees you from. You know, sitting around a conference, people being like I don't know what's gonna work if you have some sort of consumer input and then the other one the other way. inexpensive way to do it is Sem tests. Sometimes we'll throw together a quick landing page even if it doesn't fully connect to the utility and buy a hundred bucks of Sem against it.

Yeah, and have two or three different concepts. So two or three different landing pages and that'll give you a pretty good sense of feedback. Um, very quickly. Yeah.

I Love it. it's it's such an important element. One of the things we're we're talking with all the team leaders is creating that culture of testing. Just you know ABT Always be testing just like they all understand.

you know, always be closing. We also need to always be testing to figure out what is the most optimal approach to the problem. We're trying to solve. More traffic, more full form fill outs, more applications, more sales, whatever it may be.

But let's let's go a little different direction. I Keep saying you know Greg and I've talked about it. you know, carry a bunch like does the world really need another mortgage company and I I bring it up somewhat tongue-in-cheek because I know what the experience is like I know that it is. You know whether I'm refinancing a property or I just did a 35-year Hud loan on an apartment building that if I told you what we did the last two weeks you know, like going to the dentist would have been way more fun than having four teeth removed like no novocaine.

It was that kind of experience. It's horrific. So what innovation has Tomo done that you guys are most proud of? So I think that the things that we are proud of that are the most innovative available around bringing customers answers faster, and moving toward a world where they get digital self-service experiences that provide them with real, reliable answers about what they can qualify for and get the things they can use like pre-approvals or someday final approvals instantly. That that's the direction.

The goal is not to have a nicer person who's handling the same paperwork over the course of 30 days. It's for you to be able to connect your accounts, say what you want to do, and get a final answer on whether you can get a mortgage for that property or not. So why doesn't that already exist? Or does it? Did you guys just take something that was out there and make it better? Or did you create something new? Because it's so darn hard that the infrastructure in Fintech and Industry exists that this is, um, undifferentiated. Uh, you know, press releases and Technology are far easier to write and produce than actual API connections, data technology, and Industry changing.

uh, enabling platforms. Uh, that? that's really what it is. Uh. as we dig deeper into, uh, bringing the automated mortgage, Uh, using people to drive, advice and comfort in the mortgage process, loan officers, and digital technology to enable this stuff.

Um, the infrastructure really is being built right in front of us today. Uh, and it's It's quite a massive lift, so when it's done, what can we all expect I know it's never done done, but when this iteration is done, what can we expect? an agent refers their customer to Tomo The customer is able to go to our website, enter just a tiny bit of information about themselves so that we can connect to their accounts, and they get an instant answer with an underwritten pre-approval letter saying what they can afford that they can use to go make an offer on a home. And when they make an offer on a home, they get to enter the property address and they find out immediately that they're final approved. That's that's where we're building toward S.

And there's no 30-day wait. There's no long list, You know that constant drip of document requests. There's no wondering and worrying. They just know that they're good.

Their mortgage is lined up again. Like for the listener, it just sounds so simple and it's just so baffling that it doesn't already exist. Well, you want to build a simple experience for a consumer. all the complexity behind it, you know, right? The the goal is to abstract all that complexity away and let the customer just focus on what actually matters.

Which is, how are they going to get their stuff from their old place to their new place, right? What color is that sofa gonna be? Yes, Not. Write me a letter of explanation for this hard credit that check that you got? Yes, Yes. Greg Anything different on what it's done? Yeah, talk to me. Yeah, and part part of this Tom is the the technology to enable these things.

And part of it is is the Insight the business process. We know mortgage has so many different iterations, right? You credit your income, your assets, everyone has a different Financial story and life story And that's been difficult for the propeller heads, my people. Uh uh, you might have called us in high school nerds, but so be it. Um, that's been difficult to capture all those differences in people.

those business rules in software to the point that you could automate the stuff. That's what we're grinding away at. And you do one loan and then ten loans at 100 loans at a thousand loans. and then you start to see, um, the pattern matching that you need to solve and we're right on.

We're right on the cusp of it. Did I Just call myself a nerd Tom I I Love it I Love it. Hey Listen I Tell my boys before I went to college the Nerds rule the world like you're gonna be fine guys. just be smart.

but let's go a different direction. A lot of a lot of people will listen to this and they'll say they're so free in Sharing What it is that they ultimately want to achieve. Aren't they concerned that rocket or Wells Fargo or just name any you know, independent mortgage company or a bank is going to say? Well if these Knuckleheads from you know Seattle and Connecticut do this. We can deploy resources in capital and get it done infinitely faster.

