Jeffrey Glass is a serial entrepreneur. Most recently he is the co-founder and CEO of Hometap which aims to revolutionize home financing, giving homeowners a new way to take advantage of the equity in their homes. The company has raised over $100 million from investors like General Catalyst, ICONIQ Capital, American Family Ventures, G20 Ventures, Pillar VC, and Pillar Ventures. Prior to this, he co-founded Zooba (acquired by Bertelsman), m-Qube (acquired by VeriSign), and NRG eSports.
In this episode you will learn:
- The often-overlooked group of people in your organization you should focus more on
- Strategy versus execution failure
- Hometap’s business model
- His top piece of advice for young entrepreneurs
- The pain and challenges of being too early or too late with your startup idea
- The cold call from Madonna’s manager
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Jeffrey Glass:
By age 22, Jeffrey Glass started two college marketing businesses that helped pay off some of his college loans.
Over the next two decades, Jeffrey Glass ran 4 other successful businesses and learned a ton about what it takes to start, build, and grow technology and data-driven companies in this ultra-competitive world.
Jeffrey Glass has also been in the investor’s seat, spending 6 years as an MD at Bain Capital Ventures. Jeffrey Glass is currently the co-founder and CEO of Hometap Equity Partners, a data-driven, residential real estate platform that is changing homeownership financing.
Hometap invests in residential properties making passive investments alongside homeowners and participates in the future value of the home. For homeowners, this is a simplified, sensible alternative to debt and monthly payments that allow them to pay off bills, build their savings, and fund the things that come up in life. For investors, this is a new asset class, allowing them to participate in the multi-trillion-dollar residential real estate market without the operational and management hassles of owning and operating homes.
Jeffrey Glass lives in Brookline, MA with wife and three children. He is a graduate of Amherst College and Harvard Business School.
Connect with Jeffrey Glass:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we’re going to have a founder that has done it so many times that I just get dizzy with thinking about how many times he’s done it: building, scaling, exiting, he’s been on both sides of the table, and really incredible, the story of this entrepreneur. Without further ado, I’d like to welcome our guest today. Jeffrey Glass, welcome to the show.
Jeffrey Glass: Hey, it’s great to be with you today. Thanks for having me on.
Alejandro: So, born in Brooklyn, New York. How was life growing up in Brooklyn?
Jeffrey Glass: You know, it was quite interesting. I grew up in Brooklyn and had a pretty good childhood. My dad was a commissioned salesman that taught me the value of being good at selling, and he worked across a lot of different jobs over the course of his career and was proud of the fact that whatever he earned, he knew that he deserved it because it was from the fruits of his labor. He worked across a lot of different industries. He sold windows, insurance, stocks, aluminum siding, and had a lot of different jobs over the years. Ultimately, he was an office furniture salesman, and that worked out reasonably well for him. I learned a lot from him. My mom, early in her career, was an educator. So, she taught elementary school until I was born, and then she stayed home to keep me out of trouble, and for the most part, did a pretty good job of that. Life was pretty good, other than I shared a bedroom with my little sister, Randi, and that was kind of annoying. But we’re still pretty close.
Alejandro: That’s good.
Jeffrey Glass: It was a bonding experience. Ironically, the first time I ever had my own room was when I left to go to college because before my sister was born, I shared a bedroom with my mom’s mom, who was sick for several years. So, yeah, I finally got some freedom when I went to college and had my own room.
Alejandro: Even at senior high school, that’s really the time where you got the taste of entrepreneurship, the taste of getting out there and being in action. And perhaps you got some of this from your father because it seems like he was a dropout and a go-getter too. So, here you were, literally selling office furniture door to door. What did that teach you about getting out there and selling?
Jeffrey Glass: There’s a funny story behind that. It was the summer before I went to college, and I’d love to tell you about that experience, too, but it was the summer before I went to college. I was a financial aid kid. We didn’t have a lot of money, and I really wanted to make some money to put some dollars away for college and have a little bit for spending money. So, the only job that I could really get was I went to the owner of my dad’s office furniture company, and I asked him for a job, and he said, “Look. We don’t have anything. The only thing we have is, we’re looking for another sales guy. You’re an 18-year-old kid. We sell office furniture to corporations here in Manhattan. There’s no salary, there’s no draw, there’s no nothing, so I really don’t think this is a good idea for you, Jeff.” And I said, “Perfect. I’ll take it.” I remember the office was a couple of blocks from the Empire State Building, and I spent the first couple of weeks learning office furniture. My dad taught me some stuff, and the other guys in the office taught me some stuff, and I took some brochures. You could do this back then. I literally walked over to the Empire State Building and spent the next, whatever it was, a week-and-a-half or so knocking on every single door from top to bottom in the Empire State Building trying to sell file cabinets and credenzas and whatever else I could figure out that people needed. So, I learned a lot there. I learned how to take rejection. I learned how you’ve got to keep taking swings at the bat if you want to be able to get a hit. I learned a lot about making sure you’re being courteous to everyone inside a company, particularly those who were greeting you at the door. It was a really fantastic experience for me. I wound up doing it that summer. I made a few bucks that summer, sold a couple of file cabinets, made a little bit of commission, and then I wound up doing it the following summer, and actually having a couple of big accounts. I accidentally ran into this Japanese investment bank that was furnishing a few floors in an office tower. So I wound up getting that deal. I learned how to negotiate and manage clients and delivery and account management. It was a very formative experience for me at a young age.
