Print
More News

Lending Tree Founder Gives Talk At UNCW's Business Week

By Jenny Callison, posted Mar 29, 2017
UNCW students line up to speak with Lending Tree founder Doug Lebda (left) after his talk Wednesday. (Photo by Jenny Callison)
Doug Lebda likes to think differently.

Lebda, who founded the online lending aggregator Lending Tree, uses what he calls Effectuation as an alternative to the traditional business startup approach. He talked about the core principles of effectual thinking Wednesday at University of North Carolina Wilmington as part of the university’s Business Week program.
 
Effectuation differs from the traditional causal thinking approach to business development in that the entrepreneur starts out by inventorying assets – what’s on hand – rather than determining a goal and figuring out what it will take to meet that goal. Lebda said the concept was developed by Saras Sarasvathy, a faculty member at University of Virginia’s Darden School of Business, where Lebda studied.
 
Effectual thinking is common among successful entrepreneurs, Lebda said, citing Sarasvathy’s research involving what she called expert entrepreneurs: people who had a record of successful startups.
 
“It’s a way of thinking; a method that can be applied to any area of life,” he told an overflow audience in Cameron Hall auditorium. “It could be as important as the scientific method over time.”
 
Five principles underlie the Effectuation process. Lebda related his own entrepreneurial journey with Charlotte-based Lending Tree in illustrating those principles.
 
1. Bird in the hand: “Think about your personal balance sheet,” Lebda said. “Who are you, and what do you have? Whom do you know?”
 
He likened this way of starting a business to a chef who is asked to prepare a meal using only the ingredients and equipment already on hand. A causal approach would be for the chef to determine what meal to prepare and then to assemble the equipment and ingredients needed to achieve that goal.
 
In his case, Lebda made a list of every asset he had, from his skills to his network of contacts, that would enable him to launch an online lending marketplace.
 
2. Affordable loss: Instead of focusing on profits, determine what and how much you can afford to lose in the venture, Lebda explained. The loss might be financial, or time or sacrifice of other important parts of your life.
 
Lebda gave himself one year, taking a break from graduate business school to see if he could turn his idea into a viable business.
 
3. Crazy Quilt: Talk about your concept to anyone who might be able to help you and give you feedback, but really listen only to those who are willing to get skin in the game, Lebda said. The result? A "quilt" of connections, ideas and, ideally, resources.
 
The most important question he would ask others, he said, was “What would it take for you to invest $10,000?” Lebda added that the requirements laid out by potential investors were a great source of learning for him and led to his making several improvements in his business plan that resulted in early investments. He also forged barter arrangements, learned what he could get for free and honed his sales skills.
 
4. Lemonade: When unexpected negative things happen, figure out how to turn them into positives, Lebda said. “Pivot. Find out what is right around the corner -- it’s a new market, a new opportunity.”
 
When Lebda realized he was having difficulty signing banks up to be part of Lending Tree’s base of online lenders, he talked to an official at one major bank, who explained that his bank didn’t have the technology to accept online loan applications. Lebda ended up building a new website for the bank. That job wasn’t aligned with Lending Tree’s business path, but it netted a nice profit, cemented the relationship with that new client and opened the door to helping other banks with their websites.
 
5. Pilot in the plane: While businesses try to predict the future, it is sometimes more important to be in control of current conditions, just as an airline pilot must stay on top of what’s happening even when the craft is on autopilot.
 
“I stay very close to my clients,” Lebda said.
 
In answer to a question from the audience, the Lending Tree executive said that Effectuation is a way of seeing the world and generating options.
 
“I’ve come close to bankruptcy four times, and each time it was a thrill,” he said. “We’re always learning and solving problems, and it’s made us better.”
Ico insights

INSIGHTS

SPONSORS' CONTENT
Leath 683x10242

Avoiding HR Nightmares: Help is Here!

Lisa Leath - Leath HR Group
Burrus rob headshot 300x300

Are You Blockchain Bound?

Robert Burrus - Cameron School of Business - UNC-Wilmington
Tysonemery

Protect Yourself from Cyber Crime in Real Estate Transactions

Tyson Emery - KBT Realty

Trending News

Open For Business: New Announcements (Sept. 19)

Johanna Cano - Sep 19, 2018

Open For Business: New Announcements (Sept. 18)

Staff Reports - Sep 18, 2018

In Storm's Aftermath, Gas, Supplies Filter In

Cece Nunn - Sep 18, 2018

Tips On What To Do Now For Storm Damage

Vicky Janowski - Sep 19, 2018

Downtown Recovery Ongoing, Flooding Still An Issue

Cece Nunn and Christina Haley O'Neal - Sep 19, 2018

In The Current Issue

WordPress Conference Cancels Due To Hurricane   

WordCamp Wilmington was among the events canceled because of Hurricane Florence....


Love, Lydia Bakery Moves In

Lydia Clopton opened Love, Lydia in July at 1502 South Third St. The location was previously a home that was remodeled into the bakery....


State Releases Visitor Spending Data

Visitor spending increased in Pender County for 2017, with a growth rate that outpaced Brunswick and New Hanover counties, and even the stat...

Book On Business

The 2018 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2018 Power Breakfast - Dishing on the Restaurant Biz
2018 WilmingtonBiz Expo - Keynote Lunch with Eric Dinenberg, Rouse Properties
2017 Health Care Heroes