2020-04-29 USA business - to grow

Growing business -> in portfolio management depends on the controlled approach. Learning the hard way helps us to grow.

Once we have test strategy fixed & see what is working good with borrowers we can absolutely work on steps to improve behavior. In later stage we can test cash-flow & the pre-set strategy. Cash-flow proof generates new revenue stream to company.  Cash flow & value allows company enter market on the foremost position (FinTech market)

2020-04-21 Business & vision

Management of the company depends on the approach. Value of the opportunity is somewhere between a traditional approach and vision, where "crazy land" is a place not to go to and advanced approach allows to build great company with nice returns on investment and low risks. Pushing the management to advanced level, especially with experience in traditional business approach is not only a skill, but also balancing between "crazy land" and "vision". Not trying to "re-invent the wheel" is critical, as usually competition is seeing the same opportunity. If they did fail, or advance that way is important.

2020-04-18 Lending market (USA)

Lending business is different to other businesses. And that difference is set on the product it serves and the behavior of the product. On one side everybody wants it, it does not get old, there is no problem to turn it to cash once has to be returned to investors.

In time of slowing economy there is one challenge though. The ability of paying for the product changes. While other products you can mark up, lets take a toy for example, lending product you can mark up only limited way. I can, without a problem, produce a toy for 1 USD and sell it for 100 USD. Market is willing to pay for the toy, because I needed to transfer it, I did spend some time on research of the toy to bring more value to customer. And customer is willing to pay my markup. With lending product - money - it is much harder. I can not produce money for 1 USD and sell it for 100 USD. Even I would spend tons of R&D and try to cut the production costs. Therefore the markup is much smaller. 

This is why, if we compare money and toy the potential loss is mucb bigger. Once I have an intellectual property in a toy and production cost is only 1% or 10% I can devide my potential loss of not paying customer to more toys. My intelectual property with a toy costs me the same if I produce one or 100s of them. By money, as the markup is much much smaller I can not do that. 

And one more problem. Once I buy a toy for 80USD and I sell the same toy for 100USD I do have 25% markup. As (100-80)/80=25%

But if lender lends 80USD and asks monthly repayments for next 10months with 25% p.a. he will only receive around 90USD. Why? As the way calculate the interest is not the same we do calculate markup. 

This is why lending and selling toys is a different business.