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Guest: Doug Lebda, the founder, chairman, and CEO of LendingTree, a three-billion-dollar market cap company that empowers consumers and continues to change the way people shop for financing.
Episode in a Tweet: LendingTree grew BIG business by following these strategies – and you can too.
Quick Background: There’s truth in advertising to those LendingTree ads we all remember, in which a green puppet named Lenny tries to help people avoid getting the runaround from banks and lenders. That was once 24-year-old Doug Lebda, struggling to find a good mortgage rate for his first home purchase. From that frustration came a multi-billion-dollar idea: an online platform that makes it easier for consumers to comparison-shop for loans of all kinds.
On today’s show, Doug discusses how he grew LendingTree from $10,000 in seed money into an e-commerce giant, and how you can apply some of the same strategies to growing your own business BIG.
Transcript: Download the full transcript here.
Key Insights from LendingTree’s Growth
1. Follow your vision towards something new.
In 1998, most people were still skittish about giving a website their credit card number, let alone comparison shopping for personal loans. But Doug knew that there had to be other people like him who were frustrated by all the hoops you have to jump through when you’re looking for a loan.
Even better, Doug had a vision: “If I could create a marketplace where, on one side, you’ve got banks competing for the consumer’s business, and I can add value to the lender by reducing their customer acquisition costs, getting them customers that fit their specific profile, and do it in quantities that matter to them, then I can actually help them improve their business.”
All the e-commerce pioneers that survived the dotcom bubble had that same clarity of vision. Google wanted to organize all the world’s information. Amazon set out to be a place where consumers could buy anything they wanted. Facebook is determined to connect everyone on the planet.
Focusing your own business with a clear mission statement is step one towards creating a value proposition that consumers can’t ignore.
2. Demand the best from everyone – including yourself.
Doug remembers a key turning point during the early days of LendingTree when he took on his first $5,000 outside investor. It made him think about how to separate his role as CEO, as a shareholder in the company he runs, and his duty to outside shareholders. It was no longer “just about Doug,” instead, he had more stakeholders to consider.
“Now, part of my job is to be a fiduciary of the investor’s money, and to make sure I can hopefully get him a good return on his money,” says Doug. “Now, it’s not about me. I think every founder and CEO has to say, ‘As a shareholder, my job is to maximize investment returns and hire the best team. And in some instances, the best team may not be you.”
Because Doug knew that he wanted to remain the CEO, and manage the business for the long-run, he would put on his shareholder’s hat to evaluate himself critically, and push himself to be a manager worthy of running the business he envisioned.
So, if the successful CEO of a multi-billion-dollar company spent a good part of his day wondering if he should fire himself, why the heck are you still putting up with ineffective c-suite officers, or a sales manager who keeps over-promising and under-delivering? Middling CEOs stick with bad employees for all sorts of bad reasons. Guys way up at the top, like Doug, believe that the quality of the team is everything, and don’t hand out free passes to anyone – not even themselves!
3. Hit the books.
Top CEOs know that it’s their responsibility to stay curious and keep learning. But, once again, the cream of the crop go to the next level. Bill Gates takes two “Think Weeks” every year where he does nothing but read. Richard Branson bought a private island where he could be apart from the daily business grind and be free to dream up the next big thing for Virgin.
And Doug, who runs a huge, successful financial company… Recently went back to business school and finished his MBA! “Our stock price has done very, very well every time I’ve been studying at the University of Virginia — Darden School of Business, because I apply everything I learned directly back into the business,” says Doug.
“The second way I learned is through hiring great people, people who knew more than I did,” he says. “You could be the Dilbert cartoon, where smart workers make the CEO the stupidest guy in the organization, but a lot of times entrepreneurs make the mistake of not wanting to look bad in front of their board, in front of their shareholders, so they hire dopes who can’t really do the job.”
4. “Do what only you can uniquely do.”
As LendingTree continues to scale, Doug has passed a message down through his ranks to keep every single employee on task: “Do what only you can uniquely do.”
The CEO has to set that example from the top. “As a founder and CEO, I need to be in the weeds, but not in the numbers,” Doug says. “I need to be in the weeds of the fine line customer experience. I need to be in the weeds with our lenders, meeting the heads of the companies, going and walking around in their call centers. I need to be in the weeds with their people, motivating them and talking to them, but I can only uniquely do that. Somebody else can tell me whether we’re running on plan or not, and if we’re not, I can dig in where I need to.”
5. Design a “Project Calvin.”
Thinking about his customers as people, and not just numbers on a page, is another way that Doug was able to innovate at LendingTree. He met a man named Calvin who was down on his luck, had poor credit, and couldn’t get a loan.
So, Doug told his product team, “Go design Project Calvin.” Using Calvin’s needs as a test case, Doug and his team created a new loan product that they’ve been able to automate and market to other consumers. “It’s going to turn into a $50 million business for us in revenue, while also helping people to anticipate ways that they can improve their credit,” Doug says. “We did that without market studies and we did it very quickly because we built a project around one person — but there’s tens and tens of millions of people just like him. Now we’re able to empathize with that person and actually understand his situation, because we are walking in his shoes.”
What could your “Project Calvin” be? What is a product or service your customers need, or will need after the next big shift in your industry. If you’re not on the leading edge of the next big innovation, I guarantee that one of your competitors will be.
1. Heading into new frontiers can be scary, but if your vision is strong and clear, you could also be on the path to BIG new opportunities.
2. You be the CEO. Let your managers be managers, your sales people be sales people, and so on down the line. Anyone you can’t trust to do their job without your handholding should not be working for you.
3. Walk in your customers’ shoes. Refine your existing pitch to appeal to their wants and needs, or better yet, dream up the next big innovation they won’t be able to live without.