From AWS Product Manager to Revolutionising Home Loans

Running a business [music] can feel lonely, especially when the decisions get heavy. Welcome to CEO Rispro by Sora Jane. Practical insights [music] from the boardroom and the meditation cushion. I'm sorry. I've done 10,000 hours in three [music] major parts of my life. I've spent 10,000 hours being a CEO, 10,000 hours being a board member, and 10,000 [music] hours meditating. What we're going to do in each episode is really unpack a real business challenge that the CEO is facing and see if we can [music] work through it So we have a very interesting chat with Rahul Ley. Um he's a until recently a senior product manager at AWS leading a team of product managers here in Sydney.

He's decided to go out on his own and set up a mortgage broking company. So the problem that he thought that he needed to solve was how do I get my first 10 customers? But as the conversation evolves, it it turns out that's probably not the core question that he needs to solve. He needs to figure out how do I get, you know, customer 10 to 90 to 100 and how do I make sure I service them with a cost base that makes my business economically viable. Super interesting chat. If you're interested in the mortgage broking industry, it's a great uh listen Good guys. Welcome to another episode of CEOs. I've got Apple from Mark Bonnet's house here.

Do you want to introduce yourself?

Sure. Um how do I This is a good I haven't thought about this right now. Um I'm trying to launch a new business but before that I used to work for Amazon. I used to run my product team there. Before that was a long time ago. About a decade ago I used to work for TCS doing sales and consulting. Uh

yeah.

Yeah.

Cool. Brilliant.

Perfect. Well um tell us a bit about monetas. What is it that you're planning to do?

Sure. So the core value the the problem monetary system is trying to solve it is how do borrowers or homeowners get on the best possible loan by best possible I define as the lowest cost which meets their needs um and stay on that forever.

Yeah.

Uh right now the way it works is one you're never on one you never know if you're on the best possible loan. Mhm.

I I often find that number one people start off trying to find the best possible rate and by the time you sign which is like you know a month down the line you never know that that what is the best possible rate you're like ah I trust the guy that's

and then secondly you're never on the best possible rate because by the time you start and 6 months down the line rates have changed and you never go back and do a better thing. Yeah. So what I find is typically over the life of the loan if you have let's say a million dollar a loan which is very standard you will probably end up spending about 80 to 100k more than what you possibly could have

which is huge and so how do I kind of remove that barrier and make people get what they can be the most optimal

perfect that makes sense so um it's the way we run these sessions you've got trying to talk through business problem that you're facing right now and kind of workshop that in time so what's something that you're struggling with right now that you wanted to talk through

right so right now. Look, so this is where I'm at in the in my journey is I've got a value prop.

Mhm.

I've got a business problem.

Yeah.

I have got the license. I'm almost ready to go.

Yeah.

What I'm trying to figure out is how do I go to market?

Yeah.

In the most efficient possible way. it and it doesn't mean efficiency in the sense that obviously I would want to steal but right now I want to prove that there's I want to get the product market fit so let's let's say how do I make product market fit as good market

so it's really is it do you want to get product market fit very quickly or you want to get customers very quickly you want

yeah I mean both is connected right I want to get customers very quickly so then I can figure out if there is a product market fit

that's really or maybe all the first you want to get customers that's probably the first thing to do Correct. Without customer, it's all package.

It is all exactly.

Yeah. So, is it how do I get my first set of customers?

Yeah.

Yeah. And and what would success be like for your first customer? Like how many like how do you measure is it is it the value of the loan? Is it number of customers? What's your picture?

Um it's about three things.

Yeah.

So, I want the average loan size to be at least a million plus. Mhm. Number two, the cost of acquisition for a customer should be for the first set of customers not more than $1,500. Um, and third, the rate at which the customers come in. Like, you know, if I get one customer, if the market is too slow, it's about if I can attract about 10 customers.

Yeah.

Yeah. That's probably Yeah.

So, how do I get my first 10 customers? Um, average value at least 1 mil.

Yeah.

Cool. So tell us a bit bit about your own business. I mean how did you come up with this idea? I mean you're working in a product team in Amazon. Uh you finished up there but what made you doing this but just go get another work at Microsoft or Salesforce work at another kind of product company?

That's a good question. So how did I come up with this? Um I think one I've always been kind of looking to try and do on my own. Uh so I pretty much decided that once I'm finished with my current job I'm going to try and do something.

Yeah.

I'll try if it works good otherwise I always go find out the

and then the question was what am I going to do?

Yeah. And and and why did you want to go try something else? Cuz you have people that work to like you know TCS the Amazon you become part of this machine.

Yeah.

And that's where you get very good out of working the machine. you do get very good at working in a machine but the pros and cons are

if you work in a really good machine like Amazon um it kind of puts you I mean at least okay so when I joined culture was quite different like I think it was quote unquote multiple in the sense that you would have a lot of freedom to go try new things and as some grew and grew and grew obviously you became more you felt more like a caucus people

which is what started happening to me.

How long were you at Amazon for?

Uh nine years.

So yeah, so I saw it like yeah I saw

essentially and by the time I was attending AWS where I was working five times which is incredible but also it became massive right so I had layers and layers of I would call management between me and the eventual decision making. So it kind of became little frustrating and so I was like I want to make I want to shape whatever I'm doing. Yeah, I have more control over what I'm doing and that's why I try this.

Because you start to do something by yourself.

Yeah.

How did you come to mortgages?

How did I come? So this I kind of stumbled upon because I was trying to kind of get when we bought our house. I was trying to figure out my own mortgage

and then we went through obviously a broker. We kind of saw what he offered us and then I was like this doesn't seem great. So I kind of did my own research and I found out that literally between what he was offering and what I could do on my own over a period of like the door value I could save 150k I was like look I want to do other people if you do this it's yours and he was like look I can't do it

I can't do it for various reason that I don't bank at the same time blah blah blah and I was like that's silly so I went to a few other ones and I couldn't get it and I was like okay I have to do it by myself was able to do it

y

and I was like this is citym why is nobody able to solve this problem? So I kind of d into it into it and then I realized a whole bunch of reasons structural reasons why people I was like huh

this seems like a good thing

but I potentially could like help people make money

and yeah it seems like you have enough value prop to tell the customer saying hey I'm going to save you obvious money

and that's why I decided to try this.

Okay. Yeah.

Okay. So you're in the gift shop back on October now you this for a month or two. Yeah.

So, what do you what have you been doing for the last couple of months to get this up and running?

What I've been doing the last couple of months, um I think one part of it at the beginning was trying to sort of regulatory is shows like the way you do marketing is obviously because financial services compliance uh to kind of say sign off to go through an aggator whose comp whose credit license are called.

Yeah.

So, they have to kind of agree on what kind of language are used etc etc. That's one piece of work. Okay, the second piece of work is to kind of make sure that the value promise kind of flows through the entire process. So kind of figure out once the customer actually lands, how do you make sure you actually get them what you promise? So figure that piece out the entire what I would call the standing operating process for how you kind of get the customer on their loan and then keep them on the best rate. And the third piece was actually

and figuring out in first like a bio diagram or you actually build tech

actually build the

some part of it is it's less the visual diagram part of it. It's more to figure out how do you make the economics of the business worldwide also the customer the best value. So how you kind of make sure

that you're scanning so the best possible deal but also not increasing your cost so much that you kind of you know that's why you do it. That's the second part and the third part I was thinking in order just like this you know build up side make sure we give everything you have

you have customerf facing collateral so that you can go with customers

okay and okay so you got your regulator sort out sort out your website processes sorted out so where are you now in terms of the launching journey

where I'm at now is I kind of need to give some finishing touches um to the website kind of figure out my I really I have some ideas on the go to market strategy as to how do I I think the first 10 15 customers that's what I hope would be easy but then how do I scale from 1050 to let's say the next 200 and because 10 15 friends and family

what happens after that is the question so I've been thinking about that and that's where my mind's been

yeah and explain to me the the value propag the value was basically very simple um I would essentially commit to find out the lowest possible loan that they can potentially access

and effectively I find that that says between anywhere between.15% to.5% difference between what people have and while the number the percentages seem small in absolute dollar values that's pretty high. So over a lifetime you're talking about you know

70 to 150k uh in the first year you would say anywhere from 3 to 6k. Yeah. So this is for person who is going to do this. It's saving five six K for not much work for this.