Alejandro: It sounds productive, for sure. And then you go to Amherst College, and there you take economics and politics. Obviously, you had to do something around numbers after the experience doing the door-to-door selling. How was this for you? How was going to Amherst and doing this?
Jeffrey Glass: Amherst was amazing. As I said, I grew up in Brookland. All my schools were really incredibly diverse. In fact, my elementary school, I remember reading about was then, and still is considered to be one of the most ethnically diverse elementary schools in the country. It was this really great multi-cultural enriched, but very urban experience. Then I went to Amherst, which also had a nice amount of diversity. It wasn’t quite as diverse as Brooklyn was back then. But nonetheless, it was out in the country. It was in Western Mass, a pioneer valley, beautiful settings, people didn’t lock their doors. I remember when I went to visit for visiting day, and when you’re an admitted student to check out the college and the student who was letting me stay with him, he left me a little note and said, “You just come into my room. The door’s open.” I was like, “The door’s open!?” It was lifechanging for me. It was the fresh air, and the mountains and people were very inviting, and it was really quite different from New York City living, and intellectually, it was very stimulating. It just opened my eyes to a lot of intellectual ideas, people from all around the world and around the country, from different backgrounds. So, lifechanging. I lost my Brooklyn accent, as you can probably hear. It was great. I studied political science and economics, which was a lot of fun. I took a lot of theater classes. I was a mediocre actor in a couple of shows. That was the thing about small colleges. You didn’t have to be that great to participate. I had a radio show. I participated in student government. Even, I walked onto the football team and played for a year, having never played in high school. So, that’s the kind of experience you could get back then in a small liberal arts college. Then, one of the highlights for me is, I started a company while I was there, too, which was my major extracurricular activity.
Alejandro: What was this company about?
Jeffrey Glass: When I got to Amherst, I had no money. I went to the college bookstore and could not believe how expensive a college sweatshirt was. Even though I received a lot of grant money, but my parents were really stretched to contribute to my tuition, and I had a lot of loans, and I was supposed to be on a work-study program. I was so annoyed at the outrageous prices that the bookstore was charging, that my roommate and I decided we were going to start a competitor. Neither one of us had any money, but he was in better shape than I was, so we borrowed — this was an enormous amount of money at the time. We borrowed $10,000 from my roommate’s dad, and we created a mail-order catalog, and we then handwrote thousands of mailing labels to parents and alumni all around the country and around the world, and we began this tee-shirt, sweatshirt, college memorabilia business. We didn’t realize it at the time, but we were in the direct-marketing business. We learned how to direct market, and manage inventory, and run the operations, and deal with customers, and negotiate with manufacturers and screen printers. No question. I’ve since then to run some pretty cool technology business over the years, but I learned more about business running my little college clothing and memorabilia company than I did in any of my fancy venture capital-backed companies since then.
Alejandro: That’s amazing. Then after this, you had the idea of doing law school. You definitely deferred that, but one thing that is super interesting here is that you were very driven to really shape up your skill sets around business and around strategy, and that led you to doing some consulting, and then also going to business school. How did you really find that type of determination?
Jeffrey Glass: It’s nice of you to ask that. I think I was, in a lot of ways, shaped by the fact that my dad was a really smart guy, but for a bunch of personal reasons and family reasons had a super-tough childhood. As a result, he has dropped out of high school in 10th grade, and I got to see the struggles that he had in his life and how hard everything was for him. I think that was a motivating factor for me, which was just that I needed to make sure I put myself and my family and be able to help my parents to be in a better place. So, I was always very driven by that. As you mentioned, I thought about law school, and I actually had applied to law school; I had been accepted to law school; I was going to go to law school. I wanted to go into public service. I had this and still do, have this longing to feel like I’m doing something for the broader good. But I got taken away by — I accidentally stumbled into a recruiting meeting for a strategy consulting firm in Boston and thought that was super cool. I felt like I had a lot of entrepreneurial instincts, and had built this little company, and sold office furniture, and really loved business as well as the though of public service. So, I thought, “Oh, I’ll just go work for this company for a couple of years.” I deferred law school, and “I’ll learn strategy and finance and communications and how to deal with clients and give a strategic framework to all of this entrepreneurial feeling that I had inside.” So, that’s what I did. I took a job, deferred law school, moved to Boston, and then, it didn’t work out so well, which I learned my first less of the sometimes cold, corporate world. I was there for about six weeks, and they laid off 250 people, including me. So, it was a short-lived career in my first job out of college. It was not an auspicious business start to young Jeffrey Glass.
