Market Outlook: The podcast highlights the potential thawing of the housing market in Q4 2025, with Rocket Companies positioned to play a significant role in revitalizing home sales and consumer confidence.
Company Strategy: Rocket Companies is focusing on vertical integration through strategic acquisitions of Redfin and Mr. Cooper, aiming to create a "superfunnel" that enhances the home buying and mortgage experience.
Competitive Advantage: Rocket's legacy in the mortgage industry, combined with its technological advancements and AI integration, positions it as a leader in providing seamless and cost-effective mortgage solutions.
Acquisitions Impact: The acquisitions of Redfin and Mr. Cooper are seen as accelerators of Rocket's strategy to double its purchase market share and expand its refinance market share by 2027.
AI and Technology: Rocket is investing heavily in AI and data infrastructure to enhance customer experience, improve efficiency, and drive down costs, positioning itself as a fintech leader in the housing industry.
Financial Metrics: The company focuses on KPIs such as top-of-the-funnel growth, conversion improvement, cost reduction, and recapture rate to measure success and communicate value to investors.
Investor Sentiment: Despite initial skepticism, Rocket's strategic moves and technological advancements are gaining traction among investors, potentially attracting growth-focused tech investors.
Transcript
[Music] Ladies and gentlemen, welcome to live from the compound. My name is Downtown Josh Brown. I'm here with a very special guest. Verun Krishna is the chief executive officer of Rocket Companies, a position he has held since September 2023. Prior to joining Rocket, Baroon served as executive vice president and general manager of Inuit's consumer group from May 2022 to September 2023. Prior to INT, Verun has held positions at PayPal, Groupon, Better Works, and Microsoft. Run Krishna, welcome to uh live from the compound. How are you today? >> Great to be here, Josh. Thanks for having me, my friend. >> All right. I had to have you on because I feel like one of the big stories for tw let's say Q4 2025 and hopefully into 2026 is the thawing of the housing market and rocket is going to play a significant role in I think just getting uh existing home sales, new home sales, getting consumers back on track. We've kind of been in this ice age. We all understand the underlying reasons why, but it feels like that's starting to break now uh in a positive direction and you guys are right at the epicenter of that. Is that how you see it as well? >> We do. I mean, look, housing is the bedrock of the American dream. It's 20% of the GDP and it's something that all human beings fundamentally want and need. And so if we can do things to improve the housing situation in this country, improve affordability, improve inventory, that's like a fundamental cause for us. And so, >> um, it's exciting to see, you know, some thawing, as you said, uh, some green shoots, um, on the horizon. And we're going to keep building. We're going to build like it's our mission because it is. I want to ask you for the viewers who are not familiar with Rocket just as a quick primer. Um, Rocket Mortgage is probably familiar to a lot of people, certainly Rocket Money to uh, fans of of this channel. Um, but tell us about your position in the the US mortgage market and uh, kind of your your competitive advantage if you would. >> Yeah, I mean, Rocket is a story of legacy. We've been around for over 40 years. Um, you know, we sort of have led every transformation in the mortgage space. We were the first to bring mortgages to the internet. We were the first to put them on a mobile phone. We are now going to be the first to reinvent them in the context of artificial intelligence. But the company has a pretty amazing legacy. I mean, we're we do business in all 50 states and 3,000 parishes. Um, we have built a massive mortgage engine. We have an incredible experience that's very technologydriven and it's fueled by our soul and our culture. You know, this company didn't sort of come out of nowhere. This is a legacy that has been around for a long time. And so we are obsessed with building great experiences for clients. The Rocket Mortgage experience is known for being lowcost, uh, seamless, personalized, and just building confidence with consumers every day. And that's how we've grown to become the largest lender in the nation. So, I want to talk um I want to just uh full disclosure before we start talking about recent events. Um I am a shareholder in uh Rocket, not trading the stock. I intend to be a long-term shareholder. And one of the things that attracted me to the story or two of the things I should say were two acquisitions that you guys made over the summer that caught my eye because in a moment where the housing market was kind of morbid and and down and out and people were more excited about, you know, technology market, etc., you guys were doubling and and tripling down on this vertical integration strategy. So you bought Redf Fin, which is one of the largest I I I guess platforms for home buyers and lead genen for realtors, etc. Sort of like a top of the funnel idea. Um, and that closed over the summer and then you bought Mr. Cooper, which is the largest uh portfolio of of mortgage uh servicing uh business. Um, so now you guys have top of the funnel to drive more mortgage originations or refies. Um, you've got the rocket mortgage business and you've got this Mr. Cooper business which is just closed. Um, where you can actually service uh the mortgages once they're once they're um once they're in existence, I guess would be the way I would phrase it. Um, tell us about why those deals are important to the future of what you guys are working on. >> Yeah, absolutely. So, it's been a very big and busy summer for Rocket and um we're very excited that both Redfin and Mr. Cooper are officially closed. These are two public company deals. It's a huge milestone and I would just say these are not just acquisitions. I mean, they're very direct accelerators of our vision and strategy. You know, we've set some bold goals um to hit by 2027. We want to double our purchase market share from 4 to 8%. We want to expand our refinance market share from 12 to 20%. And when you think about it, these acquisitions are really in service to that strategy. It's about uh increasing our distribution, building more relationships with clients, and just building a better experience. You know, the context for this for me is that when I joined this company, you know, I took a look at the housing market, I spent a lot of time learning from the outside, talking to CEOs in the industry. And Josh, there's such an adversarial dynamic in the home ownership