On this episode of Labs Live, Dan and Tobi are joined by Bob Walters of Quicken Loans, who brought his experience, passion, and perspective on lending to the table. Bob discusses the challenges with today’s mortgage process and how to they’ve simplified it through process and technology.

Bob Walters is the President and Chief Operating Officer for Quicken Loans Inc., where he oversees the day-to-day operations of the business, where he focuses on strategic planning and collaboration between the various operational teams at Quicken Loans.

Transcript:

Dan:
All right. Welcome back to Labs Live. Tobi, how you doing?

Tobi:
Pretty good.

Dan:
Tobi, can we address the setup that you have now? It has advanced by leaps and bounds from the last time we were broadcasting.

Tobi:
You’re welcome. You’re welcome. You’re welcome.

Dan:
So, did you do this on your own? We’ve got art on the wall. We’re not just in a weird white background. This is fantastic. Was this done by you, curated by you?

Tobi:
Done by me with a wonderful assist from one of my friends. So, really good. But yeah, I ordered this paintings myself, set this all up, set the camera up. So, I had an assist, but mostly myself.

Dan:
All right. All right. Toby has the traditional Labs Live equipment from the office. Big time upgrade, we’re appreciative of that. All right. So, it’s been a month since we’ve broadcasted. So last time we were on we were talking to Orchid Bertelsen, the Head of Digital Innovation for Nestle USA. Fantastic conversation talking about understanding the why, why do you build things? Trying to avoid those shiny objects, and then how to sell to stakeholders. So, I thought it was a great show. If you didn’t get a chance to check it out, head over to detroitlabs.com/live. You can watch that show. Also, you can go to our YouTube page, you can subscribe, you can hit the bell icon to be notified. Head over to our LinkedIn, follow us on there. We do stream live on both YouTube and LinkedIn at the same time. With that said, Tobi, you mentioned you’re excited about the show.

Tobi:
Very, very. I remember… Should you announce him first or should I just say what I want to say?

Dan:
Well, maybe I should announce him. So today, we’re going to be joined by Bob Walters, the President and COO of Quicken Loans and Rocket Mortgage and this is exciting. A little plug, I happen to have two mortgages and a refi from Quicken, not at the same time. Labs Live is not that good, one at a time, but it’s been a fantastic experience. And so, we’re excited to have him on. Tobi, you want to add anything before I bring Bob in?

Tobi:
Yeah, absolutely. I think the second time I met Bob was this meeting where he white boarded some of this stuff we’re going to talk about today. And I remember leaving that meeting and talking to you about how incredible that was. How passionate he was about the future. Before that conversation I didn’t know a lot about the mortgage industry at all. So I’m very excited that people get to see that passion and that message today because that’s one of the best meetings I’ve ever been in. Yeah, for sure.

Dan:
All right. Well, far better introduction than I made. So, Bob, welcome to the stream. You got glowing praise from Tobi, so it’s a lot to live up to. Thanks for joining us today.

Bob:
You know what I’m concerned about right now is that if that was the best meeting Tobi’s been in, what is happening over there? Because-

Dan:
That’s a fair point. I would like to mention though, Tobi does talk to a lot of external companies. So maybe it’s not all of us. But yeah, we may have set a low bar. Anyways, Bob, thanks for joining. Today we’re talking about the future of lending and how technology plays a role in that, and how process changes. But I think before we get to that point, I think it would make sense to touch on the current mortgage process. So, I just went through a refi, but there’s a lot that happens behind the scenes that we don’t have a clue about.

Bob:
Yeah, gosh, we could talk for hours we won’t, but it’s funny. You can go to a car dealership, and you can get a 40, 50, $60,000 loan and you can get that in an hour or two. And then guess what, you get to drive your collateral away. Meanwhile, in the mortgage world, that collateral, the house is affixed to a foundation and yet the process can take weeks 3, 4, 5, 6 weeks, so why is it so incredibly different than getting a credit card loan, a personal loan or a car loan? There’s a lot of reasons for it. And first of all, it’s a much bigger loan. It’s a really important transaction.

Bob:
And then there’s a lot of people involved. You need to get the home appraised. And so, a professional appraiser has to come out. You need to make sure that you truly own it. So title and title searches because there have been owners in the past. Can you afford it? Do you have a job? Verifying the job, verifying the income. How much assets do you have? Verifying those assets. It goes on and on. Is the home properly insured? There’s all kinds of things that are happening behind the scenes.

Bob:
It’s a very labor intensive business that has been changing pretty rapidly over the last number of years as technology has largely… Not largely but in many cases has replaced picking up a phone and verifying find these kinds of things. I always say that as technologically advanced we are, and we are, and we’re moving in that direction. The predominant technology in the mortgage industry is 140 some odd years old. It’s called the telephone. And it’s one human being picking up that telephone and talking to another human being and verifying things. And workflow as you can imagine, it’s actually similar… We’re here in Detroit.