Alejandro: Totally. Here, you did then after this business school experience and really getting out there. You became the COO of Travelers, and then after this, you definitely saw the acquisition and how this ended up being sold to GE Capital. But this led you to your first business. That was Zooba. How did you come across the idea of Zooba? This was like your first big meaningful company besides the memorabilia business. So how did you come across this idea, and how did you bring it to life?
Jeffrey Glass: Just to be clear, Alejandro, I was not the COO of Travelers. I was the COO of a small company that Travelers had acquired.
Alejandro: Got it.
Jeffrey Glass: But very entrepreneurial, fast-growing, and it was a sales and marketing organization. I worked for this woman who was amazingly talented and learned a ton there that definitely set me up further for an entrepreneurial career. Sometimes, the best things that happen to you are just accidental. I was with a friend from business school, so yeah, in-between Amherst and where we are here in the story, I spent a few years in strategy consulting in a different firm, one that did not lay me off, as well as going to business school. I was with a friend, and I was talking about all of the learnings and things that we were doing from a direct marketing standpoint — things we were doing with data. My friend, who was a business school classmate, was a content publisher and had worked in France for IDG in their publishing business. We started brainstorming on the opportunity to use content as a way of learning more about the interest and behavior of individuals. And then being able to apply a data and analytical approach like we do in direct marketing to create an internet business that would enable us to provide content of relevance to consumers. In exchange for that content, we would then know more about the consumer’s interest and be able to offer then advertising and offers that were contextually relevant to their interest and to the content that they were reading about. We originally started this company as a technology. The legal name of the company was Transactive Solutions, which is an incredibly exciting name. The first customer of Transactive Solutions, which was this direct marketing engine, and this distributive content management platform, and this email personalization capability, all back in the dot-com era. This was all cutting-edge, cool technology back then. The first customer was Zooba.com of Transactive Solutions. We were both, and we were using it to showcase how good the technology could be. What happened was, within six months of launching Zooba, which was this content platform, we grew from nothing to over 6 million subscriptions. There was no social media. There was no viral marketing back then. This was old-school. We instantly got — we just hit this incredible chord of consumer interest and ramped up quickly and wound up getting acquired by Bertelsmann. A crazy time. This is 1999, 2000. The internet is booming, and then the internet in March of 2000 went bust, and we were there to see all of the chaos around them.
Alejandro: For sure. And in almost no time. I was less than three years. Here, the beauty is that you were able to see the full cycle. What would you say that seeing that full cycle for the first time really taught you?
Jeffrey Glass: A few things. A lot of people got really hurt in 2000 because they got too full of themselves and believed their own — drank their own Kool-Aid. But with respect to evaluations and business metrics. One of the things that has stayed with me for a long time is that sometimes when things are really euphoric, and markets are hot, and evaluations are high, and M&A is cranking is that we operators can sometimes be tricked into forgetting that you need to worry about the core metrics of the business and the fundamental business model. Unfortunately, there were lots of examples of companies that spent too much money, really didn’t focus on — in our business, we focused a tremendous amount on customer acquisition costs and the lifetime value of those customers. Back in that era, people looked down upon us for that. But one of the reasons why we were able to weather that storm was because we really stayed true to running the business like a business, and tried not to buy into all of the hype. But the other thing I’d say is, our business did well, and we sold to Bertelsmann, and they were a great partner, and I enjoyed working with them afterward. It was an overall amazing experience. There were, obviously, much bigger companies that got created in that time period, and those were the companies that if you’re able to survive — maybe this is relevant to today’s day and age. Those companies that are able to sustain themselves and survive the downturn are in a great position when things turn back up. Some of the greatest companies that we know today, the biggest, most important technology companies, they all came roaring out, post the dot-com crash, back into the mid-2000s, those companies, we set the foundation for what they are today, companies like Amazon, Google, and others. So, a lot to learn there.
Alejandro: Then, you couldn’t stay doing nothing, and then m-Qube came knocking, so what was m-Qube?