If you had access to the center I mean how how would your rate be any different than the book store?

Right. So there's two things that have to happen for me to kind of make it work. One is even though you have access to the same aggregators there's all 80 lenders of which 50 are available through applicator. So choosing the right aggregator makes sense one but assuming you know you just biggest with the most.

Yeah. Yeah. Exactly. So you choose the right aggregator and the second piece is that you within the 50 aggregators you also have to separate with different banks.

So the big fours dominate the market. Big fours are not the max going to offer you the sharpest rate because they they already have. So you have to find the banks which will offer you the sharpest rate. So you then have to go and separately kind of register with them. And that's again that's not that's kind of trivial but that's not because not everybody is accredited with that.

Yeah

that's the second piece. And the third piece that you have to do is to actually then be willing to share part of your commission that you made

to make sure that the comm customers are payroll which I think most of the people are not willing to do.

Yeah. Okay. And so okay so you've um you find the cheapest slump I guess any broker will do. You work with aggregators you work with direct I guess any broker will do. But I guess what you can do differently will be your shares having your upside.

So actually most brokers will not give you the cheapest part like

if you have to assume they would. No.

No. That's the funny thing, right? I mean that's what I thought that they would give you the cheapest possible

and the funny thing is they wouldn't.

Uh one I think the first thing they the first thing they will most of them do is like you know get you got home a question. Uh what is the cheapest possible loan? And that's a good question to ask right what is cheapest possible for SAR is not the cheapest possible for because you know different LDRs like different profile all of that

so the funny thing is the lending rules are such the government has a regulation called first interest duty and the rules are such that as long as you look at three different lenders and you find the cheapest between that you're actually meeting the letter of the law so most most brokers will actually not give you the cheapest possible law so one is to to do that which I think I would say don't do and then on top of that if you are actually also shared up enough to then figure out if they're not getting the best line because you can Google these things quite easily these days right

you could so I found the hard way that googling would not be the right answer

for the simple reason that

let's say there are three ways you could potentially most people would do you go to a what they call a comparison site like you go on a you go sitting on or cash out funny enough both of them I don't think they will give you the entire list of lenders

okay

so they first that is that

and then

even if you let's say hypothetically you go and you see that you know there is this potential thing which is this lender is available from this loan I don't know if you can qualify for that

mhm

uh the third thing is if you go to two different mortgage brokers mortgage brokers are restricted to the patent and they are accredited two rights the aggregator is strict to 50 they only most likely Most of them kind of sign up for 1050. They are only restricted to the universe of 105 now 80.

Sure. Sure.

And then they are going to say during the 105 I have 10 of the best part. So

but I would have assumed perhaps naively that the larger mortgage working firms like the Aussie Hamlines they're connected with everybody. So they've got access to every is that not the case?

Aussie only connected to 25 lenders.

Uh and I'm not sure why. Like I'm not sure why but

it's not like that doesn't seem to indicates.

Yeah.

Is that what you guys get? Different commission rates per lender. Do you is that why they are Cherokee lenders or is it somewhat marginous?

I think it's a bit so I think probably let's say

I think it's a bit historical right most of the large

mortgage brokers they have had their existing relationships with different lenders. So they have that and that's what kind of ties into it and

there is potentially no real incentive to go to newer lenders. Yeah.

So that's one potentially and the second thing is there's also a cost of the more lenders you kind of are accredited with the more just bookkeeping you have more work and so understand

so there is only the change is what I've just that's the summary of it.

It seems like such a trivial solution you had. I know. Um but if it's that true, I'm sure other people have done it. Like like what am I missing? What am I what am I not understanding the complexity of this?

Yeah. So I have to a few people because I had the same question. It seems so simple and obvious. Why are more people not doing it?

Um so there was I think about 10 15 years ago there was a company called refund home loans which came into that kind of Yeah. So look, I have $3,000 or $3,000 back when I

I don't know. I just would read up on the documents and through his talks to see and I think they failed for a couple of reasons because at that point of time they had a lot of franchises. They had like physical through France. So the costs were higher and I think they couldn't make the economy work. So you are passing on

all I think I don't know what that promise was. I think they would pass about 50% of their commission back. They still pass $3,000 they said.

Yeah. Yeah. So one was the house prices were much lower then like you said later it's over.

So the loan values were smaller so your commission you wouldn't get so much and then if you're giving 3,000 back from them.

Yeah.

So you're basically keeping half of the commission and I don't think they could pick the government's worth based on what they have.

Yeah.

Uh what has changed right now is the house prices are that much higher. Your average loan value is that much higher.

Yeah.

And most of the people are very comfortable. I don't have a I don't have a physical quite present and if I could

have the bags reduce how much they give you for Santa Claus proportionately. So it has it has compressed a little bit but it has compressed over the last 30 years but not in the same proportion as to where the house prices have gone.

They are fantastic at it.

So that's one.

Yeah.

Uh so anyway so refund fun uh collapse because they couldn't make the commerce work. And then I spoke with a few other people and they had a few interesting things to say. They said look

I think eventually you will need to end up finding people to kind of do this. Yes. And they haven't been able to make it work with essentially several people

and so they say you have to kind of have people who are working on a commission almost and

so to keep them motivated and then you end up passing along say again world

uh that might be true. Yeah,

I'm just curious to see given that now where AI is I first want to see. So the way I'm thinking about this is sorry going back to the program right so

if the value prop kind of resonates with the customers which I think it should given that it's almost mining

then can I use AI to automate a whole bunch of players given where the state of AI is today.

Yeah. And then if the people aspect is very minimal, can take the government's work and I don't know if the existing people have thought about this or maybe people are working on it. I just don't know.

Yeah. Interesting. But it's kind of like your like with Amazon, right? They've got the low cost operating model. Yeah.

You're trying to do that with mortgages, I guess.

Yeah. And then you think about it, right? Why would you stick to mortgages? Like think about this. The largest expense that any household has. I mean the most strongest answer is you spend most of your money on financial expenses. So if you take mortgages, insuranceances and if you even create your savings account as a yeah

product you purchase that's where most of your money is.

Why isn't somebody trying to optimize that for you? It's almost like a model right and you can easily go from if you can solve this for mortgages there's no reason why you can't solve this for insuranceances. Yeah. why you couldn't solve this for

I'm not going to get investing because that's very personal everybody but why couldn't you solve this for making sure you're getting the best savings rate from your sack account

and that you have basically doubted a a large part of the customer spend

yeah suddenly you're dropping a lot of value

I mean because look I think it sounds so easy you'll get 10 customers I'm sure you know 10 people with 100 it's you finance only so that's easy so everybody has a loan deck that they finance you offer it cheaper I have to go through the bulk of the paperwork for them. So there's not a lot of

headache for them. So totally get like you get your first end customers quite easily.

