Ask myself, “Where do I want to be 1, 3 and 5 years from now?” Then try to take actions to help make that a reality.”
Andrew Housser co-founded and is co-CEO of Freedom Financial Network (FFN). FFN is a family of companies including FreedomPlus, ConsolidationPlus, Freedom Financial Asset Management, Bills.com and Freedom Debt Relief, focused on delivering innovative products that improve the financial well-being of its customers. FFN has been recognized by the Inc. 500 list, Entrepreneur Magazine’s Hot 100, and been named multiple times to the list of Best Places to Work in Silicon Valley and Phoenix. Previously, Andrew worked in the financial services industry, doing private equity investing with Littlejohn & Co., and working in investment banking for Salomon Smith Barney. Andrew, together with co-founder Brad Stroh, is a past winner of the Ernst & Young Entrepreneur of the Year Award for Northern California. Andrew sits on the board of directors of several startup companies as well as two independent school boards. Andrew received his MBA from Stanford Business School, where he was an Arjay Miller Scholar, and received a BA summa cum laude from Dartmouth College, where he was a member of Phi Beta Kappa. He lives in California with his wife Lara and 3 children.
Where did the idea for Freedom Financial Network come from?
One of the reasons I chose to go to business school was my strong desire to do something entrepreneurial. I wanted get off the investment banking and private equity path that I was on. During school and following graduation I dug into various ideas – some crazier than others. One early idea came from an independent study project on a business plan for importing beer from Belize (the inspiration for which was spring break my second year of business school). I had a lot of fun and I learned a lot, most importantly that importing beer from Belize to the U.S. was a terrible business idea (and that things always taste better when you are on vacation). After graduating from business school in June 2002, I continued to investigate various ideas, from taxi cab medallions, to a Netflix for jewelry, among others. Not finding anything I had enough passion or understanding of, I shifted focus to financial services, something I did understand well, and I started bouncing ideas around with Brad Stroh, my good friend from business school. Brad and I shared vision and sensibilities and became businesses partners.
In financial services, we saw opportunity everywhere – an enormous industry, with a lot of segmentation and fragmentation, and not a lot of innovation. One of the frustrating insights we found was that it was a lot easier to make money by getting people into debt – and keeping them there – than it was to try to actually help people improve their financial lives. Some of the biggest banks in the world actually have behavioral economists on staff focused on manipulating consumers to take on as much debt as they can possibly take on, while still barely being able to keep up with minimum payments, keeping them on a never ending treadmill of debt.
We thought about the business we wanted to build: a business with a great culture; a workplace that focused not only on the bottom line, but also on delivering a product that we feel great about; and building a team full of people with whom we love spending time. Culture and organizational behavior are big focuses of the Stanford business school curriculum. We were inspired by the idea of culture as a competitive advantage. From the outset, we thought about building something that would last for decades, and that led to the conversation about what type of business we wanted to be driving to every day for 10 or more years.
It was at this crossroads that Brad and I came up with the two core values that remain part of our DNA to this day: The Heart and the Dollar. The heart is about delivering products we are proud to offer and about caring deeply about our teammates, clients, partners and communities. The dollar is about building a business that delivers strong economic results. That combination gives us the ability to attract and retain amazing people; invest heavily in the people, technology and processes necessary to innovate and continually improve our services; and to deliver great returns to our investors.
Coincidentally, right after our heart and dollar moment, a friend I hadn’t seen for a while shared a story about how he got himself out of $30,000 in delinquent debt. After ignoring dozens of letters and phone calls from collectors for months, he decided to pick up the phone and yell at the collectors. Eventually, his yelling turned into negotiating, and over a back and forth period of several months, he finally got them to agree to accept $9,000 as payment in full for the debt.
It was a real lightbulb moment. I’d never known you could negotiate on a debt, and that creditors would accept reductions in principal balances for consumers in hardship. I realized that if I didn’t know about it, the average American probably didn’t know about it either. I also knew that, unlike my friend, most people would really not enjoy the process of negotiating with aggressive debt collectors, especially people with multiple outstanding debts (our current FDR customers come to us with 9 or 10 different debts, on average).