Bob:
It’s similar to the way cars were manufactured before Henry Ford in the assembly line. Back then there were hundreds of… In Detroit, believe it or not, there were hundreds and hundreds of automobile manufacturers, and they all largely did it the same way. It was a small group of skilled professionals who would build a car from the ground up, push it out, and do it again. Well, that was fine, but that doesn’t scale. And so, Henry Ford and others, the assembly line that changed the world in many ways.

Bob:
What we’re doing at Rocket company is really akin to that. It is scaling and bringing automation and bringing real process to what is still largely an industry dominated with small groups of people manufacturing a mortgage from the ground up pushing it on and doing it again. Separating out processes and really bringing prioritization and objectivity to that. And it’s exciting to see, it’s exciting to do. You can see a couple things. One is you can get approved almost instantly online at 3:00 in the morning if you want. That’s very different than even four or five years ago when that wasn’t possible. But secondly, the arduous process of all the verification that I was talking about earlier, that is speeding up. That is becoming more automated, and the turn times, the amount of time it takes from your application till you’re able to close and get the money that is shrinking slowly but surely. It’s still probably on average four weeks. It needs to be four days. And then hopefully at some point, it needs to be four hours. So, we’ll walk before we run, but that is coming in, and it’s coming quickly.

Dan:
So, you mentioned the phone being the most critical piece of technology in the equation here. Do you still see the phone being as critical as it is right now? Or do you see some of that stuff moving towards more automation or the phone doesn’t have to be picked up?

Bob:
Yeah, more and more, every day. I’ll give you two examples. We verify that you have a job. How historically, and quite frankly, still pretty dominant in our industry do we do that? We pick up the telephone, we call the employer, usually the HR department, and we say, is Dan, is Tobi, are they employed there? And they say yes. Sometimes we’ll send them a form, they fill the form out. What’s the problem with that? Well, you call them you get voicemail. They call you they get voice, you can see the back and forth kind of stuff that goes on.

Bob:
Here’s another one. How do we verify that you have the proper homeowner’s insurance in place on your home? Well, we use Alexander Graham Bell’s invention, we pick up the telephone, we call a local agent. And we say, “Send us Dan’s deck page, declaration page.” That shows the amount of insurance you have, the deductible, etc. Again, you can imagine if we call and they pick up immediately and have the information, great, but that’s not the way it usually works. Or they’ll fax back the deck page, and then we will… It won’t be readable, so we call them back and then they’re not around, and so they call us.

Bob:
These are the kinds of things that time can really stack up very, very quickly. Today, more and more, we are innovating this at Rocket. We go directly to the insurance company with the client’s permission, of course. In one nanosecond, we pull the information. We pull it in digitally, and we don’t have all these delays. We don’t have to input information off of a fax. You can see that more and more these are the kinds of things that are dis-intermediating the old way.

Bob:
But it’s, I like my analogy, some work, some don’t. But I think about our process like a lock, and I’m no locksmith. So if somebody is out there and I screw this up, give me a little latitude. But the way I understand a lock to work is there are these different tumblers inside, and let’s say there’s 10 of them. And so, you have to line all those up for the lock to open. If you line up nine, but the last one’s not lined up the locks [inaudible 00:10:02]. Until all the locks line up or all the tumblers lineup, you don’t get that real speed. You’re only as good as the longest pole in the tent. And so, we’re working really, really hard on doing that. So phone is still important, but less so every day as we work hard to remove that and go direct to the source for the data and the verification that we use.

Dan:
And so, how do you… So you talk about creating efficiency? How do you ensure that… I would think in order to create efficiency, in order to enable speed, the process needs to be replicated with a higher degree of certainty every single time. How do you make sure that all of these different data sources, all of these different questions are correct? You’ve got a lot of mortgage bankers talking to a lot of different people. What is in place that manages that or where does that transition at some point?

Bob:
Yeah, there’s a number of different ways. One of the things, some people have said, are you worried about quality when you’re pulling the data? The quality actually improves. Anytime you take intermediaries out, the telephone game. When you whisper a sentence into somebody’s ear, and then it goes around the room, the quality of that sentence degrades over time. Same thing with quality. The more people you have touching data, the more people that get involved. You’re keying something in, there’s an opportunity to fat finger it. There’s an opportunity to misinterpret it. So that’s a benefit.

Bob:
But another thing that is huge that I think touches on what you were talking about is something we call Rocket Logic. And Rocket Logic is, here’s an example of TurboTax. TurboTax, 35 million Americans every year use TurboTax to file their taxes, and they do it accurately and IRS guidelines are really complicated. And these 35 million Americans are not tax professionals. That’s not their thing. So how is it that 35 million people who don’t really have an innate knowledge of something that’s highly complicated do it accurately?

Bob:
The answer is, really TurboTax is guiding them through. It’s a Q&A based approach to really helping people tease out things. They don’t have a drop down that says, “Dan, how are you filing? Are you filing, married jointly, married separately, single, pick.” They don’t do it that way. They ask you questions that are easy to answer, and that you can tease out. Like are you married? Yes or no. Will you be filing one return or more than one return? I don’t know these exactly. But then once they’ve asked enough of those foundational questions, then they say, “Oh, you’re filing married separately or married jointly.” They tell you because they’ve teased it out.