But I think maybe the problem will actually be as you touched on there is that how how would you scale this? Cuz when you're not paying yourself a salary early like you don't have to make money as an early on um you kind of work for free because of hope of a future dream.

Yeah.

When you try to schedule you're going to get the same cost basis that all these other guys hit. You might not have offices. You might have storefronts. you might have as expensive even when agencies fail and becomes two brokers, three brokers, a couple back office people, you're going to get stuck with the same cost base. Is that fair to say or do you think you can do something clever with AI as

Yeah. So that's the hypothesis, right? That's the hypothesis. So if I can So one, I don't I would obviously have a back office at some point

but I don't expect to be essentially like right. I don't expect to have a shot in every street. I think that's not the eight because if I have that, then you're right. I would have similar.

Yes.

Uh in terms of having smart people do it, you're right. I should have but then the second part of the entire thing comes in is can I make smart people more productive using AI?

Yeah.

And if I can do that, then there is real value to be made.

Mhm.

Okay.

That's really it. That's that's the two part proposition like the value prop. The first part is relatively so quote unquote simple

and the second part of it is the how you use AI. So if let's say that your broker is doing let's say three

deals per week

can I get him to do 16 work?

Yeah.

Yeah. I mean competitors working there'll be the other kind of work from home brokers. Yeah.

There's lots of brokers like husband wife couple or tele friends come together. Everyone send out brokers and got quite a low cost base from similar to yours. Yeah.

They probably do all work themselves afternoon or

Yep. Yeah,

even got one of my cousins like during the day he works for Telos. During the afternoon he does a couple of mortgage brok.

Yeah.

So I guess they're guys are going to compete against. So I get your hypothesis that okay well you will answer the same scaling cost as other people because you use tech more effectively. You use AI but shouldn't you test that before you even start it? Uh there this is maybe me coming from Amazon right I think if you get the customers the customers don't care if it's magical tech right

I think right now given that I've used the tech enough to know and I've gone through I've written a few losses so I know where you could potentially use tech but I feel reasonably confident I mean I might obviously find that it doesn't work at all but right I feel reasonably confident that there is enough there is enough taking place at this moment that if you spend money to build did it you can build a platform which will be able to increase the productivity of

that that I feel that part to me seems less worrisome

than yeah and the one and two mortgage broker people the the thing which I've realized right if you're a couple of let's say your five mortgage brokers

uh funny enough 50% of their revenue comes from trade commissions

right and I'm offering to give the trade commissions away right up front

and so what are the commission.

So train commission says the way the way people get paid is you get two commissions. You get an upfront option.

Yeah.

And you get trail commission.

So the upfront commission is effectively a you get 065% of the loan that you get paid the moment the loan set.

So they say million loan $600,000

up front when you get set and then every month that the loan is current you get about.1 5% of the loan roughly.

So 1,500 in that case. Okay.

Yeah. uh perm and you get that paid every month.

So 1,500 what should you ship? What does 500 debt?

1,500. So $180 this.

Yeah. A month. Okay.

A month.

Yeah.

Uh and what happens is after a few years if you have been in the business for 2 three years 50% of your comes from preion which is your existing loans which are just paying your money. So these people don't and that's why at that's why I'm saying they're not motivated to find the best deal for you because they are actually getting a whole bunch of 50% of their comes coming from these loans. Uh and so that's why they're not they've not only built it like it's just a simple body motivation problem, right?

Yeah.

And it's not motivated. You're making enough money. So that's what a whole bunch of people said. Why would you

I guess customers they'll get the upfront commission. They don't put any up front from you. I mean if they refinance you from one bank to another do they get another upfront?

You do but then what happens is you keep the upfront only if you're with the same bank for two years. There's a clawback. If you can't change banks the two years then you get a clover based on prorated based on modification.

Yeah.

So they should be incented every two years to trim you somebody else. Don't you

they should be in I suppose if they tend not to.

Yeah. I I think I don't understand why they don't but yeah I don't I haven't seen that as

okay. I mean I'm to believe that AI will automate it. That that that makes sense. I mean if it isn't there it'll be there. it will

it it'll eventually get there. Um are other group is trying to doing the same to reduce their cost base by using this kind of tech is more of a traditional kind of area. Look I think if you're a one or two% sure I think you might be trying to use AI to kind of reduce your cost maybe uh but I don't think they are trying to pass value back to the customer one.

Yeah.

So I'm not sure what's happening behind the scenes. I'm sure I I can fully believe that they are.

Yeah, but I don't think anymore buying back.

Yeah, I don't think anyone has been invited back. So, in which case, so there is that extra margin to be had there. I suspect the people who are probably trying to use this the most are the larger ones. I would presume the the bigger ones in the market that you see would be super motivated to try it. And but again, I don't think there is any competitive pressure to kind of offer that value.

The big top reason is when tech effectively, right? It will cost us millions. It'll take him 10 years.

Yeah.

Or they go proof of concept. As some proof of concept, they won't get funding.

Yeah. I think it's just hardiness, right? If you existing business, like it takes you have to be a tech business to be able to do that. Yeah.

But if you're not, then you just Okay, makes sense. And how did you figure out that getting money back is what customers want? cuz cuz my experience is any money back is amazing but you know when we bought our last house it was more about who can actually get you this loan approved cuz we were like right against the edge.

Yeah. So I think there is

for me it wasn't getting the money back.

Yeah.

It was actually something else that I was looking for.

So you're right. Uh I think people have two things in mind. There are two different types of customers. One is who are trying to buy a new house and once you are trying to buy a new house there is a different set of criteria. Like you said, most people want good enough to you, they don't want the best to deal.

Mhm.

And depending on what your circumstances are, you know, you're just trying to make sure that you have a loan that on the day you set. Yeah.

That's good.

Yeah.

And then once you actually paid down the loan a little bit,

then people kind of start thinking about, hey, can I make this better?

Yeah.

And if you can't, and I think that's where it comes in, right? M

also what I've realized is and I haven't seen this happen but most people like the simple fact of the matter is when you're signing like the biggest loss purchase of your life you have so much anxiety around thing you just want something that will help you close it unless you're done then you're in a better frame of mind to say okay how do I optimize it because you know half one third of my income is one duty

you can't do the two stress into one thing is

yeah yeah and that's why I couldn't refinance it it's sense if you don't your s and everything like

see what's happen just refinance it

I I would happily look at people who want to buy new houses as well like I'm happy to do that as long as they reach a certain threshold like obviously can't like you know be spending a because people who are buying new houses also it takes much longer so you're spending a lot of time

hand six months for exactly so I'm happy to help them say this is what you have at this moment but you know some people just need a lot of hand holding that I don't think that is part of the business at this until I get at some point I'll have a good enough to kind of help you know so they can just stop the like they talk Yeah, I mean it's very different than your models like ebant like ebank don't do new loans they do online you can't

yeah somebody but then they're having the best stroke because they tend sometimes have the best rate not always but they tend to have the best rate because they lower cost yeah

is your model kind of an antilous to that

it it is kind of similar than that yeah yeah it's not that

the only thing which I would say different from your money

it's not about so the money for me is not the main promise right the main promise for is I keep your optimal throughout the lifetime of the movie. That is the promise. How do I do it is not really like I can find your money back when I find the best known like obviously you have to be hold but that is the

that's the promise.

Yeah.

And I don't know of any other lead broker which is willing to make that promise to them because it's not embit.

