00:06:29 · Michael Tannenbaum
So there's two primary things that we've done there. One is we've taken the attributes of the loans, right, the credit score, the income, all that. We've put them on blockchain, and we've reduced the amount of time that in... That an investor buying a loan will have to go back and check that data because they know it's verifiable on chain. We've cut 80% of the cost of third party diligence reviewed doing that. And the other thing's fraud. You know that fraud is such a big deal in financial services. We use the blockchain to track the loan over its life and ensure that someone can't double pledge it or double sell double sell it. And if you go back to 2008 when there were all these liar loans, you know, this is a great use of blockchain to get around that. So it's a lot about software and speed on the front end and kind of blockchain on the back end to to increase the speed and to lower the cost.
00:07:22 · Anthony Pompliano
[00:07:22] S1: Now when you think about, kind of the scale at which you're doing this, you guys have grown incredibly quickly. One of the things that, I see a lot of people talking about online and, you know, I invested in the business, in the private market. We, have held shares in the public market. The rule of 40 Yeah. Is, a way that most people analyze a, kind of enterprise software type business. That's right. And the idea is how fast are you growing revenue and how fast are you growing EBITDA. You add those numbers together. You're over 40, that's excellent. So you're going more than 20%, 20%, that'd be great. Right. You guys rule of one fifty, I think, in the last quarter, where you guys are actually growing both revenue and EBITDA at such an incredible rate. Where is that growth coming from? Like, why is it growing so quickly?
00:08:07 · Michael Tannenbaum
[00:08:07] S0: Yeah. I mean, we've broken the trade off between margin and and growth to your point. Right? Normally, it's like I'm investing for growth, so my margins are lower. I think with Figure, that really gets to that marketplace strategy that we have. So it... You know, we have a bunch of partners that are leveraging our technology to originate assets, and they're doing the marketing. Right? They're doing the sales. So it's almost in a... Some way like franchising, right, where you have a a franchise that uses your brand, and you're not spending all of those costs, you're just getting the higher margin piece of that business. It's kinda similar with Figure in that we've got 500 different partners, all spending marketing dollars, all hiring sales forces to use our product. And as a result, we provide the capital market, the software for them to create these mortgages, but we're not out spending money to get the customers ourselves. We're not we're not out using our own balance sheet to lend to the end customer. And as a result, it's a higher margin business, and it's... And we're able to make a bunch of different bets on different customers. So just as an example, we have Lowe's home improvement. Right? They're out there using the home equity product in stores, you know, in in home improvement stores across the country. At the same time, we have regional banks that have historically had not as strong technology in this space using the deep investments they've made in their branches and in their brand. And we're just, you know, sort of piggybacking off all that. And you... And and we've got 500 different individual bets that are all growing. And at the same time, we're we're just not putting out as much capital or marketing dollars. And so I think you're seeing that in the margins, and that's also fueling the growth.
00:09:54 · Anthony Pompliano
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00:11:04 · Michael Tannenbaum
[00:11:04] S0: There's probably three main reasons. One is the the home equity environment that we're in. Two is the technology that we talked about, and three is the fact that we're helping people go after what is generally a greenfield market. So on the first, if you just look at the home equity environment, we talked about that, but there's about 35,000,000,000,000 of home equity outstanding. And in the rate environment that we're in, home equity is red hot. Right? People are looking to take money out of their homes. The second is the technology. We are far and away the market leader from a technology standpoint. We do almost 2,000,000,000 of this a month. We've done 30,000,000,000 to date. We're triple a in the capital markets, S and P, and Moody's. So we're... We have this great platform that that is attracting people. And then I think, lastly, what you're seeing from the partners is they're looking to grow their business in this environment. It is a tougher environment for consumers as we talked about with affordability. It's a tougher environment for rates, and we're offering a greenfield product, a way to monetize customers, and essentially go after a customer base that would have previously been not profitable. And just to to kind of put it in perspective, our average loan amount is around a $100,000. With a $12,000 cost to originate a mortgage, it's 12%. Right? Simple math. That's not tenable. Whereas with Figure, we can turn a customer, which would be maybe smaller balance, again, back to the affordability point, potentially ignored previously, now is profitable because we've taken so much cost out of the system. So a previously $12,000 cost originate now is one, and that unlocks a whole segment of customers that are now profitable for our partners.
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?