Bob:
It’s funny in the mortgage industry and I’m sure others as well. But the way it works today is there’s all these drop downs, and it seems tantalizingly easy like, “Well, hello, you only have three choices.” Like occupancy, for example. Do you… Is it your primary residence? There’s only three choices in occupancy in our business. You can say it’s your primary residence, it’s your second home, or it’s an investment property. How hard can that be? So easy, right? Turns out people screw it up all the time. Why? Not because they’re dumb. They’re not dumb at all. It’s because it’s complicated because there’s all kinds of inherent rules in place behind the scenes of how long you live in a property. Do you rent it out? If you do, for how long? Those kinds of things that determine whether it is a primary or a second home or investment property.

Bob:
So, when you ask foundational questions, and this is where Rocket Logic comes in. Rocket Logic is basically taking the brain of a 20 year underwriter or a 20 year mortgage banker and pulling out all those questions that they would ask you as they try to determine that. And that way then anybody can come along guided by Rocket Logic and ask the right questions at the right time. That’s when we get scale.

Bob:
Our industry is so strange when you look at it, there are thousands and thousands of mortgage companies. Rocket’s the largest… We have the largest, most amount of market share in our industry, but we only have 9% market share. No other huge industry looks like that where the leading company or entity only has 9% market share. Most they’ll have… the number one participant might have 30% market share or 40% market share. You don’t see the fragmentation that you see in our industry. So, why is it? Why is that the case? The answer is because it’s been so complicated and so labor intensive. All the things I talked about earlier that getting scale is very… You can’t just write a couple lines of code and go, “We’re all set.” It doesn’t work that way. And so, a company, you could start up Dan’s mortgage company and do 30 loans a month, and compete with us or Wells Fargo or whomever.

Bob:
That’s changing though rapidly. And so, you will see and you have seen scale come to the industry, and it’s coming through automation. It’s coming through technology. It’s coming through process. And a lot of the barriers, those tumblers in the lock that I referred to, they’re starting to fall one by one. It’s really, really exciting. In Rocket Logic, that guiding of the team members and getting that objectivity and scale is a huge part of it.

Tobi:
What do you see… I think you’ve touched on a lot of those nine or 10 different kind of challenges, but what do you see as the biggest impediment to getting this utopia of getting loans in four days?

Bob:
Gosh, Tobi, the answer is… I wish I could say it’s appraisal, but that’s not it, or title, but that’s not it. It’s this amalgam of there’s so many things. It is bringing. Here comes another analogy. Hold on to your hat. And I might have done this for you guys in the meeting you said was interesting. So hopefully it’ll be interesting. If I have… This will be a question for you and Dan’s math, ready? If I have one, one die, dice, one die, six sided die, and I roll it. What are the possible number of permutations of outcome I could get?

Dan:
Tobi, you’re going to have to answer. You’re the developer. [crosstalk 00:16:42].

Bob:
All right, ready Tobi? The math gets hard enough.

Dan:
I did well on that first one. I just gave up.

Bob:
I have two die. I roll it. What are the number of permutations I can get?

Tobi:
Should it be 36?

Bob:
It’s 36. You’re right. Well, if it’s three, it’s 216. So, the answer is you just take six to whatever number of dice power right? So, okay, four I think it’s like a little more than 1000. Now, here’s where it gets fun. 20 dice, 20 die, I could hold those in one hand or cup my hands 20, it’s not a lot. It’s just 20. Just 20 dice, that’s it. I roll them, what are the number of permutations now that could come out? And the answer is four quadrillion. That is a trillion times 4,000. That’s a lot of zeros.

Bob:
So, where am I going with this? If just 20 dice that are six sided lead to four quadrillion different possibilities, permutations? What happens when you try to close 100,000 loans a month of 100,000 different families in different states with different properties, different employment types, different asset types, against Fannie Mae’s guidelines, Freddie Mac’s guidelines, FHA’s guidelines, VA’s guidelines, rural development guidelines, RESPA rules, all these kinds of things. It makes the 20 dice look like child’s play. And now you start to understand that’s why you have to have all these human beings teasing out every loan because every loan is a little bit of a snowflake. Everyone’s a little different.

Bob:
To answer your question, Tobi, the hard part is how do you take that insane level of permutation and narrow it so now you can really get scale and objectivity? And the answer is things we talked about. The answer, computers are really, really, really good at doing that. I have a little saying that let computers do what computers do well, so humans can do what humans do well. Humans suck at remembering a billion things. Like here are the 150 things for you to think or remember perfectly, then I’ll do that to 1000 people. Are they all going to apply all those things perfectly every minute? No, of course not. They’re not. Each one of us have our own biases. Each one of us forget things, remember things, confuse things. So computers, when properly programmed are really good at applying rule sets.

Bob:
What are humans good at that computers suck at? Humans are good at influencing and persuading other human beings, showing empathy, showing understanding, dealing with really complicated things that the computer isn’t yet able to do. So we’re working really, really hard at having the computer do those things. Bring all that that subjectivity and confusion and bring it into rule sets. But that means you now need to control the data. You need to be able to control the situations because once you do, you can write rule sets around those and drive that and let the humans do what they’re so good at.

