Elliot Moss
Welcome to the Jazz Shapers Podcast from Mishcon de Reya. What you are about to hear was originally broadcast on Jazz FM however the music has been cut due to rights issues.
Welcome to the brand new season of Jazz Shapers with me I’m Elliot Moss. It is where we bring together, as I hope you well know, the pioneers of the business world with the musicians shaping Jazz, Soul and blues and we’ve got typically risk-taking, problem-solving, inspiring and can-do guests joining us over these next few weeks. With me today launching this season in style is Daniel Hegarty, Founder and CEO of Habito, the digital mortgage broker aiming to transform the home buying experience. Aged 16 and having to choose between buckling down to his A levels or touring the world as a guitarist with his punk band, Serum, he unsurprisingly chose the latter. But after a decade as a freelance musician in Los Angeles, it was the music industry he was keen to escape. Back in the UK he stumbled he says, into the world of Fintec, working at loan companies, Wonga, then Everline but it was a nightmare mortgage application where his brokers’ mistakes almost cost him the house that gave Daniel an entrepreneurial idea – what if he could develop technology to fix this antiquated industry and make buying a house easier and more supported. Habito was launched in 2015 and is now both a broker and lender, offering award winning free to consumer mortgage services and they are the first UK mortgage company to receive BCorp accreditation which is no mean feat.
I am with Daniel Hegarty, he is the Founder of Habito and they make the mortgage process easy. I am not saying this because you told me to say that, I’m saying it because that is what you set out to do. Six years down the line, is it a yes from the Judges, is it on the way from the Judges or is it a lots more work to do from the Judges?
Daniel Hegarty
I would say firstly, thank you for having me.
Elliot Moss
It’s a pleasure.
Daniel Hegarty
I still feel like we are very early on the journey, I think we’ve made an immense amount of progress, helped a lot of customers on the journey to home ownership but yeah, I mean it is such an extraordinarily complex and bysantine industry it feels like there’s, yeah, a very, very long to-do list in front of us.
Elliot Moss
And yet of course you’ve got a huge number of accolades, 2020 I think you were the best mortgage advisor or broker in the industry which is fantastic. You’ve built something, you’re heavily funded, I sense immediately that you are (a) a man on a mission but you are quietly spoken he says after three seconds of meeting Daniel, but (b) that I don’t know if you will ever think the job is done?
Daniel Hegarty
You might well be right and I have been accused in the past of not celebrating the successes that we’ve had as I sort of stare forward into the jobs left to do but no, listen I think you know, home ownership is so fundamental to the human experience, whether it be from an economic perspective, whether it be from a you know, the basics of needing shelter, whether it’s from an emotional perspective as we think about you know, raising families in these back gardens and so on, so I think like a topic that complex and important to us as individuals and as a society like, there’s, there’s a lot of work to do and yeah I am thankfully excited about doing that work for, for quite a long time.
Elliot Moss
And of course you have achieved a lot but as you said, this is a very complicated and bysantine industry and very well put but back in 2015 you know, I often say this to people that have spotted the ‘why don’t we just fix the thing’, I’ve had Alex Chesterman here talking about second hand cars and Cazoo goes from strength to strength. What is it that converted you to being able to do something about the frustration rather than like the rest of us saying, this is not very good?
Daniel Hegarty
Yeah I think it, it’s interesting. So I think as an entrepreneur you are always looking for things to fix, you are looking for like little broken things in the way that perhaps you can make a difference to and I, I had actually already been working in financial services as you said, for a few years and when it came to buying my first house which feels like this sort of impossible mountain particularly if you are trying to do it in London and was, I was really struck by a few things like there’s all the obvious stuff like it’s an abominable process, like nobody is telling you the truth, nobody is talking to each other, the volume of jargon and misinformation is maddening and all the while like this is literally the most important thing you can possibly conceive of so beyond all of that I think the thing that really struck me was how entirely disempowered I felt in the process and how I really at a fundamental level did not understand what the mortgage was or how the home buying process worked and so I guess that the insight there was you know, this was an industry that been built up over decades, even hundreds of years around the complexity of regulation and property rights and so on and actually the only person who had been completely ignored in that process was the customer, the consumer, the home owner at the end of it so I guess the very simplistic thought that occurred to me was if you could rebuild this, this market, this industry, this process around the customer or the home owner then you might be able to do something quite interesting.