journey. Each of these parts of the experience, the home search experience, the real estate experience, the mortgage financing experience, you know, going through title and credit, and then going into closing and servicing are like completely different worlds, but a consumer has to go through every single one of those things as they experience home ownership. And there's this hugely competitive dynamic at every part of the funnel. And so that was kind of the first realization. The second thing is when you just think about the economics of housing, you know, in consumer products, there's this concept called an LTV to CAC ratio, lifetime value to customer acquisition cost. And the problem with these segments being all sort of separated is that you can't create good economics, right? Like because the consumer basically goes from one part into the other part into the other part. Everyone sort of takes their cut and their piece. It's very antiquated. there's a lot of friction and value is not created for the consumer. And so our thesis is very simple. It's that if we can connect these parts of the experience, we can acquire clients at a lower cost. We can create a great mortgage experience. We can then service those clients and then as they enjoy their experience and servicing, we can recapture them and continue to offer them new products, cash out refinance, another purchase, a rate and term refinance, um home equity loan, um a personal loan. And so the thesis is very simple. It's that these are not parts of separate funnels. We think that they can integrate to create a superfunnel. And in an era of data and AI, this strengthens our company. It allows us to have more data, more signals. That data powers better models, better experiences. When you think about Mr. Cooper and Rocket, you know, that's 10 million clients that we will service in total. Wow. >> That's 150 million annual interactions with those clients. You know, Redfin has approximately 50 million monthly active users that are engaging with the product, most of whom are using the product daily. So, that's a lot of interactions. They have 2,200 agents that are now um part of the Rocket uh ecosystem and over 5,000 agents that are part of the partner network. And so, ultimately, we can just create a better experience. We can create a more AIdriven experience with better data. And then the best part is that we can save consumers money. I mean, today the average consumer is spending something like 10% of the cost of a home on things like fees and rates and buy downs and things like that. And so on a $400,000 home, that's like 40,000 bucks. And if we can lower the cost of acquisition and we can become a lot more efficient and streamlined, we think we can eliminate, you know, a huge chunk of that experience for clients. So the thesis is just connecting these parts of the funnel, creating a superfunnel, reducing kind of the expense related, passing that savings back to the client and then obviously driving value prop that allows us to grow our market share. >> Is the intention to have the customer come in through let's say Red Fin searching for a three-bedroom home in a specific zip code. They happen upon a listing. Okay. From there, they get a realtor on the site who's willing to show them the home. From there, okay, I'm closing. I'm going to need a mortgage, get a rocket mortgage. Are they Is that in app or is that like an email chain or how like how do you keep that person in your ecosystem versus shopping around for each of those steps along the journey that you just laid out? Yeah, I mean the idea is to build a fully integrated, fully verticalized experience that's very deep versus shallow. And so we have a preferred pricing bundle that we've already launched with Redfin where clients can save up to $6,000 on closing costs. >> We have a button inside of the Redfin app where you can apply for financing. We're going to move more of the mortgage experience up into the Redfin experience so that clients don't have to leave and go through multiple destinations. We have trained our Redfin agents to work with our Rocket Mortgage local bankers. Um, and so, you know, and then there's everything from just the account and sort of login experience to seamless data transfer to just making the whole experience feel like it's just one simple and seamless thing. So, and we're going to continue to to build on that. But the other thing is it works in the other direction as well. There are some clients that start with the home. There's other clients that start with the financing and then look for the home. And so the lead flow actually works in both directions where we actually create and generate demand for our Redfin agents and our ecosystem as well. And that's the beauty is that we want the funnel to work in every direction. And the same thing applies to servicing as well is that the servicing book with Mr. Cooper and Rocket put together represents a lead pipeline for not just our agents but also our our mortgage brokers as well. We have a healthy broker broker business. And so ultimately we want to just create an ecosystem where everyone that participates in that ecosystem can thrive, can run, can grow, and for that to be a much more integrated experience. >> It's really fascinating. So it's a legacy business that people know and have come to trust over decades, but it's wrapped in this fintech uh app experience with AI on top as like the top layer to make everything just work more intelligently. And it's really rare um I think in in finance to see something like this. Most most of the debates within fintech is like brand new business, hundred-year-old business, compete head-to-head. And you guys are you guys are kind of a hybrid of of both ideas. And I really like it. >> Yeah. You know what's interesting is that I've been in fintech most of my professional career. I mean, I've been in the payments business. I've been in point of sale. I've built local commerce applications for merchants. I did the nation's >> Turboax. I oversaw Turboax and Mint. Um, and so you learn a lot and one thing you realize is like all of fintech at some point it's about something more fundamental and that's when I discovered housing. And in my view, you know, the housing industry is the last frontier of fintech. It's sort of the cause at the end of the day. That's why people are saving. That's why they're trying to, you know, handle things like payments, taxes, personal loans, you know, uh, investing. Ultimately, it all is about paying one thing and that's the mortgage. So, so that's why in some ways I feel like mortgage is really the last frontier of fintech. >> So, I read a lot of sellside research and when you guys first announced these deals, I guess in the spring, uh there wasn't universal