The following interview is a conversation we had with Steve Berneman, CEO of Blueprint , on our podcast Category Visionaries. You can view the full episode here: Steve Berneman, CEO of Blueprint Title: $24 Million Raised to Build the Future of Title Insurance Management
Steve Berneman
Absolutely, Brett. Glad to be here.
Brett
Yeah.
Brett
So before we begin talking about what you’re building, let’s start with a quick summary of who you are and a bit more about your background.
Steve Berneman
Absolutely. So Steve Bernman Proud, Nashville, Tennessee resident. I am a startup founder. My backstory is I was a teacher for a little while. I worked in minor league baseball for a little while. I did a Jdmba at Vanderbilt, and my focus was on small business the whole time. I got to work with some really great startups while I was a student, graduated, went to a law firm. I did high tech M and A in Austin, which was absolutely fantastic. It was part of the boom of Austin and got to work with really great founders. Most associates like to work buy side because you’re working with really big name clients. And I was the one associate who really wanted to focus on sell side. I got to sit with founders in that moment where they were thinking about selling this thing they had built, and that seat at the table was just really great.
Steve Berneman
Left my firm, started a company in Austin at the intersection of professional sports and video games. I’m not a gamer. I just respect the industry. We built what I think was a cool company. We sold it. I went to Vanderbilt for a year as an entrepreneur in resident and during that time built out a thesis and some thoughts on title insurance. And as I’m sure we’ll talk about today, I specifically looked for title. I was coming out of video games and sports, and I was looking for this really isn’t a joke. I was looking for the most boring industry I could possibly find because I wanted so much room and just space to run because I was in an industry that no one wanted to talk to me about. I’m realizing what a terrible way to start your podcast to talk about an industry that no one wants to talk about.
Steve Berneman
But we’ve been doing it now for six years, and we found it, mesmerizingly interesting and look forward to talking to you about it.
Brett
I always joke with friends. If you’re meeting someone new at dinner and they’re telling you about their business and it’s this big, sexy, amazing thing. You can assume that they probably don’t have any money and don’t make a lot of money. If it’s something that’s boring, just assume they’re rich, assume they’re crushing, and assume they have a really good business. So it’s a good general rule. I like the dive into boring businesses. I love it. And a couple of quick questions just so that we can get to better understand what makes you tick as a founder and as a leader. Is there a specific CEO that you’re looking up to and following the most right now?
Steve Berneman
Yeah, there’s a founder that I absolutely love and I’m going to go outside of Tech, the person I think I look up to the most and try to learn from is Jose Andres. Jose Andres, for those who don’t know, is a chef. Most of his restaurants are in the DC area, although he has stuff everywhere, I assume most people have heard of him. He, among other things, introduced or is credited for introducing small plates to the US. Which was really a European thing. And so you can love him and hate him for that. But really what he’s done with World Central Kitchen is just amazing. He flies in and talk about founder and entrepreneurship. The war in Ukraine starts or there’s a natural disaster anywhere in the world. His group flies in and they set up food production and delivery services within hours. And you think about what he’s done on high end dining and that sort of like small scale, more bootstrapped level entrepreneurship, but then to be able to switch and go into giant, high scale, low margin nonprofit work.
Steve Berneman
I read everything he writes. I follow him on any podcast he does. Nontraditional founder, but really amazing at building solutions.
Brett
Nice. I love that. And I always love when our guests have someone that’s not the typical suspect of someone in Tech. I think it’s just a really good place to learn outside of this industry and seeing what others are doing and then applying those lessons to technology. So I love that. All right, so next question for you is what book has had the greatest impact on you as a founder?
Steve Berneman
Yeah, I mentioned I was a lawyer and so I’m going to utterly punt and avoid your question. I don’t have a favorite movie, I don’t have a favorite band, but I do have probably five to ten books that I think about all the time. And so hard thing about hard things I come back to and what I think about is like the section about sales. I come back to the book who when hiring, because a huge part of my job is surrounding myself with the right leaders. This is not a sexy answer, but the Malcolm Gladwell books, I think they have little ways to make you rethink what you’re thinking. And so when I look atomic habits or any of these books that just make you rethink what you’re doing today and how you can do it just a little bit better. Those are the books I go back to.
Brett
Nice. I love it. And do you consider yourself a peacetime CEO or wartime CEO?
Steve Berneman
That’s a really interesting question. I don’t have to be either because I work in an industry that no one else wants to talk about or work in. I think what that means is we get to partner and grow. I would guess that makes me a peacetime CEO. But it’s not so much peacetime versus wartime as everyone we work with agrees about the antiquated nature of our industry and they’re thrilled for someone to be pressing forward. And so we have competitors who I talk to at conferences will sit and meet because we rarely run into each other and every time they improve the industry, it improves us as well.
Brett
Got it. Very cool. And we’re going to talk about the origin story and what the company does here in a second. But just for some context setting, can you give us the 101 of what title insurance is, exactly how it works and just an overview of the industry as a whole?