Elliot Moss
The complexity though Daniel, of lending people money against an asset which you hope isn’t going to fall down and how much someone earns and how you calculate it and interest rates and the market, I mean it is inherently very complicated. How do you ensure, and I looked at the website before meeting you obviously and it’s bright and it’s light and it is like simple questions at the beginning and all that. How do you ensure that when you take the complexity away from something, you don’t make it so simple that you miss things that are really important?
Daniel Hegarty
That’s a really great question. So I think there’s a few parts, so I think, I think one of the greatest enemies in this industry is actually just language like the level of jargon whether it is LTV’s, SVR’s, LTI’s like it’s just like nobody, why would anybody understand this like it’s ridiculous to assume that anyone would be an expert at mortgages, like you do it maybe once every few years, you buy a house once every eight to ten years so everybody is coming to it as a novice but yet we speak to them like they’re you know, like they’re a lawyer or some kind of technical expert so I think the first thing is just calling things what they are and asking questions in a way that they could be potentially understood and then as you say yeah there are, there are a vast number of kind of complex levers and algorithms and affects that are happening in the background but really the customer just needs to know how much can I borrow, how much is it going to cost me and can I have the mortgage? Obviously there is all the natural warnings that have to be made around repossession and making your repayments and so on but ultimately like the customer just wants to know if they are going to be able to get the house that they want and we want to get them there in the simplest way possible.
Elliot Moss
And I think that’s brilliant, I think language often obfuscates, not just in this industry but in most industries, the legal industry is one, accounting is another, I mean they just do and you kind of wonder who it is serving but wanting to do that, seeing how bad the process was for you and then first moves into actually creating the business, just tell me a little bit about how (a) why you believed you could do that and (b) where those first few people came from to help you grow?
Daniel Hegarty
Yeah I do think a little bit of ignorance and naivety are very helpful in all of these journeys and so yeah I guess I sort of had a fire in my belly about it and I went off and spoke to anyone who would speak to me so I spoke to some of the banks, the Regulator, customers, mortgage brokers, as many people in the space that I could find and generally had lots of people sort of shaking their head at me and telling me what I was suggesting was ridiculous and I was just, I was struck by two things, one was like how infatuated they all were by the complexity of their market and all of the technical terminology and the history of the thing, I mean how powerfully disinteresting that was to me as a consumer at that point and two was that there was a, like a real sense of customers are going to put up with it, everybody wants to own a home you know, like nobody’s going to force us to do better than we are already doing and so I think those two things combined, like I think a, yeah a belief that customers were being left behind in this process for no good reason and the idea that the people who would potentially get in my way further down the line weren’t paying much attention, really yeah gave me kind of the impetus to get going.
Elliot Moss
And then those first few people, where did you find the right kind of people, and we are going to talk about, go on to talk about your values later but you know, it, it looks great six years later but I am pretty sure that it doesn’t quite get written down in the way that it then appears six years ago. In other words, you may have had to find people before you decided what you were really looking for?
Daniel Hegarty
In terms of employees?
Elliot Moss
Yeah.
Daniel Hegarty
Yeah I mean those first sells are heard right, like essentially I was asking somebody if they wanted to come and sit in my kitchen with me for six months and listen to me ramble and I was fortunate like I found some people who kind of I guess shared the entrepreneurial zeal and belief that there was like a real meaningful problem to solve but it was, it kind of threw me asking people who the best people they had ever worked with were and then me sitting down with coffee and sort of talking at them until they, they broke down and agreed to come and help me for a while.