approval among the analysts who cover Rocket. Uh I don't think anyone disagreed with the thesis. Uh I think maybe just people looked at they're spending a lot of money. I sure hope this pays off. that that seemed to be some of the and then there were people who were extremely positive about it and they got it immediately. The bulls have been validated so far just based on the share price uh appreciation from the lows. Um but do you think that some of the skeptics on Wall Street now that you've closed these deals are starting to come around? Is that like the tenor of the conversations that you're starting to have? >> It is. And I think fundamentally, you know, at the end of the day, you have to have conviction in your strategy. And if you believe in your strategy and you execute well and you believe in sort of the long-term value of of the company, I'm a big believer that the rest of it just kind of takes care of itself. And so, you know, I've built funnel built funnel-based products for most of my career. And so, when you see an opportunity to connect a funnel and growth hack that funnel, you know that there's a there there. And housing in some ways is the biggest funnel that there is, right? It's a it's a five trillion dollar market. And so I think what's interesting is just each parts of these funnel reflects like sort of different investor thesis. So you have growth investors, you have value investors, right, that fundamentally manage on, you know, a different kind of construct of how they build models. But what we're creating is in some ways a new species. And so it's understandable that how do you think about that new species, right? How do you value it? How do you think about its growth prospects? But when you just try to understand that a consumer has to go through each parts of the experience together and they're not disparate, they're not disconnected. And when you really just sort of understand that in an AIdriven world, data is going to be the air that we breathe. When you think about the application of AI to the mortgage experience and the home ownership experience, which I'm happy to talk about more, it's a very natural fit. And so the strategy in some sense is something we have massive conviction around and we're going to keep putting up points. We're going to keep putting up proof points. We're going to keep executing. We're going to keep growing our share. We're going to keep innovating. And we're pretty confident that if we do a good job with that, you know, from a long-term perspective, the rest will take care of itself. >> I love that. Um, I want to ask you about just mortgage rates in general, not a rate prediction from you, but how meaningful is it for a company like yours if in fact mortgage rates follow uh overnight rates, 2-year rates lower? Um because if you're bullish on let's say home building stocks, home renovation, mortgages, like if you're looking at that segment of the stock market as an investor, then you have to believe that mortgage rates will should be and and will be lower uh as the Fed very very slowly takes down overnight rates. What does that do? What does that do for the various businesses under your umbrella? Yeah, I mean look, it's no secret that Rocket has a built the world's greatest massive refi machine. And so low rates is pretty straightforward. That leads to more refies and it leads to more purchases. So it's a very very healthy dynamic for us. >> Yeah. >> And what's also interesting is that we have um one of the things that we're very proud of is what we call our recapture rate. And that means our ability because we have such an amazing servicing experience with Rocket and and now with Mr. Cooper as well, we earn the right to generate more business with those same clients. So we have a recapture rate that's 3x higher than industry. And that's a big deal when you think about stretching that over 10 million loans now um versus what we serve today. But you know, Josh, I think the the biggest thing that I would >> So, Verun, let me just let me just put a let me just um put a exclamation point on that recapture idea. This gets to the heart of that LTV versus CAC calculation. It's not just, hey, we did a refi for this person and maybe we'll talk to them in 20 years. People have continuous needs to refinance. And if you do a good job for them on one project, you should be the first choice for the next time they need to do something, whether it's a heliloc or second second vacation home or or something, maybe even an insurance uh need like you guys should be like that's the idea is that you guys are front and center for them. Okay. >> Yes. Exactly right. That is that is the fundamental thesis behind why Mr. Cooper and Rocket are coming together. I mean, we have a massive origination business. Now, our servicing business is equal to that, if not bigger. But connecting them to create a flywheel effect and a network effect is the is the is the fundamental thesis because if we do that, our cost of acquisition effectively goes to zero and we can create an LTV to CAC ratio that's never been seen before in housing. So, that's that's the fundamental thesis. Exactly. Right. But the thing that I would also say is that the beauty of these acquisitions is that they counterbalance the company in a really healthy way because regardless of what the market does, even if you have, let's just say, a higher rate environment, those MSRs, the mortgage servicing rights that we have, they increase in value. And so when you combine these different parts of the business, what you end up with is a housing is a housing company, a home ownership company that's more counterbalanced, that doesn't need a loaded low rate environment to thrive. Um, because we have a more stable earnings base, we have more uh we have a more scalable growth springboard for generating future originations, we can kind of make hay and survive and thrive in any rate or economic cycle as well. >> Think that's a really I think it's a really great point. It's almost like a built-in hedge. Um, that's right. You obviously you'd prefer to be writing more business on the front end with uh home sales and and refies, but if you can't because of prevailing factors that are outside of your control, hey, we have this other part of the business now that's gigantic and we actually get paid more in a higher rate environment. Okay. I want to ask you about the AI opportunity. Um obviously everyone working in fintech uh wants to share with their uh shareholders and with the investment community. This is how AI is going to make us a better business or make a better customer experience or some combination. So tell us what you guys are working on and how you think about that opportunity. >> Yeah, very excited about AI. You know, there's