For Sig Anderman, Technology is a Means, Not an End

Some view computers and related technology as entertainment devices. Others, as high-tech replacements for common gadgets like typewriters. Still others arrive at a high-tech solution because it's just the most appropriate answer to a low-tech question. That's the type of visionary one finds in Sig Anderman, CEO of Ellie Mae, Inc. Ellie Mae is a business-to-business provider of Internet services for the residential mortgage brokerage industry. The company provides loan originators with retail web sites and a direct connection to lenders and service providers to expedite the lending process. With its headquarters at 4457 Willow Road here in Hacienda, Ellie Mae employs 180 people, with 120 of them here in Pleasanton.

Sig Anderman grew up in Manhattan and was educated as an attorney at NYU Law School. He moved to the Bay Area 25 years ago via Chappaqua, just north of New York City. 30 years ago, he co-founded a company that provided home warranties, which are contracts sold through Realtors to guarantee aspects of a purchased property such as essential mechanical systems and appliances. He sold that company, called American Home Shield, in 1982, and it is now the largest home warranty company in the U.S. Next, he started a company to help Realtors understand and arrange for mortgage financing using computer technology. "There was no Internet in those days," Anderman says. "Just data transmission over telephone lines." The name of that company was CompuFund and Anderman sold it back in 1988. In 1992, Anderman started a company dedicated to automating and streamlining the homeinspection business called Inspectech. In 1997, Anderman moved on once again, selling Inspectech and, in 1998, he started Ellie Mae.

Each of the companies that Anderman founded moved progressively further into using technology as a real-world tool to solve the problems of people with specific jobs and responsibilities. With Ellie Mae, he sought to take on a much bigger challenge than he had in his other endeavors-the loan origination process. "We started the company in 1998 to provide technology tools-specifically Internet tools-for mortgage originators, what we call third-party originators who are mortgage brokers, mortgage bankers, small banks, small SNLs, and credit unions. Our mission was to bring the power of the Internet to these third-party originators."

Loan origination starts from the moment the applicant-the borrower-decides to borrow money to the day it's funded, 45 days later. Within that time there is an enormous volume of data that has to be communicated, analyzed, entered into various databases, and returned to the sender. "For each mortgage, on average, the data is touched and reviewed by 61 people who work for about ten different kinds of companies, including the lender, the appraiser, the credit bureau and the title company," Anderman says. "You've got a lot of data moving around that is very detail-oriented. For example, it's very important that the amount of the loan is accurate and the digits of the social security number are correct - and in the right sequence." Any seemingly small data entry error can have costly consequences in both time and money. For every loan written, all of this data has to be transferred many, times among the various companies involved in getting the loan funded. In the past, it was done by phone, fax, overnight delivery, or mail. "You've got the whole industry doing, say, 17 million loans last year," Anderman says. "In connection with that they're ordering another 170 million other services. And in connection with those 170 million services and 17 million loans there are about two billion transfers of data just to get all of the loans originated."

"If you look at this industry, you have to say, is there a better way to move all of this data around more accurately with less work and fewer errors? The answer is the Internet because you can take bundles of data and transfer them from one computer to another computer instantly and virtually free. So you eliminate all the time delay, all of the cost, and all of the errors." What Ellie Mae did was to create technology that acts as sort of a universal switch that allows all of these different players to communicate-including some 40,000 third-party originators, 80,000 appraisers, several hundred lenders, several hundred credit bureaus, and several hundred title agencies. "That's our basic business," Anderman says. "Moving that data back and forth."

Anderman isn't a computer programmer-he's a lawyer from Manhattan. One of the most important keys to building his fourth successful business was finding the appropriate people to build its products. "My partner is a PhD in computer science, Limin Hu. He's the computer genius," Anderman says. "I like technology to be 'point-and-click' easy. I think that's what everybody wants-the simplicity. Complex technology should also be simple and usuable." Finding the right people to run Ellie Mae was also a key goal. "We have very good management. Our president has several talented people that report to her. Management in any company needs to be organized so that people can work effectively together, understand what the common goal is, and keep working to accomplish it."

Obviously, founding numerous successful businesses takes more than just a few good ideas. "I don't think you start out your career saying 'I'm going to be a successful business person,'" Anderman says. "But I think that you need to do everything with passion and gusto and the sense that you really can accomplish what you want." Experience is also a key element in his success. "I've been involved in real estate and mortgage services for a long time. Being in the business for 30 years certainly helps and my approach is to try to take what on the surface appear to be difficult things and try to make them as simple as possible."

Picking a field with abundant opportunities is also an extremely important business decision. "Every year, almost no matter what happens, six or seven million people buy a house and have to get it financed," Anderman says. "In recent years, especially, the refinancing boom has been enormous." With such a high rate of mortgage activity, it's likely that many loan originators will be looking for options to ease the movement of data-a boon for Ellie Mae and Anderman. Even without the trend toward refinancing, the number of home purchases each year gives Ellie Mae a constantly burgeoning market, making getting involved in the market a solid decision.Anderman is humble enough to admit that effort and inspiration aren't always the whole picture. "You never know how it's going to turn out," he says. "You need to set a goal and be stubborn about it, then make each of the steps in your career successful, but the final ingredient is luck. You do all the right things and then you keep your fingers crossed that you'll be lucky as well." Many in the mortgage loan business are fortunate that Sig Anderman has been a persistent visionary, but few would say that luck has had much to do with his success. Most would be more likely to say that Anderman is evidence that hard work creates opportunities for those with the vision to see them.

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