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Patrick McKenzie Profile picture
@patio11
Aug 12, 2019 • 8 tweets • 2 min read • Read on X
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In the category of "It's obvious that there are huge chunks of the economy which need one SFBA-startup quality workflow web app", I give you blend.com , which did that for mortgage origination at banks / credit unions / independent mortgage originators.
It's one of those magically mundane things. The business process here is extremely well-understood; the actual front end and backend processes in the US for mortgage origination are, and this is a technical term, a roaring pyroclastic tire fire.
I went through Blend's white labeled process while trying to get pre-approval to hopefully help a family member out, and literally sent a human two emails "Sorry only have 15 minutes so no possible way this is done today" "Erm ignore the last I think it's ready for you."
This is helped by me being preternaturally organized but sufficient data entry for a mortgage application being collectable in 15 minutes is pretty stunning to me, even with all of the documents ready to go.
If you want to read about mortgage origination and understand why "Hmm this seems like a frontend-heavy web application that one could reasonably deliver in a hackathon" is not coextensive with the actual solution, see
amazon.com/Digitally-Tran…

(Disclaimer: read critically.)
A non-obvious challenge here is that the most important consumer for a home mortgage is not obviously the person buying the house, it is the GSE or other financial system entity which is going to securitize the mortgage.

They have *much* more exacting requirements.
And, structurally, they will *never* talk to the person buying the house, the bank that person has the down payment at, the HR department certifying that that person is gainfully employed, etc etc, *but* they have a lot of very specific questions for *all* of these people.
And so the mortgage loan originator has to have all their paperwork together and pre-reviewed prior to sending it over to the securitizing party.

And if they don't? Well, then they're at substantial risk of either eating the home loan or carrying it on their books for 7+ years.

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More from @patio11

Patrick McKenzie Profile picture
Jul 22
X: To get compensation for XYZ the firm wants all nine digits of our zip code.
Me: Oof well thats look-uppable.
X: I think this is intentional friction to avoid a payout. Certainly they didn't need [nine digits] to charge my credit card.
Me: Oh AVS verification fun fact.
X: What could be a fun fact.
Me: So AVS *can* return a code allowing some credit card schemes to discriminate between a 9 digit match and only a 5 digit match but in practice false positives eat all the benefit from more aggressive forms of matching than just five digits so...
... relatively few companies would benefit from either asking for the full nine digits or rejecting transactions for which they are wrong.
X: Not helping.
Me: Sorry.
Read 7 tweets
Patrick McKenzie Profile picture
May 1
A word to the wise. Don't invent a fictitious entity and attempt to open a bank account for it. The laws for bank fraud are drafted *broadly.*
But if you must, then don't do it while arguing for an expansion of the Bank Secrecy Act regime, because the existing BSA regime already orders your bank to inform on you.
But if you must, then don't do it while engaging in organized pressure campaign against firms with strong recordkeeping culture and an institutional desire to please government.
Read 15 tweets
Patrick McKenzie Profile picture
Apr 15
My annual exhortation:

You, reader in the tech industry, should have plural million dollars of term life insurance coverage outside of that offered through employer.

You should also strongly consider own-occupation long term disability insurance.
For much more detail on this, see previous threads like, but I'll recap the most important bits.

Term life is a commodity product. Premium never changes after you lock in the term. Many people reading this will pay tens or low hundreds of dollars per million in coverage.
Read 20 tweets
Patrick McKenzie Profile picture
Apr 14
Next up at MicroConf: @robwalling on How to use AI in SaaS.

This has been something of an undercurrent in a lot of conversations here. Lots of unease and anxiety about it, and IMHO a bit overblown w/r/t impact on SaaS specifically.

With that, Rob:
Rob did informal survey of a few hundred TinySeed companies (he runs a VC/accelerator which invests in many bootstrapped-adjacent software companies) to see how its actually getting deployed in production.

Taxonomy: six-ish ways that companies actually metabolizing it.
AI as product: Difficult for bootstrappers to keep up with the labs on LLM/etc development. Very, very tractable to make something downstream of the labs.
Read 25 tweets
Patrick McKenzie Profile picture
Apr 6
A common model I have is that, like many people, I have some finite amount of consequential decisions I can make a day. This is sometimes a frustration for my wife, who wants me to spend a decision on e.g. “What color should we make…”
There are some classes of non-domestic decisions which still seem to take a slot, and where there are theoretically wrong answers, but where any plausible answer is fine.

I love having LLMs available for this.
Example from earlier: “Should we use X medication for symptom management of a minor recurring condition, or should we escalate to a medial professional for a recommendation?”

I probably could have Googled to kick off a research process, but that’s -1 for the day.
Read 6 tweets
Patrick McKenzie Profile picture
Mar 31
Cannot underline this enough: send your human-prepared return to an LLM for review prior to signing it. The closest thing to free money.

It isn't even necessarily on the complex or hard bits, either. The first thing it surfaced me was an IL credit for elementary school tuition.
Also helps in the intermediate stages when you're dealing with accountant questions which might be, how do I say this nicely, "I thought I was hiring you to give me answers in this domain." Much higher bandwidth than multiple messages in an email thread at tax time.
"Why is he asking this?"
"Presumably he is attempting to qualify whether you have specified foreign financial assets."
"What does he really need to know?"
"Is the Tokyo condo held directly or in an LLC/etc"
"Held directly."
"OK so no you don't have those assets."
"Find authority"
Read 4 tweets

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