Bob:
I don’t know how satisfying an answer it is. It’s actually satisfying to me in the sense from a business perspective because it’s really hard to do this. And so, the entities that do are going to have tremendous competitive advantage over those that don’t. And so, but maybe the more satisfying answer is what are the long poles in the tent? Long poles in the tent are appraisal, valuing your home. A lot of work has been done there to find methodologies both using human beings, appraisers, and technology to speed that up and make that process more efficient and quicker.

Dan:
So, Bob, please correct me if I’m wrong here, but it seems like there’s a bit of a shift now in process and relationship from the first step of a mortgage. So, currently, and maybe more historically, that process up front was much faster. It was, okay, let’s engage with somebody. Let’s respect their time. Let’s get as much information as we can up front, but let’s get them into process. There’s not keeping them on the phone a long amount of time. And that’s largely worked for many, many years. But as you shift to a more robust data collection upfront to provide better service or faster service, I should say, ongoing. Do you see that upfront process changing? Is the person going to be on the phone longer or in a chat longer or something along those lines?

Bob:
Yeah, I think that’s spot on. I think historically, it’s like talk to somebody, they’ll ask for your name, your address, and your social security number. They’ll run credit, and they’ll give you a basic approval. And here’s where people get frustrated with that. They’re like, “Oh, great, I just got approved.” Well, the real work has now begun because there’s so much more. That can take minutes, but the rest of the process can take a month.

Bob:
And along the way you can get that phone call, like, “Oh, well, you know what, you told me you make this much money, but it turns out I can’t use that over time because you only got it last month. You didn’t get it before. You don’t have a year seasoning on that. You haven’t been on the job this long. Oh, something just popped up on title. Oh, I didn’t quite realize.” Whatever, that happens all the time in our business.

Bob:
And that’s why people really… It’s when people go through the mortgage process there’s anxiety because they know that… I call it the hand grenade. We pull the pin out and in any amount, in any time that the hand grenade could go off and blow up the whole deal. And so, it’s tantalizingly easy upfront, very quick. Just give me your name and, “Oh, look, you’re tentatively approved, and you’re all set.” Where we’re going now is we’re going to be asking more questions up front. We’re going to be doing more work up front. Right up front, so you might rather than just give a half an hour of your time. You might give two hours of your time up front, but the payoff will be instead of then dragging through a four week process, the goal will be you should be ready to close in 48 or 72 hours.

Bob:
We’re not there exactly yet, although it happens quite often now. It’s not like oh, this is Star Wars type stuff. It is happening. But it’ll really be great when it happens 90% of the time, and that’s where we need to be where there’s a significant amount of work that you need to do, provide information. But then we give you certainty within a few days, you’re good, you’re done. If it’s a refinance, go ahead and close. If it’s a purchase, you’re good and when you and the seller or you and the buyer are able to agree on a time that you want to close, go ahead and do that.

Bob:
I think that’s what people want. People really want that, I call it speed to certainty. They want it. They want certainty quickly, and they’re willing to invest a little bit of time because quite frankly in our current process less so for us but a lot for other traditional lenders. You put in a lot of time over the course of a month. You’re getting called. Now, I need this. Oh, we need to change that, and the anxiety that is going on. Am I really good? So that’s where we’re going, and it’s really exciting, and technology quite frankly is leading 90% of that.

Dan:
It’s interesting because I think there’s probably… Tobi, I think you’re going to add some, but I’ll make comment and you can jump in. I think there’s probably a couple camps. One saying, “You can’t bother people. You got to get through, make this as painless as possible up front,” but I’m actually in the camp that you’re talking about is people are willing to spend time on the phone because it is the largest transaction in their life. And even if it’s a refinance, or still, how many different options do you have in a refinance that you have to look at? So, it’s not as cut and dry? And I think maybe it’s generational, but I can only speak for myself. I’m willing to spend the time upfront to fully understand and have confidence that this thing is going to move through. And so, I’m personally encouraged that that’s where it’s going. And it sounds like for efficiency and for scale, that’s really what needs to happen. You need all those inputs for technology to be able to take over.

Bob:
One of the things that we want to do is we want to give as many options to people as possible. So what if we say, “Dan, here’s the thing. If you provide me all this information, I can commit to closing your loan in three days.” I’m making stuff up, but or if you just want to provide me this and this, then it might take two weeks, your choice. So that’s really… Or you provide these things, we get it closed, you get this interest rate. You provide less and it takes longer, you get that interest rate. So, leave it up to the client to decide how they’d like to transact. We see with overwhelming, that people, what people really want is they want to get over with. Nobody gets a mortgage because it’s fun. They get it because it’s a means to an end. It gives them the ability to purchase that home they want to raise their family in. It gives them the ability to lower their interest rate and lower the amount of money they’re paying every month. That’s what they’re trying to do. And so, they really want to get that speed to certainty.

Tobi:
Yeah.