a lot of hype out there around this technology and just as an engineer, as a computer scientist myself, I think it's very important that you kind of have to look past the hype and look to really concrete benefits and concrete impact. And you know, what I would say is that first off, you know, I think technology is most definitely going to define the next decade of housing. And it's not just AI, it's what AI actually will lead to in the coming 3 to 5 10 years. you know, it's applying AI to robotics, 3D printing, materials engineering, but even when you just think about some of the core applications of AI, you know, we think about it as a couple of key areas. There's like natural language processing, there's machine learning, and there's like knowledge engineering. And when you think about those key applied technologies in the context of like a home ownership experience, right, it's a lot of interesting things, right? It's like talking on the phone with a mortgage banker to get a loan priced. It's your capital markets infrastructure and the models that apply hedging and pricing and arbitrage day over day. It's providing documents and data and extracting classifying, you know, using computer vision to to um to automate the document process. It's underwriting, right? A deterministic algorithm that helps you understand, you know, how to qualify a particular client with more seamlessness. Then it's things like title, appraisal and closing using computer vision to understand appraisal values right under you know understand how to create fairness there. Um and then it's servicing right servicing is a massive opportunity for significant improvements in automation personalization. Um and so it's capabilities there. So when you when you think about these kind of applications, the reason I think about NLP uh machine learning and K knowledge engineering because they very directly apply to improve all of those processes and all of those processes are pretty much core to what it takes to originate a mortgage, service a mortgage, search for a home, work with a realtor, etc. So we've spent about $500 million over the past five years investing in our data infrastructure, our models, our AI infrastructure, our personalization. Um, we have a platform called Rocket Logic. You know, it basically handles everything from our telefan to our document processing to our underwriting to our title appraisal and closing. And we have some pretty amazing applications. I would love to invite you down to Detroit and just show you some demos of the stuff that we're working on. But it's pretty wild. I mean, when we get we do hundreds and hundreds of thousands of calls every single week. We have telefan systems that will analyze a call, provide proactive coaching, uh, provide conversion opportunities for bankers in real time. grade them report cards. Um, we have interventions that help you understand how to persuade and talk to the client at the right time, how to make sure you understand their needs, ask for the business the right way. Um, we have instant answers and chat. Chat's available 247 now. You know, it's three times more productive than and a banker can handle multiple chats at a time because the generative aspect of it is handling most of the issues and resolution. Um, we have something called model context protocol. That's something that allows us to build internal apps that we can use to drive personalization. And so it's not just our engineering teams that are building products and services for driving conversion. It's anyone. It's someone who's non-technical that can just use Agentic AI and just say, "Hey, build me an application that does this and that." And tap into the vast amount of data that we have. You know, we have um we have just a speed and sort of productivity increase that like what used to take weeks and months to develop develop now takes hours and days. Um, we have 30 pabytes of data that's fueling just predictive intent. We have better models on our clients. We have better understanding of where they are in the conversion funnel. And so we are, I would say, not just like connecting the home ownership journey, Josh. We are fully fully reinventing it. You know, it's AI powered, it's data driven, it's built on trust. And the one thing I would also say is that this is very much going to translate into core KPIs. And one of the things as an investor >> new new KPIs or existing KPIs that will be supercharged >> I would say there I would say it's existing KPIs that are supercharged but but it's ones that I think that our investors should be able to hold us accountable to. >> Are we growing the top of the funnel? Right? That's one that we've talked about. Are we driving massive conversion improvement? Are we becoming more efficient and reducing the cost to produce a loan and obviously thereby creating more value for clients? And then are we driving a recapture rate that is best in class for the industry? And so those four metrics, those four KPIs are effectively how we're going to run the company. And so the same metrics I think should be applicable to how we think about, you know, telling our story to the street as well. And so, you know, there should be no air between how we think about running the company and how we manage the expectations of our shareholders. But the reason that these KPIs are important is because they're directly relevant to our investments in AI. >> Yeah, I think that's right. And I think you get a bigger uh I think you get a better multiple on Wall Street these days if you can demonstrate that not only are earnings growing as a result of efficiencies due to um some of these nextgen technologies but if you're a leader in creating the path for these technologies I think uh the investor base changes and uh you're looking at more of a growth kind of tech investor versus I got to fill my bucket with 10% financials uh you know in a in a mutual fund. So uh it's very exciting time for Rocket. I totally agree with you. I'm really thrilled to be part of the story as an investor and on behalf of all of your shareholders who are watching today, I just want to thank you for giving us some of your time and sharing what you guys are working on. It's uh it's really interesting and and we appreciate it. >> Yeah, we appreciate it too, Josh. And um thank you for having me on the show. I love what you're doing with this uh with this channel and this community as well. and I'm going to come to Detroit and uh we'll we'll do a tour and I'm going to get a coney dog. Sounds good. >> Love to have you anytime. >> All right, Verun Krishna, ladies and gentlemen, thanks to uh thanks to Rocket Companies and thanks to Veroon. Thanks for watching all of you. Like and subscribe, do all the things and we will see you soon.