The concept of debt negotiation hadn’t been on our radar before because there were no real businesses doing it. As we started looking at the landscape, the opportunity started to appear more and more significant. Consumer debt was reaching all-time highs, charged off debt and bankruptcies were also reaching all-time highs. The small firms (often run by current or former attorneys) providing debt negotiation services at that time were horribly inefficient – often with attorneys doing the sales, marketing, customer service, and negotiations. The technology infrastructure was non-existent (some didn’t even use computers!). Any savings negotiated were often more than chewed up by attorney’s fees.
We saw an enormous opportunity to help people in serious need by developing a 21st century model for debt negotiation that leverages technology, analytics, process and amazing people – all built on the foundation of the heart and the dollar.
What does your typical day look like and how do you make it productive?
Most importantly, I work to balance family and work. I believe that focusing on work to the detriment of quality family time leads to the degradation of both.
My days are pretty standard, for the most part. Most days I am up early and helping my kids get ready for school. I cook breakfast for them when I am in town, which is a ritual I enjoy as it gives me the opportunity to spend casual time with them before we head off in our separate directions.
When Freedom was a smaller company we used to joke about people at big companies who spend all their time in meetings. As much as I hate to admit it, as we have grown to 2,000 employees, I now spend a lot of my time in meetings. The communication challenges of a large organization necessitate it to some extent. In addition, the downside of changing something quickly and having it go wrong is much greater than it was when we were smaller. In those early days, changes impacted fewer people, they were easier to unwind and we didn’t have as much to lose. All that said, we try to be conscious of making meetings productive by providing materials in advance; starting each meeting stating a clear purpose of the meeting and an understanding of what decisions we want to be able to make; and closing every meeting with a summary of decisions that have been made, as well as action items to take away from it. We also periodically review standing meetings to see if they are still serving a useful purpose, and if they can be eliminated, or consolidated into other meetings. But the fact of the matter remains that communication challenges and meeting efficacy remain two big challenges for me and our company.
My meetings range from one on ones with my direct reports – which are some of my favorite meetings as they allow us to really dig into the big challenges and opportunities we are facing – to weekly department meetings, monthly financial meetings, and committee meetings, and they fill up a good chunk of my calendar. Aside from that, I try to walk around and check in with people in the San Mateo office for casual flow of information, and call leaders in our Arizona office for the same purpose. I block times on my calendar to be able to put my head down to focus on meaty tactical or strategic issues. I spend a few days a month in our Arizona offices, and also spend a chunk of my time (either on the phone, in meetings, or on the road) with business partners and investors.
When I am not traveling, I am usually able to make it home for dinner with my family, before helping get the kids to bed.
After kids’ bedtime, I’ll do a combination of getting back online for work, playing the piano, limited TV (there are a couple shows I’m currently into). I always read at least a little bit before bed, and always turn the light out in time for 8 hours of sleep.
How do you bring ideas to life?
As we’ve expanded the products offered by Freedom Financial Network, we’ve had the opportunity to launch 7 different businesses under the FFN umbrella, 5 of which are still around and successful today. We started our first business, Freedom Debt Relief, in 2002, almost 9 years before the book, The Lean Startup, was published. But many of the strategies that we used to approach new product launches uncannily mirror those outlined in the book. The idea of gathering feedback and information from customers and the market, starting quickly and cheaply with a minimal viable product, iterating rapidly based on customer response and data, split testing, killing things that are not working early before a huge investment of time and money.
After the initial lightbulb moment discussed in question 1 above, Brad and I quickly went to work to try to see what consumer response would be to a service that negotiated consumer debts. We set up an 800 number to the spare bedroom in the house I was renting in Menlo Park, and then first placed an advertisement for debt negotiation services in the National Enquirer to see what consumer response would be. We received a lot of phone calls, but we also learned something important about customer targeting. The people who called us from that ad generally had debts like a $500 payday loan, or a $2,000 title loan. We had done enough research to know that the business model would not work with small debt amounts, even with a more efficient and technology driven business model.
At this point Brad and I were doing everything ourselves. He started setting up a Google Adwords account to help us target a different market (with help and advice from a classmate of ours who was working at Google and who would ultimately go on to run all of Adwords), and I went to work building a website with some limited computer science skills I had learned in undergrad. When we flipped the switch on a Sunday night, relying on an unoptimized Adwords campaign and a rudimentary, single-page website with a horribly ugly design, we didn’t know what to expect.
