I really enjoyed reading your article about how Rocket Mortgage is disrupting the brick-and-mortar mortgage business. I did want to cover one point at the outset: the tweets you posted as examples of public flashbacks to the financial crisis are relevant, but they miss the true target.
It’s amazing that — eight years after the housing crisis — Fannie Mae, Freddie Mac and Ginnie Mae are still chugging along, gobbling up securitized (i.e., aggregated) mortgages from Quicken Loans and regular brick-and-mortar banks. Quicken Loans is using warehouse loans as short-term financing, to bridge the short timespan it needs between financing the home purchase and selling off the securitized mortgages to the government. In other words, Quicken Loans doesn’t have to worry about the housing market over the mid- or long-term: they just need to worry about the short-term housing market.
As you point out, Quicken Loans generated $80 billion of mortgage volume in 2015. Would Quicken Loans approve a mortgage in 14 minutes if they had to hold those mortgage for 10, 15 or 30 years? Would they create as many mortgages? If the answer is “no,” then we should be taking a close look in the mirror, because this kind of digitization might be a bigger and badder sequel to a horror movie that first aired in 2008.
Don’t get me wrong: I think the digitization of Quicken Loans is a great competitive advantage against its brick-and-mortar competitors. As you point out, they’ve streamlined a very paper-intensive and regulation-heavy process. It just makes me very wary that Quicken Loans is choosing to build their book of business off warehouse loans and little assets…
Hi GB – Thanks for an exciting and relevant Sunday NFL read!
While I admire Carson Palmer’s and the Arizona Cardinals’ tech progressiveness, I wonder whether virtual reality will have the biggest impact with NFL teams, or instead with NFL fans. I actually believe that a much greater opportunity exists with immersive in-game VR experiences for fans. For example, using a network of 360 cameras and 3D audio, the NFL could place each fan on the field during a game. Also, the target market increases from 32 teams, to over 100 million (http://www.nytimes.com/2016/02/09/sports/football/viewership-of-super-bowl-falls-short-of-record.html?_r=0).
Watching an NFL game via VR will be an unparalleled fan experience, but it may come with a cost. If fans flock to VR, what changes will that have on how we view games? Will sports or entertainment become less social, and more isolated? As VR becomes more ubiquitous, I believe content and hardware creators will need to find ways to make VR more social.
Wow Javier – Thanks for the introduction to Proteus Digital Health!
While many people are familiar with Apple Watches and FitBits, I don’t think the general public has imagined the full potential of organic bioelectronic devices. For example, why have an iPhone in your pocket when it can be embedded in your wrist? Why go to the doctor when you can inject microchips or nanomachines into your bloodstream or neural system?
While I agree that there are a lot of salivating investors and sky-high valuations for organic bioelectronic companies, I do believe that they will play a critical role in the future healthcare industry. But this idea isn’t new. In fact, the concept of “swallowing the doctor” can be traced as far back as 1959, in a famous lecture by physicist Richard Feynman: https://en.wikipedia.org/wiki/There's_Plenty_of_Room_at_the_Bottom
It’ll be interesting to see if Proteus succeeds!
Thanks for the great article Chanti! I was already aware of Loyal3 (https://www.loyal3.com), but this is my first introduction to RobinHood. I always enjoy learning about disrupting companies that contradict “truths” that have been otherwise accepted for decades, such as commission-based stock trading.
I did find it interesting that RobinHood still has to charge fees on security sales, which are mandated by the U.S. Securities & Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). See https://support.robinhood.com/hc/en-us/articles/208650436-Fees-on-Robinhood-
Also, RobinHood plans to make money by encouraging margin accounts, which generate interest income for RobinHood. If RobinHood’s mission is to introduce investing to millennials, I question their strategy of promoting margin trading. When trading on margin, you need to additionally obtain returns to cover your margin costs, which can range from 5-10%. This might not be the best lesson for a new investor…
To that end, I think the positioning of Loyal3 is better. Loyal3’s customers are public companies who realize that customer loyalty can be increased with share ownership. Also, to keep costs down, Loyal3 bundles its entire trade orders into 1 order per day. On the downside, this doesn’t provide much price discovery to its investor customers, but on the upside, this bundle trading keeps transaction costs down.
It will be very interesting to see how these disrupting “free” brokerages will continue to impact large financial institutions.
As a caveat, one result of charging for trash based on consumption might be an increase in littering. If people are faced with the choice of paying more, they may choose to dump their trash in others’ dumpsters, or worse, litter.
I’m so glad you focused on a subject that many people prefer to ignore! We talked about externalities during our climate change class discussion, and trash and recycling are great examples of externalities. People usually don’t like to think about their trash, and thus they don’t acknowledge the huge environmental cost of removing trash and recyclables from our residential and commercial areas.
Waste Management has done a great job at introducing new technology to its trash collection business, but I think we’ll need to see more paradigm changes within`. As WM is able to obtain more real-time information through wireless technology, such as the capacity and payload wireless information provided by the BigBelly Solar unit, hopefully it will then move to changing how we PAY for trash.
Trash collection is unique among utilities, in that it is not priced based on actual consumption. In fact, there would probably be public backlash if local or state governments tried to charge people for trash collection. However, we need to find a way to link the cost of waste management (reclamation and landfill) to actual practice.