How Rocket Built the Amazon of Home Buying
Summary
Transcript
[Music] Ladies and gentlemen, welcome to live from the compound. My name is Downtown Josh Brown. I'm here with a very special guest. Verun Krishna is the chief executive officer of Rocket Companies, a position he has held since September 2023. Prior to joining Rocket, Baroon served as executive vice president and general manager of Inuit's consumer group from May 2022 to September 2023. Prior to INT, Verun has held positions at PayPal, Groupon, Better Works, and Microsoft. Run Krishna, welcome to uh live from the compound. How are you today? >> Great to be here, Josh. Thanks for having me, my friend. >> All right. I had to have you on because I feel like one of the big stories for tw let's say Q4 2025 and hopefully into 2026 is the thawing of the housing market and rocket is going to play a significant role in I think just getting uh existing home sales, new home sales, getting consumers back on track. We've kind of been in this ice age. We all understand the underlying reasons why, but it feels like that's starting to break now uh in a positive direction and you guys are right at the epicenter of that. Is that how you see it as well? >> We do. I mean, look, housing is the bedrock of the American dream. It's 20% of the GDP and it's something that all human beings fundamentally want and need. And so if we can do things to improve the housing situation in this country, improve affordability, improve inventory, that's like a fundamental cause for us. And so, >> um, it's exciting to see, you know, some thawing, as you said, uh, some green shoots, um, on the horizon. And we're going to keep building. We're going to build like it's our mission because it is. I want to ask you for the viewers who are not familiar with Rocket just as a quick primer. Um, Rocket Mortgage is probably familiar to a lot of people, certainly Rocket Money to uh, fans of of this channel. Um, but tell us about your position in the the US mortgage market and uh, kind of your your competitive advantage if you would. >> Yeah, I mean, Rocket is a story of legacy. We've been around for over 40 years. Um, you know, we sort of have led every transformation in the mortgage space. We were the first to bring mortgages to the internet. We were the first to put them on a mobile phone. We are now going to be the first to reinvent them in the context of artificial intelligence. But the company has a pretty amazing legacy. I mean, we're we do business in all 50 states and 3,000 parishes. Um, we have built a massive mortgage engine. We have an incredible experience that's very technologydriven and it's fueled by our soul and our culture. You know, this company didn't sort of come out of nowhere. This is a legacy that has been around for a long time. And so we are obsessed with building great experiences for clients. The Rocket Mortgage experience is known for being lowcost, uh, seamless, personalized, and just building confidence with consumers every day. And that's how we've grown to become the largest lender in the nation. So, I want to talk um I want to just uh full disclosure before we start talking about recent events. Um I am a shareholder in uh Rocket, not trading the stock. I intend to be a long-term shareholder. And one of the things that attracted me to the story or two of the things I should say were two acquisitions that you guys made over the summer that caught my eye because in a moment where the housing market was kind of morbid and and down and out and people were more excited about, you know, technology market, etc., you guys were doubling and and tripling down on this vertical integration strategy. So you bought Redf Fin, which is one of the largest I I I guess platforms for home buyers and lead genen for realtors, etc. Sort of like a top of the funnel idea. Um, and that closed over the summer and then you bought Mr. Cooper, which is the largest uh portfolio of of mortgage uh servicing uh business. Um, so now you guys have top of the funnel to drive more mortgage originations or refies. Um, you've got the rocket mortgage business and you've got this Mr. Cooper business which is just closed. Um, where you can actually service uh the mortgages once they're once they're um once they're in existence, I guess would be the way I would phrase it. Um, tell us about why those deals are important to the future of what you guys are working on. >> Yeah, absolutely. So, it's been a very big and busy summer for Rocket and um we're very excited that both Redfin and Mr. Cooper are officially closed. These are two public company deals. It's a huge milestone and I would just say these are not just acquisitions. I mean, they're very direct accelerators of our vision and strategy. You know, we've set some bold goals um to hit by 2027. We want to double our purchase market share from 4 to 8%. We want to expand our refinance market share from 12 to 20%. And when you think about it, these acquisitions are really in service to that strategy. It's about uh increasing our distribution, building more relationships with clients, and just building a better experience. You know, the context for this for me is that when I joined this company, you know, I took a look at the housing market, I spent a lot of time learning from the outside, talking to CEOs in the industry. And Josh, there's such an adversarial dynamic in the home ownership journey. Each of these parts of the experience, the home search experience, the real estate experience, the mortgage financing experience, you know, going through title and credit, and then going into closing and servicing are like completely different worlds, but a consumer has to go through every single one of those things as they experience home ownership. And there's this hugely competitive dynamic at every part of the funnel. And so that was kind of the first realization. The second thing is when you just think about the economics of housing, you know, in consumer products, there's this concept called an LTV to CAC ratio, lifetime value to customer acquisition cost. And the problem with these segments being all sort of separated is that you can't create good economics, right? Like because the consumer basically goes from one part into the other part into the other part. Everyone sort of takes their cut and their piece. It's very antiquated. there's a lot of friction and value is not created for the consumer. And so our thesis