Yeah. Okay. Makes sense. So going back to your original question now. How do you get your first set of customers? You 10 customers with a reasonable enough loan value. What what's your current plan to get those guys? I think the first that set of 10 customer was having simple friends, family, colleagues. I think you know try and get that because technology is probably the trust is you know is not there like trust will be like do the right thing by them and not

I think the interesting question is how could I go from let's say 10 customers to the 100th customer like

at some point I could run out of pool of friends and family

you only have so many friends with mortgages sign up like you might get somebody else.

Exactly. That's the interesting question for

Yeah. So maybe can we read to the question of really how do you kind of get from 10 to 100 customers?

Yeah.

But the problem there is maybe going to actually have a cost of acquiring customers.

Exactly.

Right. Can't just be coffees and lunches. All right.

Yeah.

Um to people, you know,

and if you haven't cost inquiry customers, but you're not keeping the upfront money for yourself. Well, to be like a capital outlay, you're going to have to start putting bits into the business because you're going to get trail over a long period of time.

So the trail I want I'm not planning to keep. So the trail is not going to accumulate. I would keep part of but I would keep the upfront depending on what the what is the benchmark. So the way I think about the way I think about for each person I'll find a benchmark for you which is from the pool of all the lenders that I can see available

and that's what I'm trying to match from the pool of lenders I have access to.

Mhm. And if there is a difference let's say you know right now the benchmark for 4.75 I can access something at 4.95 I'll make the 2% whole by giving you part of

oh so you'll give up battle neutral and I'll give you a better rate.

Yeah then that's the

and the mechanics like allowing you to do that doesn't it?

Yeah the mechanics allow you to do that that's that's a big

okay so it's more so you'll kind of give up your trouble but let me be out front.

Yeah I mean it

it's money right? It's just somebody coming in at different screens whether you call it up front coming up in different times cuz we for example get 90 customers straight away you know let's say the two or three month period you're going to have a huge cost process then right

the cost of process sure yeah yes

um but then if you get up money well that's kind of okay money correct

is very very aligned to when your cost base goes out

correct you get money you get money paid like 15 days after you kind of set the deal of course so it's the money comes in it's not a huge

yeah and how good representation these first 10 customers to happen. So we're 31st December.

Yeah.

Um like what's your time scale? How long do you expect that to take?

Uh I would say maybe two months.

Okay. Yeah.

So like the end of benefit your first dozen or so through the system.

Yeah.

Um hopefully that's worked out. And how long does it grow finance general?

The process actually is not that long. I think depending on the vendor it can take anywhere from like some quick day two days. like net to net from the start I get access to the documents

to the day it's settled let's say 3 weeks I max at about one say so sometime in bar you will be all that with those 10 people

um so you'll make sure the system works make sure it works make sure they're getting enough money you can get better deals you can get your internal processes working

um and then what are you going to invest in whatever AI tech you're going to have to help automate the process

so the way I'm going to do this is first get the first set of 10 customers then I only hire a few vehicle if yeah then I'll try and look for the first 10 customers I don't think are going to tell me if there is well forget product market fit that is even the value prop is present right because what they are going to do is people are not interesting I'm fine

yeah if it was the same they probably don't send you

so that is not going to be

so uh no I'm fine yeah

so that's not going to tell me much

I I think the next set of let's say 20 to 100 customers are going to tell me more because those are people who even if they're let's say friends of friends I'll have to probably convince them more. So that is going to tell me is the value proposition.

Yeah.

And there to kind of s because I think at that point in time

I won't be able to process the volume by myself. So I'll let's say my cost people kind of helping me with that. So I think the next set of invest in investments will be a kind of hiring the right set of people and once I have done that

and I feel like okay now I know exactly what problem which are the inefficient points in the system then I think it's the time to invest I think there's multiple places where you could invest you probably invest in

trying to be more efficient in getting more customers so you could have you know right now I have a calculator which kind of gives people an idea of how much they can save

maybe double down on that or maybe go and try and build tech to make people more efficient. just needs to be seen where that should be made

because I think I think you probably won't beat the value from I think that's the obviously

that's what I feel like I feel it's simple enough to say this is the money sign up your money

I think you're going to find it easy enough to get customers however you advertise you advertise and you got born and they'll

they'll come through your process they'll give it a shot I think your problem will actually be is how do you make sure you can still make enough money for yourself to run this company

I think it's going to be more of a costbased problem not a um

since cost split. Yeah, you're right. Yeah, it's going to be and I make sure my cost base is right so I can continuously run cuz I mean if you use the app as well they they're the guys that ping the low cost model but they lost billions and billions for years and years and years and that's how they kind of got to their that's how they got to the scale that's what how they can compete on that

that's true that's true

so when does that see I'm still to figure out how do I make sure

I I have my cash reserves or manage my cost values or I'm not lose too much loan lose nothing but not lose too much on the first part of the loan

so I can't grow myself broke doing this.

That's actually a good point. That's actually a good point.

So I think that's what will get you done. I don't think many customers are going to be the high part.

Yeah. Yeah. You're probably right. You're probably right. In which case I think the after the 20 to let's say 100 customers have come through then it's kind of honing in I my hypothesis as part of the process are the most time consuming and where you know you kind of need to double down to kind of have tech simplify things

but then really test it when people are because you know experience of file cases versus experience of hybrid cases is quite different and once you have enough evidence to say okay these are the double down on missing

there

to kind of simplify the process and

then reduce the cost base like the whole point is want to kind of have keep on reducing the cost further and further

and increase the efficiency of the humans who are doing the work as much as I can

well you're need a huge cash base to do this right because I figure it's going to I mean for your first 10 your cost basically the exact same as everybody else

y

probably high as your 350 pay junior included Yes.

Um, for your next 100, well, you might get a ton of people. You might have them offshore. It might be a bit achievable, but everybody does that anyway.

You might have a few local people helping you, you know, 20, 30, $40, $50 an hour, what whatever it is.

Um, cuz I reckon to get some sort of AI model sorted to make it more efficient. I don't think it's like a one like a three to six to 12 month task. Sure. Kind of figure out different choke points and optimize that one, but sort out the next five, sort out the next five. So, how do you make sure you don't run out of money during that 12 month period? Cuz you're going to be paying people salaries, right? You're going to have you're going to have an office big enough to sit in.

Yeah. So, so how do I Yeah, that's a good question. At some point, I'd like to raise money.

Um, from what I see at least, so there is like how would I put it orders of difficulty on the problem that needs to be solved, right? So, I give you a more concrete example. So right now the way the process works is

people fill out people give information

and I plan to use open backing tools try to make it as simple as possible and then they kind of give you all the information and then you somebody has to kind of sift through that and put it in aggregate system. Yeah,

that actually takes a fair system to you or

that takes a fair bit of time to just you know sift through the information into the system.

That's one place where you could potentially use tech to identify it as an agent model that exactly. Uh then the second part of the information is I think once you've read in the system I think there is a document generation that you have to create a do comparison report of some sort

uh which is mostly automated by the systems that are in currently in place but then I will have to tweet it because I'm not doing exactly what every broker is doing because I I'm putting it back some money back blah blah blah so I think there's some intelligence in there

that is the second part and the third part of the piece is then once let's say you a customer said, "Yep, whatever you're recommending is good, or we change the recommendation to something else, blah, blah, blah." Then probably redo the work and then file it. So, those are the rough steps that we kind of go through.

Uh most of the work seems to be around kind of getting the data because that seems to be the hard piece of the work.

Uh so simplifying it for the customer because that's where most of the drop off is.