Elliot Moss
This is Daniel Hegarty, he breaks people to ensure they come and help him build his vision. We will be hearing lots more from him, he’s my Business Shaper today and he is the Founder of Habito and they are doing really interesting things in the mortgage market. Right now let’s hear a taster from the Mishcon Innovation Series, a brand new podcast which can be found on all of the major podcast platforms; Natasha Knight invites business founders to share their industry insights and practical advice for those of you thinking about getting into an industry and thinking about starting your very own thing. In this clip focussed on retail we hear Tama Tamagotchi, Founder and CEO of Papineau, an online stationary brand.
You can hear all our former Business Shapers on the Jazz Shapers podcast and indeed you can hear this very programme again if you pop Jazz Shapers into your podcast platform of choice or if you have got a smart speaker why not ask it to play Jazz Shapers and there you will find a taster of our recent shows. But back to today’s guest, our first guest of our brand new season, it’s Daniel Hegarty, Founder and CEO of Habito, the digital mortgage broker transforming the home buying experience. So you get these people round the table, you convince them, you give them nice coffee, you do all that stuff. Those first, and once it’s happening and once you’ve got some funding and then you’ve got some runway. What are those first year or two like with the benefit now of four years? I mean obviously we all forget the horrible stuff or we try to. Maybe we won’t even remember the horrible stuff, what was it like for you as you look back now?
Daniel Hegarty
I, I found it deeply unpleasant. Like I think a lot, a lot of Founders I find like yearning back to those early days when it was just us and a white board but I felt like a crazy fantasist running around telling everyone that I was the made-up CEO of my made-up company that was going to take over the mortgage industry and I didn’t, like it wasn’t great for my mental health and actually once we got sort of through that first six or twelve months and we like had built a prototype and we had real customers and real investors and sort of enough of us that we had some momentum, I found it a lot more enjoyable and I think, I think it’s interesting, I think the sort of the gap between conception and execution just gets longer and longer and longer as the business gets bigger and more complex and more heavily regulated but there is definitely a sweet spot when you know, you are like thirty to fifty people and you are like just moving at the speed of light and you are shipping new product every week which actually was two or three years in for us which is probably the point that I hark back to.
Elliot Moss
I hope I don’t get this wrong but there is a philosophy or there’s a theory around this thing called solipsism which is all about the thing that you believe in your head is the thing that’s true outside of your head. Which is essentially what most entrepreneurs do in those first eighteen months. If that’s the case, how did you remain sane and hold on?
Daniel Hegarty
I think you have to be able to hold two ideas in your head simultaneously that are completely oppositional; one is that like your savings are running out, your wife is probably going to leave you, that you’ve got these strangers in your kitchen…
Elliot Moss
You say this with such a straight face, I love it. Just carry on talking about Armageddon.
Daniel Hegarty
Yeah. The other one is that you might end up you know, like completely changing an entire industry and changing the lives of those people around the kitchen table and changing the lives of the customers that you help serve and I think a lot of the other Founders I know don’t hold those two ideas, they only hold the latter and I guess maybe I am a little to sane.
Elliot Moss
But that sanity just to touch on the music career that happened before. Music is relatively insane, relatively chaotic, relatively entrepreneurial actually, relatively let’s make it up, let’s write some music, let’s play, it’s going to sound different tonight and you toured for a long time and all that. Surely you were pretty inured to the notion of chaos and if so, has that actually thinking about it, helped you manage the fact that it’s all over the place in those first few years?
Daniel Hegarty
Yeah for sure. Like I think, I mean not, it’s a bit trite but there are definitely some parallels right like you, you are a few people in a band, a few people around the kitchen table, maybe the VC’s are the record companies, maybe your websites the album, I am not quite sure that that adds up but, but ultimately like company building is a creative activity to me, to my mind and I think the thing again that really struck me as I have gone along is that as the company gets larger, it doesn’t get less creative, I actually just get to share in that creative process with a larger number of people and I find that really, really quite exciting and I guess it is probably the main thing that drives me on to do it so, so no definitely a background in music and comfort with chaos is an excellent primer for start-up life.
