When I heard that two friends and highly successful businessmen—Tim Chermak and Mitchell Broderick—had launched a new venture called John Galt Mortgage Company, I immediately thought, Brilliant! But I didn’t realize then how brilliant their idea really is. They aim to simultaneously upend an industry and improve American culture by promoting rational philosophic ideas. Impossible, you say? Wait until you hear their idea. (What follows is an edited, condensed version of the conversation we had on my podcast, “Philosophy for Flourishing.” Listen to the full version here).
Hersey: One of the first things visitors to your site will see is this: “For purely selfish reasons, we want to save you as much money as possible so you tell your friends and family about us. That’s why we cap our profit on every mortgage and use the ‘leftover’ savings to help you qualify for a better interest rate.” Could you say a bit about your approach to business?
Tim Chermak: When you think back to some of the most successful entrepreneurs in American business history—Rockefeller, Carnegie, Vanderbilt, Ford—they built products and services at price points that were major wins for consumers. Rockefeller brought the price of kerosene—the main source of light—down 80 percent for the average person. The narrative that businessmen are evil and built their riches by screwing people turns out to be totally false. If you spend even two minutes researching how these guys built their businesses, that becomes apparent. Vanderbilt, for instance, decided to go into the steamship business, which was the main method of transportation at the time. His competitors were cronies who had used political pull to get government-granted monopolies in certain areas. But he essentially said, “I don’t care if opening this company is technically illegal—I’m not going to follow these unjust laws. I’m just going to give consumers such a good deal that it becomes political suicide to oppose me.” And he became known as a people’s champion. You could almost call him a populist hero because he brought down the price of steamship travel so much. He is responsible, in the modern era at least, for the idea of a loss leader: He would sell a fare at cost or at a loss and then make money back on sales of concessions and the like. He realized that if you scale this, you can have lower profit margins but still make a ton of money by giving consumers a win-win deal that they would choose over competitors.
This is really what inspired us to launch John Galt Mortgage Company (JGMC). We saw an opportunity to apply this idea in the mortgage industry: Lower the margins and pass the savings on to customers. They win, and if we can attract enough customers, we win, too.
Hersey: One of the prominent subheads on your site is: “Finally, A Company That Doesn’t Hate American Values.” What values are those? . . .
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