is very simple. It's that if we can connect these parts of the experience, we can acquire clients at a lower cost. We can create a great mortgage experience. We can then service those clients and then as they enjoy their experience and servicing, we can recapture them and continue to offer them new products, cash out refinance, another purchase, a rate and term refinance, um home equity loan, um a personal loan. And so the thesis is very simple. It's that these are not parts of separate funnels. We think that they can integrate to create a superfunnel. And in an era of data and AI, this strengthens our company. It allows us to have more data, more signals. That data powers better models, better experiences. When you think about Mr. Cooper and Rocket, you know, that's 10 million clients that we will service in total. Wow. >> That's 150 million annual interactions with those clients. You know, Redfin has approximately 50 million monthly active users that are engaging with the product, most of whom are using the product daily. So, that's a lot of interactions. They have 2,200 agents that are now um part of the Rocket uh ecosystem and over 5,000 agents that are part of the partner network. And so, ultimately, we can just create a better experience. We can create a more AIdriven experience with better data. And then the best part is that we can save consumers money. I mean, today the average consumer is spending something like 10% of the cost of a home on things like fees and rates and buy downs and things like that. And so on a $400,000 home, that's like 40,000 bucks. And if we can lower the cost of acquisition and we can become a lot more efficient and streamlined, we think we can eliminate, you know, a huge chunk of that experience for clients. So the thesis is just connecting these parts of the funnel, creating a superfunnel, reducing kind of the expense related, passing that savings back to the client and then obviously driving value prop that allows us to grow our market share. >> Is the intention to have the customer come in through let's say Red Fin searching for a three-bedroom home in a specific zip code. They happen upon a listing. Okay. From there, they get a realtor on the site who's willing to show them the home. From there, okay, I'm closing. I'm going to need a mortgage, get a rocket mortgage. Are they Is that in app or is that like an email chain or how like how do you keep that person in your ecosystem versus shopping around for each of those steps along the journey that you just laid out? Yeah, I mean the idea is to build a fully integrated, fully verticalized experience that's very deep versus shallow. And so we have a preferred pricing bundle that we've already launched with Redfin where clients can save up to $6,000 on closing costs. >> We have a button inside of the Redfin app where you can apply for financing. We're going to move more of the mortgage experience up into the Redfin experience so that clients don't have to leave and go through multiple destinations. We have trained our Redfin agents to work with our Rocket Mortgage local bankers. Um, and so, you know, and then there's everything from just the account and sort of login experience to seamless data transfer to just making the whole experience feel like it's just one simple and seamless thing. So, and we're going to continue to to build on that. But the other thing is it works in the other direction as well. There are some clients that start with the home. There's other clients that start with the financing and then look for the home. And so the lead flow actually works in both directions where we actually create and generate demand for our Redfin agents and our ecosystem as well. And that's the beauty is that we want the funnel to work in every direction. And the same thing applies to servicing as well is that the servicing book with Mr. Cooper and Rocket put together represents a lead pipeline for not just our agents but also our our mortgage brokers as well. We have a healthy broker broker business. And so ultimately we want to just create an ecosystem where everyone that participates in that ecosystem can thrive, can run, can grow, and for that to be a much more integrated experience. >> It's really fascinating. So it's a legacy business that people know and have come to trust over decades, but it's wrapped in this fintech uh app experience with AI on top as like the top layer to make everything just work more intelligently. And it's really rare um I think in in finance to see something like this. Most most of the debates within fintech is like brand new business, hundred-year-old business, compete head-to-head. And you guys are you guys are kind of a hybrid of of both ideas. And I really like it. >> Yeah. You know what's interesting is that I've been in fintech most of my professional career. I mean, I've been in the payments business. I've been in point of sale. I've built local commerce applications for merchants. I did the nation's >> Turboax. I oversaw Turboax and Mint. Um, and so you learn a lot and one thing you realize is like all of fintech at some point it's about something more fundamental and that's when I discovered housing. And in my view, you know, the housing industry is the last frontier of fintech. It's sort of the cause at the end of the day. That's why people are saving. That's why they're trying to, you know, handle things like payments, taxes, personal loans, you know, uh, investing. Ultimately, it all is about paying one thing and that's the mortgage. So, so that's why in some ways I feel like mortgage is really the last frontier of fintech. >> So, I read a lot of sellside research and when you guys first announced these deals, I guess in the spring, uh there wasn't universal approval among the analysts who cover Rocket. Uh I don't think anyone disagreed with the thesis. Uh I think maybe just people looked at they're spending a lot of money. I sure hope this pays off. that that seemed to be some of the and then there were people who were extremely positive about it and they got it immediately. The bulls have been validated so far just based on the share price uh appreciation from the lows. Um but do you think that some of the skeptics on Wall Street now that you've closed these deals are starting to come around? Is that like the tenor of the conversations that you're starting to have? >> It is. And I think fundamentally, you know, at the end of the day, you