I woke up Monday morning and saw over 100 emails in my inbox with the same subject line, “You have a New Form Submitted”. I started opening the emails and looking to make sure they weren’t all the same form. They weren’t. There were people from all over the country, with 20, 30, 40 thousand dollars of debt, who had come to our terrible website and entered their information looking for help. I started calling the people back, still thinking I was doing research. How much debt do you have? What was the reason for getting into debt? What was the catalyst for reaching out to us? Income, expenses, assets. Have you tried talking to your creditors about your problem? What did they say? Have you considered bankruptcy, debt consolidation, credit counseling? I explained that we were recent Stanford business school grads looking into debt negotiation as a potential debt resolution option. Some customers were disappointed to hear we didn’t have a business yet. A few said, “You seem like a smart guy, if I pay you a few hundred bucks, will you see what you can do for me?” All of a sudden checks started showing up in my mailbox. We quickly got a lawyer friend of a friend to draft the appropriate legal docs. Then we found an Stanford business school alum from a generation before us who was willing to give us office space for free on the condition that we return the favor someday (we have been growing tenants of his for the past 15 years). We raised a small friends & family financing round, and the snowball started rolling.
What’s one trend that really excites you?
I’m fascinated by crypto-currencies, what they can do for safely transacting in developing economies, storing value, hedging inflation, facilitating payments and remittances. I know there are many smart people who are naysayers claiming it “is not a real thing” and has no inherent value. But these same people are holding pieces of paper in their wallets and relying on a digital ledger for their bank accounts.
What is one habit of yours that makes you more productive as an entrepreneur?
Sleep – 8 hours a night. Every night.
What advice would you give your younger self?
You don’t always have to be right. If it’s not critical, let it go.
Tell us something that’s true that almost nobody agrees with you on.
99% of people in the U.S. are great people. We’re obviously living in a hyper partisan period, and it’s not fun listening to people on both sides of political spectrum attack each other with insults and degrading language. I’m happy to call myself independent, but I try not to get angry if people see the world differently than I do. There is no question there are some bad people with repellant views out there, but I do believe it is a small minority. Unfortunately, the press loves focusing on these small groups because it creates controversy and gets ratings. Someone once told me that if you disagree with someone, don’t argue face to face. Stand behind him instead, and look over his shoulder so you can see what he is looking at.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
Ask myself, “Where do I want to be 1, 3 and 5 years from now?” Then try to take actions to help make that a reality.
What is one strategy that has helped you grow your business?
Building a great culture. It is amazing what can get done when you have hard working, caring individuals all striving towards the same goals. We are not perfect by any means, but we care deeply, and we work hard to maintain the culture we have built. We have been able to attract and retain great people, and avoid politics and jerks (for the most part – see next question).
What is one failure you had as an entrepreneur, and how did you overcome it?
Not getting rid of jerks fast enough. When you are a smaller company, it is a hard decision to get rid of a high performer who is a bad cultural fit. That is, it is a hard decision until you see the negative impacts that keeping that person around has on your organization. By failing to take action, you are sending a signal to the entire organization about your values. And behavior like that it can grow like a cancer. If someone is a high performer but a jerk, give that person the message early and in no uncertain terms. If they don’t fix it, set them free.
What is one business idea that you’re willing to give away to our readers?
Netflix for jewelry. Still think it is an idea worth pursuing.
What is the best $100 you recently spent? What and why?
Books. I read every night, both fiction and non-fiction. Fiction is like a mini-vacation, without the hassle or expense. Non-fiction – I’ll steal a line from Warren Buffet – is like compound interest for the brain.
What software and web services do you use? What do you love about them?
Salesforce.com, Google Cloud Platform, Tableau, Box.com. We are a people business first and foremost. But technology and data & analytics are areas into which we will always be heavily investing to try to get better every single day.
What is the one book that you recommend our community should read and why?
Based on what I’ve read recently, I’ll recommend one fiction and one non-fiction. “Homegoing”, by Yaa Gyasi, is a beautiful novel that begins in the Gold Coast of western Africa during the British slave trade, and follows the different fates of two half-sisters and their descendants through multiple generations up until present day America. “The Advantage” by Pat Lencioni is an easy to read, but very insightful book that I’d recommend to anybody who believes that organizational health and culture is important to their organization’s success.
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