Elliot Moss
This point about being creative and continuing to be creative and how important that is. There’s a really brilliant juxtaposition there between the incredibly dry world of getting money to buy a house which is a very important moment and the notion of creativity. You are known as a business to do creative things and indeed your creative partners, Uncommon Nils, one of the Founders there was a guest on the programme. Why do you think creativity is important to you, where does that come from way back in the day even before you at the age of sixteen decided not to do A levels and went off to become a you know, a touring musician?
Daniel Hegarty
So that’s a really great question, I’ve never been asked that before. I think, I think for me like creativity is, is kind of another way of talking about communication. I think in all of our different ways, at different points in our lives we are trying to find ways to communicate our essential self to others and have them connect with us and for me as a really introvert, shy teenager like being in my terrible punk band and shouting a lot was the way that I managed to get it across. I guess now approaching forty with a few kids and like a fair few employees to take care of, I find myself trying to communicate in a way that is more comprehensible and more sort of universal and has more perhaps practical impact on people’s lives but to me the story is almost exactly the same.
Elliot Moss
And the bravery to create a book which is you know, erotic? Talking about, what was the title of the book?
Daniel Hegarty
It was the Road to Completion.
Elliot Moss
The Road to Completion and there was the other thing that, that I know you guys did which was…
Daniel Hegarty
The Mortgage Kamasutra.
Elliot Moss
The Mortgage Kamasutra of course where the website went down to encourage couples to enjoy each other in the way that couples’ should enjoy each other. All those, all those things most mortgage businesses, most financial service businesses would not touch them with a barge pole.
Daniel Hegarty
Yeah I think the core of that again is, is empathy really was that we, obviously we talked to tens of thousands of customers every year and the thing that we heard through some surveying was (1) that six out of ten mortgage customers go through some kind of like mortgage related stress or anxiety and I think that then half of them stop having sex, lose their libido during the house purchasing process which kind of obviously stuck in our heads and we were like, what are we going to do about this, like that’s a real problem to solve and so every year when Valentine’s Day comes around, we inevitably find ourselves scratching our head and thinking about how we might sort of bring a little love back into the world.
Elliot Moss
It’s like, I feel like I have just been transported to interviewing Dr Ruth, who for those people of a certain age will remember in the 80’s Dr Ruth popped up talking all about people’s sex lives. So Dr Daniel you are solving it.
Daniel Hegarty
We are here for all problems.
Elliot Moss
And on that point that you talk about empathise and I mentioned your values earlier. The values of the business as stated; empathise with purpose, build better things, be a hundred percent responsible, have backbone. These were constructed by you and a group of people or by you?
Daniel Hegarty
I think they began with me scribbling them down at the kitchen table and really, I should say another part of why I wanted to Found a business was that I wanted to work somewhere that I liked and where I felt like we were sort of a positive force in the world beyond just our commercial activities but yeah as… those scribbles then became as our sort of leadership team built out, we went away and spent a couple of days really sort of digging into them and precisely what they mean and how they would show up in the world and then they became crystallised in the way that you describe.
Elliot Moss
Brilliant stuff. We are going to have our final chat with Daniel very shortly and we are going to be playing a bit of a treat for you from Cécile McLorin Salvant, that’s in just a moment, don’t go anywhere.
I’ve got Daniel Hegarty just for a few more minutes here on Jazz Shapers and he, if you haven’t been listening earlier, and I suggest if you’ve missed it go back on to your favourite podcast platform you can pick it up, he is the Founder of Habito and they are reinventing the world of mortgages. Will it ever end? I mean can you, you know at what point will you go, I’ve done it. I asked you at the beginning how far you are along the way. When will you look and go, I think I am making inroads. Is it a market share thing, is it a you keep doing customer service and they go ‘wow’. At what point will that person inside of you who is never content with quite where they’ve got to maybe go, I’m feeling a bit better now?
Daniel Hegarty
I imagine it will be them that kick me out to be honest like you know, it like an infinitely large market, the UK’s second biggest mortgage market in the entire world which most people don’t realise, you are talking about trillions of pounds worth of mortgages, tens of millions of customers so I think, I think there will probably be a day where like the company gets too big for me and there’s somebody who is better at running a ten thousand or a hundred thousand person organisation but no, I think a problem of this scale and sort of human importance, or human magnitude, I struggle to imagine myself getting bored of solving it.