Hi Maria – What a great read! I always enjoy learning more about an entrepreneur, especially one from such an unassuming background. Doug Feeney has come up with a simple yet brilliant way of combatting overfishing: Eat a different fish!
However, I worry about the sustainability of Feeney’s plan. On the one hand, diverting attention to the dogfish (or whatever name the Cape Cod fishermen use to re-brand it) might give other species a chance to replenish their population. But it won’t impact the rapidly increasing demand for fish. For example, a recent study estimates that “fish consumption has risen from an annual average of 22 pounds per person in the 1960s to nearly double that in 2012” .
Thus while Feeney’s solution is a smart short-term solution, it doesn’t seem like an sustainable environmentally-friendly solution.
 “U.N.: Record-high Global Demand for Fish Threatens Oceans”, Peter Moskowitz, Aljazeera America (May 19, 2014), available at http://america.aljazeera.com/articles/2014/5/19/aquaculture-fishingreport.html
Since 2014, commodity prices have plummeted, which has left many industries — such as rail — feeling overextended. Rail leaned heavily on the energy industry to build up high volumes and comfortable margins. However, when commodities pricing plunged in 2014, rail volumes and profits plummeted.
As Elise points out above, rail is significantly more fuel efficient than trucking. The railroads have closed the gap between cross-country shipping times, such that rail takes as little as 7 days versus 6 days for trucking. However, shipping by rail is still plagued with delays, especially at the origin or destination rail yards. Thus one way for rail to be more “green” is to help customers achieve better, more efficient supply chain solutions. Thus by increasing their competitiveness with trucking, rail can swap trailers for railcars, and will help reduce the domestic supply chain industry’s carbon footprint.
Hi HBS2018 — I really enjoyed reading this post! As you point out, one of the biggest and most frustrating challenges of climate change is confronting “unbelievers” such as Governor Rick Scott.
Unfortunately, if nothing is done to stop or reverse global climate change, I see a downward spiral happening in Florida. As you point out, rising sea levels, record temperatures, and flooding or eroding beaches will severely damage Florida’s tourism industry. As Florida loses this crucial source of state revenue, it will incur larger and larger bills to fix its beaches, swamped water control infrastructure, and flooded coastal towns and cities. As these negative shortfalls are felt statewide, more taxes or federal funds will be needed, after which more and more people will migrate out of Florida for more promising futures in other U.S. states.
In a way, we can look at the impacts of Katrina as an example of the multi-year impacts of mass flooding in an urban area. Katrina is estimated to have caused $108 billion of damages, and 10 years after Katrina, New Orleans’ population (1.252 million) has still not returned to its pre-Katrina population (1.386 million), nor has its housing units and businesses returned to pre-2005 levels .
 See, e.g., “Hurricane Katrina: Facts, Damage & Aftermath,” Kim Ann Zimmermann, LiveScience (Aug. 27, 2015), available at http://www.livescience.com/22522-hurricane-katrina-facts.html
Hi – I enjoyed reading your article on the climate change challenges presented by cardboard packaging. As you allude in your article, I feel that people sometimes view 100% cardboard recycling rates as a zero sum game. However, as you point out, there are vast energies expended during the full life cycle of a cardboard box, including carbon emitting reprocessing, burning, and reverse logistics.
Unfortunately, I’m not expecting material changes to come from a company like Packaging Corporation of America (“PCA”). While your list of environmental actions taken by PCA is quite impressive, I feel that the real change has to happen with runaway consumerism. Therefore, I see a greater role being played by fulfillment centers, such as Amazon or Walmart. As these companies increasingly focus on “last mile” delivery, hopefully they will find ways to ship products with less cardboard packaging–or even eliminate it altogether. Would PCA get on “board” with such a no-packaging future, or a future where they swap volume for innovative packaging design (as you promote in your article)? Time will tell…
Thanks for starting the conversation Vincent. At this point, I don’t think a partnership with Tesla or other EV innovators would make much sense for two main reasons. First, Daimler Trucks (“DT”) is leading the pack in “greening” big rigs, and I feel that bringing on other partners would only slow DT down. Second, the engineering and vehicular necessities of hauling 80,000 lbs. of equipment and cargo along highways and city streets is far more demanding than a 4,000-5,000 lbs. passenger vehicle .
I also think an Tesla-Gigafactory-sized bet might miss its mark. The average commercial truck on U.S. roads is growing older, not younger. A recent study shows that the average age of commercial vehicles was 12.5 years in 2007, and was 14.8 years in 2014 . DT should be cautious, focusing on reaching the right solution rather than reaching a solution as soon as possible.
Nevertheless, I do agree with PThatai that DT must continue to focus on “innovat[ing] in a large way”. The Urban eTruck is a perfect focus for the company. At our trucking company, we recently rolled out a fleet of half-natural gas and half-electric urban “last mile” delivery trucks. Focusing on greening smaller trucks with less hauling demands is a good start to fixing this very large problem.
 “How Much Does Model S Weigh – The Definitive Answer”, Forums – Tesla Motors, Inc., available at https://forums.tesla.com/forum/forums/how-much-does-model-s-weigh-definitive-answer
 See, e.g., “Class 8 Commercial Vehicles Continue to Drive Overall U.S. Commercial Vehicle Demand, IHS Says,” available at http://news.ihsmarkit.com/press-release/automotive/class-8-commercial-vehicles-continue-drive-overall-us-commercial-vehicle-de