Mortgage origination is a massive business deeply stuck in the past. Proof: in 2020 it still takes an average of 45 days to approve a mortgage. Israeli founder Eilon Shalev and his buddies from MIT Sloan School aim to change all that with their startup Elphi.
Click here to read the full transcript of this episode.
Highlights:
Sal Daher Welcomes Listeners & Introduces Eilon Shalev of Elphi
What Elphi Does
The Non-Linearity of Mortgage Applications Is a Huge Problem – Average Time to Approval: 45 Days
“We have a paying customer and the software is live today with that lender. That lender is a non-depository mortgage lender, which means it is not a bank.”
The Current State of the Mortgage Origination Business
A Shout out to Sonal Singh of Spatio Metrics for Connecting Sal Daher and Eilon Shalev
The Founding Story of Elphi
Why University Tuition Is So Astronomically High
How Eilon Shalev Shifted His Focus from Student Financing to Mortgages
“I was obligated to just try to choose the most problematic problem I can find from that large industry and try to solve it.”
The Elphi Team
Sal Daher Plugs His Investment Syndicate
Eilon Shalev’s Entrepreneurial Journey
Parting Thoughts from Eilon Shalev
“…one of the main reasons that there was no innovation in that particular space for those particular problems is the high barriers to entry. Once you overcome those barriers to entry, you are that kid in a candy shop…”
Transcript, “Elphi: Hacking Mortgages”
GUEST: CEO and founder EILON SHALEV
Saleh Daher: Welcome to Angel Invest Boston, conversations with Boston's most interesting founders and angel investors. I'm Saleh Daher, an angel investor who is very curious to learn more about the exciting technology companies being built in Boston’s singular startup ecosystem. Singular, because it's just loaded with brilliant people from the great universities we have here. Our guest today is one such person. I'd like to welcome Eilon Shalev. Welcome, Eilon.
Eilon Shalev: Hey, how are you today?
Saleh Daher: Great. Eilon comes via the MIT Sloan School. He's the founder of Elphi. Elphi is a software platform that aims basically to revolutionize the mortgage industry. I'm just going to let Eilon take it from here. So Eilon, explain what Elphi does and what problem it's addressing.
What Elphi Does
Eilon Shalev: So, what Elphi it's doing is helping to streamline the mortgage life cycle from origination to securitization. We're a Software as a Service company, and our clients use our software to streamline the operations. From the moment they receive an application from a borrower to the moment they need to close the loan and sell it on the secondary market, they use our technology.
The Non-Linearity of Mortgage Applications Is a Huge Problem – Average Time to Approval: 45 Days
So, the problem that Elphi is solving is the non-linear process of mortgage origination. So the software solutions that are built today have been built assuming that the process is linear. Whereas in reality, the process is non-linear and requires a lot of coordination across multiple parties, and that coordination is so complicated to achieve with a linear software that it just takes 45 days on average to originate a loan.
Saleh Daher: Maybe we can unpack what you mean by linear, because not everybody has a technical background who listens. It means that it does not proceed in a linear fashion, meaning in a straight line from you fill out the application, it gets reviewed, and then it gets approved. That will be a straight line. What happens is that you filled out the application and then they come back to you and say, "We need some more documents." Is that what you're referring to this recursion? You go from first state of filling out the document, you present the thing, and then they come back to you and say, "Oh, we need this, we need that. Your application doesn't qualify for this, but it could qualify for that," that translation back and forth.
Eilon Shalev: Exactly, exactly. Each borrower has a different story in a different scenario. So think about the steps as in the borrower comes in and tells a story to the lender, then the lender listens to that story and gives back some reaction to the borrower. If the software is flexible and non-linear enough, the lender can actually send back a response automatically to the borrower telling them what now is the next step customized for them specifically. That capability is very important.
Saleh Daher: Mm-hmm (affirmative). So the borrower is going to take a meandering path through the approval process and depending on background and the documents they can provide and the loan they're looking for and so forth. So your software walks them through. It allows the lender to be more responsive, to explain more clearly. It's built to incorporate that into the process?
