Mortgage Media caught up with Nima Ghamsari to discuss the origins of Blend, the challenges of working in the mortgage vertical and how his company attracts talent in the hot Fintech space.
Suresh Ramakrishnan: This is Suresh Ramakrishnan of Mortgage Media. We are here at a noisy venue at the MBA Annual Convention in Austin. Joining us today is Nima Ghamsari, who is Co-founder and CEO of Blend. Nima, thanks for joining.
Ghamsari: Thanks for having me.
Ramakrishnan: Blend has been one of those stories in the Fintech space that has really been in the news. You guys have done some amazing things. If you would, tell me what led you to start Blend, and especially in the mortgage space in particular, given how regulated it is. What led you to that decision?
Ghamsari: Sure. After college, I went to a startup called Palantir, and at Palantir we were trying to figure out how to get into financial services. This is right when the crisis was hitting.
Ramakrishnan: ’08 timeframe?
Ghamsari: ’08 is when I joined. Then I stayed there through 2012. Right then, the crisis hit, and a lot of the banks that we were trying to work with said, “Well, what we need to focus on right now is our mortgage books.” They had really big mortgage books, of which a lot of the loans were underwater, and a lot of the ones that were underwater were in default. So, we were set up with this problem of how do you successfully modify or find alternatives to foreclosure at scale in huge mortgage books.
As I was working on these problems with some of the biggest portfolios in the country, I realized that it was all paper. In a world of data, the mortgage industry was still using primarily documents and paper, and for me to understand what was the person’s income when they got the loan, was the income the same, those questions couldn’t be asked at scale because you have to look up documents.
That was a really profound discovery for me. I was thinking with a computer science background of like, “Why are we not doing this with data? Why are we not doing this with data instead of documents?” I was reflecting on that a lot during the last three or four years I was there.
I think the biggest reason is there have been very few times when there’s been a pure technologist who was so deep in the mortgage world. It needed the crisis to come and say, “We need to solve this problem. It’s a big problem. Maybe it’ll look at things differently.” I was able to see that problem from a technologist’s point of view. I realized that I’m a total outsider, by the way. I have complete humility about the fact that I’m not a mortgage person, but I felt like software could make this industry a lot better.
Ramakrishnan: So, essentially, you saw that you had to change the paradigm, given the way things were. Was it the idea to take technology to modernize the industry, or was it just to solve that particular problem with the documentation?
Ghamsari: Honestly, when I started Blend, and maybe this is most people who start companies, all I knew was that the space was all paper and there was a lot of opportunity. I didn’t know how big the opportunity was, and I didn’t know how big the ecosystem around that opportunity was, but I knew it was big. I set out, obviously, with a big dream of transforming the industry, but I had to start somewhere. So, I started with like, “Okay, well, what if this file was more digital? What if it was digital all the way to the GSEs?” We were even working with some of the GSEs back then.
It was a super interesting place for me to be thrown into right after college. I feel very grateful that I got a chance to see the depth of that problem space and then have a chance to go out and build it myself a few years later.
Ramakrishnan: It’s an exciting story to come into an industry – especially as arcane as the terminologies in the mortgage industry. I saw your video on LinkedIn about your immigrant story. Tell me a little bit about that.
Ghamsari: Sure. I was born in Iran, and my family moved here when I was very young. When we moved here, my parents took the first job that they could get after college. They went to University of Michigan for grad school first, and then they went to find the first job they could get. Unfortunately, the jobs that they got as immigrants were just not very high-paying jobs.
Ramakrishnan: Even with their master’s degree?
Ghamsari: Even with their master’s degree. It just didn’t matter. When we moved to Cincinnati, they were both professors, and professors don’t get paid a lot of money. So, doing that, raising two kids, making sure you live in a neighborhood that’s good enough so that I could go to good schools and my sister could go to a good school was basically like, we didn’t get to save anything. Sometime in the late ’90s, my parents used the limited savings they had to get a 5% down loan or a 3% down loan on a $100,000 home in Cincinnati. The mortgage ended up being roughly equivalent to what the rent was. The out-of-pocket expenses weren’t higher, but then 20+ years later…
Ramakrishnan: They had an asset.
Ghamsari: They had an asset. I think the thing that I sometimes forget is that Blend does almost three billion a day in mortgage applications. Three billion. We get to touch a reasonable percentage of the industry through our platform. I get to see those great numbers, and it’s great to see a portfolio of numbers that big. But I think sometimes people forget that, or at least at times, I forget that the people behind these numbers are humans and families, and the impact that we’re having for people who are able to get these things is, hopefully, it’s long-term generational wealth like it was for my family. I don’t even call it wealth. It was just enough for retirement. That was so powerful for them, and I think it’s powerful for millions of families that we get to touch every year.
