TheLoanPage.com 1997 – 2007

When we cover the lead generation space, we most often focus on new companies, acquisitions, interesting technologies, and/or strategies used in the space. In today’s hot bed of lead generation growth, we don’t often cover or even come across a lead generation company closing its doors. While not covered extensively, this is what happened January 24, 2007 to mortgage lead generation site TheLoanPage.com. It has a storied past that begins in Baltimore, Maryland two doors down from internet advertising giant and AOL shining star, Advertising.com.

TheLoanPage began several years earlier and typified the lead generation companies of 2002 and 2003. It was early to the game (founded in 1997), which allowed it to build out a network of buyers more easily than entrants today. Rather than the skepticism buyers have today, the offline market had such an appetite that even if a buyer had doubts about online leads, many more stood in line to take their place. On the media side, it didn’t hurt that they could walk over to Advertising.com’s offices. Additionally, given the high demand for leads, relative unsophistication in the marketplace, and accessibility of media, TheLoanPage.com (TLP) didn’t have difficulty scaling business.

Fourteen or so months prior to the sale to Housevalues.com (NASDAQ:SOLD) in the beginning of November 2005 (word of the sale leaked in middle of October 2005), Venture capital firm Battery Ventures purchased the company in June of 2004. To better leverage the talent market and assets provided by Batter Ventures, the company moved from Baltimore to San Francisco. It made sense – even though Advertising.com had just been sold and TLP had no signs of slowing, you simply couldn’t call Baltimore, Maryland a hotbed of internet activity.

More astute observers will note that deal terms alone suggested TheLoanPage.com had some rust under the hood. Battery Ventures invested approximately $10 million into the acquisition, yet as reported by the Puget Sound Business Journal, HouseValues.com spent $5.25 million in cash and assumed $1.8 million in the debt to acquire them. Venture capital firms don’t often like to lose money on deals; assuming investing in private companies mirrors the same logic as investing in public ones, you tend to sell if you think it will only go down further; or, perhaps in the case of Battery, they wanted to focus their resources elsewhere and saw this as a way to do so quickly. Either way, it wasn’t a sure fire victory for HouseValues.com at the time of purchase.

While public, HouseValues.com did not have a boatload of cash. They did very well, and close to the time of sale, the stock price continued to set new highs. A leader in real estate and expert buyers of traffic, it made sense for them to enter the after market, so to speak, of refinance. As they said in the November 2005 release, "The Loan Page’s mortgage lead generation platform is expected to allow HouseValues to expand its mortgage offerings and meet a broad variety of mortgage industry needs by offering a comprehensive menu of online products." TheLoanPage.com represented a rather inexpensive way to test this new market.

The real estate and refinance businesses differ, though. And, as a condition of acquisition, those in the San Francisco based TheLoanPage would have to move to Kirkland, Washington where HouseValues has its headquarters. Here is where odds makers probably started adjusting the potential for success. TheLoanPage had relationships with top buyers, and it had really good media buying knowledge. Unfortunately, it didn’t have a platform, and several key employees chose not to make the move. This left HouseValues with a site and relationships that, it turns out, worked with TheLoanPage not for the quality of its traffic but the quality of its people. As you can see from the stock chart below, HouseValues had enough challenges to ward off in 2006. Thus, they announced that they will exit the mortgage lead generation business and scale back or eliminate initiatives that "are not critical to its real estate agent customers." Translation – no TheLoanPage, less focus on Homepages.com and 60 people laid off.

We have yet to mention Homepages.com. It alone makes for another great case study in lead generation success and failure. Similar to the story with TheLoanPage, Homepages.com had the right ingredients on the surface, but it didn’t have what it needed to really thrive. Neither site, and more specifically with TheLoanPage, suggests a sign of a failing market. You might think a public company exiting lead generation could mean that, but instead of it being a global symbol for an industry or even a vertical, their decision to exit simply highlights the complexity and evolution of the market. In a theme often repeated, this story shows that success in one arena doesn’t guarantee success in another. It helps, but you still need to make the investment and commitment. Here, no one did anything wrong, but in today’s market, you can only afford to do things right.