Eilon Shalev: Exactly that. You can see that different lenders have different processes. One lender would require a credit report at a certain point in time according to their operations, and a different lender may require the same report at a different point in time trying to optimize their processes. The fact that multiple lenders have multiple different processes to optimize loan closing and costs associated with closing those loans, that is why we believe that the process is non-linear and different per type of lender.
Saleh Daher: Okay. So where does your startup Elphi? The logo is a little elephant. So where does Elphi stand today? Do you actually have a software platform that borrowers are using?
“We have a paying customer and the software is live today with that lender. That lender is a non-depository mortgage lender, which means it is not a bank.”
Eilon Shalev: Yes. We have a paying customer and the software is live today with that lender. That lender is a non-depository mortgage lender, which means it is not a bank.
Saleh Daher: Okay, it's a non... Yeah, depository means if you're a deposit-taking institution, you are subject to all kinds of regulations. If you're someone who is basically facilitating the lending of other people's funds, deposits taken by someone else, you are much more nimble, much less regulated, usually smarter than the average bear.
Eilon Shalev: Precisely, which is why it was easier for us to tap into that segment of the market.
Saleh Daher: Excellent, excellent. Do you have any numbers on the traction that you've had with this paying customer?
Eilon Shalev: That paying customer I can say is paying a six-figure contract for the next two years. It's actually six figures per year for two years. They wanted the three-year contract, but we decided that a two-year contract is better for us because of the economics of the deal.
Saleh Daher: You want to raise prices. So Eilon, how many people are using the software right now, how many customers?
Eilon Shalev: So, it's one customer that has roughly 30 users.
Saleh Daher: I'm talking about the borrowers; how many borrowers have been through it?
Eilon Shalev: So currently we did not open it for borrowers yet.
Saleh Daher: Oh, okay, okay. So it's in implementation stage.
Eilon Shalev: For the borrowers, it's in the implementation stage. For the lender, everything that happens on the lender side, there are roughly 30 users using it.
Saleh Daher: Oh, so what you're doing you're starting with the back office. Is that what you're doing?
Eilon Shalev: So, it is both back office and borrowers. The back office has the ability... So the loan officers who are right in between the front and the back, they have the ability to apply on behalf of the borrower. So the borrower calls them up or sends them an email, and then the loan officer now fills the application on the borrower's behalf through our software. So the other staff members can process underwrite and close the loans, and we have 30 of those users using the software.
Saleh Daher: So, you have 30 officers. How many loan applications have they processed?
Eilon Shalev: Several dozens in a matter of a few weeks, several dozens.
Saleh Daher: A matter of few weeks, okay. So you're just beginning to ramp up.
Eilon Shalev: Yes.
The Current State of the Mortgage Origination Business
Saleh Daher: Excellent, excellent. Give us a little bit of a general picture of the mortgage space. You're addressing this problem and that it's non-linear. So what is the current state of the art for mortgage lender?
Eilon Shalev: So, the best loan origination system is called encompass. It's a very good product that has 25% market share. The company's name is Ellie Mae, and don't let the Mae fool you. It is not a government-sponsored enterprise.
Saleh Daher: It has no relation to Fannie. They'll let the last name fool you but no relation to Fannie Mae and Sallie Mae and all those entities.
Eilon Shalev: All those Maes, yes. There is a business relationship, but there's no contextual relationship.
Saleh Daher: Actually, Fannie Mae is a private corporation but government-sponsored. It has special government guarantees and so on, but anyway so it's understood. So Ellie Mae, is that a reference to Beverly Hillbillies? Wasn't that a little character? You're too young to know and I'm almost too young to know, because I think Ellie Mae was the comely daughter of Jed Clampett on Beverly Hillbillies.
Eilon Shalev: Well, maybe. Maybe, I haven't seen it. So Ellie Mae, they started in 1997, roughly, alongside many other legacy players today that have survived since then. They built a very preliminary version of the software that is being used today. The good thing that they did in 2009 was to acquire a compliance company and because of that acquisition, Ellie Mae was able to increase their market share substantially and which 25 to even 35% market share they have today. However, when it comes to innovation, that's where the interesting thing happens. If you look at the mortgage industry since the '90s until today, you would find very important milestones for the industry. So 2008 was a very important milestone of the crash.