Starting a startup is really hard, and building a company is really hard. Growing a company is really hard, and being part of a growing company’s really hard. Being part of a growing company in a regulated industry is really hard, with big, big legacy players who have a lot of work to do and a lot of ambition to grow. It’s just all really hard. The things that keep me going when times are tough is just the impact that it had on my family and impact I’m able to see in other people’s families.
Ramakrishnan: Which is probably the biggest purchase in most people’s lives.
Ramakrishnan: Making that experience something that’s memorable, not for the wrong reasons, is probably another good thing too.
Ghamsari: For a low- to middle-class family, like my family, there won’t ever be a more leveraged, higher-value asset that they will grow into, over time, than a mortgage. There won’t, there can’t be, than a home. There can’t be because the government doesn’t give 3% down loans for anything else, at least as far as I know. Maybe small businesses, but it’s very rare. I don’t know anything about small businesses, so if I’m wrong about that, sorry, but I know that it’s such a high-leverage asset that allows consumers to turn it into real wealth, which is so powerful in America.
Ramakrishnan: Yeah. I think the mortgage system, the way it is here with the 30-year fixed, is something that a lot of countries don’t have.
Ghamsari: They don’t have it. It’s because the United States has realized that property in a country that’s growing, if the GDP is growing, the property values in a country that’s getting more populated with growing wealth, the value of property’s going to go up over time. So, America has this belief that home ownership is a big part of the American dream. That is basically betting that the value of property is going to go up over time, and they’ve been right.
Ramakrishnan: Not a crazy 20% a year, but yeah.
Ghamsari: Generational wealth.
Ramakrishnan: Right. Now, you touched on this being a very regulated industry. How does Blend keep up with these changes in technology, in regulations at a federal and a state level? Do you rely on your customer client partners? Do you sort of bring that, or do you have a huge compliance department?
Ghamsari: We have a huge compliance department, but we also have to work closely with our customers because our customers often, as you know with regulation, interpretation matters a lot. So, part of our job is to figure out what interpretation can we find common ground among all of our customers.
Ramakrishnan: Interpretations are not easy.
Ghamsari: They’re not easy, and it’s hard to find common ground, but I think finding the common ground is important. Otherwise, we’ll have 50 different versions of our product out there, and yet, there’s only one law at the end of the day. I don’t want to have 50 different interpretations. Part of the job with the compliance is not just to interpret it ourselves, but to work with our customers and our product team to find a common ground across all of our customers.
Ramakrishnan: Bringing someone like Tim Mayopoulos on board, does that help with that process, more in terms of credibility, in the mortgage industry?
Ghamsari: There is credibility, yeah. I think it really was a gift and a curse not having any experience with the mortgage industry coming into this company, or very little experience.
Ramakrishnan: No preconceived notions.
Ghamsari: No preconceived notions is a gift. The curse is that nobody believes anything I say, either, which is totally reasonable. Why would you believe anybody who’s never done a mortgage before about what the optimal mortgage process is? So, it’s forced me to approach things with a bit of humility on like, “Here’s what I think could be best based on what I see. Now let me understand better how it fits into your business.” We do that still to this day as we roll out new features. But yes, it’s great having Tim on board, We’re a fast-growing company. Having people internally who can help us navigate growth and scale is super valuable, but externally, people give a lot of credibility to people who have seen changes in the industry over time.
Ramakrishnan: Right, and then built a body of work over at the DSC, for example.
Ghamsari: Ten years. Before that, in a bank for 10 years.
Ramakrishnan: Right. As far as focus is concerned, is it IMBs mainly for you, or is it IMBs and large money center banks? The ones that have the resources to do it in house, let’s say, how do you compete against that, and is IMB a focus of yours?
Ghamsari: Yeah, we work with IMBs. We work with big and small banks. We work with big and small credit unions. We work with big and small home builders. My focus is how do I build a platform that can be an accelerator? The reason I use that language is that it creates a shift in the conversation where, of course, with any amount of time, with unlimited time and unlimited resources, anybody can build anything. But the reality is the industry’s moving so quickly that we never have unlimited time. The thing that matters right now is speed of adaptation and speed of change. Or, sorry, speed of adaptation and speed of implementation. In a world where we can’t adapt or we can’t implement things quickly, we’re going to lose market share. We’re going to lose customers who don’t want to do this with us anymore. We’re going to fall behind compared to competitors. So, what I talk to our customers about, is, “Let’s focus on being fast and adapting as opposed to focusing on what’s proprietary and what’s not because there’s so much to do. We’re just scratching the surface.”