have to have conviction in your strategy. And if you believe in your strategy and you execute well and you believe in sort of the long-term value of of the company, I'm a big believer that the rest of it just kind of takes care of itself. And so, you know, I've built funnel built funnel-based products for most of my career. And so, when you see an opportunity to connect a funnel and growth hack that funnel, you know that there's a there there. And housing in some ways is the biggest funnel that there is, right? It's a it's a five trillion dollar market. And so I think what's interesting is just each parts of these funnel reflects like sort of different investor thesis. So you have growth investors, you have value investors, right, that fundamentally manage on, you know, a different kind of construct of how they build models. But what we're creating is in some ways a new species. And so it's understandable that how do you think about that new species, right? How do you value it? How do you think about its growth prospects? But when you just try to understand that a consumer has to go through each parts of the experience together and they're not disparate, they're not disconnected. And when you really just sort of understand that in an AIdriven world, data is going to be the air that we breathe. When you think about the application of AI to the mortgage experience and the home ownership experience, which I'm happy to talk about more, it's a very natural fit. And so the strategy in some sense is something we have massive conviction around and we're going to keep putting up points. We're going to keep putting up proof points. We're going to keep executing. We're going to keep growing our share. We're going to keep innovating. And we're pretty confident that if we do a good job with that, you know, from a long-term perspective, the rest will take care of itself. >> I love that. Um, I want to ask you about just mortgage rates in general, not a rate prediction from you, but how meaningful is it for a company like yours if in fact mortgage rates follow uh overnight rates, 2-year rates lower? Um because if you're bullish on let's say home building stocks, home renovation, mortgages, like if you're looking at that segment of the stock market as an investor, then you have to believe that mortgage rates will should be and and will be lower uh as the Fed very very slowly takes down overnight rates. What does that do? What does that do for the various businesses under your umbrella? Yeah, I mean look, it's no secret that Rocket has a built the world's greatest massive refi machine. And so low rates is pretty straightforward. That leads to more refies and it leads to more purchases. So it's a very very healthy dynamic for us. >> Yeah. >> And what's also interesting is that we have um one of the things that we're very proud of is what we call our recapture rate. And that means our ability because we have such an amazing servicing experience with Rocket and and now with Mr. Cooper as well, we earn the right to generate more business with those same clients. So we have a recapture rate that's 3x higher than industry. And that's a big deal when you think about stretching that over 10 million loans now um versus what we serve today. But you know, Josh, I think the the biggest thing that I would >> So, Verun, let me just let me just put a let me just um put a exclamation point on that recapture idea. This gets to the heart of that LTV versus CAC calculation. It's not just, hey, we did a refi for this person and maybe we'll talk to them in 20 years. People have continuous needs to refinance. And if you do a good job for them on one project, you should be the first choice for the next time they need to do something, whether it's a heliloc or second second vacation home or or something, maybe even an insurance uh need like you guys should be like that's the idea is that you guys are front and center for them. Okay. >> Yes. Exactly right. That is that is the fundamental thesis behind why Mr. Cooper and Rocket are coming together. I mean, we have a massive origination business. Now, our servicing business is equal to that, if not bigger. But connecting them to create a flywheel effect and a network effect is the is the is the fundamental thesis because if we do that, our cost of acquisition effectively goes to zero and we can create an LTV to CAC ratio that's never been seen before in housing. So, that's that's the fundamental thesis. Exactly. Right. But the thing that I would also say is that the beauty of these acquisitions is that they counterbalance the company in a really healthy way because regardless of what the market does, even if you have, let's just say, a higher rate environment, those MSRs, the mortgage servicing rights that we have, they increase in value. And so when you combine these different parts of the business, what you end up with is a housing is a housing company, a home ownership company that's more counterbalanced, that doesn't need a loaded low rate environment to thrive. Um, because we have a more stable earnings base, we have more uh we have a more scalable growth springboard for generating future originations, we can kind of make hay and survive and thrive in any rate or economic cycle as well. >> Think that's a really I think it's a really great point. It's almost like a built-in hedge. Um, that's right. You obviously you'd prefer to be writing more business on the front end with uh home sales and and refies, but if you can't because of prevailing factors that are outside of your control, hey, we have this other part of the business now that's gigantic and we actually get paid more in a higher rate environment. Okay. I want to ask you about the AI opportunity. Um obviously everyone working in fintech uh wants to share with their uh shareholders and with the investment community. This is how AI is going to make us a better business or make a better customer experience or some combination. So tell us what you guys are working on and how you think about that opportunity. >> Yeah, very excited about AI. You know, there's a lot of hype out there around this technology and just as an engineer, as a computer scientist myself, I think it's very important that you kind of have to look past the hype and look to really concrete benefits and concrete impact. And you know, what I would say is that first off, you know, I think technology is most definitely going to