Saleh Daher: Oh, yeah. I will say a meltdown.
Eilon Shalev: It was a meltdown. Their reaction to a meltdown, as we all know, was Fannie Mae and Freddie Mac became government-sponsored enterprises and regulation came in. When do you think the regulation settled? Definitely not in 2009, it took many years. So 2014, 2015, the regulation settles and that's a new milestone. I would call it the TRID Era, where TRID is an acronym of two acronyms. The mortgage industry loves acronyms. So you've got TRID, which is TILA-RESPA Integrated Disclosure.
Saleh Daher: It's a highly-regulated industry. So it's an acronym within an acronym that's talked about recursive, jeez.
Eilon Shalev: Exactly. So, when you talk about an industry that has a regulation square abbreviation, you know that it's going to be complicated to enter as a new entrant. So only 2014, 2015, the regulation settled. At this point in time, Ellie Mae already have captured a lot of market share because of 2009 acquisition, and they go public 2011 that they experienced. So by 2014, they are growing market share, and they're selling a product that has very good compliance tool embedded within their software. So nobody's focusing on innovation, everybody's focusing on compliance.
When I say everybody, I'm talking about lenders, I'm talking about loan origination system providers, such as Ellie Mae and others, and I'm talking about technology providers. Because at this point in time because of regulation, many technology partners start to pop up and add another layer of service into the very complicated mortgage origination process. We're talking about closing disclosures and we're talking about verifications of income and verifications of employment and verifications of ethics and title insurance and appraisal. The software providers that help the appraisals, the appraisers get the orders and the title production systems that help the title underwriters underwrite the insurance. So you have this crazy ecosystem that is built around the system of record, which is the loan origination system that Ellie Mae and others have built.
So, nobody's focusing on pure innovation specifically in the loan origination system but everything ancillary to that. Until now, until now, nobody has tried to rebuild the loan origination system according to the complicated process that that was created after the crisis had happened. So that's why Elphi thinks that there's a need and void in the market to create that core component build from the ground up, which is the loan origination system that we have been building.
A Shout out to Sonal Singh of Spatio Metrics for Connecting Sal Daher and Eilon Shalev
Saleh Daher: Excellent, excellent. Oh, I should just mention right now that the idea of having you on was thanks to Sonal Singh of Spatio Metrics. I'm very grateful to her because I think you're really a very interesting guest and a very interesting topic. So Eilon, tell me a little bit about the founding story. How did Elphi come about?
The Founding Story of Elphi
Eilon Shalev: So, when I came to the United States to get my MBA at MIT back then in September 2017, I knew that I wanted to start a company. I knew that I wanted to be an entrepreneur coming out of MIT, and I did not know in which space. So the one thing that was close to heart was the-
Saleh Daher: This is MIT Sloan School, right?
Eilon Shalev: MIT Sloan School of Management. I came to Sloan and I thought, "Hey, I want to be an entrepreneur. I should probably pursue something I'm passionate about." The problem that I was passionate about was financing my own MBA as a student. It was a problem and so that problem was very dear to me. So I was learning about the student lending space and I was also learning about Blockchain. Back then, it was slightly before Bitcoin became a $20,000 asset. It was before that just before the search. It was a very, very exciting time to be across incredibly talented, knowledgeable professors at MIT, Simon Johnson, Gary Gensler, Michael Casey, and Neha Narula from the Digital Currency Initiative, the DCI. So being around those people and talk about Blockchain every week was very, very inspiring. I thought, "Hey, maybe we can use Blockchain to democratize student lending."
Saleh Daher: Right.
Eilon Shalev: Little that I know that the only person who can, in my opinion, solve the student lending problem is basically the President of the United States, because the problem is not that technology nor the interest rates. The problem is the cost of attendance, literally how much money it costs.
Saleh Daher: To attend the schools.
Eilon Shalev: Exactly.l.