Ramakrishnan: Tell me about your expansion into consumer and auto lending. I went to the Blend website. It said, “Hi, my name is so-and-so,” and something about an auto loan. Tell me about that transition. And do you see yourself more as a financial marketplace, if you will, as far as the front-end is concerned?
Ghamsari: I think what we’ve gotten really good at over the years is how do we get a consumer approved for this product and conditions cleared and documents signed in the simplest, fastest way possible? A lot of the things that are required to get a mortgage are income, assets, credit liabilities, collateral. It turns out those are the same ingredients, the same DNA, that’s required to underwrite really any consumer financial product, any consumer banking product, at least. It also turns out that a lot of our customers are depository diversified institutions. So, a lot of them asked us, “Hey, can you apply the same technology to all these other spaces?”
Every time we build a new verification, like an identity verification, we can then apply that to all the products at once because we have one platform that does all of these things. Then, a lot of our customers, are thinking, “How do I serve my customers across all these different products in a seamless and streamlined way?”
Ramakrishnan: So, as your clients look at a one-stop-shop, if you will, for multiple products, they can use one platform to bring the customer in…
Ghamsari: And use the same data. And get the same fast approval, maybe even for multiple products. That becomes really powerful, where a customer can come in and get the full gamut of all the things that are available to them. But most importantly, we made a one-tap mortgage approval. I’m not talking about vaporware, like pre-qualified, stated income. I’m talking about a fully-verified mortgage approval in one tap. That is just using data instead of documents, the same paradigm I talked about earlier. It’s just a fundamentally different world we live in than it was when most of these processes that were put in place today were created. The fact that we can do a one-tap mortgage approval and a one-tap approval for any product eventually means that the customer can be served in a meaningfully different way than they used to be.
Ramakrishnan: I think that with the one-stop..a lot of these large financial institutions have been trying to get to that point, but it’s just that they need a bridge to get there.
Ghamsari: It’s extremely difficult. It’s extremely difficult. Even today, we haven’t solved it. We spend more money than almost any financial institution on this specific part of the technology stack. It’s just the amount of energy that goes into us building those things, I just can’t underestimate it. And our investment, as we build and we’re successful, we have to keep investing more in those things over time, not less, because the environment, the world is changing. Consumer behavior is changing, data sources are changing, underwriting criteria are changing. Everything’s changing. So, it’s constantly investing more and more over time.
Ramakrishnan: How do you keep up? What keeps you up at night late? Because the same factors you mentioned, things keep changing so rapidly, and if you’re in multiple areas, the regulations are different. Maybe not as arcane as the mortgages, but it still keeps changing at a federal and state level. So, how do you keep all this and go to sleep at night?
Ghamsari: Well, this is kind of what I signed up for. I think managing the complexity is something that’s really difficult. I definitely rely a lot on having really great teams within product management and engineering and design – specifically, making sure that our product, as it gets more complex under the hood, is maintainable from an architectural perspective so we can improve it over time, and also, still simple from a consumer perspective. Just because there’s a lot of complexity under the hood doesn’t mean the architecture has to be terrible, and it doesn’t mean the experience has to be terrible. But that means we have to have great engineers, and product and design folks who can manage all that complexity in their heads, different parts of it in their heads, and then find a way to weave it together meaningfully.
Ramakrishnan: And work as a team to get that result. Because of where you are in fintech, a hot space now, how do you manage to attract and retain talent?
Ghamsari: When I think of what talent nowadays wants, I think they want autonomy. They want to be given a problem and be able to solve it. They want to improve their skills, they want mastery. And they want to work in a space that has a good purpose. I think we’ve shown in my personal example, but other examples too, we’ve shown that there’s really good consumer impact if we’re able to do these things at scale.
If we can give them that autonomy and we can give them that mastery, and we can give them that purpose, people will stay. It’s really hard to do, though, because again, things are growing fast. It’s difficult. There’s a lot of chaotic moments internally, and we have to go and manage that and still maintain that autonomy, mastery, and purpose.
Ramakrishnan: Okay. They feel that they’re making a difference.
Ghamsari: It’s so important, because everyone can give them money now, but not everyone can give them that feeling of making a difference.
Ramakrishnan: Last question. What do you do to relax? How do you unwind?
Ghamsari: I find this job very relaxing. I don’t often get stressed, if ever, about this company, not because there’s not a lot of stuff to do and not because it’s not really hard, but because we built the company for the long haul, I have great people around me, and we have amazing customers who I work with every day. Just being here at MBA, I have gotten to spend so much time with customers on just how they’re thinking about the world and how aligned it is with where we want to go, and how much trust they’ve put in us. Of course that’s relaxing to me because that gives me confidence. It just makes me feel like everything’s going to be fine. There’s going to be bumps along the way, but we’re so aligned on vision, we’re so aligned on direction that everything’s going to be fine.
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