From the September 1999 issue of Startups

His mission is to make the whole time-consuming, intimidating, distasteful process of applying for a mortgage a relic of the past. Traditionalists may scoff at 35-year-old Daniel Geduldig's homebased business in tiny Dillsburg, Pennsylvania; his rapid-fire quips; his offbeat advertising; and his practice of completing mortgage applications by phone in the evening, rather than meeting with clients in person during the business day. But he's the one laughing all the way to the bank.

In just five years, using unconventional methods, Geduldig, owner of Dan the Mortgage Man Inc., has turned a $5,000 investment into a $17 million business, named one of the fastest-growing companies in central Pennsylvania by virtue of its skyrocketing sales. "Half the people who see my ads roll their eyes and wouldn't have anything to do with me," Geduldig says. "But my clients would vote for me for president."

Despite his slightly loopy image, which is carefully cultivated, Dan the Mortgage Man knows exactly what he's doing. His wacky marketing techniques--like newspaper ads featuring his face on a bottle of mouthwash accompanied by the slogan "Kills the incompetence that causes bad service"--attract younger clients who might otherwise feel uncomfortable doing the whole uptight mortgage thing.

It's this kind of unconventional thinking that has young entrepreneurs in the traditionally staid financial services industry developing a growing and loyal following, catering to the clients more established financial advisors don't want to be bothered with: Gen Xers like themselves.


Pamela Rohland (prohla@aol.com) would love to know more about earning money and less about spending it.

Next-Generation Investing

True, twentysomethings and early-thirtysomethings don't have as much money to invest and spend on financial services as their parents' generation. But someday they will, and if you're there to serve your fellow Xers now, you're bound to reap rewards down the road.

"Forty million people were born between 1965 and 1976," says Don Silver, author of The Generation X Money Book: Achieving Security and Independence (Adams-Hall Publishing). "During their lifetime, they'll go through seven to 10 jobs and have up to five different careers. Traditional money and retirement planning techniques won't work for them because they'll be encountering dramatically new definitions of jobs, work and career, not to mention retirement plans. So, serving Generation Xers is a logical move. Right now, entrepreneurs looking to make money from them might face an uphill battle, but time is on their side."

Although Generation X's financial prowess hasn't yet peaked, it's nothing to sneeze at. In 1997, U.S. News & World Report reported that 60 percent of Xers are actively saving for retirement, and that Xers account for one-fifth of all U.S. investors.

Why are Xers concerning themselves now about a retirement that could be 40 or more years away? "They have less security than the baby boomers did," Silver says. "More than any previous generation, they need to know how to protect their financial future and be aware in advance of the financial impact of any life-changing decision, such as moving to a new job or getting married."

Although marketing financial services to your peers may give you an edge, it's not the only way to go. Xers who are busy building careers and families don't have as much money to invest as those who are already established. Some entrepreneurs hope to make up the difference by building a large volume of clients; others serve clients from a variety of age groups.

Brent Houston, 29-year-old managing director of Mr. Stock, an online investment brokerage in San Francisco, says his company appeals to younger people with technical savvy and a desire to call their own investment shots, as well as older investors with deeper pockets. "Most brokers go after asset managers with $150,000 or more to invest," he says. "There aren't a lot of Generation Xers who have that kind of money, and they're being left behind. We try to give our customers the tools they need and let them make their own decisions. Our business allows people with a minimum of $2,000 to go online and buy Microsoft shares for $100 each."

The 6-year-old company earned $4 million in 1998; Houston expects Mr. Stock to have 100 brokers employed by mid-2000.

Other financial services entrepreneurs don't target individuals at all. Jeanne Esti's company, Strategic Solutions, taps into the desire of businesses, associations and other organizations to establish their own credit cards, with a portion of the proceeds from sales going to a specific cause. Outfitting herself with a laptop computer, a phone and a printer/copier for less than $5,000, Esti, 30, started her company in September 1998. From her Alexandria, Virginia, home, she worked the phones, gathered leads from former contacts and read credit card industry publications. Although she believes it's too early to tell what her future sales will be, her client list, which includes The Nature Conservancy and National Geographic, gives her a sense of optimism about her business's future.

"I teach my clients how to put deals together," Esti says. "There are a lot of intricacies to doing this, but there's such a wealth of rewards if it's done properly." While many companies that want to establish a credit card already have legal teams in place to do that, Esti says she can go beyond legalistic details and put the project together from start to finish.

One of the toughest parts of her business is persuading banks they have something to gain from the deal--namely, the organization's mailing list and access to all its members. "When potential clients ask why they need me," Esti says, "I tell them it's because I have the expertise, and they need someone impartial to tell them what will work and what won't."

Thinking Out Of The Box

Like most entrepreneurs in this industry, Esti worked in a related field before going solo. After earning a degree in communications and marketing, she worked at MasterCard and American Express before starting Strategic Solutions. Houston worked on the trading floor of the Pacific Stock Exchange before he and his former partner, Peter Eberle, struck a deal with their former employer, option-market maker Group One in San Francisco, to put up the start-up capital--equipment and office space included.

Geduldig, a former psychology major, worked for two years in the mortgage industry before launching his own business. He wanted to go out on his own because he was tired of his bosses saying no to his outside-the-box ideas. "It was an excellent time to start the business because of the low interest rates," he says. "I was in the right place at the right time."

The keys to Geduldig's success are low overhead (working from home with only one employee), developing strong relationships with dozens of lenders nationwide and charging above-average rates. "People are willing to pay me significantly more for the convenience of not having to take time off work to go to a mortgage company and fill out forms," he explains. "They can give me their information at home in the evening while they're wearing their bathrobes."

Houston, too, knew his business would have to be different to succeed. He opted for a playful name and logo to market his staff as renegade brokers. Mr. Stock's trademarked cartoon emblem--a stockbroker holding stock certificates in one hand and a wad of cash in the other--may be goofy, but the company itself is serious about its approach. Providing excellent customer service is one way start-ups can compete with the big boys. Mr. Stock guarantees any phone call will be answered by a live broker within three rings and that a broker will respond to any customer's e-mail within 24 hours.

The open-collar young entrepreneurs finding success in this once-stuffy, shirt-and-tie business are distinguishing themselves by breaking with industry traditions. In the process, they're upholding a larger business tradition: making money by giving customers what they want, the way they want it. Taking the time to learn what customers need is an investment that pays off for everyone involved.

Smart Move

Cash In

  • The Generation X Money Book: Achieving Security and Independence by Don Silver (Adams-Hall Publishing, $15, 800-888-4452).
  • Gen X Press (http://www.genxpress.com): This Towson, Maryland, company provides a newsletter and consulting services to help businesses better market their services to Gen Xers. For more information, call (410) 464-2020.
  • The National Association of Personal Financial Advisors (http://www.napfa.org) helps people get into the financial services business and offers extensive information. Call (847) 537-7722 or (888) 333-6659 for details.
  • The Whiz.com (http://www.thewhiz.com): This online community provides Generation Xers with personal financial information.

Contact Sources

Dan The Mortgage Man Inc.,dgeduldig@aol.com, http://www.dtmm.com

Mr. Stock,info@mrstock.com, http://www.mrstock.com