Office Hours: Tomo Co-Founder Greg Schwartz's Bid to Simplify Mortgages

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Tomo Co-Founder Greg Schwartz
Photo courtesy of Tomo

On this episode of Office Hours, Tomo co-founder and CEO Greg Schwartz talks about how his work at Zillow and as an ad executive led him to co-found a digital mortgage startup.

The lack of any formal business schooling never bothered Greg Schwartz. He credits his liberal arts degree with teaching him to “think critically, and express a point of view.”

After school at New York’s Hamilton College, Schwartz found himself working in advertising “for no particular reason,” other than it seemed interesting. There, he said he found his calling.

“The guy at the next desk worked at an ad agency called Kirshenbaum Bond & Partners. And [they] happened to be buying the second ad campaign ever on AOL,” he said. “He was buying this very strange thing called ‘digital advertising’ — and that started it all.”

After years working his way up in digital advertising at large brands including CNN Money and Yahoo!, Schwartz ended up at Zillow. He knew he didn’t want to spend his career as a salesman, and was looking for a job that allowed him more creative freedom and space for innovation.

“I went to Zillow because it was one of the last great categories that no one had really figured out — the digital experience on housing,” he said. “One of the drivers of the U.S. economy didn't have a driving, innovative Google-esque, or Amazon-esque brand driving it. So why not Zillow?”

The more Schwartz delved into the real estate business, the more he saw an opportunity to remove unnecessary friction between mortgage lenders and their clients. Many banks, he said, were simply too big to see the needs of their customers — an experience he analogizes as the relationship between an elephant and an ant.

“The elephant doesn't hate the ant, but an elephant steps on an ant because it can't see it,” he said.

Schwartz saw an opportunity to create a better experience, and a better brand, that could make the mortgage process easier, by allowing users to get pre-approved for a loan at their convenience. His startup, Tomo, is a digital mortgage company that aims to simplify and speed up the mortgage experience from a process that can take months to days.

“We're a state-regulated bank, effectively, a non-depository lender — we actually underwrite mortgages,” he said. “And we've totally re-architected and digitized the experience so that you’ve got a person available when you need them.”

Schwartz said one of the biggest lessons he’s learned while running a startup in the midst of a housing crisis is to always be raising capital, so you have a cushion for the future.

“I'm not an entrepreneur that believes in trying to optimize to every last decimal point of timing and perfection, because you're not in control of the conditions you live in,” he said, quoting business legend Bill Gurley. “When capital is available, and you think it's reasonably priced, you take it to ensure that you don't get yourself in a bad position.”

Schwartz said that a lot of times entrepreneurs will find themselves in better financial positions than they realize.

“If you've got gross margin, if you've got a growth story, you can get a round done,” he said.

That outlook has become all the more crucial during a time when rising interest rates are making the real estate industry far more challenging. Schwartz said that has meant he’s had to focus his business and relentlessly cut features and projects that are not essential.

“I like to think of myself as a bit of a wartime CEO,” he said. “Start with a zero mindset. Fight for every customer. Fight for every line of code. Fight for every new agent relationship.”

Working with a team of passionate individuals, he said, has helped in those efforts.

“The advice I would give to everyone is, ‘surround yourself with people — in our case, a board — who will challenge you’,” he said. “It’s especially important in times where the business isn't easy.”

Note: Office Hours Host and dot.LA Chairman Spencer Rascoff is an investor in Tomo. Social and Engagement Editor Andria Moore contributed to this post.

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