define the next decade of housing. And it's not just AI, it's what AI actually will lead to in the coming 3 to 5 10 years. you know, it's applying AI to robotics, 3D printing, materials engineering, but even when you just think about some of the core applications of AI, you know, we think about it as a couple of key areas. There's like natural language processing, there's machine learning, and there's like knowledge engineering. And when you think about those key applied technologies in the context of like a home ownership experience, right, it's a lot of interesting things, right? It's like talking on the phone with a mortgage banker to get a loan priced. It's your capital markets infrastructure and the models that apply hedging and pricing and arbitrage day over day. It's providing documents and data and extracting classifying, you know, using computer vision to to um to automate the document process. It's underwriting, right? A deterministic algorithm that helps you understand, you know, how to qualify a particular client with more seamlessness. Then it's things like title, appraisal and closing using computer vision to understand appraisal values right under you know understand how to create fairness there. Um and then it's servicing right servicing is a massive opportunity for significant improvements in automation personalization. Um and so it's capabilities there. So when you when you think about these kind of applications, the reason I think about NLP uh machine learning and K knowledge engineering because they very directly apply to improve all of those processes and all of those processes are pretty much core to what it takes to originate a mortgage, service a mortgage, search for a home, work with a realtor, etc. So we've spent about $500 million over the past five years investing in our data infrastructure, our models, our AI infrastructure, our personalization. Um, we have a platform called Rocket Logic. You know, it basically handles everything from our telefan to our document processing to our underwriting to our title appraisal and closing. And we have some pretty amazing applications. I would love to invite you down to Detroit and just show you some demos of the stuff that we're working on. But it's pretty wild. I mean, when we get we do hundreds and hundreds of thousands of calls every single week. We have telefan systems that will analyze a call, provide proactive coaching, uh, provide conversion opportunities for bankers in real time. grade them report cards. Um, we have interventions that help you understand how to persuade and talk to the client at the right time, how to make sure you understand their needs, ask for the business the right way. Um, we have instant answers and chat. Chat's available 247 now. You know, it's three times more productive than and a banker can handle multiple chats at a time because the generative aspect of it is handling most of the issues and resolution. Um, we have something called model context protocol. That's something that allows us to build internal apps that we can use to drive personalization. And so it's not just our engineering teams that are building products and services for driving conversion. It's anyone. It's someone who's non-technical that can just use Agentic AI and just say, "Hey, build me an application that does this and that." And tap into the vast amount of data that we have. You know, we have um we have just a speed and sort of productivity increase that like what used to take weeks and months to develop develop now takes hours and days. Um, we have 30 pabytes of data that's fueling just predictive intent. We have better models on our clients. We have better understanding of where they are in the conversion funnel. And so we are, I would say, not just like connecting the home ownership journey, Josh. We are fully fully reinventing it. You know, it's AI powered, it's data driven, it's built on trust. And the one thing I would also say is that this is very much going to translate into core KPIs. And one of the things as an investor >> new new KPIs or existing KPIs that will be supercharged >> I would say there I would say it's existing KPIs that are supercharged but but it's ones that I think that our investors should be able to hold us accountable to. >> Are we growing the top of the funnel? Right? That's one that we've talked about. Are we driving massive conversion improvement? Are we becoming more efficient and reducing the cost to produce a loan and obviously thereby creating more value for clients? And then are we driving a recapture rate that is best in class for the industry? And so those four metrics, those four KPIs are effectively how we're going to run the company. And so the same metrics I think should be applicable to how we think about, you know, telling our story to the street as well. And so, you know, there should be no air between how we think about running the company and how we manage the expectations of our shareholders. But the reason that these KPIs are important is because they're directly relevant to our investments in AI. >> Yeah, I think that's right. And I think you get a bigger uh I think you get a better multiple on Wall Street these days if you can demonstrate that not only are earnings growing as a result of efficiencies due to um some of these nextgen technologies but if you're a leader in creating the path for these technologies I think uh the investor base changes and uh you're looking at more of a growth kind of tech investor versus I got to fill my bucket with 10% financials uh you know in a in a mutual fund. So uh it's very exciting time for Rocket. I totally agree with you. I'm really thrilled to be part of the story as an investor and on behalf of all of your shareholders who are watching today, I just want to thank you for giving us some of your time and sharing what you guys are working on. It's uh it's really interesting and and we appreciate it. >> Yeah, we appreciate it too, Josh. And um thank you for having me on the show. I love what you're doing with this uh with this channel and this community as well. and I'm going to come to Detroit and uh we'll we'll do a tour and I'm going to get a coney dog. Sounds good. >> Love to have you anytime. >> All right, Verun Krishna, ladies and gentlemen, thanks to uh thanks to Rocket Companies and thanks to Veroon. Thanks for watching all of you. Like and subscribe, do all the things and we will see you soon.