Elliot Moss
And how do you handle the responsibility of all the people and that desire to change the industry and being a dad and being a husband and all those other things. Where’s your refuge as it were to ensure that you, you can cope?
Daniel Hegarty
Well look I think as in everything you just need to surround yourself with extraordinary people like I am blessed with an amazing wife, and amazing kids and just a really amazing group of people running Habito and bear in mind it has been like a tough few years for everybody and you know our whole market shut down for four months and it’s easy when you know all the graphs up into the right and you are winning on every front but like we all got to see each other in like a tough emotional moment as a company and I guess as a country but for us it was incredible. I think we came much closer together, sort of new levels of emotional honesty were found and yeah so my refuge is sort of within my work rather than separate from my work which I feel very lucky.
Elliot Moss
And the market is obviously coming back, the world is sort of returning a little bit. You’re, I imagine are quite chipper about where things are going in terms of the economy versus your business. Is that, does that look positive to you?
Daniel Hegarty
Yeah I mean again with a complex couple of years, very boom or bust with stamp duty holidays and lockdowns and so on but no things sort of, business is returning to normal I would say now and again like it’s, it’s at the very core of what everybody thinks about every day in this country, like everybody loves property and everybody wants to own a home or buy a home or buy their next home and so yeah, we’ve had a wonderful start to the year and are anticipating a good couple of years ahead.
Elliot Moss
That’s funny you talk about being an introvert and your teenage years just before we go to your song choice. Do you think actually in some ways introverts are more suited to this role than people might thing because they can reflect, they don’t need you know, the applause of the crowd, they can actually find the space and in the last few years of course we’ve all had much more time to reflect. Has it been actually a boom, a boom period for introverted type entrepreneurs Daniel?
Daniel Hegarty
I don’t know, I can’t speak for them. The, the way someone defined introversion and extroversion to me once was when you are tired, what do you do, do you want to go and be alone or do you want to go and sit on a friend’s sofa and eat a pizza and be with others and I’m like I’m very much I want to be on my own and so I think yeah I think lockdown and also you know, running these companies is in its way a lonely job so I think being able to sort of draw energy from yourself in these sort of challenging times is a, is a helpful thing. But it does make the getting up on stage and doing radio interviews a little bit more challenging.
Elliot Moss
Well you are doing a pretty good job to me so thank you. Listen I have really enjoyed talking to you, thank you for your honesty and your insight as well and the truth has been good and I think people need to hear the truth sometimes and we like to bring you lots of that here on Jazz Shapers. Just before I let you disappear, what’s your song choice and why have you chosen it?
Daniel Hegarty
It’s A Love Supreme by John Coltrane, I’m told not an entirely original choice which hurts my feelings.
Elliot Moss
We were only kidding. It’s amazingly original, it’s the first time today that anyone has said that.
Daniel Hegarty
It was, well for me I will say, it was big for me as a teenager. I very much remember just hearing that little four note motif that repeats and repeats and it becoming just this incredibly kind of complex thing above it and that sort of stayed with me like even the cathedrals are made out of little bricks ultimately and I think Coltrane was sort of masterful in taking the simple and making it very beautiful and complex.
Elliot Moss
That was John Coltrane with A Love Supreme, the song choice of my Business Shaper today, Daniel Hegarty. He talked really importantly in a complicated world about calling things what they are, it’s a really good lesson for any business trying to do that. He said that building a company is essentially a creative activity, I love that and finally he talked about creativity as a means of communication not just for the business but actually for who you are as a person and your own essence, lovely stuff. That’s it from me and Jazz Shapers, have a lovely weekend.
We hope you enjoyed that edition of Jazz Shapers. You’ll find hundreds of more guests available for you to listen to in our archive, to find out more just search Jazz Shapers in iTunes or your favourite podcast platform or head over to Mishcon.com/JazzShapers.