Jeffrey Glass: It’s funny that you say that I’m not good at doing nothing because we sold the business to Bertelsmann. We worked for Bertelsmann for a while. As I said, it was really great. The technology that we had was super useful inside of Bertelsmann, and we made a lot of great friends and partners inside there. When I eventually left, I had a young daughter who was just a few years old, and I was reflecting on my own childhood and the fact that my parents didn’t have the luxury. My mom stayed home with us, but my dad certainly didn’t have the luxury of ever spending any meaningful quality time with us when we were little because he was busting his butt trying to make a living. I said, “I’m going to take a year or two and just really spend time with my daughter, and take inventory of what a great blessing to have this opportunity. I lasted maybe three weeks before I was like, “I’ve got to get back to work.” So, I’m a horrible failure at being a stay-at-home dad. I have three children. I think all of my kids are quite glad that I failed at being a stay-at-home dad and went back to work. I had a relationship with a venture firm from when I was raising money for Zooba, and they had been working on a mobile idea that unfortunately didn’t work. They had put some seed capital into it, and there was an idea to create what was called an MVNO, which was a Mobile Virtual Network Operator. What that meant was, at the time — the time here is 2001, 2002. The idea was that mobile was going to be this big thing. Remember, the smartphone didn’t happen. Apple didn’t launch the iPhone for another six years at that point. This is the early days of mobile. The idea there was brands are going to want to have their own mobile service. So, you’re Disney, and you’re going to offer the Disney phone. That’s going to be a way for Disney to stay relevant with their customers and their fans and to be able to promote Disney content someday. It was kind of a wacky idea. I had nothing to do with this idea, but it was an interesting creative idea, but it didn’t work. I showed up on the scene, and there were a handful of engineers who were working on that, and there was a little bit of seed money left from that idea. They were trying to morph this into a new mobile idea, and I got asked whether or not I would help. The idea that we were working on was to create a mobile marketing platform. This is what became m-Qube. The vision for the business was, can we create a platform that enables brands and marketers and advertisers to take advantage of mobile as a marketing channel? Which today, seems really obvious, but in 2002, this was a time when people were on feature phones where you had to triple tap on your phone in order to send a text message. You couldn’t send a text message from some carriers to another carrier. So, if you were on AT&T, and I was on Verizon, we couldn’t text each other because there was no interoperability. These were the really early days of mobile, and so we started working on building what we were hoping to be is the marketing mobile platform.
Alejandro: Then, what happened here because I know that as an entrepreneur, this for you was quite a challenging time at the beginning. We are talking about really dark times and desperate times where you didn’t know. Where was the cheese at the end of the tunnel? During those times where you’re on the other side of the mountain, how did you guys keep yourselves together to keep pushing?
Jeffrey Glass: Alejandro, it’s such a great question because the first several years of this business were really quite miserable. The first year wasn’t miserable, because the first year we had the naïve excitement about how we were going to build this mobile marketing platform. The first three years of this business, we did no revenue. We had raised a whole bunch of venture capital money. We had a small team, and everything we did, we just could not get anything going. It was just too early in mobile. Customers weren’t willing to pay. The technology was not there. One of the things that I think a lot about as an entrepreneur and having spent some time as a venture capitalist, is how do you think about whether or not somebody is early or too early? Because the problem with being an entrepreneur is, if you have an idea, you’re going to fall into one of two buckets, almost definitionally, which is you’re either going to be really early, or you’re going to be late. If you’re late, you missed it. If you’re late with an idea, there are seven other companies that have raised venture capital money, and have built out their technology, and have customers, and are creating defensibility, so there’s no opportunity anymore. But if you’re early, and you’re too early, you bleed to death, and you run out of money before there’s ever an opportunity to create the market that you’re trying to create. So, so much of being successful in this world of VC-backed technology companies is the luck of timing. Yeah, on the margin, you could be smart about how you manage your cash, and how you make your investments, and how you think about where to deploy, but so much of it is the serendipity of did you get there early, but not too early? For the first several years of this business, I was quite convinced we had gotten there too early. Almost anybody who had started a mobile anything in the years before we went out of business; we made this through, but if the window that we made this through was six months, I might be exaggerating. It was really tight, and so very hard. I can remember I had a board member who at every board meeting, we’d go through the board stuff, and we’d talk about the pipeline, and once again, we’d have no sales. I felt horrible. I felt like I was letting down my investors. I had employees. We didn’t have a huge team, but we had 10 or 12 people. I felt a huge responsibility to try to keep things going for them. My own family, and my own personal self-confidence, it was really tough.
Alejandro: What was the turning point there, Jeff?