Dan:
Go ahead, Tobi.

Tobi:
So, this is a more zoomed out question, I guess. So, in the mortgage industry, Rocket company is number one, as you said, 9%. And it’s very typical in other industries that we’ve seen that you will see a new kid on the block is the one that is disrupting. But talking to you, you are the leader, and you are the one pushing this innovation and continuously pushing. This is just personal curiosity, what is that driving this continuous passion about making it better? Even when you can be comfortable. You have a giant share in a very huge industry. I think from a Quicken, and from you as the president perspective, what is that driving force that’s making you not settle?

Bob:
That’s a good question, an interesting question. It’s funny because to me, continuous change and innovation is so interesting and exciting and fun, quite frankly. My question would be, what would have somebody sit and rest on their laurels? I will say this, one of the things I’m really proud of and very fortunate at our company is that innovation has always been rewarded. It’s really been, that’s just the end to play. It’s who we are. I think we have a pretty significant comfort level with change. Maybe that’s the answer, I think for some companies, because to innovate means you’re going to mess with people’s situation. They’re used to doing it this way, and you’re going to go, “Guess what, you’re not going to do it that way anymore. It’s going to be like this.” And people are like, “Oh, I was used to this.” And they don’t necessarily like it.

Bob:
But certain cultures and I think ours is one of them, when your culture is that change is a constant, and that it continues in that we don’t respond defensively or maybe that’s our initial reaction, but then we embrace that change. And we also have leadership, Dan Gilbert’s been amazing at this over the years, that is okay with failing. You know when you’re wrong. You can’t fail constantly, but you’re going to screw up if you try to innovate a lot. You’re going to make mistakes. The question is what’s the tolerance for the organization. Do you get fired if you make a mistake, or do you get beaten down and yelled at? Or do people go, “I see what you were doing there.” And you included us in that change too. That’s your thing. It’s not like you say, “Guess what,” you come down from on high and say, “Here’s what’s happening.” You’re including people constantly on what’s happening with that change.

Bob:
I think that really is a big part of it. I see a lot of traditional lenders, they don’t seem to innovate because it seems like a lot of people in the company say don’t mess with my current situation. I think that that’s the case. When you look at great companies. I look at Amazon and my sense is that they are trying new stuff all the time. They are innovating all the time. They screw up… I mean, what was that? What was the phone they put out that was a flop?

Dan:
Oh, the Fire.

Bob:
Yeah, the Fire. Okay, but they kept going. I don’t know, the Kindle. I don’t know right away those kinds of things, the cloud, all these things that they’ve done, they could’ve just said, “Well, we sell books. We’re really good at selling books. We’re going to sell books,” but they keep innovating in areas that seemingly aren’t even… Like them moving to the cloud with tech after they were selling books or toothpaste online. But they realized that they had these enormous server networks, and they said, “Let’s utilize that.” I really think that culture is a huge part of it. Companies that have it innovate, companies that don’t, don’t.

Dan:
It’s interesting to build on that too. I mean, one of the things I really admire about Quicken and Rock, and the different [inaudible 00:30:46] companies too, the technology team is so strong in you. It’s second to none. Yet, when you think about innovation and never resting, you’re so open to looking for more opportunities to partner with other companies that maybe bring in a different perspective. I know our companies work together. We’ve got a team that’s that’s working with Rocket Mortgage right now on some different stuff.

Dan:
I think it’s interesting because we don’t have the mortgage background, but we have a consumer background. You bring a lot of the mortgage expertise and consumer expertise too with your clients. But I’ve always found that to be a big piece of why Quicken Loans does so well and Rocket Mortgage does so well. You’re not just thinking in the mortgage industry. You’re thinking about people, the larger people, because at the end of the day, that’s who you’re transacting with. I always admire the willingness, and not even really willingness, the need and the push to Tobi’s point of bringing more people in and trying to understand so many different perspectives.

Bob:
Yeah, I think that’s right, Dan. That goes back to culture. If you understand our company, you understand how important culture is. We have these sayings we call isms that are really, really important to us. It’s just a common language to express things that are this common importance to all of us. But you’re right, we look… I don’t look necessarily to other lenders for inspiration, although I’m sure there’s instances where that’s the case. I look to folks like Toyota, and Amazon, and Federal Express in some of these world class processes. Because whether you’re pushing packages or you’re pushing metal to make an automobile or you’re pushing data to manufacturer a mortgage, the principles oftentimes are similar.

Bob:
And then the same thing is, you guys have a great perspective of how consumers want to engage with all kinds of different products that you guys have built incredible applications for. So, you guys aren’t just writing code, you’re solving problems. You’re solving problems for people to make their lives better, to make their experience better. How do I order a pizza faster? How do I pay my electric bill more easily? Those kinds of… That’s really it. If you think of yourself as in the problem solving business, no matter what you do, then you’re open to any kind of inspiration. Whether it comes from folks that develop great world-class applications. Whether it’s psychologists who think about human behavior. Whether it be Toyota and other incredible manufacturers that have really resolved a lot of things. If you bring all of that together, you can really do an incredible job at solving people’s problems and making their lives better. And if you do, you’ll have a successful company because people will be like, “I want that.”