Why University Tuition Is So Astronomically High
Saleh Daher: Well, yeah, it's a very complex problem. It's a little bit of a problem of capture. You have the universities. The more that the government facilitates lending the universities being, what's the word for it, they are colluding monopolies. There is a specific exemption for universities to collude. They are allowed to collude in admissions. So, they are discriminating monopolists, that's the term that I wanted to look for. They can charge whatever tuition you can pay. It's like the con man who says, "I've got the Golden Gate Bridge. I've got the Brooklyn Bridge. I want to sell it to you." You say, "How much do you want for the Brooklyn Bridge?" He says, "How much you have on you," okay? That's discriminating monopolist. You can charge each person what they're willing to pay.
So, what happens to the universities, I mean the top universities, they can say to an applying student, "Look, if you come in, we're going to expect you to pay so much for you to get your benefit of association with our name." By the way, a lot of the value of the universities tend to be, they're very good at selecting really smart people and having them go through. So I don't think it's the president by him or herself who can solve this. It's a matter that has to do with the Congress. It's a matter that has to do with creating more competition, more accountability. It's a very complicated matter. The absurd cost of tuition has to do with the fact that universities are allowed to collude.
So, since they are monopolist, if the government raises the amount of money available, they just raise the tuition and they capture that. So, the history has been, and whatever the government does to facilitate tuition, the universities managed to increase the tuition. Then they give you this baloney, okay, about, "Oh, the tuition only pays one-third of the cost of education." Horse hockey, okay? The student is the cash cow for the university and they are just a wash in cash. They are right now going to be under a lot of pressure if they basically become MOOCs. Tuition is going to have to come down somewhat, and I suspect they will. Anyway, don't get me started on this.
Eilon Shalev: Yeah, yeah. I'm sorry, I'm sorry, but that's how the company started. So I was researching that topic. In fact, if they are going to take down tuition, that will be the first time I think for 50 years. I went back to Excel spreadsheets that I was able to put my hands on from the '70s and see how MBA tuition went up, and you know what? The trend was it always went up, including not limited to the 2008 crisis. You would expect that because of the crisis-
Saleh Daher: Oh, but you see, they are discriminating the monopolists, that's just the sticker price. As I say, they look at you and say, "You pay so much," okay? For example, if you are a Chinese foreign student, they love Chinese foreign students, because they pay full freight, okay? If you're some brilliant scholarship kid from the Midwest, they only pay 20%. People usually pay like 60, 70% of the tuition. It's a negotiation process. So it's a very dirty thing. You have them dealing with very naive people, very idealistic. These guys do this for a living, and it's really reprehensible. There should be much more competition between universities and the whole thing is just, it's way overvalued. It's due for a fall, for a correction. There's a bubble there. There's a massive bubble with student loans, and there is going to be a correction.
Anyway, so getting back. So you were trying to solve the problem of student loans, running away of tuition going up and so forth. How did you cotton onto mortgages?
How Eilon Shalev Shifted His Focus from Student Financing to Mortgages
Eilon Shalev: Right, right. So what happened was when I realized, "Okay, I probably am not going to be able to solve that problem," because of the reasons that we just discussed. I thought, "Okay, I already learned for four and a half months about lending in general." I also come from a background of enterprise software in my former occupation. So I thought, "Maybe I can leverage enterprise software in lending but at a larger scale, the unit economics might make sense." So, I looked at the market and I saw at the time student lending market was 1.3 trillion and the mortgage industry of course nine point something trillion. So you just see the numbers and you can immediately realize-
Saleh Daher: Yeah, exactly.
Eilon Shalev: ... exactly. So the numbers are huge and so the impact is huge, and we entrepreneurs are always focused on impact. Where can I make the most impact with the ideas and practices that I can bring into the table? So it was a very easy switch to be searching the mortgage space.
The interesting thing, first, it's very easy to find people from the mortgage industry, because every person on the planet somehow is connected to mortgage. You could be a mortgage lender yourself. You could be... Your sister could be a mortgage lawyer and your father can be an appraiser or your daughter could have just bought a condo somewhere. So everybody somehow is connected to housing and mortgage, so it's very easy, very easy to get people excited when you do research.
“I was obligated to just try to choose the most problematic problem I can find from that large industry and try to solve it.”