And the second part

and how we simplified it from a portal that cannot find or something. I think that's not even the most rewarding piece. I think

some of the problems are around making sure that customers just don't if you have three back cars. Yeah.

If I'm asking you to get

let's say go get 12 month statements from each bank account just like people just find it commercial.

Yeah. It's

it's just the effort right convenience. So if I can make that convenience and there's open banking which will help that I think that's where some is

uh to make customers problem simpler. So they have

so they'll lo into your system they all connect to the bank account suck out the statements and some of the things I can't do like for example AT won't give us access to that that that talks to that and then you need to go to your rental if blah blah but try and make the document collection simple

that's one and then put all the collection information from a document that's documents that you haveated

into systems of a leaders so that you can find the best possible I think that's say so that's why I think the Well, did do you have your views to

Yes.

Sorry. So once you have done that right, I think there is simpler solutions that you can do and there's very complicated solutions to it that can be super seamless solutions that you can do which you know kind of suck in everything and then spit it out and then no human has to touch it.

That would probably would require maybe a few million dollar investment. Yeah.

But I don't have to start with right.

It sounds very simple stuff.

Yeah. I would start with simple super stuff like if you're getting documents you can use simply assistance to kind of get the first generation out and then have a human kind of pre-arify so that they are key they just have to reverify the information so I'm saying there is like I don't have to start spending millions of dollars you spend few not even hundreds of thousand tens of thousands of dollars and get that itself is not complex

yeah you can I can probably do that or I can also what I think and then you can build it build it build as I can see the volume you're going to get to see Yeah, that makes sense. And do you have a view as to when you do your first tenant, you're doing a manual, you're doing it by yourself,

be giving a bit of money back, but you otherwise would need to cover your cost.

Do you have a view? Will you break even for those 10 B? Will you lose money? Will you still make a bit of money out of it?

I actually expect to make money off.

I still expect to make money out of that. I mean, depends on what I want to pay myself. Yeah.

But let's say I pay what I would pay my if I was an employee working in my own firm, then I would expect to make money off them. I wouldn't expect to make huge money off of them, but they would be worth that worse than this. Why? They're only worse if right now the margins are insanely high in in this work because you're saying you're actually giving off a big chunk of margin back to the client anyway. Um, if you still think it's profitable that that means today the margins must be very high which might be

so and so again this might be naive. I think that markets seem reasonably high, right? Like I think

so the way I would put it is you get about every year about how let me do the math.

M

you on a on a minimum of let's say you get about 6 and a half grand first year and then about 800 grand. Yeah,

that's roughly say 6 1/2 plus 2 grand 8 and a half grand for the first year and the next year you get in like a little bit less than 1,800 because

you're paid you're paying 1,500,000 bucks. So over a threeear period

you're getting about 10 grand.

Yeah.

And I don't think that's 10 grand enough for work to be done. You know

how much of tell me how much do you it takes about let's say for a loan which is complicated it takes about 20 hours of book over

even if I paid 20 hours of work for me and let's say costition is say about 15 minutes right yeah

it's still not work

although I mean so the analogy on like when Australia first launched in Australia but so they only had one plane they had the sector 37 what whatever one They had a very low cost to operate. They only had one set of planes, one set of technicians, one set of parts and that's why they compete a lot on price at the start. But um as they profile like that to buy other planes and you know flexi kind of came in um so I bet for your first customer should just refight customers probably the cost is quite low but then they're going to come to you and be like hey you did this ref for me now I want to buy this new house and suddenly the complexity is much more or they want to be like oh I want to buy something super fun more complex or I'm buying this shop like more complex and they might suck you down lower margin deals.

That is true. So I thought about that right. So the way I think about that is

the way to think about it is not on a per incremental basis.

The way to think it about it is the customer lifetime value, right?

So let's say you're a customer. I'm just making things up, right? You have a property portfolio of a few million dollars. Let's say to $3 million. Yeah.

Which doesn't seem to be out of reach for most city.

Um you have about 70% on aggregate in loans. So on a $3 million you have up to $2 million in loan.

I have to look at it from on a $2 million portfolio loan portfolio. Let's say you have two or three loans. Even if one of them is super complicated because you have SMSF and it's taking me a buttload of work. The other two are probably easy on an average

it still makes it worth. And the other thing you have to realize right it's very complicated for the first time you're getting the loan down.

Yeah. But the second time you are refinancing page after 3 four years or two to three years it's not that complicated because you already have the paperwork you have set everything in place you probably paid off let's say your loan to value ratio has gone

yeah better and so it's a 30ear cycle right so you have to keep the longterm in mind this is a long-term game this is not I have to make all my money from the first deal

that's how you have to think about it in the customer lifetime value is actually quite this is potentially the largest purchase most people are making in their lives Yeah.

And so it's really high dollar values you're talking about.

So I get it, right? So I get the acquisition won't be hard because you'll have a unique problem. I get processing still seem to make money out of it. You'll automate reduce your cost base. If you're offshore, it will be even trickier. Why is it everyone doing this? Why is there not 30 people like you doing this? Like what what's the missing?

Yeah, that's a good question. So I have been asking myself this for the last six months, right? I've been dealing with this for 3 months before I quit.

Yeah.

And I've been asking me the same voice of the same question. What am I missing? Why aren't other people doing this?

Um, so I can because obviously I have a big blind spot to this. So I just give you the answers that maybe we can brainstorm what what are missing. All right. So the answers I have heard range from the interesting answers I've heard from the first answer I heard is you could have adverse selection of clients but that I think people say look if you are trying to give money back or if you're trying to find most optimal deal what people will you'll find is you will find customers who are constantly chasing the best deal and they will constantly keep on trying to turn out you

to me the answer to I thought about that I was like yep that is potentially possible So but again my prop is I didn't make sure you are on the most optimal loan that you are.

So you'll turn me to another product yourself every time.

I I'm very happy to jump there myself and even if I have to turn there even within the 2-year period then I'm potentially happy to do that because again I have the 30 year window in mind. So even if I were not making money in the first year

I'm hoping to make money over the 30- year period. So it's potentially in my benefit to keep them as long as the threshold, right? If you're on a 500, if you have a low 500k, you probably or 500k may be still on the margins, but if you have a 3 400 km, sorry, I can't help you right now, but

everyone's got to buy that.

Yeah. Yeah. Exactly. So

So that's one that's an answer I heard. The second answer I heard which I think is actually probably more interesting is most this is from another person who had a just mortgage broker. They said we tried the salary broker model where they said

we would pay broker salary, we would give them leads and then they have to kind of

make sure that they close the deal

and he said they couldn't make it work. He said

why is that?

Yeah.

Yeah. He said just that he couldn't find people motivated enough by salary and so we ended up throwing so we went from a commission to salary couldn't make it work. We end going back to commissions again. Yeah. Yeah. So that I think is probably the more interesting part of the myth that god I haven't figured out what I feel should be easy but that again was he said that he tried it 3 years ago whereas I was not in the place where so they had to rely on doing all the work and maybe that's the complexity I'm missing which is

um and a few other people said look I think what you're missing is this is potentially the large not this is most for most people the largest transaction of their life

you need to build trust and Most people don't have trust talking to a computer to do this.

So you need to have frontf facing people who you need to pay a lot of money to kind of do this.

Yeah.

Which I kind of agree with like you need to have front facing but then it's the same question.

How many frontf facing people do I need and how much do I need to pay them to make the economics work and maybe that's what I've been saying that

I can't make them efficient enough or frontf facing people need a lot more money than I'm expecting to pay them.