Bob:
Amazon’s amazing not because they have the greatest website because it’s [inaudible 00:34:02]. But it’s because when you order that toothpaste or when you order that socket wrench, it’s going to show up in a day or two reliably every single time. And it’s almost like magic. And so they’ve made life easier for all of us. So, they’re prospering.

Dan:
You hit on something that I think is very, very interesting, and it’s the piece that fascinates me probably the most. You draw inspiration from other companies, and not necessarily from a technology standpoint. You mentioned Amazon, you mentioned UPS. From a tech standpoint, maybe they’re not the flashiest, right? But their process. And as you’ve been talking through this, I very much see technology playing an important role, but it seems like it enables the process. Personally, I would think the process, and changing the process, and embracing a new one can be the most difficult. Do you see that being more difficult than technology?

Bob:
Yeah. The computer won’t yell at you when you change code, right? The computer doesn’t get frustrated with you when you’ve taken the way it’s operated for years and years and changed it. These biological computers called human beings, they don’t necessarily like it so much. It goes back to what we talked about earlier, they resist change. We all resist change. And so, you’re right, processes that require… Especially if they involve human beings can be quite difficult to change. And also processes, there’s a beauty to processes. There’s a quote, one of my favorite quotes, which I’ll probably butcher a little bit but it says, every process is perfectly designed to get the results it gets. Every process is perfectly designed to get the results it gets. Because then if you think about it, and you approach it that way, you’re like, “Wait a second, I’m getting terrible results, what’s going on?” Whether we did it on purpose or inadvertently, usually inadvertently, we designed a process that got us those results.

Bob:
And so, whenever you’re not happy with the results you’re getting, look at the process you’ve designed or that has been designed because you’re going to find out why. The incentives, the way it works, that’s what’s leading to that result. And it’s empowering when you think about that, because you now realize you have the power to go change it. Find out what about that process isn’t working, or is leading to those sub-optimal results, and change it, and make it better. And if you didn’t make it better, change it again, change it again, until it gets better. It’s a very empowering way to think.

Dan:
Do you ever envision a state in where you’ve done all this really well? You’ve changed process. You’ve implemented the technology that you need. You just do like that, sit back and say, “All right, great, everything’s at scale, and we just let it go,” or is this an ongoing thing constantly moving?

Bob:
It’s constantly moving. There’s no such thing as done. It’s like, when will the internet be done? It’s never going to be done. It’s there’s always a better way. There’s always a better way. That actually is one of the reasons that excites me to get up the next day is because there is a better way, and it’s fun. It’s like the ultimate puzzle. You’re constantly… Imagine that… Here comes an analogy, look out. But imagine you’ve got a puzzle, and unlike the normal puzzle that has these defined boundaries, it’s never done. You’re constantly going, and that’s exciting. That’s interesting because the day that it was like, “Oh, it’s good enough.” I think for most of us that work with us and folks like you guys, that’d suck. That would be terrible.

Dan:
It’s boring fast for it.

Bob:
It’s boring. Yeah, we have a saying, one of our isms, money and numbers follow, they do not lead. If your goal is like, “Well, how do I just make a giant pile of money? Or how do I win this award?” There’s a couple of problems with that. First of all, you’re motivated toward the wrong thing. But secondly, what happens if you do get that pile of money? Or you do win that award? Are you done? And then what? The answer is you’re never done, and that’s cool. The process is the fun part. The continuing, the fight, the making it better, the getting up off the floor when you screwed up. That’s the good part.

Bob:
You rarely hear if you talk to a super successful person. Somebody who’s maybe older, and you say, “What do you reflect back on as the greatest part of your career?” They’re not going to be like, “You know, it’s that time that I hit my first X amount of dollars.” That’s not it. It’d be like, “I remember when we were starting out, and there was just seven of us. And we were all doing these things together. We had to work two all nighters in a row because we were about to fail.” That’s what they remember. That was the cool part. I think that’s really important because yeah, of course, we’d all like to have monetary success, and we’d like to have big titles and stuff like and that’s cool. Money and numbers do follow, and they follow people who do great work.

Bob:
But ultimately, the people who have the most money for the most part and the most titles and the most fancy, that wasn’t what they were chasing. They were chasing great work, and that’s what came… The titles and the awards, that came along with it. I learned that from Dan, Dan Gilbert. He’s done obviously very well. That’s not what gets him up. Dan, you know Dan Gilbert really, really well too. It is the thrill of the hunt, the hunt of ideas, the hunt of excellence, the hunt of really coming up with stuff. That’s what motivates him, and I think most really successful people are similar.

Dan:
I think Dan was always interesting like that because he knew that if you didn’t approach it that way you become a snapshot in history. So, if you look at AOL, you look at Gateway, and those are just a couple of the ones that came off top of my head. I’m sure there’s many, many more. They were icons at one point, right? They were innovating but then they said, “You know what, okay, this is what we are.” And then they had a hard time moving. AOL eventually went into content, get scooped up by Verizon. I don’t know if you call that a success or not, but they had something at one point that was very unique. And so, I like that mindset, so you don’t become one of those examples.