So, I was just drawn into this never-ending research that exposed me to so many problems that as an entrepreneur who loves to solve problems, I was obligated to just try to choose the most problematic problem I can find from that large industry and try to solve it.
Saleh Daher: That is certainly a hairy problem. Now, had you been working in the mortgage industry for 10 years so that you knew the ins and outs of it, or are you an autodidact or self-taught specialist on the field?
Eilon Shalev: I would say the latter. So I did not come from mortgage industry and in fact, I think it's actually good. I did have a call-
Saleh Daher: Fresh eyes on that problem, yes.
Eilon Shalev: Yes. So I had a call with someone from Fannie Mae, a technologist from Fannie Mae. The guy has been there like 20 years, and he told me the following. It is much better to be a technologist and then come to the mortgage industry and try to solve the problem as opposed to be a mortgage expert and then learn about technology so you could solve your problems. So he actually mentioned that the fact that we did not come from the mortgage industry but surrounded ourselves with a network of more than 10 advisors from the mortgage industry was the reason we were able to identify so quickly the problem and crisply address it with research and development efforts.
Saleh Daher: You talked about your advisers. So talk a little bit about the rest of the team. I mean, do you have co-founders?
The Elphi Team
Eilon Shalev: Yes. So I do. We are three co-founders. Both of them, Daniel and Will, joined me after I had worked on Elphi for a year. So Daniel and I worked together back in Israel in the same military unit. We were both in charge on some elements of our enterprise software. He was more teaching people how to use it, and I was more a super admin of the software. So we had seen both angles of the enterprise software usage. He went to Chicago Booth to get his MBA while I was at MIT Sloan. We applied together, we prepared together. We took the GMAT together. Yeah, so we've been best friends for a decade. Will, he graduated from MIT with an undergrad degree in aerospace engineering and also computer science.
Saleh Daher: One of the very hardest majors in MIT.
Eilon Shalev: Yes. He's just a brilliant kid who spent at least a year with me at MIT Sloan taking entrepreneurship classes, running the classes together. By the time both of us graduated, we knew that we love working with each other.
Saleh Daher: Fantastic.
Eilon Shalev: He spent some summers at Facebook and Google and NASA, so he has some good credit.
Sal Daher Does a Plug for his Investment Syndicate
Saleh Daher: Okay. What I wanted to address next is your entrepreneurial journey, how you decided to become an entrepreneur, your life in Israel, in the Army and all that, and then how you become an entrepreneur. First, let me do a little plug for my podcast, which is the... One of the reasons that I have the podcast is to learn more about startups. The other reason I have a podcast is also to invite listeners to participate in my syndicate list. I'm an angel investor who has an investment syndicate list, which means I'm a lead investor in interesting companies, companies that I happen to be very much a believer in. If an investor is an accredited investor, okay, I do not take people in my syndicate list, who are not accredited investors, then we can have a chat and talk about interesting companies that I'm investing in at the moment. I'd like to ask listeners who are accredited investors to go to angelinvestboston.com and to sign up and then let's have a chat.
Eilon Shalev’s Entrepreneurial Journey
Anyway, Eilon, let's talk about your entrepreneurial journey. What did your family do in Israel? What does your dad, your mom, what do they do?
Eilon Shalev: Yeah. So my dad is an engineer, not a software engineer, but more of applied materials engineer. So he designed many satellites that are flying out there, Israeli satellites. He designed buildings that are, I don't know, 300 meters tall. So he's a very interesting engineer and he's owning his own business. So it's in between at being an entrepreneur and being a very professional steady career, somewhere in between. He was always pushing me towards being an independent business owner, and so that is definitely, definitely something that I got from my father.
My mom is a psychologist. She's retired now, but she's a psychologist. She served the city of Tel Aviv many years until she retired, at the end as the managing director of the psychological centers for schools that are mixed Jewish, Arab Muslim, Arab Christian schools. So diversity was very important to us as I was growing up.
Saleh Daher: Yes, interesting. So then you went to university. Where did you study?
Eilon Shalev: The University of Beersheba.
