On a pleasant September morning, a pre-dawn moment of clarity lit me up as I walked north on Michigan Avenue toward the office at 4 a.m., just six hours after leaving the office the night before.
Although I’d picked up and acted on a recurring theme from my fellow CEOs at monthly meetings of Vistage, an executive coaching organization I had joined earlier in 2017, I hadn’t applied it the person who needed it most.
I joined Vistage to become a better CEO and, most importantly, a better manager at American Homeowner Preservation, which I founded at the outset of the housing crisis in 2008. In our first decade, we erased over $120 million in homeowners’ negative equity and saved families over $6 million annually on their housing payments. And we demonstrated that we could purchase distressed mortgages from lenders at big discounts and generate extraordinary financial returns while providing transformative solutions to families at risk of foreclosure.
That September morning, AHP was on solid ground, with all-time-high revenue, a team that had grown in both number and experience, and a healthy financial position. But I had this gnawing feeling that I was losing control: I just could not squeeze enough hours out of my days to keep up with everything. Although I implemented many of the Vistage lessons with our staff of 21, at times I felt like I was drowning.
A year prior, I had recognized that I needed help. Although I was a tenacious entrepreneur, I was not adept at building, managing, and getting the most out of my team. Too often, I would simply offer to do someone else’s more complicated work instead of taking the time out to show my teammate how to do it. I wasn’t trying to be NBA standout Kobe Bryant, but I had the same effect: employees sometimes became frustrated and disillusioned while I made the star plays that they could have made if I only invested a bit more time in them.
Through Vistage, I learned that my shortcomings were not unique, as many successful entrepreneurs face similar challenges in growing their businesses. A recurring theme was having “the right butts in the right seats,” meaning that team members with the proper experience, skills and mindset are in fitting positions in the organization. Think of a basketball team playing their center in the role of a point guard: the results would likely be disastrous, not because the center is a bad player but simply because he or she is in the wrong position. This led to the brain flash on my early morning walk in September: maybe my butt was in the wrong seat?
After almost ten years of doing everything I could do to build AHP, maybe I was the constraint to AHP’s continued growth? What if I hired someone who is a great manager, who could build, manage and get the most out of AHP’s team? As the elevator door closed for my ride up to our sixth-floor office, the realization solidified in my mind: the most significant obstacle to my goals was me.
As soon as I settled at my desk, I sent an email to a multitude of industry contacts: AHP Servicing is a new servicer in process of getting licensed nationwide. I will be President and we are seeking a CEO, COO and CFO.
Three months earlier, I had a blowout with our mortgage servicer: their fees were high and their service was low. They were our sixth servicer in as many years. Thus, I resolved that AHP would go through the licensing process to become a national servicer. We would bring social responsibility and a willingness to do the right thing to mortgage servicing, an industry often devoid of caring, compassion and basic human decency.
Drawing upon AHP’s decade of experience in resolving thousands of distressed mortgages, the new AHP Servicing would broaden our mission from fixing the mortgages we buy to fixing the mortgages owned by others. We want to show others that keeping families in their homes is rewarding not only socially, but financially. The new servicing operation would significantly expand AHP’s prospects for growth.
When I sent that email, I was unsure of the response I would get. However, soon resumes were coming in from executives at major banks and servicers as well as Fannie Mae, E*Trade, and other much larger companies. Many were intrigued by AHP’s mission and wanted to be a part of it–and help grow it. I was surprised and gratified.
Awkwardly, as we made progress in the selection process, the leading CEO candidate asked, “Can I become CEO and President of AHP Servicing as well as American Homeowner Preservation?” I was a bit taken aback by the question.
“What would I do?” I asked, hesitatingly.
“You can be Chairman of the Board,” she replied, succinctly.
Later, I realized that the team needed to see the new CEO as the undisputed leader, and having me around would not allow that to happen. Two leaders on a team does not typically yield ideal results.
“Everything rises and falls on leadership,” the author John Maxwell once wrote. I realized that I had done everything I could to build AHP to this point and now was the time for me to step aside. I needed to hand over my baby to someone better equipped to grow AHP into its next decade. I’d remain principal shareholder and become Chairman, helping guide AHP high-level.
With the prospects for AHP’s growth greater than ever, there are still millions of families in America struggling with their mortgages. AHP is like chemo to cancer: we help some homeowners while millions of others succumb. The problem is so much larger.
How can I help more families at risk of foreclosure stay in their homes? That’s why I started AHP Servicing, and why I am moving my butt out of the CEO seat and the right butt into it.
Jorge Newbery is founder of American Homeowner Preservation LLC.