Jeffrey Glass: Before I tell you the turning point, just to give you a sense of how bad this was, and also how good it turned out to be, I’ll give a little spoiler alert. A few years into this, we’ve got no revenue, we’ve burned through a bunch of millions of dollars of venture capital money, we’ve got nothing to show for ourselves, and we literally tried to give away the company. We had a competitor who was doing a little better than us, but not great, and we said, “Why don’t we merge the companies. You guys can have the company. You can be the CEO. You can call the company your company’s name. I’ll work for you if you want me to. If you don’t, I’ll leave. Our investors will put some money into the combined company, and you two entrepreneurs on the other side could take a few dollars off.” We were literally paying them to buy us, and they turned us down. Two years later, we sold the business for several hundred million dollars. So, sometimes the best deals are the ones you can’t get done, and sometimes your own inability to sell turns out to be a blessing.
Jeffrey Glass: That’s how desperate we were. We could not pay to give away this company.
Alejandro: That’s amazing.
Jeffrey Glass: As I was saying, I had this board member who kept saying, “We’re not selling, but we don’t have any salespeople, Jeff. Why don’t we hire more salespeople?” I would have this constant conversation with him and say, “Look. I’m out there trying to sell every day, and there’s just not a market for what we’re doing. If we hired more salespeople, the only thing that’s going to do is, we’re just going to have more burn, and we’re going to go out of business faster.” I think there’s an important lesson in there or one that all of us who have been in these companies have to grapple with at some point or another, which is, when things are not working, I think it’s really hard to know whether or not it’s not working because of a failure of strategy, or a failure of execution. If it’s a failure of strategy, you need to change, or just shut down because it’s not going to work. Right? If it’s a failure of execution, and I used to ask myself this question all the time, which is like, “Is this a good idea, but I’m just bad at running it, and I’m just not a good leader for this business? I don’t know how to get it done?” Because ultimately, as a founder in that company, and person who cared not just about the equity in the business, but cared about it just being successful and accomplishing the goals, I did not want to be the person who’s holding it back. So, I used to ask that to my board all the time. I’d say, “Guys, is it me? If there’s someone out there who could make this business successful, we should find them. I don’t need to be the CEO. I’ll do anything to help make the company successful. I don’t have to be the guy.” So, we spent a lot of time thinking about is this a failure strategy or a failure of execution. One of the data points in the favor of this was a failure of strategy was the fact that nobody in the space was really doing well. It wasn’t like I had a couple of competitors who were cranking it. We were thinking, “This is probably more a failure of strategy. We’re just pointed in the wrong direction. The market is too early, and what we were selling — we were trying to convince marketers that they should spend money on mobile, when it was really early, and really hard, and really cluggie to pull these kinds of marketing campaigns off. The other lesson I learned in here and thought about at the time, which is, if you’re inventing a new medium, it’s hard to convince a big brand that has a reputation and has spent hundreds of years building that reputation, that they should risk their brand on something new and innovative. It’s also really hard to create a new cost center. Like, “This is a new way for you to spend money.” So we pivoted the business, and we decided what we’re going to do is, we’re going to leverage our technology around mobile content delivery and the ability to drive transactions on mobile phones. Instead of trying to make it a marketing platform, we made it a content delivery platform, and specifically a content delivery platform for content that the consumer would want to pay extra for. That was an incredibly important lightbulb moment. In fact, my partner in StartingFive, which is the entity that we used to create my current business, Hometap, he worked with me at m-Qube. He was a huge instrumental person, a guy named Andy Miller. He was an instrumental guy in helping figure this out. But even with that insight, we lucked out. This is why, again, I think so much of entrepreneurship, we get the credit when it goes well, and we get slapped around when it doesn’t go well, but so much of it is luck. This is a really funny story. He gets a call from a guy who says, “I work for a global entertainer, and we want to do something big on mobile.” We said, “Okay. Who is it?” He said, “We can’t tell you.” We said, “Okay. What is it you want us to do?” He said, “Well, we don’t know because you guys are the mobile experts, so you tell us.” I said, “Well, we don’t know who you are.” He said, “We need you to give us a proposal on pricing and how it’s going to work.” This Andy Miller came to me with this idea. I said, “What are you talking about?” He said, “I don’t know. The guy seems credible, but he won’t tell us what they want to do, who they are, why it matters.” We were really struggling at this point as a company. Andy said to me, “What should we do?” I said, “We should send them a proposal.” So, we sent this guy a proposal. We’re negotiating a deal having no idea who they are, what they want. It could have been a practical joke. It could have been a buddy of mine from business school just having a good laugh. So, it turns out that this guy was the manager for Madonna. We wound up launching this really big mobile music product for Madonna, which got global attention. On the backs of that, we wound up getting all these wireless carrier deals done, and all of these content companies started calling us up to want to do business. And the business took off, and it was because of a cold call that we got from a guy who refused to identify himself. Whenever you break down what really happened behind the scenes inside companies, there’s always a lot of luck that happens inside, behind the scenes.