Saleh Daher: Then after that you joined the Army and you were in a unit where you were using software for supply chain and the Army. What was that?
Eilon Shalev: I would call it some sort of an ERP software.
Saleh Daher: Okay, Enterprise Resource Planning software.
Eilon Shalev: Right.
Saleh Daher: Very good. Then you met one of your co-founders. All the time, you have running in your head the idea that your dad had told you, "Hey, you've got to go and start your own business," and you've seen your dad have his own business. Why Sloan, why did you decide to apply to Sloan?
Eilon Shalev: I decided to apply to Sloan because I had known some former colleagues who went to MIT Sloan and got their MBAs over there. I spoke with them about their experience. Given that we came from the same background and they knew about me being interested in entrepreneurship and innovation and technology, it was only natural for me to at least apply and try to get into MIT Sloan. I did also obviously try to get into some other schools, but Sloan has given me an offer, and MIT Sloan is a school that I... It was on my top list, so I just had to take it.
Saleh Daher: Great, great. Is there any topic that you would like to touch on that are important to you or Elphi of what you'd like to communicate to this audience of founders, angel investors, people who work in startups; sort of a technology, startup space, what you think might be valuable for them to hear?
Parting Thoughts from Eilon Shalev
Eilon Shalev: Sure, I actually have a topic in mind. So one thing that Elphi has had from the very first moment of its inception is core values. The company has core values. One of the things surprises me a lot when engaging with investors, especially early-stage investors, is that I don't think that even one investor had asked me, "What are the core values at Elphi?" It's like they're operating under the assumption that the company is too young to even have core values, and which is the opposite way of how you want to build great solid things, not only businesses. You want to start with your core values and grow from there and not vice versa, and so-
Saleh Daher: So, what are those values?
Eilon Shalev: So, we have an acronym. The mortgage industry, you’ve got to have an acronym, so.
Saleh Daher: Yeah, that's good, that's right.
Eilon Shalev: IHACKED, and so it stands for I, H, A, C, K, E, D. They stand for integrity, honesty, accountability, creativity, knowledge, equity, and diversity. So integrity for us means to adhere to ethical and moral principles, whereas honesty is being truthful with others. So you can actually have integrity but not honesty or vice versa, and so we define those two as I did.
Accountability. We were building technology with very strict timeline and people need to deliver on time whatever they're responsible. If they can't, they need to at least tell the stakeholders who rely on their work that they won't be able to deliver on time and they should do that ahead of time otherwise, the machine cannot move on, and so accountability.
Creativity and knowledge. Those two come together in terms of the scope. So on the creativity side, we need to be the ones bringing innovation to the industry and not vice-versa. The mortgage industry has been lacking in this space, and so we need to be creative in every problem that we're trying to solve. We never, never concern ourselves in the ideation process. So we never concern ourselves with constraints.
Saleh Daher: So, you don't say, "Oh, this is too expensive to try to do," or whatever. If you think it's really important to try to build it into the process, you figure out a way for it to become economical.
Eilon Shalev: So yes, depending on the time, depending on when. So let's say now we have this new feature that we want to come up with. So one of the concerns that our engineers have is that it won't be ready to be pushed by the next plan of launch of the next push. So I tell them, "It doesn't matter. Let's talk about what is the best solution." We have this idea for a feature that we came with due to knowledge, because we did some user research. So we brought some knowledge for some data and evidence and we came up with this idea, "Let's try to figure out what is the best solution from a creativity perspective."
Only then after we have solution number one, solution number two, solution number three, then we start concerning ourselves with constraints, "Oh, we won't be able to do it in time. Oh, it's too expensive. Oh, we on Google cloud. We're not on AWS, so we can't do it." That doesn't matter at the beginning. So creativity is key in the ideation phase. I alluded to knowledge also. We don't take decisions based on hunches. We take decisions based on evidence and data.
Last but not least equity and diversity. These two core values came into play when somebody wanted to join the company. At the time, he had made an offensive comment against the LGBTQ community. Personally, I wasn't able to bring that person in to work and represent Elphi, but at the time we did not have equity in diversity. We had only the five core values at the beginning. So even though it wasn't Eilon decision, it wasn't a company decision. It had to be a company decision. So we brought in equity and diversity. Whereas inequity, you provide people with the tools that they need in order to be successful unlike equality.
