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States Title’s Year to Remember: We’re Just Getting Started

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By Christopher Morrison

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15m

In January 2019, a little over two years after our CEO, Max Simkoff, founded States Title to revolutionize residential real estate closings, we did something pretty unique: As a scrappy San Francisco startup with a bold vision, we acquired an established title agency with a 65-year legacy and its affiliate underwriter that serves 39 States and the District of Columbia.

Yes, David bought Goliath.

Or as Charles Moldow, General Partner at Foundation Capital, our lead investor, noted at the time: “Bottom line: a 22-person tech startup somehow just acquired a 1,000+-person incumbent. That’s akin to Tesla, circa 2005, acquiring GM.

Bringing North American Title Company and North American Title Insurance Company under the States Title umbrella marked our arrival on the national stage. Overnight, we became one of the top 10 real estate settlement services in the U.S. with:

  • Near nationwide coverage
  • Experienced and dedicated title personnel
  • Established business relationships

It’s been an exciting year here at States Title and as we reflect on all we’ve accomplished and race into 2020, I’m sharing my COO’s eye view of our “year in review” of 2019. Our progress, people, patents and press gave us a year to remember and serve as an exceptional foundation for everything we’ll accomplish in 2020 and beyond.

Progress – 100x Growth

Our customers – which now include several of the largest lenders in the country – are first movers and early adopters by nature. They understand the value of working with States Title both now and in the future and are an integral part of our product development.

Back in 2018, a “proof of concept” year, we insured $13 million of real estate transactions with our flagship innovation – instant predictive underwriting for title insurance. In 2019, our customers helped us grow that by a factor of 100x to more than $1.3 billion of insured real estate transactions.

While growth is exciting on its own, what’s most important is that it speaks volumes to the value our customers see in our solution. It also emphatically demonstrates our ability to create scalable machine intelligence-driven solutions and deliver them to a market that is long overdue for innovation.

Recognizing and fueling this growth, we raised $32 million in 2019 – $7 million from our investors during the acquisition in January and a further $25 million in a Series B round in June. As a result, we saw the 7th highest valuation jump of VC-backed private companies according to PitchBook’s VC Valuations Report with nearly 14x growth.

People – Our Competitive Advantage

The only way to revolutionize an industry is with the right people. It takes the right mix of talent and the right culture, and that’s doubly true when you bring together a scrappy startup and an established pair of national incumbents.

Our people are the true source of our competitive advantage, and I reflect on 2019 as the year of hiring.

In 12 months, we hired more than 35 product managers, data scientists and engineers across our primary tech hubs in San Francisco, CA, Durham, NC, and Miami, FL. With nearly 5,000 applicants, our hiring ratio for these teams averaged nearly 150 applicants for each position.

At the same time, we hired well over 250 associates into our title and escrow operations across the country, continuing our investment in that area of the business.

As far as I know, we’re the only company in our industry with academic and industrial expertise from astrophysics, data science, machine intelligence, supply chain management, operations research and engineering disciplines collaborating with leading title and escrow professionals across the country. Their collective expertise puts us in the best position to leverage the extensive institutional knowledge we have within the title and escrow industry.

We also bolstered our board of directors and our roster of leading advisors. In just the second half of 2019, Silicon Valley pioneer, Karen Richardson, and former Treasury Secretary, Larry Summers, joined States Title’s board, and 30-year banking veteran, John Adam Kanas, joined us as a senior advisor.

As Max explained at the time: “John’s experience at the top of the financial sector complements Larry’s at the highest levels of government and Karen’s at the forefront of major technological progress. Together with our board, their insight will prove invaluable as we navigate this dynamic macroeconomic landscape.”

Patents – Disruption 101

Disruptive companies excel at engineering effective and scalable solutions and are often measured by the intellectual property they develop and protect in their formative years.

In April and December 2019, States Title secured complementary machine intelligence patents, largely thanks to the ingenuity of Andy Mahdavi, our Chief Data Science Officer, and the stellar team of data scientists he continues to build.

  1. The first patent protects States Title’s use of data science to create predictive title insurance by assigning a risk score to indicate how safe a property is in terms of potential liens or other liabilities. 
  2. The second patent protects States Title’s unique application of the Markov Chain Monte Carlo technique to turn this risk score into a profit/loss number.

In practical terms, these patents form the core of a machine intelligence-driven title and escrow solution that represents valuable, long-overdue disruption for the industry. How valuable? For residential real estate lenders, our solution has the potential to increase profit margins on refinancing loan originations by up to 35 percent.

Press – Building Momentum

If a mission is worth accomplishing, it is also worth talking about.

Last year, we began to engage and educate a wider audience on machine intelligence, data science, growth and disruption, for example:

Elsewhere, States Title had the privilege to be written about as:

It’s a privilege to see the hard work of so many on our team receive the recognition it deserves, and coverage like this helps us bolster our brand and attract great new people and resources to our cause as we transform closings in this country.

I track performance across States Title’s operations and have witnessed first-hand how these four foundational focal points – progress, people, patents and press – drive the most essential components of success: growth and profitability.

And while I am so proud of what every one of us at the company has accomplished this past year, it is just a snapshot of things to come. As I said at the top: we’re just getting started.

About Christopher Morrison:

Christopher is responsible for overseeing all day-to-day operations at States Title. Prior to joining States Title as part of its founding management team, Christopher was an Associate Partner at McKinsey & Company.