Alejandro: Wow! And the rest is history. The company went from zero to 250 million in literally three years, which is remarkable. Then a really fantastic outcome. It was reported, which is not accurate, for 250 million, the acquisition.
Jeffrey Glass: Yeah. I try not to focus on the numbers. It was a big number, but more importantly than the big number, it was an amazing effort by the team, and so many learnings about what it takes to build a team, and to survive tough times, and to be open to changing your business model, and to listen to what customers have to say. It was a lifechanging experience for me.
Alejandro: That’s fantastic. This really pushed you to the other side of the table. Why did you go to the other side of the table, Jeff?
Jeffrey Glass: I had run a bunch of companies. I had built this business that Bertelsmann bought. I then had this crazy two-companies-in-one experience at Hometap, where we thought we were going to die. The first few years, we thought we were going to die because we had no business, and then the last three years, we thought we were going to die because we couldn’t handle all the volume. I would say, the m-Qube experience was so amazing for me, and so emotional, and I was so proud of it, and also so exhausted, but I didn’t feel like I could ever recreate it. It was like the team that I had there; I loved that team. I’m still close with that team. I’m so proud of that team. This is an amazing stat: something like over 10% of our couple of hundred employees, within five or six years after m-Qube to be CEOs of their own. It was a perfect moment in time where everything was magical those last few years, albeit we were drowning from all the volume. So, I felt like I wasn’t going to be able to recreate that, and I thought, “I’m only qualified to do two jobs, which was to either be an entrepreneur or to try to help entrepreneurs. Bain Capital Ventures was an early investor in m-Qube, along with another early venture firm from General Catalyst. Bain offered me a role in their partnership, and it was just too good to pass up, so then I spent the next, whatever it was, seven-plus or eight years on the other side of the table investing with entrepreneurs, and seeing it from that side.
Alejandro: That’s amazing. I want to ask you two questions about this experience with Bain and being on the other side of the table before we continue on the operational role, especially now with your latest baby, now with Hometap. But here on Bain, the first one is, you were also part of the board at an observer level of LinkedIn? What does a board like that, like a rocket ship like that look like? What does corporate governance at its best look like?
Jeffrey Glass: Incredible. It was such an incredible experience for me. Both the board and the operating team there was unlike anything I had ever seen. Frankly, even today, when I think of myself as a CEO, I try to think back to things that I learned. I learned way more than I contributed to the LinkedIn boards, for sure. I look at the work that guys like Jeff Weiner and Steve Sordello, their CFO, and Reid Hoffman. Those guys are just so incredible, and the level that they were playing at was such a different level than what we mere entrepreneurs play at. I remember early after our investment — and we wrote a pretty big check from Bain Capital into LinkedIn, obviously, several years before the IPO. Shortly, thereafter, I remember a big company had approached LinkedIn and wanted to acquire them for a meaningful multiple above what we had paid, and a way meaningful multiple above what some of the even earlier investors had paid, and certainly, an amount of money that would have made everybody who is involved there very wealthy from an operating team standpoint. They gave it about 30 seconds in the board meeting.
Jeffrey Glass: It just was not interesting to them. The thing that was most impressive to me about the leadership and the founders, Reid and Jeff Weiner, all those guys, was just the conviction that they had that they were going to change the world and that they were going to revolutionize the world of professional networking, and they did it. I was so lucky. I didn’t spend that much time in my career as a venture capitalist, and to have had the opportunity to be on that board was an incredible highlight of my career there.
Alejandro: Absolutely. You were here in Bain, close to about seven years, and I’m sure that you invested. You saw a lot of companies and a lot of entrepreneurs, so in terms of pattern recognition, especially now. You’ve gone now and started Hometap, which you guys are really killing it, but now, how do you see pattern recognition, like things that may have legs or not have legs, and then also founders that may also have what it takes? Can you talk to us a little bit about that?
