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25, 2000 To regularly receive Leasing News kitmenkin@leasingnews.org ---also ON LINE at www.leasingnews.org--- (report to be posted today)
Tom Allanson has resigned as president of GE/Colonial Pacific "to take the opportunity of a lifetime." He has joined Intuit to head their Turbo Tax division. Living in Silicon Valley, see employees leave for better jobs and opportunites, I can appreciate this. Netbank has just completed a deal with Quicken, who is owned by Intuit and runs Turbo Tax on their software and internet connection. Quicken is going to not only recommend Netbank, meaning Quicken users should change banks, but change their software so it will automatically interface, using the features of Quicken and possibly Turbo Tax. It is only a matter of time that we will see money as we now see postage stamps being printed via the internet.They don't use paper money on Star Trek. Perhaps with the automation of loans, ATM machines everywhere, and grocery chains having banking offices, we will see less actual branch offices and more on line banking. The electronic cash is not that far from reality in the next five to ten years. Electronic payments and record keeping is becoming very popular. I can remember less than two years ago Bank of America and Wells Fargo saying the internet banking will never catch on...They didn't even want to go on line. I also remember when ATM's came out, banks were against them, saying people would never use them... Bob Rodi---Venture Capital and Online Leasing/Signature,too. Just a quick comment on the Newswire stories on all of the new online "leaders" in the internet finance marketplace. I recently conducted a regional meeting for the UAEL that led me to do some fairly extensive research on the online marketers. Most of the business models I could get information on are designed to work on a margin of approximately 300 basis points. Now, while I'm no genius with regards to VC, M&A activity, etc. I still learned that with 300 basis points as a "target" profit margin these companies, operating as brokers, would have to generate more than $100,000,000 in volume to make $4-$5MM in fee income. With an average application size somwhere in the $10-$12K range the application volume that would have to be generated, assuming that normal industry closing ratios are achieved, is phenomenal. My point in mentioning this is that I am wondering what kind of returns the investors in these companies are looking for. To get one of these companies into acceptable IPO territory would take volume levels of $200-$300 million. I can only draw one of two conclusions from this. Those of us that have been around many years have grossly underestimated the actual size of the small ticket market or there is going to be a blood bath of a market share war during which no one will make a dime, fraud will actually be encouraged, and even the winners will be so decimated that I believe that it would be difficult for them to continue in business. In the long run the investors in these companies will never realize their anticipated returns. It seems like a bankrupt business model that doesn't stand up to close scrutiny. I would very much like to hear the opposing view here. I really wasn't able to learn much about exit strategies for the investors in these models. Do these investors have different exit strategies that normal venture capitalists? It seems that they would almost have to have altruistic intentions given the way the numbers stack up. What am I missing here? I also agree with Joe Bonano on the signature compliance issue. We use a "continuing guarantee" that has language wherein the guarantor grants permission to update credit. They also agree to provide additional financial information upon our request. I'm not certain however that the permission in a continuing guarantee will hold up to scrutiny as permission to "initiate" a creditinvestigation. I will revert, however, to my prior comments regarding "on line" applications or applications taken over the phone and offer one possible solution that fits more with the modern automated application process. With "on line" applications there is already some precedent that says the customer grants permission when the customer clicks or selects "OK" or "submit". The problem is with identification of the customer. Applications by phone may be easier to handle. Here at LeaseNOW we have a software based PBX that runs over our NT network (VOIP). This software allows me to digitally record any phone call if I so desire. I am seriously considering making a follow-up call to our "on line" customers and digitally recording their permission to run a credit report. Customers giving applications over the phone will be asked for permission to "record" their application. As you know a digital voice recording is as good as a fingerprint for identification purposes. The customer's voice print can be saved and attached to their credit file. If we are ever challenged or audited for compliance the voice prints could be produced as evidence of compliance. We are already using this method on our verbal verifications. I would be interested in the opinions of our legal eagles in engineering this type of compliance. Short of this method I don't know any way to be absolutely sure that the person giving you a signature is who they say they are without getting it notarized. Opinions Please. Bob Rodi drlease@leasenow.com August 25,1918 Leonard Bernstein Birthday If you would like to join our leasing news network, all you need to do is ask. We are also ON LINE: www.leasingnews.org We do not add anyone to our mail group unless they request it- Name: Kit Menkin E-mail: Kit Menkin kitmenkin@leasingnews.org Date: 08/25/00 Time: 11:00:42 www.leasingnews.org 346 Mathew Street Santa Clara, Ca. 95050 Voice: 408-727-7477 E-Fax: (781)459-4789 to regularly receive Leasing News kitmenkin@leasingnews.org American conductor and composer, Leonard Bernstein, conducted the New York Philharmonic Orchestra. While growing up in Manhattan, my mother would take my brother and I one Sunday once a month to the children's concert that he conducted along with a short movie clip about music staring Gerald McBong Bong. As I grew older, we went to the concerts on weekends, then saw West Side Story and On the Town, plus Candide, composed by Leonard Bernstein. My father played classical music all the time at our house and I grew to love this music. In fact, I first learned about how jazz worked from the Bernstein concerts and he also produced a Columbia record, which is not out of date today. www.leasingnews.org |