That's a really good idea. Let's go get it done. Aren't you guys slightly nervous that the more people hear about this competitors are going to say we're going to take them out I Don't know, you know I'm not Andy Jesse Yeah I'm not either I think Eddie Jassy had this quote I was trying to remember the CEO of of Amazon which is competition isn't one of the top 10 things I talk about in my weekly leadership meeting. Hey, whether I'd say it applies here.

This is such a complicated, demanding space. Uh, those companies you mentioned have had 30 40 years to solve it for whatever reason they have it to date. I Don't know why knee and Carrie and our team of Robin Hood like uh, you know do-gooders come along and we're fundamentally gonna make the largest bank in the world change their practices I think that's unlikely. um, lest we have that impact I'm I'm gonna bite my tongue because I know some companies that had to change because somebody came out of nowhere, you know Netflix Blockbuster Horse and buggy car horses were around for a real long time Henry Ford Kind of pulled it off, but let's I'll go a different direction.

What do you guys see right now I mean obviously you must have a lot of consumer data on the amount of people that are coming to your website talking to you guys, whether they're a lot of agent referrals which I know you guys receive as well as uh, direct to consumer or what are you hearing most from uh, people that want to get a mortgage today? What insights do you have Carry for the person listening to go a little behind beyond their typical prequal. to figure out what's really on the minds of consumers right now I mean I think I Think we all know that the biggest thing home buyers are thinking about today is rates and and what it means for them as rates change. And so it's really important for customers to be able to have a very, very crisp understanding of what their loan application looks like so they can understand what does my budget look like at this rate and what does it look like if it goes up and what does it look like if it goes down and having a rough prequal is not sufficient in this environment because you just don't know how your budget is going to change if rates go up a whole percent or down a percent and understanding that range and what it means for what you can afford and maybe even being able to control that range by locking your rate before you're under contract which Tomo does support, That's really important. So I I Think everyone needs to be much, much more solid on their financials than we were in an environment where money was effectively free.

Greg any other Insight on the buyers today and I'm curious, Is it more? Is it more First-time buyers? second, third, fourth, fifth, sixth. Are you seeing any Uh specific age groups Millennials more than Boomers more than exers Any of that data? Yeah, hey hey we SP You know we and we intend to. We we do best for the first and second time home buyers, especially early adopters of Technology But everyone wants a better way. It's just where things start and where things get adopted.

Um, this is such an interesting Market it's changing week to week. Tom Um, Thanksgiving week I think for all of real estate was probably a pretty pretty slow week. Uh, unusually slow. Uh, even even for Thanksgiving week this week.

Uh uh. and last week were much stronger weeks. Um, it is straight. We're showing a six percent part rate today.

Uh, that's got a lot of folks that were hanging around back can market so we're finding folks still want a house. They still want a well-priced house. We know well, well-priced houses aren't staying on the market for very long. Um, we all we all see that see that data and now we're seeing a downstream and on the phones which is interest rates move down.

People are being really opportunistic. Our lock and Shop product couldn't be a more perfect product for the day. Uh, you know we do a 120 day lock and Shop without a contract without having to have an address and uh. and then it also has a float down.

So if prices even go down further, the rate will flow down and it's 450 bucks. That has been probably our hottest product um over the last few weeks because people know that things may well go back up and they want to grab the moment. I Know we're not and none of us are in the prediction business. but December 14th is right around the corner as we're filming this today and many are saying the inflation rate is going in the right direction, going down depending upon you know which which news you know media you're listening to.

But if that's the case, the assumption is inflation goes down. Maybe it's in the low sevens, Maybe it gets to high sixes. We know interest rates will follow. What do you guys think is going to happen? Isn't this the hardest? Isn't this one of the hardest questions? Um I I I'd be surprised if we see sustained rates in in the in the low 60s high fives.

Uh, my sense is Europe isn't under control yet? Not that I'm an economist. Uh. Housing prices? Still, you know, especially on the rental side are still quite, uh, significant. High Uh so I think if we bump around in the sixes, that would be a great thing.

A great thing for who. Uh, that's my polite way of saying I Think we still have a little bit of inflation to take out of the market? Yeah, uh. and I'm hoping that we don't. We don't.

We don't see an increase. Uh, back into the Sevens Carrie Thoughts Everything Greg said. But then I'll add we know the demand is still there. There's still people who weren't able to find homes before Um, because of inventory problems and they're sitting around waiting for things to change so that you know there's more inventory or rates go down or both.

