00:12:47 · Anthony Pompliano, Michael Tannenbaum
[00:12:47] S1: So how do you guys make money, right, if the cost comes down so significantly? [00:12:50] S0: So we take base... Basically, you could think about our business as the loans that are originated have somewhere between 58% value, right, between the fees that are charged and the interest rates that are earned by the investors. And we take a portion of that out when our customers sell the loans. So it's sort of a marketplace fee earned at the time the loan is sold. That's the main way. But we're also the servicer on a lot of the loans, which means on behalf of the investors, we collect payments and manage compliance disclosures, etcetera, we get paid to do that. So we earn an upfront fee at the time the loan is sold and then a fee over the life of the loan. [00:13:33] S1: Now we've been talking a lot about HELOC and mortgages and stuff like that. You guys are really in the lending business. Right? It's not just HELOCs. You guys are starting to do a lot of other things as well. Can you talk about maybe the expansion of the business and how you think taking this idea of, like, how do you compress fees, how do you use technology to really attack this, and how it applies in these other areas?
00:13:50 · Michael Tannenbaum
[00:13:50] S0: Yeah. I think the mortgage is obviously a major asset class. It's the largest consumer asset class. But the opportunity in the capital markets with blockchain, the opportunity to standardize and drive efficiency is not just a mortgage opportunity. It's not just a home equity opportunity. So you've seen us do a few things, to to expand beyond there. One is we bought a company that actually focuses a lot on investor mortgages. So people that buy homes, fix them up and sell them, or fix them up and rent them out. That... I think about 25% of The US housing stock is actually owned by an investor. So that's a really big opportunity. We bought the market leader in that space, and we're taking their technology, which was market leading, bringing it on chain, and making it part of our our our capital market. But you've also seen us do things in the auto space. Right? We partnered with an auto lender to bring their capital market activity onto blockchain, onto our platform, and standardize that as well. And you're also seeing us do that in small business lending, which is another great opportunity. I mean, it's equally... Talk about affordability. You have, you know, very high small... You know, ask anyone who's tried to get a small business loan. Rates are really high. Your alternative would be the small business administration, which is capped annually in terms of amount of money that they give out and also is known, to be a little bit slow. Right? And so we are breaking through that area as well by branching out into these other asset classes. Ultimately, our mission is to bring the entire capital markets on the chain, and we're doing that in all these different lending asset classes.
00:15:30 · Anthony Pompliano
[00:15:30] S1: When you look at these other areas, tokenization is really kind of the underlying thing. When I go on your website, though, I don't really see... Like, the consumer websites don't talk about tokenization in any material way. Can you talk a little bit as to, like, the plumbing versus, like, the consumer pitch?
00:15:43 · Michael Tannenbaum, Anthony Pompliano
[00:15:43] S0: I think one of the reasons Figure has been successful is we put things like tokenization and blockchain in the back and let that be about the infrastructure and the piping to your point. If you go back to 2010, right, and and look at the cloud era, people weren't celebrating... Excuse me. People weren't celebrating the fact that software was in the cloud. They were focused on what they could get from the cloud. Whereas I think with crypto and blockchain, there have been people who do blockchain for blockchain's sake, which is fine, but that's not what Figure does. We use blockchain to add real value in the capital markets, ultimately, to your, you know, to your opening point around affordability and and cutting costs. And so for us, we don't focus on blockchain because, ultimately, people who are in homes and who are looking to save money and save time are not saying, I wanna tokenize, you know, my my mortgage. But they're seeing the value of that tokenization. The capital market sees the value of that tokenization. The real time data, we use stablecoins to settle loans, which which again saves time and money. So there's a lot of benefits to it, but that's more for an institutional audience. So if you go to our website, we're not necessarily preaching, at least on the hero page, the the the virtues of blockchain, but we are very much building that infrastructure, which is powering the future of the capital markets. [00:17:06] S1: Where else can you expand to?
00:17:06 · Anthony Pompliano, Michael Tannenbaum
[00:17:06] S1: Where else can you expand to? [00:17:09] S0: Well, the consumer credit space that we're in is a very large space. I think within mortgage, it's about a 2,000,000,000,000 annual market, and we are doing about 2,000,000,000 a month, as I mentioned. So there is a huge amount of white space for us to go after there and a huge amount of... I think we have about 500 partners. So we're very early innings in growing that marketplace out. That said, we've been at this for about eight years. I think the results are really impressive in eight years, but we, you know, we're 500 partners in after eight years. So we recognize that to expand into all these other asset classes like we've been talking about, into auto, into personal loan and consumer loan, into small business. If we're gonna do that, we're not going to be able to convince every customer to use our software. We're gonna have to take closed loans and bring them into our marketplace and standardize that way. And that's actually where AI has come in. So we built a a pretty interesting loan adapter, which takes closed loans and ultimately adapts them to our marketplace. We took what used to be... Take months to do happens now in weeks because we've been able to standardize those assets and bring them into our ecosystem.
00:18:27 · Anthony Pompliano
[00:18:27] S1: When you think about doing this, it does feel like you can own a relationship with a consumer. So you start to say, hey. We were able to get you a HELOC. Now we're able to help you with x y z loan, then this one, then that one, and let's grow with you throughout your life. Is that kind of the plan, is to have like this direct relationship that you can own?