Yeah. There probably a couple things there. I mean, I think you're I would probably agree with the first one why they said maybe scrape the bottom of the barrel. These guys will just trim it.

Yeah.

Um maybe they I think you're right. If you kind of team them happy, keep a good break, you'll probably hang on to them anyway. Um and then they'll be less likely to turn on to somebody else because they're getting such a great deal from you. So, I totally buy that. Um what about So, what was your second?

The second one was that I need to pay large commission. Yeah. The brokers need to pay a lot more than I think they need to be paid. Yeah. So, there's two parts of that. One was DN brokers and like with Eubank or we just sold one product that was my one with them, but they were fantastic. They were online. Never have to talk to anybody. Didn't have to be friends with anybody. Simple system. I knew what to do. I would call them up whenever I needed to. So, in that case, I didn't. I personally a tech savage kind of person didn't need it. But I reckon everyone under 20 or 30 or 40 will probably not need a bullet.

Maybe your older uncles and aunties will probably want to talk to somebody you can hold on to the internet. That's why I have offices as well, right? The generation that we are with, even the 30 and 40 because 20 years not owning houses, 30, 40 year old and they probably happy not to talk to people if they put enough system

and and plus those guys are probably doing, you know, your three, four, $5 million purchases while your 20-y olds are buying half million dollar houses and your 60 year olds are paying off their house and not buying anything anyway or they paid off a lot of their debt cuz they bought the house 20 years ago. So, there's not that much to ref.

Yeah. um on the broker. So that that I see as is more nuanced about whether um whether you need a broker to do the sales side of things. Um because it probably depends on if you're going to spend all your money on marketing, drive to a portal, have them sign up themselves, well then you don't. But I think what you might find, I mean the analy is like with real estate agents and like new recruiters, every correct recruit goes works for themselves.

Yeah.

Cuz they all of a sudden see, okay, I'm generating a million dollar worth of commission. not getting paid half a million dollars. That's not fair. Yeah,

I've did this myself.

Every great real estate agent goes out does does this themselves like every every time you buy a great home from from an agent and they're really good, two years later they'll have their own brand and buy their own sh

and maybe that's why people pay brokers so much so they actually don't go off and do it themselves. I Well, what kind of salary do brokers get these days? I don't know that market. What's the is it is it all commission? Is it based on commission? It's always based on commission. I think whatever I see, you know, from when we see.com, I think brokers get paid anywhere from 150k to like 500 kit depending on base or

15 million to about half a mill.

It's crazy, right? Like I mean,

we can't afford to give a lot of money back.

Yeah. And so I had a more so I thought about it as well as like look, I need to test this out. The other reason that the Brooks might be mean to do a whole bunch of sale is because if you're doing what everyone else is doing, then you need to sell and you need to sell based on how personable you are, how much trust you can build.

But if my value prop look and my professor right, I encourage people to go seek other brokers out in the market and you have processes running a side

if I can't get you a better deal, I might say. So maybe I potentially I'm hoping I actually might not need to have these superstar sales people brokers I need to have because

what I found working with people also the people who are very good at sales I'm not necessarily good at processing

transaction work I need I'm thinking I need people who are very good at transaction understand the nuances will get things done quickly because the sales has been done by the value and by hopefully world of power and the website

so is is your model then trying to figure out how do you adopt as many brokers is not as many broker not brokers.

I tend not to say brokers but one is not as many brokers and not as many brokers who need to do the sale for me. So lower skills or low cost brokers.

So the mental model I have is

think of it as the Apple store right

the the Apple geniuses

they are not there to sell the product. the people are already sold when they go to office. They are just there to help figure out the right things for them and to get them out the store as quickly as possible. That's the mental model I have.

Uh versus if you go to a GB High five, they're there to serve the product. I'm not trying to be a GB High five.

Okay.

So then you just got to make sure that your how you acquire customers is super effective. It's not going to be the brokers.

Yeah.

Because that's a super expensive way to do it. And and it kind of makes sense if they are paying, you know, half a million dollars a year. It totally made sense why commissions are so high because you got to find that person and and the overhead and the back office.

Um and then it makes sense why other people can't afford to give anything back cuz you got to find the salary. There's actually not a lot of money to give back to everybody.

Absolutely. So then you got to figure out

Yeah. Yeah. So I think perhaps figure out in your model maybe this is what you're thinking is how do you make sure that that you actually don't need the brokers or that you need kind of cheaper lower skill kind of brokers.

Not I wouldn't say lower skill. I would say different skill, right? I think

or more economical, right?

More economical. I think I want people who are OT once they have come through the door.

Yeah.

They can quickly sort that through and put them in the right place as quickly as possible.

Will they have the sales finesse you need to get used to though?

Cuz I think that's why these bros are paid a lot of money. I assume they've got attention to details so they can do the application.

Yeah. Yeah.

But they're very friendly. They're very salesy. They'll follow up. There's all that kind of thing. They'll spam you, email, text you afterwards to get the deal.

Yeah. So I think

and that's probably why they paid so much to have that that sales acument.

So that's the current business model, right? I think what happens is what they will tell you what most

brokers will tell you. And I think part of it is that they will come, they will listen to your problem and they will suggest innovative solutions for you which you potentially may not have thought of. So this is again where I think yes that is true but again where I think AI is going to be hugely beneficial I think because there's only s so many different permutations combinations to buy the hard

certific there is only so many patterns and you can fit yourself into some pattern and yes a smart man can help you figure out a pattern but this is something which given time and I'm not talking years I'm talking months

you can use AI to kind of solve that for you what brokers give you. Um, and I'm not going to talk to the brokers that I've ever dealt with. It's

I've just assumed they've got some little back office fig, but

it's them sitting in your living room, selling to you, convincing to use you, not

y

convincing you that, hey, this refund, you buy all this money back and we'll actually look after you and I'm your buddy and I'm going to buy you lunch once every six months to make sure things are okay.

So, I'm hoping he need that because Do you think that might be needed anymore? I'm hoping that's not even right. I think the way I think about this entire sales process is you are going from at some point people thought you could only buy shoes in the store and now people are very comfortable buying at some point people were like you absolutely need to be in store to be and that's what I'm thinking and that's my hypothesis that

I will be able to scale

if people are willing to shift to a model where you don't need such a high touch a lot of

giving [snorts] a lot of cuddles and you know lunches and are ready to be like, okay, if I convinced that this is potentially the most optimal thing I can get, yeah,

then I'm happy to engage with you, get on with it, and be efficient about it.

So then for your first 10 customers, would you consider only giving them the amount of love and time that you could actually afford to do?

Yeah.

And treating them with a skill level, a dummy sorted out, the skill level as if one of your brokers doing the work cuz actually product market fit, right? to figure out could a 150k broker

do this work and sign this customer up so no doubt you could do it but you aren't that 150k broker

you're a lot more skilled

I mean you're absolutely right is I tried to do it but honestly there's a thing you just really right I suspect what's going

I don't want to win it and so I'm going to go all out and potentially I'm going to shoot myself in the forge like in the long run I'd be very happy to getting the 10 customers but I potentially I think that's why 20 to 100 customers are more important where I will have somebody else do that and I see

if I can able to do that the same way.

That's true. I mean you can do it only at the first 10 20 or or the next 100 is fine.

But I think you're right. I think you're absolutely right

because I think that's the actual product market fit. Can a what's a better word than a than a than a done broker? What's what's a better word like a entry level or transactional broker or um what would we call them? What would your Cad be? [laughter]

What? I mean, I like how Apple calls them Apple geniuses.

