Canada’s most outspoken capitalist has pulled the plug on brokering. After a little over a year in the business, Kevin O’Leary’s mortgage operation has closed.
Alex Kenjeev, President O’Leary Ventures, told CMT this:
“After a careful trial and evaluation period, we have decided to exit the mortgage space. We will be focusing instead on other financial services businesses that we see as more compelling. Kevin is constantly looking at opportunities where he can add the most value, and we regularly assess and reassess which ones make the most sense at any given time.”
“That being said, we will keep an eye on industry trends and developments, and if the right opportunity arises we may revisit the mortgage space at that time.”
O’Leary’s model was to make mortgages “simple” (e.g., simplified products, process and paperwork). As we all know in the mortgage business, however, terms, legal disclosures and lender commitments are anything but simple.
O’Leary also tried to leverage his personal brand, which was likely a double-edged sword. Having a money-hungry persona isn’t necessarily reassuring to consumers ― who want to know that you’re looking out for their best interests.
O’Leary Mortgages also touted that it would help people find “the best possible rates.” But the proof in the pudding (actual mortgage rates, promotions or other pricing information) was nowhere to be found on his website.
In sum, O’Leary Mortgages was a pilot project that didn’t generate the returns O’Leary envisioned. The problem might have been that he treated it like a pilot and didn’t make the investment needed to grow consumer awareness and differentiate his offerings.
If anything, it’s a fascinating case study on how you can’t scale in this business without an unambiguous competitive edge. And that takes more than a famous name.
Related: Kevin O’Leary on O’Leary Mortgages
Rob McLister, CMT (email)