Bob:
I have a few heroes in business. Nobody’s perfect. So we don’t want to put people up on too much of a pedestal. But there’s some people that have done some amazing things. Like I think Warren Buffett’s amazing to me, but Jeff Bezos at Amazon, I really, I am so impressed with him in so many different ways. But he said something that goes to what you’re saying that really even made me more impressed. He said, “You know something? I don’t know, 30, 40 years, it’s very likely that Amazon’s going to get disrupted. That Amazon might go out of business.” What leader of a major company says that? No, they would be like, “We’re going to go on forever. We’re going to… But he recognizes that, especially now, the world is moving so quickly that you innovate or somebody else will eat your lunch. And the very fact that he acknowledges that, I think then explains why they’re so doggone innovative all the time and doing the things that they do. I just found that really impressive.

Dan:
Yeah, that’s been a big piece of Detroit Labs from the very beginning. We don’t know how long mobile development or web development is going to be able to command the bill rates that we bring to the table, the quality of work. We don’t know how long that’s going to be. And we continue to look for more opportunities in the design space, in the rapid prototyping space. And it’s all about making sure that you’re somewhat… No one can predict the future. But how do you create a mindset to be able to embrace the changes of the future? I think one of the interesting… I’ll kind of give my last big praise, I think of Quicken Loans here. I suppose I could do that for a while. But I think you’re not a small company. And typically, large companies run the risk of those smaller companies coming in, beat me up, taking over a slice of it, and then start to eat into it a little bit.

Dan:
I think it’s interesting that you’ve embraced speed, and because you’re not going to have always the best answers. You’re not going to have always the best solution. But if you can be fast, and you can fail fast. That’s the normal saying, and I think you kind of referenced that earlier with Dan encouraging people to… that failure is okay. I think that is one of those key things that’s really going to help Rocket Mortgage never hit the finish line. But how do you keep extending that race at a fast pace?

Bob:
Yeah, I think you guys, Detroit Labs, have done a great job. You’ve grown pretty substantially too from when it was you and a few of the founders starting things to where you are today. And yeah, it’s interesting how it changes as you get larger. It makes culture that much more important about what people deem is important. What is that common language of understanding? Do you just say stuff like we value everybody’s ideas, or do you live it? In a pure meritocracy, if somebody, if an intern started two days ago, and they’ve got a better idea than the CEO, it should win out. That’s this high lofty thought, and people could roll their eyes. In the real world that we live in, it’s often not quite that, but the closer you can get to that. Whether you’re a big company or small, the better you are for a whole bunch of reasons because nobody, no matter how smart they are, has all the answers. It comes…

Bob:
I find that the coolest stuff that we’ve ever come up or where I’ve been a part of it, what happened was you got in a room, and it’s usually over time. It’s not miraculous, but sometimes you get in a room and somebody’s got a kernel of an idea and the next person goes, and they say something that makes it a little better, and somebody else adds something. And all of a sudden it goes. There’s plenty of times where I’ve been involved in that.

Bob:
Again, it’s so easy and romantic to have this romantic notion of a Steve Jobs that comes down from on high and says we will do… But I bet you if you really went in there, I bet he was providing lots of incredible inspiration. But I bet there was lots of other people saying, “No, no, we should do it like this.” And he’d be like, “That’s an interesting point. We should do that.” And it built on that, but it only comes if you are open to those kinds of things. And you’ve got that it’s okay in those kinds of environment versus like, well, just let’s wait for the big boss to say something. Let’s do that. Because I promise you, if that’s the case, the big boss is going to lead you off a cliff. Not intentionally, but they just don’t have all the answers. They just don’t. They can’t see everything. Nobody’s omniscient or all-knowing.

Bob:
So you need this culture that really lets the power of lots of brains figure out cool stuff and we work hard. I’ve asked Dan in the past, Dan Gilbert, what the biggest… his biggest concern was, and his biggest concern as we’ve gotten bigger and more successful is would we lose the culture? It’s one thing to have a culture when it’s 50 people, but we’re at 20,000+, how do you maintain that? It’s a lot of hard work. It’s a lot of energy, but the payoff is huge.

Tobi:
Yeah. I think you just sparked my curiosity as well when you talk about gathering in a room and sharing ideas. How has the last, I think, couple weeks, months been with switching to remote work for such a huge company?

Bob:
I’ll tell you what, Tobi, for me it’s been… I’ll be vulnerable and tell you where I was wrong. Prior to this, I wasn’t a particular fan of work from home. Not because I didn’t think certain people couldn’t do their job effectively. Clearly, you could underwrite a loan or something like that. You could do that effectively, but I felt that it would be difficult on the culture. I still think there’s tremendous value in face-to-face. But I’ve really seen, especially technologies like this, I’ve really seen how the company can stay connected and how people can really work together. That said, it’s the white boarding kinds of sessions that I’ve found to be the most challenging.