Broker genius.

Yeah, that's for a broker genius who doesn't have to do who doesn't have to do a lot of things, right?

Who is more efficient in giving you the load that you need?

So, is that what you really want to test out for the first 10? Cuz I I know you like you to go all out and insert and you also have to do that all that kind of thing,

but you won't figure out this model works or not.

Yeah, that's true. And then come March,

yeah,

you're gonna recruit somebody

and then you're gonna figure out you be like, "Oh I should have figured that out three months ago."

Yeah. So that's what I mean I keep on going back and forth on this, right? I mean I think one of my friends who also has his own company, he was saying maybe you shouldn't be trying to get your friends and family for the first time customers because when your friends and family are coming through,

you don't have to you won't have to sell them as you are selling to say somebody who you don't know. M

so you won't know if you are actually but your value prop is resonating.

Yeah.

And so he was like why if you don't care about learning from those 10 deals why would you try I mean not avoid that but if they come through fine but they don't go don't go chasing them go chase people looking to do

well you will learn what you're trying to learn by media.

Yeah that's but I think there's two parts. One I'd say you still got after there's a low cost of acquisition.

Yeah. Um but I'd say go after them with the level of service you want if my favorite customer.

Yeah, I think that's what I that's where I landed. I think there is learning to be had for the first 10. Yeah.

And there's different learning to be had where as you pointed pointing out rightly that

I need to be able to kind of test the actual product which is not a lot of high touch be more efficient with kind of processing them and see if the collateral the sales collateral I have is enough for them to do the sale. But the big thing I'm challenging you with is though I reckon that's what you do for the first 10 as well. Not just

Yeah, I know. I don't understand. I agree with you. I agree with you. Just I I don't know. Yeah, I have the set restraint to be able to do it. I mean, yes, I think you are very nice there.

Although you'll have to do it for the next hund anyways.

Yeah. And that's why

Yeah,

cuz you might find that um I mean, worst case scenario, you might find that being low touch brokerage just doesn't work.

That's it. That's what most people have to put me that it's not going to work

like this is a high touch business but then again my hypothesis is low touch broker genius might book for refinance will not I know it will not work for a new home buyer understand that you're you're buying a second or third call

so you might have three T's of brokers you'll have a very expensive half million dollar broker that does new business do that because the value is worth it

yeah and you might have a broker genius which does the simple refs

exactly

um but I reckon the upside if you can push restrain yourself is you want to figure out if the brokerage is what is not going to work. You want to figure that out in February, not in July.

100%. As soon as I can figure it out cuz there might be things you need to change. It might be process improvements. It might be website. You might need to up your marketing spend.

That's true.

Conversion might actually be really low with a broker genius.

Yeah.

Well, what is typical conversion for this industry? If you go meet a client for the first time,

I mean

in ref specifically, is it one in 10, one in five?

I couldn't get good numbers on it. I've seen anywhere from 1 and 10 uh anywhere up to 10%.

Depend and it depends on where if you are a website brace broker which most of small shops don't tend to be. Most of them tend to be

face and for them it's like one and four five.

Yeah. Cuz I think what you might find is the reason people pay brokers so much is they up their conversion rates.

Yeah.

They improve. Right. So a broker genius if I'm a super motivated customer that's probably fine cuz I will still go on and I find my documents get my pay got whatever you want from the ATO and I'll send that to you.

Yeah.

But the big middle is they're just a bit too lazy.

So they need someone to call them three times to invite them.

Yeah.

And that's what a well paid broker would not do but a genius broker would do. Yeah. And if I'm busy that, you know, a great broker would be like, "Hey, I'll just come over for an hour and I'll stick with you and I'll do this with you."

Yeah.

And you'll get this whole bunch of people that would not have bothered refinancing. The high paid broker wouldn't, but the broker genius wouldn't have.

That's a really good hypothesis. That's actually reasonable to expect.

Yeah. Yeah.

And that might be completely okay, but then you just need to catch those people coming through, right?

Yeah. That's it. But you got to figure out how do I catch these super motivated people that are going to want to do the work and how do I target them, not just the large masses.

Yeah, that's true.

Cuz traditionally, if you're broke, you would have thought, let me go target doctors and bankers and, you know, people with lots of high disposable money. They're buying $10 million houses. But maybe with you, how do I figure out who is that super motivated refinancer that I don't need to invest a lot of money in?

Yeah, sorry. when you were saying it's just a force party, right? I think also like the the key way to learn all of this

again it goes back to customer lifetime value. So let's say if you're a high paid surgeon

and if you have a property portfolio worth $10 million then paying half a million dollar to a broker is still probably worth it because if you servicing a whole bunch of way so just if it's not but you're right the the business model will be very different because then effectively if I'm just targeting people but super lazy and somebody has to go there go and kind of you know do all the paperwork from them

is going to be quite different. sort of be this automate versus what I'm thinking is more more automated and more Uback.

Yeah.

Yeah. What's that service?

And I mean not so much the surgeon versus the clerk. It's the

which of those clients going to do the work for me? So I have a lower cost.

That's true. That's true.

And some of them you make a lot of money from your surgeon house you make a lot of money from.

Yeah.

The local back telling it makes less money from. But you need to pick out

which wasn't motivated to do it by themselves. You're right. the profile of people who are happy to do it by themselves and how do I find it

and I'm going to guess and this is I know tell me if you think this hypothesis resonates that the higher the load value the less motivated they have to do it themselves because they make more money they spend more hours working probably um and I find if you make a lot of money you don't need to be as financially a student you don't need to save 10 grand a year on something yeah

you just totally forget about it and it hides away the Maybe, maybe.

So, you might be stuck with these smaller customers, the one or two million dollar lines, not four, five, $10 million lines.

H

I'm trying to think about it, right? Sorry, I haven't thought about it. So, I'm trying to

Cuz when you're when you're poor, you always think about money.

Yeah.

Like you remember back in the uni days, right? When you have any money, like every time you bought something, you always thought about it.

Yeah. Yeah.

And now when I buy it cost, I didn't think about it. I didn't ask for how much. of this aspect of the game because you got money now. That's true except not except I think the only thing which I think about is because the four fivek

is not fixed right it's a percentage of how much you so if you have a $10 portfolio or a $5 million portfolio you're not going to say 5k per year you're going to probably spend 15k per year 20 but again is that worth your time is a question I haven't thought about I mean

um yeah remains to be

it's not it's not an objective is if let's say you got 10 I think you're right attitude towards money will change if you're yeah if you have enough money to not worry about what's that 15k going to do to me

yeah is it worth the effort worth then someone else with the $10 million portfolio wants to totally say 50 a year

yeah they'll totally do

yeah if you ask me if I got 2% as much as I love my private banker I'd fell to the curve

yeah [laughter]

because no matter how much money I have I always want to save a bit of extra.

Yeah. Yeah. So you need to find maybe I should find you and your friends.

Well, you need to find those kind of people.

That's true. That's true. And the question then is how do I have the marketing to find to find those kind of people?

Yeah.

Cuz that's what you want. I mean, sure, your 10 family and friends, but your next 20 to 100 that you go spend money trying to acquire,

what you're trying to do is how to acquire the ones that are most likely to convert it.

Yeah. And I think the stuff you said before, you know, loan value, I don't think that's relevant. I think it's, you know, um, how much effort are they willing to do? Um, do they see a bit of value in saving a bit of money? And are they to be easy to convert?

Yeah, I think that's the criteria.

That's the criteria. That's true.

And are you going to be able to convert with the cost space if you're happy to hold?