Jeffrey Glass: Yeah. When we started Hometap, there were four of us working on it at the end of 2016. Frankly, what appealed most to me was not first and foremost that it could be a great business. It can and will be a great, important, durable business, but what really related to me was the fact that we had an opportunity here to create something for homeowners. One of the lessons I would say that I’ve thought about over the years is, I think more and more, and maybe it goes back full circle to when I was in college and thinking about going into public service, and I pursued this business and entrepreneurial career, but always wanting to feel like I was doing something beyond myself. What got me most excited about Hometap, which is this vision that we have around making homeownership less stressful and more accessible. There are so many tens of millions of American families who are what we describe as house rich and cash poor, who have this overwhelming percentage of their network tied up, illiquid in their home, and over the years, it builds up, and their home appreciates, and they pay down their mortgage, and so they have more and more value in their house in most cases. Yet, the only way they can access that capital is by either selling their home, which leaves them without a home, or by further borrowing against it, and borrowing against it puts them backward into more monthly payments, more debt, more stress in their lives, lack of flexibility to be able to do other things. So, this idea around can we give a homeowner the same kind of opportunity, an equity opportunity, that fancy VCs and entrepreneurs talk about all day long, that’s what really got me excited about it. I look back. I think about my childhood where a lot of my friends and their parents who were not overly wealthy, but they bought homes, and they wound up in these really stressful situations where every month it was about just having enough to pay the mortgage. This business really speaks to me and my personal experiences. It’s way more about the mission of the business, although I’m excited about the fact that I think we are going to create a really big, important company.
Alejandro: You have seen a lot about teams and executions, so how did you put that band together for Hometap?
Jeffrey Glass: This is a fairly complicated business in that we need to be good at 1) building product and homeowner experience that our customers love. Building the homeowners’ side of our business is a critical part of what we do. But then, we also invest capital. This is back to my life also as an investor, and we’re an asset manager. So, we are entrusted by capital to make good investment decisions on their behalf, so there’s a huge data science and financial aspect to what we do. One of the things that I’m proud of is that we have built up incredibly deep [42:55] on both sides of that business. It’s not easy to do, but we’ve been able to do it. I don’t know if I have anything overly brilliant about how you scale teams and build those teams, but I would say maybe a couple of points on that, which are it’s a key part of my job. It’s keeping the company capitalized for success, and building a strong team are the two most important things that I have to get right. Part of my job is to make sure I build teams that can also attract and retain other great talent. So, I spend a lot of time on that, all the time, every day. Then the other thing I will say that I think often is neglected when people think about companies that have done well. It’s easy enough to give the senior leadership all the credit and talk about how smart the executive team is. Where the work really happens, and where the magic happens is in the middle of the organization. Winning is about execution, and execution is led by all those folks that are day-to-day, making all of these important decisions Ideally on their own, feeling empowered to make things happen and to execute and pushing the ball forward. One of the things I try and spend a lot of time on, and I think we’ve done an excellent job at Hometap. I would say m-Qube also had this going for them, which is like the center of the organization is folks that maybe they’re not quite as experienced, but they’re on their way up. They’re up and coming. They’re super capable, and we just need to culturally find ways to allow them to shine, and to flourish, and to build their careers, and to be able to drive day-to-day. That’s what lets you scale. I think unless you’re Steve Jobs, which I am definitely not, once in a lifetime kind of entrepreneur, unless you’re Steve Jobs, your business can’t scale without that. So I spend a lot of time thinking about how we do that and a lot of time thinking about how do we build a culture that perpetuates that.
Alejandro: Got it, and for the people that are listening to really understand the business model of Hometap, how do you guys make money?
Jeffrey Glass: Simple business model. We make a little bit of money off of a one-time fee that the homeowner pays when we execute the investment with them, that they don’t come out of pocket for. We just deduct that from the capital that we’re deploying to them. Then the majority of our income comes from the fees that we charge from the capital partners who pay us to put their capital to work and allow us to have the capital to give to homeowners to improve their lives.
Alejandro: Got it. I know that for this, you guys have raised quite a bit. You guys have raised about 130 million. I’m wondering here because you’ve had the opportunity of being on both sides of the table. Obviously, you’ve seen as an investor the good, the bad, and the ugly as well with other investors’ behaviors and stuff like that at the table and at a board level. So, I’m wondering why did you choose the investors that you ended up choosing for Hometap?
Jeffrey Glass: That is such a great question because I do think that entrepreneurs often don’t give enough thoughtfulness to who they take on, and they’re looking to get the money done, or they’re looking to take it at the best valuation. I’ve definitely seen this as an entrepreneur, and I’ve seen this as a venture capitalist that if you have the luxury of being able to choose, you should be thoughtful in who your capital partners are. I think it’s a great question. For me, if I went around the table and talked about all of our investors, each of them was appealing to us for a different reason, and was definitely, look, we’ve been very fortunate, which we’ve got a track record, we’ve got a great team, we’re in a giant space, we’ve got good momentum, so raising capital hasn’t been, at least historically, that difficult for us, but finding capital from the right partners is always a challenge because you want to build that right team. One of my board members is magical with how he thinks about positioning us with a brand, and how he thinks about consumer experience. One of my board members, she’s incredibly connected to the Boston technology scene and entrepreneurial network. She’s been a huge source of talent for driving toward our business. A big percentage of people who work at Hometap have actually ben sourced through our venture capitalists. I’ve got another investor who works for a large institutional asset manager on the insurance side. He’s been incredible at connecting us to capital and making introductions to institutional asset-backed investors. So everyone on our board is there for a reason. I don’t need all of them to do everything. They all have been incredibly useful to the business, and we’re lucky to be in a position to attract people of that kind of talent, but I do think if I had a piece of advice for an entrepreneur or a CEO, which you do want to get a lot out of your board and you investors, but that means managing it. It doesn’t happen by accident, and you should expect to get something from your investors other than capital. But you’ve got to put the work in to do it.