My brother has ADHD. So if he were to take a standardized test that takes 60 minutes and I were to take a standardized test that takes 60 minutes, very different results. So you need to treat him with equity and give him the additional time.
Saleh Daher: In life, rarely, is it 60 minutes they have to do a task? If you can do a task in 90 minutes but you can do it really well, that's what really counts and to stick to it and all that stuff. So very interesting, very interesting. Now it seems to me that your founding values runs a little bit across the ideas of the lean startup in a sense of the constant experimentation of not really knowing what it is that the market needs. You build something rough and ready, minimum viable product, put it out there, see how it behaves, and then come back and fiddle with it.
Let me guess what your answer is going to be to this. Your answer is going to say, "Whoa, whoa, whoa, whoa, whoa. We're dealing here, this is a little bit like medicine," okay? This mortgage market is highly developed and is already highly regulated and so forth. So what we're doing is we're going out. We're like doctors and going out and taking the pulse of different areas of the business and say, "Oh, we have a medicine for this." There's a way we can address this with this bit of technology, with that bit of technology.
So, you're like a kid in a candy shop. You've got so many imperfections, so many problems in that space that you're not discovering unmet needs. You are addressing very glaring problems that nobody is able to address, because they're stuck in this model that currently exists. They don't have the tools to address, to take fresh eyes at the problem.
“…one of the main reasons that there was no innovation in that particular space for those particular problems is the high barriers to entry. Once you overcome those barriers to entry, you are that kid in a candy shop…”
Eilon Shalev: Exactly. I think you described it perfectly. To me, one of the main reasons that there was no innovation in that particular space for those particular problems is the high barriers to entry. Once you overcome those barriers to entry, you are that kid in a candy shop, where not only you're a kid in the candy shop, you also have the money to buy whatever candy you want.
Saleh Daher: Right, right.
Eilon Shalev: Because you understand, because you know what you're doing. That's how we feel these days when it comes to the problems that we see and the technology solutions that we're building to address those problems. It's just so rewarding that we were able to grow the company to 23 people at the moment. Most of them are actually students getting credits from their university and some of them are getting awards, internship awards. We are 23 people, or maybe now 22 or 24 in recount, working full time, solving all those problems and everybody is at full capacity. So the number of problems available for solving is just so large and they are so interesting that it's just exactly as you mentioned, kid in a candy shop.
Saleh Daher: Eilon, I'm very grateful that you were able to come on the podcast and tell us about your exciting company. One last question, where do you see Elphi in five years? What's your five-year dream for Elphi? Where's Elphi going to be in five years?
Eilon Shalev: I think the company could be, I mean, if everything goes well according to plan, I think the company could be somewhere in between the one to three-billion-dollar value market cap, hopefully a publicly-traded company. Because I think given the complexities and the regulation and compliance, being a publicly-traded company will actually increase our ability to get more customers buying credibility. So publicly-traded company's the plan one to 3 billion in five years, market cap, at least 1,000 customers from all shapes and sizes, and the number of people, several hundreds, several hundreds of employees most of them sales and marketing and research and development.
I would like to cut down the G&A expenses. If you look at Ellie Mae financial statements from 2011 to 2018, you see that the G&A is roughly at 19%. I think we should cut it down to 10 to 12% G&A.
Saleh Daher: This is incredibly ambitious, but I don't think you're a crazy man. I think you were actually might just do it. So on that note, I'd like to conclude the podcast and to invite our listeners who really enjoyed this great conversation about would probably be the most boring topic you can think about, mortgages, to review the podcast on iTunes.
Eilon, you, also when your podcast is due to launch, do also review it. It helps bump up downloads for that week. We will just enjoy seeing your progress. I want to see this multi-billion dollar company in five years. I chuckle a little bit, but I say this guy could do it.
Eilon Shalev: Saleh, you're the best. Thank you so much and thanks for having me.
Saleh Daher: Awesome. This is Angel Invest Boston. I'm Saleh Daher.
I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.