Yeah. Yeah. What's the cost of acquisition and the cost for the cost of the brokerage genius, the cost of your time, cost assistant? Because if they take, you know, 10 visits, well, my be worthwhile could the rocket GPS could go me to another customer kind of thing.

That's true.

Yeah, that makes sense. That makes absolute sense.

Okay.

So, is is maybe going back to me, which maybe the original question you change, right? Not so much trying to get my first pen is the next set. How do I figure out which customers are going to convert?

Which customers are going to convert and then once I convert it, what's the cost of like processing them and keeping them happy? Yeah, I only last question there is um so the first 10 makes sense your process then why not do the next 20 the exact same time.

Uh that's a good question but I want to try and do this if

what both I'm not really opposed to doing both at the same time. I mean the only constraint right now is how many can I potentially serve?

Yeah. while not keeping people waking because nobody likes to wait. I think that's And the other thing is I'm kind of

Yeah, actually you're right. I I mean, you're right. I think it's an artificial constraint. You're right. Why can't I do both at the same time?

I mean, chase them both in.

Yeah. Yeah. And then see whatever comes through and then go through it

cuz you'll figure out sooner.

That's true.

Yeah.

And you'll figure out sooner, you know, this broken genius model cuz for the next 10 first 10 friends and family, you'll drink really well because you like them and you you want others.

Yeah. Um and I if you've worked in like AWS you know many years ago I'm sure like you know how to work hours like you know how to right

yeah grinding hours a problem. Yeah.

And look, I'm sure like you like I never went to sleep without any if there's any email on it. I won't be asleep. I'll just get that all done.

I'm sure it would be the same with True.

And if you need a offshore, you know, assistant get Yeah, that's true. I think that's that makes sense, right? Why try and you know frontload the work so that you can figure out where it's

so I think that's what you want to do. Like I don't I keep like putting yourself in gear till October. That's great. So you got time blocked yourself. Um I reckon there's something to it but I think you want to figure out your learnings very very early on year. That's true. You want to figure out Jan Feb March this model not working. What you might find is hey a lot of words but I actually need a lot more cash I need investment either personally or interpreter to build the system very quickly.

That's true.

To make this work or hey to find these nuancey customers that I need it's not you know 1500 bucks it's five grandp customer.

Yeah

and it's actually still worthwhile over 3 years but I've got a huge couple out of there up front. That's true. That's true. That's true. I mean, that needs to be seen. I don't know what I do. What?

Yeah. And I think you want to frontload that.

Yeah.

Cuz um you don't want to be loading that come August, September, October.

Yeah. Yeah. I mean, yes. It's just like everything we decide, right? The earlier the front work you say cost him a longer run.

Perfect.

Yeah.

Any else wanted to

anything else? I'm finding this very useful. No, maybe we should have the chat, you know, or you know.

Yeah. Yeah.

We should catch up again like six months time, right?

Yeah. And have a little conversation at the very hypothesize. Let me hypothesize, right? So, you'll get content friends and family. You'll over service them. You'll totally get them on board. Um, you'll get your next hybrid leads through. I think where the hardest problem to solve, which I don't think you'll solve the first time because I don't think anyone would solve the first time, is how do I find those customers that are going to suit my

Yeah.

And I think you probably through months and months and months of trying to figure out how do I target that person and what and the symptom will probably be is you'll have the broker genius who paying them 100 grand base, 50 grand commission. Um they will just not win many deals or they'll have a low conversion rate.

Yeah. And then you're going to have to untangle. Is it because I'm marketing wrong

or is the person

is the person wrong? Because you only have one person, right? You have 10 people to start with.

But isn't that the same thing? Because if I'm marketing wrong or the person wrong, isn't that the symptom of the same thing which you're saying that I'm getting the wrong sort of person through?

No. Um, so the analogy I'll give, um, if you're an AWS salesperson, you're going to do what? Yeah.

Well, even if you're crap, you're going to do what?

Yeah.

Because everybody knows the brand. You get so many incoming calls. If you're AWS salesperson for startups, oh my god, how are you not smashing it out?

Yeah.

Um, so if you if your marketing is fantastic, even a sub broker will do well.

Um, but that's where you got to have to untangle like is it the marketing that issue? Yeah, that's true.

And one way to do that is, you know, as you 10 fans and family. Um, so what are you thinking about getting your broker on board? like what months did you mentally

I would probably start looking for their end of Jan because you take a month prior and they'd have them on board like you know by end of much time frame

cuz it might be worth bossing your friends and family um like even like your very close family you don't do it like your brother-in-law or sister-in-law or something like you actually get good broker to do it.

Yeah.

Um cuz you'll find as soon as you sit on the side that you'll over service the plan.

That's true.

But you want someone else to experience the broker and see if they can actually convert them and then give you a call back and like hey they were good they were bad crap. And the other point of view, you're right. I think the other flip side of the point is even if I'm not servicing them well, they're not likely complete to me, right? For me, they're going to be nice to you, right?

Yeah. They're going to be nice for me even if I'm probably not doing a good job versus they would have been more honest if it's not me and somebody else.

And and you can catch, you know, what you say you're signing up, right? You're signing up.

Um you can tell them, hey, I've got this broker. Tell me what it's like when it's not working.

I'm being perfectly hands off. Honestly, the system works. tell me what happens and then come March, April, when if they join, you can kind of learn that pretty quickly.

That's going to happen. I reckon you're going to have this conversion trouble.

I reckon you find hard to catch those people cuz I think you just got to iterate 30 times on that kind of thing, right? You just got to keep trying different stuff.

That's true.

That's true. Then something else

and then you'll have a cost base. You got to be dragged and you just got to make sure you fund on the way through and get cost too hot.

Yeah, that makes sense.

Yeah. Cool. Any anything else you want to ask? Wanted to

No, not at the moment. I think I think that really helps solidify the next set of road maps for so many times.

Yeah. Yeah. Yeah. It's exciting for us.

Oh, I think if you get that right this would be great. This will be huge, right?

I mean, yeah. I mean this has a potential from anywhere from being you know like Amazon for financial services like it could go really well.

Yeah.

To like pocket size business. It could or it might not work at Obviously it has range of possibilities.

Yeah. No, makes sense. Perfect. Well, last thing might question I ask all the all the guests. What what is something that you always knew to be true that you like regarding the business or just

in in life general or even like your Amazon friend, you were there for quite a long time.

Yeah.

Or something that you always knew to be true that later on could be found was not. I mean this might seem very kind of obvious. So I came um I had a good academic background and I always thought like good academics equals success.

Yeah.

And this was I think I realized it very soon in working life that good academics doesn't equal success.

It's a very very loose correlation.

Very it's a very loose correlation. Yeah. That's what I really

I think what it might be I think good academics is a symptom of working hard and working hard does really well in work in real life actually what I've found uh which I hadn't thought about this is you know kind of more serious question what I found works better in real life is people with good people skills tend people who are successful sometimes true and simply because of the fact that I think a lot of academic success is dependent on individual performance

and as we all find right to higher up you go in the ranks it's about people you manage teams and only like anybody's been really really

let's say successful in any way powerful then the anything you need to be able to work through teams

you need to be something

and that's people skill I don't think and academics really teaches you unless you focus on it's all in

it's all in contribution and I think sometimes that actually does you a disservice nervous because you feel like a known can do it versus you know

committing on these. Yeah. Awesome.

Thanks for listening. I hope you enjoyed it. If you do want to be a guest, make sure you [music] hit me up and do follow me on socials and make sure you check