Bob:
Sure, you can use a Team’s whiteboard or something. It’s not quite the same as being in the room. We human beings, we may not even realize, we pick up on social cues from each other, nonverbal social cues like crazy. We’re reading each other’s facial expressions. We’re reading each other’s their physiology. We’re listening… I mean, there’s a lot going on that goes in. And so, these kinds of technologies can help a lot because we can read each other, but it’s not the same as really being able to see four or five, six people in the room at the same time. Go to a whiteboard, have the other person jump up and say, “Wait, what about this?”

Bob:
I do think that there’s advantages and disadvantages. My sense is, though, COVID is really the largest experiment of all time, for lack of a better term, to work from home and really take advantage of these technologies. And I really do think we’ll see substantial change. And I think we’ll see some kind of a hybrid model, and it won’t be one perfect model. Every company is different. Every organization is different. But the hybrid model of giving people flexibility. By the way, I think, from what I know just talking to you, Dan, Detroit Labs’ done a pretty good job about this. You guys have been ahead of the curve. You told me all the time that there’s… You have engineers and programmers will sit in the coffee shop all day and stuff like that.

Bob:
So, I think that giving people the flexibility to work autonomously, whether it be from home or whatever, but also having the ability to engage in common spaces where we can… You know how I said earlier that computers do what computers do well, so humans can do what humans do well. We need to create something that allows, let autonomous work do what autonomous work does well. So we can also let combine work or communal work do what it does work. Find… Both of them have these powerful benefits. How do we optimize both of those? I really think that the companies and organizations that are thoughtful about this are going to be the ones that will prosper in the years to come.

Dan:
That’s awesome. As we, let’s kind of bring this back home here where you have just broken our record for the longest stream by the way, so congrats.

Bob:
You’ll edit it in post.

Dan:
Yeah, there’s no post. It’s just boom, raw. But, no, this is fantastic. I think the interesting thing as we bring this back home to future of lending, it sounds like, and again, this is me summarizing, so correct me if I’m wrong. The process changes, it’s longer up front, but it’s quality. The customer feels good, feels a little bit of, you’ve talked about speed to certainty. They feel good about that, and technology aids in that. It doesn’t take over, but it aids in that. I think that that is the never ending journey to create this system that then provides scale, efficiency, and repeatability.

Bob:
Yeah, you nailed it. At the end of the day, we want… I said solve people’s problems. Their problem is that it takes too long, and it’s too much of a pain in the butt to get a mortgage. So, let’s find ways to make it easier and faster. The ultimate, I don’t know how far we are, the ultimate is that you say you want a mortgage and two minutes later you get one. We’re ways away from that. But quite frankly, that’s not fantasy stuff. I mean, you apply for a credit card, and oftentimes you can get approved right away. These things happen. So, we’re ways away from that, but let’s just start by taking what usually takes four weeks, let’s take it to three, let’s take it two, let’s take it to one, and that just makes people’s lives better. They can move on to do things that they’d rather spend their time on, and they don’t have to have anxiety about something that they have anxiety about today.

Dan:
I think that’s a perfect way to end it, Tobi. Anything else to add or are we going to let Bob end it on that beautiful note?

Tobi:
It’s perfect. It’s perfect. Couldn’t make it better.

Dan:
All right, Bob, thanks so much for joining us on Labs Live today. We appreciate you taking time out of your schedule. This stuff is clearly a passion. It’s fascinating for us. And it’s exciting to see just how fast and rapid Quicken and Rocket innovates, so-

Bob:
I appreciate you guys having me, and you guys do some really great work so keep that up.

Dan:
Awesome. Thanks.

Tobi:
Take care.

Dan:
I’m going to move you backstage. Take care.

Tobi:
See you, Bob.

Dan:
All right, Tobi. Let’s wrap this thing up. That was fantastic. We learned a lot. I could tell that you were dialed in. This is I know for sure something that interests you, which is great. I think it’s always fascinating. This whole, the difficulty, the largest, the challenge of the mortgage process is just fascinating. We learned so much by just being partners with Quicken and Rock throughout the last couple years, specifically, that it is hard. It’s difficult and those that are fast. Those that are solving the challenges of the consumer are the ones that are going to end up on top. So, when you’re ready for your mortgage, and eventually your refi, you can bring those pictures with you to wherever that place is and you can make sure that you use Rocket Mortgage for that. [crosstalk 00:53:09].

Tobi:
Of course.

Dan:
It goes without saying, right?

Tobi:
Of course.

Dan:
All right. Don’t forget to go and subscribe to our YouTube channel. Follow us on LinkedIn. If you’re watching live, and you want to come back, and maybe you caught the end of it or you want to tell all the friends this is going to be available after that, detroitlabs.com/live. That’s just a feed to our YouTube page. So, it’ll be available there as well. Any parting words, Tobi, before we let everyone get back to their day?

Tobi:
Thanks for watching for our longest stream. This is great. So, if you’ve joined us from the beginning, I appreciate you joining us today, and see you in a few weeks.

Dan:
All right, Tobi, talk to you later.

Tobi:
Talk to you later. Bye.