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Making of a Mortgage King Hinges on Super Bowl Ad, Cards

Nima Ghamsari knew he needed to nab a big customer.

He’d spent years criss-crossing America’s heartland for meetings with top mortgage executives, pitching them on partnering with his firm, San Francisco-based Blend Labs Inc. The promise: His software would make it so they wouldn’t need to collect paper documents from customers when underwriting home loans, a costly endeavor that can take weeks to process.

“Columbus, Ohio. Lewisville, Texas. Des Moines, Iowa: They’re all over the country,” Ghamsari said. “We just would do everything we could to get in touch with them.”

On Friday, Ghamsari will debut his nine-year-old startup on the New York Stock Exchange, the culmination of years of building Blend into a business now valued at almost $4 billion. From those early meetings begging lenders to use Blend’s platform, Ghamsari has built a behemoth that helped process $1.4 Trillions in mortgages last year alone and has spread its tentacles into credit cards and even auto loans.

The public listing will also prove to be a personal boon for Ghamsari, with his stake in the company valued at $300 million. Under a long-term performance award, he’ll receive additional shares that could eventually more than double his current Blend stake if the stock price reaches various targets.

Ghamsari’s interest in financial technology began in high school. After taking part-time jobs at McDonald’s Corp. and Starbucks Corp. to scrape up spending money, he soon found an easier way to raise cash: selling “Magic: The Gathering” cards on EBay Inc.

When Ghamsari got started, buyers would send him physical checks and money orders in exchange for his wares. Then the original financial-technology darling — PayPal Holdings Inc. — came into the picture.

“It just completely changed,” he said. “I just remember fintech transformed the way people transact with things online.”

Flash-forward two decades and Ghamsari’s own company does something similar: speeding up the many steps of loan underwriting — from verifying income to checking identities — using technology. He even counts PayPal co-founder Max Levchin as an early investor in Blend.

Most of his early meetings ended with Ghamsari hearing that the mortgage industry just wasn’t ready for the technology. Things started to change after a dinner with the head of mortgage lending at one of the country’s largest banks in early 2015 at a tony Italian restaurant in San Francisco’s financial district.

His eyes, they just lit up,” Ghamsari said, noting the two companies later inked a partnership. “I don’t think the company would exist today if it weren’t for this random dinner.”

Around that time, rumors began swirling in the mortgage industry that one of the biggest home lenders on the planet was also creating an app for its home-loan process. Banks’ worst fears were confirmed during the Super Bowl in 2016 when Quicken Loans debuted Rocket Mortgage, effectively putting the entire mortgage process into consumers’ hands.

“I just remember the next week I started getting calls from lenders who were on the fence,” Ghamsari said. “They’re like, ‘I get it.’”

Blend was soon flooded with partnership offers. The following year, the startup announced deals with Wells Fargo & Co. and U.S. Bancorp. The firm now has tie-ups with nearly 300 banks and is processing an average of $5 billion in loans every day.

For years, financial-technology companies were beloved by venture capitalists, who showered them with funds. Blend itself raised $300 million from Coatue and Tiger Global in January. That’s now prompted a flood of initial public offerings from many of the industry’s biggest startups, including Marqeta Inc. and SoFi Technologies Inc.

“Successful tech IPOs have prompted a number of mature fintech unicorns in 2021 to consider going public,” said Donna Parisi, global head of financial services and fintech at the law firm Shearman & Sterling. “Wall Street’s appetite for top-flight fintechs is only going to get stronger.”

Ghamsari, a former semi-professional poker player who was born in Iran and raised in Cincinnati, will list his firm on the NYSE under the symbol “BLND,” aided by banks including Goldman Sachs Group Inc. and Allen & Co. He’ll still maintain a lot of power even after the offering.

The 35-year-old will hold all Class B shares, which are entitled to 40 votes each compared with the one vote per Class A share, according to regulatory filings. That means he’ll be able to determine or “significantly influence” any action that needs the vote of shareholders, including electing the board or approving any merger.

Ghamsari said the ownership structure will help protect the company’s focus on long-term projects that can take years of patience.

“There’s probably a five-year lag of trying to build something and having scale and usage of it and, even with all the lucky things that happened along the way for us, that’s kind of normal in financial services,” he said. “That takes real conviction to do. And it’s one thing if we have to convince a small number of people, and it’s another thing to be having to convince the entire world.”

Source: Bloomberg