Um, so so we know there are buyers out there. It's just a question of what changes to unlock the situation for them. Yes, that really is the key. And I've got a mastermind coming up in a few days trying to figure out how I can help all these incredible teams go from listing several hundred homes a year to list several thousand properties a year, finding the inventory that needs to be found for these.

You know, for these buyers out there that are desperately wanting to buy. So okay, so as we get near wrapping this up, kind of just closing thoughts for the industry, you know we're going into a new year. Many are saying 2023 is going to be kind of the same of what we experienced the last you know, six months of this year? What? what? Insight or what thoughts you have for the real estate industry at large carry. Oh gosh, just gotta roll with the punches these days, don't you? It's it is.

It is constantly changing. Uh I Think staying in touch with the market so you understand how to advise customers best at the environment is the most important thing. Um, and making sure that you're not just running the old playbooks from you know, 2020 2021 but you're really evolving I think that's the most important thing. Um, it's New Times require new approaches 100 Greg Closing thoughts: Yeah, I'm gonna hit it.

Um, and you touched on it. Listings when listings. Uh, went in the last market and they went in this market as well. Uh, even even with, uh, higher mortgage rates Like I said, well, price listings sell fast.

folks want to live a better life and a better home. so focus on your listings generation strategy for sure. Uh, and this is not going to be I Really, don't think it's gonna be like a 708. Uh, this is fundamentally a different situation.

You know, 708. We had poor credit quality, which really means we gave folks mortgages that shouldn't have had them and they spent in the market. Ultimately popped When we couldn't continue to give mortgages to less qualified individuals, the whole system kind of popped. This is not the situation.

We've never had better credit quality. Uh, resulting from most 708. So good. Uh, and this is really about prices.

Got understandable so things are slowing down a little bit and people are worried. Okay, uh, that's going to solve itself. Inflation will solve itself. Listen to what Tom tells you to do.

Go out and get listings. Be disciplined. Uh, work your sphere. Uh, treat people with respect, Make sure you have a great purpose.

Um, uh. make sure if anyone walked up to you and said what's different about your real estate business from all their businesses in your Market that you have a really clear value proposition. If you do, you'll do great. Yes, it's truly going to be as we as we get near wrapping this up.

I I see next year I Hate the way this sounds. Carrie but it just is what it is. It's the rich and the rest. Right when you look across, you know broadly the MLS is in the U.S You've got nearly 71 percent of all the volume and transactions being done by the top 25 percent of the agents in the MLS.

But then if you go up a notch and say, what about the top ten, the top 10 percent are doing 51 of all the volume and all the transactions. So it's truly going to be a rich in the rest environment next year. I Think it's even going to be even more so than it was during the you know, the Pandemic 20, you know, 2020 2021. So for my listener, uh, Carey said it.

The playbooks that you were running the plays that you were running. If they're not producing results right now, stop stop. It's like hey, we ran this test it didn't work I Tried this email, it didn't work I Tried this script it didn't work I You know, hey I waited for deals to come to me, it didn't work. Run place that work and you will do really well in this environment because the vast majority of people won't Um, hey, really fast.

What states are you guys in now? I Feel like I should have asked you that a while ago because you just had I saw something on Emin You guys recently just opened up five more States Where are you now? Okay, are you pulling up the list? I Got it? I Got it? Go! Uh Colorado Connecticut District of Columbia Florida Georgia Maryland Michigan New Jersey North Carolina Ohio Pennsylvania Texas and Washington Love it, Love it. Well congratulations the two of you. Uh again, it's it's fun to to watch the two of you work together to been invited into a couple meetings in your one-hour sessions to see how the two of you go back and forth. It's fun because again we'll listen to this interview 10 years from now and we'll look back and say remember how horrible the mortgage experience was and then we'll talk about you know the beauty of maybe doing it all on your iPhone or never talking to anybody and making that process just fantastic.

So congrats the two of you! Thank you guys so much for being on the show and for my friend out there listening. Um, there was a lot of insights for you in terms of running a business having a partnership testing. I Would listen to this two or three times and listen Beyond Just Mortgage and listen to the fundamentals of how they're operating the business, operate a business the right way. Whatever industry you're in, you're going to kill it.

Congrats the two of you and for my friend out there listening and watching. Thank you so much for being a part of my community. We'll see you on the next show. Foreign.