Mortgage

Michael Slavin: ‘The real power is to determine how money is spent’

Privlo CEO on the trials and triumphs of providing loans to unique buyers

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Michael Slavin is the CEO at Privlo.

Describe what you do in one sentence: I put dislocated homebuyers into homes at the most competitive rates.

Age: 35

Degree, school: Accounting, University of Idaho

Location: Los Angeles, California; Privlo is based in Southern California, and we are currently lending in California, Colorado, Idaho, Minnesota, Maryland, Tennessee, Texas and Virginia. Privlo will be launching in additional states in coming months.

Social media: LinkedIn, Twitter, Facebook, Google Plus

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Michael Slavin guides a group on a six-day whitewater rafting trip in Idaho.

Michael Slavin guides a group on a six-day whitewater rafting trip in Idaho.

 

What’s your favorite activity outside of work and why?

Learning — connecting with thought leaders and innovators, anybody who is passionate and effective at what they do.

What’s your favorite classic piece of literature and why?

Marcus Aurelius’ “Meditations.” For me, stoicism is a practice that is well-tailored for professionals who are building innovative new businesses. Aurelius wrote “Meditations” during wartime from inside a tent on the battlefield. The passages are easy to identify with and guide me in maintaining a steady hand in navigating the high and low events of a company while finding product and market fit and scaling operations.

Are you the first entrepreneur in your family?

I am definitely not the first entrepreneur. My family, on both paternal and maternal sides, has been full of self-starters and business owners for several generations. For instance, my great-great-grandfather moved to Idaho in the late 1800s to capitalize on the gold rush. He built the first hotel, established the first bank and the first mining implements supply company (literally supplying shovels and picks) to miners in the region. These ventures led into cattle ranching and real estate investment.

Interestingly enough, each successive generation built their own businesses with their own funds. They all had to save and deploy their savings, betting on themselves with no real safety net — the true test of an entrepreneur.

Why did you decide to join your company?

I had the good fortune of starting this particular company. I decided to start it for two reasons:

1. I had worked for a few different private equity firms and started formulating my own ideas around how I may be able to build a better business — this is the breaking point to either bite your tongue or effect change slowly. Or, build your own vision from the ground up. I chose the latter.

2. It was clear that there was a tremendous amount of credit dislocation in residential mortgage. A large number of very creditworthy borrowers who, for one reason or another, can’t secure a traditional mortgage loan in today’s credit environment.

Describe a time when you felt particularly insecure about the future of your company. How did you bounce back?

In 2013, we decided to switch from being a person-to-person lending platform to a direct lender (or a business-to-person lending platform). This meant that we needed to find our first institutional lending partner to fund our loans. We are very different than a traditional lender in the sense that traditional lenders originate loans and sell them to the U.S. government. Or, they have implicit government guarantees running with each loan they originate. Basically, they never have to secure capital commitments from a private investor or institutional sources. To secure our first commitment, we kicked off a “road show” in November 2013. By January 2014, we’d selected a final partner who would fund 100 percent of our loans.

After two months of due diligence and contract negotiations, our would-be partner stalled the deal indefinitely. We’d committed all of our time and resources to getting this deal done only to have it disappear. This left us with no capital to lend, and it’s very difficult to run a lending business when you have no capital to lend. However, we quickly bounced back by reducing our operating costs while simultaneously looking for another financial partner to fund our loans. We were able to secure a term sheet, conduct due diligence, and finalize a new deal in just two months’ time — most likely a record for the industry.

What would you describe as your company’s biggest victory since you joined it?

Closing our first loan. Putting a borrower who previously could not secure a mortgage in a home at a very competitive rate.

What’s been the biggest obstacle your business has encountered, and how have you dealt with it?

Finding our borrowers. They are a very diverse set of individuals, which is why the traditional mortgage industry isn’t able to fit them into their credit box. We’ve developed a very scrappy channel mix, including partnerships with very strategic partners. Meaning, our borrowers are unique, which makes them a little more challenging to market to. Because of this, we use specialized inbound marketing techniques as well as work with partners who happen to aggregate and transact with our ideal potential customers, for instance.

What puzzles you most about the industry?

How fragmented it is. For example, the leading independent lender outside of Quicken Loans has less than 1 percent market share.

What is the most important lesson you’ve learned about building a business?

Never underestimate making quality hires. Never. And once you have them, it’s important to create a culture that promotes your team’s growth.

As an example, we have these fireside chats, which are a good way to get the team together in a less formal setting and talk about things that inspire us, both personally and professionally. It’s fun to watch the ideas churn and the exchanges that go on, which ultimately enhances work that we do. It’s a dynamic that strengthens the collaborative culture and the team’s connections with each other.

Michael Slavin during a company idea exchange, or fireside chat.

Michael Slavin during a company idea exchange, aka fireside chat.

 

What’s the most overrated real estate technology?

The real estate industry is still early in its tech adoption and innovation curve. For this reason, I feel that most of the technologies recently created have all been a help to the industry. I look forward to future innovation in this space. I’m sure there will be a good share of overhyped new technologies hitting the market, as with any industry.

How will the role of the real estate agent change over the next five years?

Many technologies have threatened to diminish the real estate agent’s role in recent years, yet the technologies that are enjoying a higher adoption rate actually enhance the real estate agent’s effectiveness. The only platform that is currently changing the role of the real estate agent is Redfin.

What motivates you more: power or money?

Ha ha. This question is meant to be full of land mines. I will say this — money and power are not mutually exclusive. What motivates me is to work hard, so in the event of amassing money I can decide how to allocate it. This is the real power — to determine how that money is spent.

I feel great minds like Elon Musk have directed their money to very noble causes, namely Tesla and SpaceX. Both companies are game-changers for humanity. Affecting similar change is the motivating factor for me. I have no interest in floating around on a yacht along the French Riviera, hosting parties for a group of people who are more interested in free champagne and being a part of the “scene” than enjoying a personal exchange with me. That’s just an extravagant way to kill time. Why kill time when time is busy killing you?

What is your biggest professional fear?

Running a company where my team feels they are showing up for a “job” and not a “calling.”

What is your biggest personal fear?

See above. There is no delineation.

Who do you respect most in the industry?

My team.

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