May 3, 2000

UAEL President Bob Rodi, also President of LeaseNow, and an internet expert, with his own software and ability to have brokers and vendors go on line, spending much money and time---Bob Rodi questions Internet Leasing Matrix Companies soliciting business without the aid of a broker:

Hi Kit,

Here I am again with a few provocative questions regarding leasing through the "portals" that are offering the "multiple offer strategy". I have posed these questions several times and I have yet to get an adequate answer. I hope that some of our astute industry observers will be able to answer these questions. I hope that you will bring some of them up in the seminar you are moderating for us at the UAEL conference in SF. Here goes:

1. What proprietary service advantage is being offered by the portals? As I understand it, a customer logs on, applies, and may receive multiple offers for "pre approvals" in a "matter of hours". Isn't this what brokers have been doing since the dawn of time in the leasing industry? Credit approval was reduced to a "matter of hours" several years ago in the leasing industry. Aren't our customers looking for approval in a matter of minutes. Once the customer receives the "offers" does he/she have to contact each lender to ask any questions or is this type of service handled by the portal CS department.

2. "Pre-Approval" (e.g. letting one know that they are qualified for lease financing) is the product of the mortgage industry. I do not see the demand for this in the leasing industry unless it is for C&D credits. How are the portals going to position themselves to compete for A&B business if there are plenty of direct lenders on line who offer"Rapid Approval", documentation and funding through their websites? With small ticket leasing a "parity price/parity product market" where is the point of differentiation for the portals who do not underwrite or fund their own transactions?

3. Why would a vendor direct their customers to a portal site and give up control of the process that makes the sale for them? Will the vendor automatically accept a P.O from the portal? I doubt it. Will a vendor require credit information to accept a P.O. from a "no name" leasing company? Does a vendor really care about saving his customer $4-$5 per month if it will delay closing the sale?

Maybe someone can help me with why this is so attractive to venture capitalists. Most of the vendors I've spoken to see little advantage with web based companies. They want their leasing company to have "rapid response" capability but very few have progressed to the point that they are willing to become the "co-producer" without being compensated and I would guess that vendors still originate 80% or more of small ticket lease volume. Are the portals going to put vendors in the leasing business or are they truly concentrating on lessee direct business?

Well, enough questions for now. I know that you will lead a lively discussion on these subjects in SF. I'm looking forward to it.

Thanks

Bob Rodi