The Flywheel Framework: Lunching & Learning with Ganesh Baskaran

The Xpanse summer interns sat down with Ganesh Baskaran, our Chief Product Officer for a “Lunch & Learn” session. This is a key part of our internship program where our entire intern team gets the opportunity to sit down with senior leadership. Each of our leaders comes prepared to share their advice and insight with our interns in a conversational presentation. Interns are free to ask questions and spark discussion where needed.

We originally planned for 30 minutes with Ganesh, but the team ended up talking for almost an hour.

Ganesh introduced the intern team to the flywheel framework for growth, which enables products to create long term competitive advantage. He explained that it is something that he learned in his 15 years with Amazon. The framework is something he has brought with him on to Xpanse.

The flywheel framework takes an exponential and cyclical perspective to strategy, arguing that if planned correctly, each area of a business will work in harmony continually feeding the growth of the other areas of the business. The push to start a flywheel is slow, but it builds momentum, and if kept going, it can feed the exponential growth seen in businesses such as Amazon, Google, Uber, Apple, AirBnB, Facebook etc. These businesses have grown exponentially through flywheel effects and have created sustainable advantages through three characteristics:

(1) proprietary technology (2) network effects (3) economies of scale

For instance, the Amazon Retail business started by focusing on three key inputs to kickstart its flywheel — Pricing, Selection and Convenience. These are the three things customers cared about two decades ago and will care about several decades from now. Focusing on these three inputs enabled Amazon Retail to build its vast selection through the 3P sellers marketplace (network effects) and competitive pricing/convenient and quick delivery through its highly scalable infrastructure (proprietary technology and economies of scale).

Ganesh also brought in the example of UberEats to provide perspective on a business that got their flywheel spinning by leveraging their own strengths within the company. To build the business of UberEats you need restaurants, drivers, and customers. Restaurants aren’t going to hop on the platform if there are not enough customers to sell their food to. Customers are not going to get on the platform if their favorite restaurants are not on the platform and if there are not enough drivers to get them their meals quickly. Drivers are not getting on the platform if there are not enough orders to deliver to enable them to make a living. You see the issue in kick-starting the flywheel.

It’s a massive initial push to make this all happen at once. Luckily for Uber Eats, Uber had already built a network of drivers and customers. They had proprietary technology, network effects and economies of scale with their rideshare business. They just had to incentivize restaurants to come on board and replicate what they did with Uber to kickstart the UberEATS flywheel. While it is a huge push to get the flywheel spinning for a multi-faceted platform such as Uber Eats, once it gets going…

• Restaurants do not want to miss out on all the possible new customers
• Customers cannot wait to have food delivered from thousands of restaurants
• Drivers have enough orders to make sustainable revenue off the platform

The growth of each wing of the platform incentivizes growth in other areas of the business. Once the flywheel is spinning, each new area of growth creates growth elsewhere and propels the business exponentially.

Xpanse, in many ways, is the same.

We are focusing on three key inputs that have always mattered to lenders (and will continue to matter for decades to come) — ability to scale their business, lowering their operational cost, and improving the quality of loan origination decisions.

We are a data platform at the core, driving automation to minimize operational cost and maximize quality using proprietary technology. We are also leveraging network effects to build our catalog of service providers to enable lenders to collect all the documents such as title, appraisal, income verification, assets verification needed to underwrite and fund their loans as quickly as possible — which in turn enables them to securitize and sell loans in the secondary market quickly and continue to scale their lending operations.

Although our beginnings are modest, we aspire to build something big that is synonymous with the operating system of the mortgage industry.

In our case, the flywheel is beginning to turn. Xpanse is uniquely positioned to gather the initial momentum to get our flywheel spinning. As a member of the Archwell family of companies, Xpanse already has established relationships with several established service providers and one of the country’s top 5 lenders. This has not only given us head start on creating network effects but also has provided access to decades of data to build out our proprietary technology.

Xpanse is building the modern OS for the greater mortgage industry that will connect and create value to borrowers, lenders, servicers, and providers. Conquering the last frontier of Fintech #BuiltInSeattle

Learn more about opportunities with Xpanse here and follow us on LinkedIn.