Alejandro: Absolutely. It’s all about not thinking about the money as money, but thinking about the network behind the money because, at the end of the day, that’s what you leverage to go farther. Love it! Let me ask you this, Jeff. Imagine you go to bed tonight, and you go to sleep, and you wake up five years later — an amazing snooze. And you wake up in a world where the vision of Hometap is fully realized. What does that world look like?
Jeffrey Glass: I would say it would have three components. The first is, we would have fulfilled our mission to make homeownership less stressful and more accessible. So, I hope that someday, there are tens of thousands or maybe hundreds of thousands of lives are made better by having this ability to have financial options similar to what business folks have in the corporate world, and they use that capital to pay off debt or to pay for college or to fund renovations for their home or launch new businesses or care for loved ones. That is the most gratifying part of what we do at Hometap. I would say the second thing is that we have an opportunity to create a lasting business where we become a true next-generation financial services company that stands for the homeowner, and stands for innovation, and for being a wonderful place to work. We focus on our culture every day, and while we will never be perfect, we aspire toward being a place where the best talents seek to build their careers and participate in our mission. I think that’s the key to being a long-term durable, and admired company. I suppose the last part, which is that if the first two went the right way, we, by default, would create a new asset class for investors. At the end of the day, give institutional capital and other investors the ability to participate in this equity side of residential real estate, which is something you can’t really do today other than in one single house, your own house. So, I’m proud of what we’re doing there, too, and at the end of the day, those returns for investors, that money is often used. It’s in people’s 401k’s and their retirement accounts and pension funds, and school endowments, and funds philanthropy. So our ability to deliver good risk-adjusted returns and noncorrelated assets for those investors is a really important thing for us too, and I’ll be proud to deliver for them as long as we’re also delivering for our homeowners. So I would say those three things. Five years from now, maybe we’ll be interviewing again, and hopefully, all three of those things will be true.
Alejandro: That’s amazing, Jeff! One of the questions that I always ask the guests that come on the show is — it’s remarkable, the experience and incredible, the journey that you’ve had. If you had the chance now to go back in time, Jeff, and have a chat with your younger self, even though that younger self sometimes probably didn’t even want to listen. But let’s say that younger Jeff that was coming out of Amherst and was thinking about a world where maybe he could create the future, he could create a business. If you could go back in time and give that younger Jeff a piece of advice before launching a business, what would that be, and why, knowing what you know now?
Jeffrey Glass: I’m glad we started at Amherst because if we went back to elementary school, that younger Jeff was really quite awkward and hard to deal with. I would tell younger Jeff, if you’re going to pursue a business career, your likelihood of being successful is certainly increased by trying to be smart and hardworking, but try to stay even keel. Don’t get too emotional about the wins or the losses because a great deal of these things that happen to you every day, ups and downs, these outcomes swing on getting or not getting a lucky break. I’ve been lucky. I’ve gotten a few of these breaks, and I’m grateful for them. But I also know that there are a lot of other folks, kids I grew up with who are just as smart or smarter and hardworking, and they haven’t gotten those lucky breaks. I’d say when you’re an entrepreneur that the difference between success and failure can be so razor-thin. Every one of my businesses that I’ve been a part of, there was a moment in time where if the wind blew a different direction, we would have been out of business. But it blew the right direction, and instead, we grew, and then we had all these good fancy exits. You just can’t get too high on yourself when it works, and you can’t beat yourself up too badly if something isn’t yet cranking. That’s what I’d tell him. Having said that, I do tend to beat myself up pretty badly when things aren’t working right, so I’m not sure I even listen to my own advice today.
Alejandro: Definitely, very, very profound, Jeff. For the folks that are listening, what is the best way for then to reach out and say hi?
Jeffrey Glass: I’d love to hear from them. They can shoot me a note on LinkedIn if they like. I’m easy to find there, and they can find me at hometap.com
Alejandro: Amazing! Jeff, thank you so much for being on the
DealMakers show today.
Jeffrey Glass: It’s been my pleasure, Alejandro. Thanks so much. This was a lot of fun going down memory lane here a bit, and thanks for giving me that opportunity.
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