Steve Berneman
Yeah, happy to. So title insurance as a background for those who have bought a house, it’s something that first of all, it’s pretty much just a US and Canadian thing. And so this is not a global industry. It is insurance that you really only get when you’re buying a new property or taking a new loan. And title insurance is a guarantee against unknown encumbrances on your ownership. And so I’ll say it again and then I’ll give the non legal explanation of what that sentence means. But it’s title insurance is a guarantee against unknown encumbrances on your ownership. And this is like a super American ideal. When you buy land, it comes with this bundle of rights and you can think of this as like shotgun in hand. I can do what I want on my land. Right. So title insurance is a guarantee that well, not really.
Steve Berneman
There’s actually some limits on your rights and your ownership when you buy a property. And most of those are totally normal. It’s things like the water company can show up and they can come onto your land and they can put a pipe down your front yard because that’s sort of good for the general society to let them do that. It’s things like a shared driveway with your neighbor and then the really normal one is almost everyone has a mortgage on their property. Well, what that means is you can’t knock down your house just because you want to, you can’t rent your house just because you want to. Those are limits on your ownership. And so title insurance, when you buy a new property, we do a historical analysis of your property and we determine what are those encumbrances, what are those liens, what are those restrictions on you?
Steve Berneman
And then we disclose them to you. And what we offer is a guarantee that there are no unknown and so if we disclose them to you, then they’re known and we promise there’s nothing else. And I give all that background to say title insurance is as much a guarantee product as anything. As an industry, we have between one and 3% claims rates, and you contrast that to the PNC insurance lines that have between a 50 and 70% claims rate. And so we sell a product that’s more like a guarantee that has a very low claims rate. And as such, the industry really hasn’t changed much in the 100 and 5170 years that it’s existed. There are four companies that control almost 90% of title insurance underwriting and that Oligopoly is incredibly strong, they’re quite old and they’ve done a good job of working as an oligopolistic power.
Steve Berneman
On the other side, the distribution in our industry is done by title agents and whereas there’s an oligopoly and title underwriting on the agency side, there is no independent title agent that controls 1% of distribution. Totally fragmented. Wow. Yeah. And so you’ve got these local title agents, you’ve got these big four underwriters. And what that’s meant is no one’s really been incentivized to improve title insurance or closing in 180 years, because neither of those groups really want to spend the money to improve. And so that’s the landscape that we saw and why we started one. Brand wow.
Brett
Super interesting. And I know you touched on that at the start of the interview, but how are you perceived in the industry? Are you the rebel that’s coming in and terrorizing everyone and bringing change to an industry that doesn’t want change or how do they view you?
Steve Berneman
It’s a $20 billion industry with four players who controlled 90% of it. I’m a nat on their shoe. I don’t think they think about me. And that’s said humbly because 90% oligopoly I would say that if they were really going to say something. We are absolutely disrupting what they’re doing, and I’m not a huge fan of the word, but our goal and a little bit of blueprint, we’re a full stack provider, so we are the underwriter. We’re also the agency and we’re the tech stack. Our entire mission is to reduce friction in real estate purchase. What that means is it shouldn’t be so confusing and hard to buy property. This idea that well, it’s an important purchase. Therefore, it should be confusing and should be hard is so antithetical to reality and to how we do everything else. The more important it is, the more clear it should be, the easier it should be.
Steve Berneman
And so we come in with that goal. Everything we do is therefore designed around buyer and seller, not around their agents, not around the lender, designed around buyer and seller and importantly, wherever possible. Our goal is to reduce cost. And so I think the thing that if we’re thought of in any way, it’s because I’m pretty public about the fact that this is a $20 billion industry. Brett that should really only be a $10 billion industry. We should absolutely be shrinking the size of title insurance and closing. And I would say that I and Blueprint are probably the only people in the industry who will say that out loud.
Brett
I mean, you have to get a target on your back at some point, right, with those big companies, if you’re saying, hey, let’s cut this tree in half.
Steve Berneman
Yeah. Listen, if no one ever comes after you as a founder, then you never got anywhere.
Brett
I love that. That’s good advice. One thing I just wanted to ask there that you mentioned, you said it’s kind of an American thing. Why doesn’t this industry exist in other countries? Like, why is that just here?
Steve Berneman
Absolutely. You’re going to rue the fact you asked this question. I mentioned I was a teacher. I was an American history teacher. So the rest of the world uses what’s generally called the King system. It’s got some other names, but Torrins is one. The King System is this idea that the government is the final arbiter in who owns land. And if you want to think about this, think Game of Thrones style, like, you no longer own this castle, you own this castle. Right? And so they’re the final arbiter. And if you think about the founders of the US, that’s not something they were going to do. The government doesn’t decide actually man people. The citizens decide. And so in the US, what we have is a recording system. What that means is when you buy property, you go and record that purchase or conveyance of the property.
Steve Berneman
You go and record that at the county level in a recording book. And genuinely, the recording book says, like, Brett owns all of the land, from the river to the tree to the rock to the old fence. Right? And when Brett sells that land, he sells it to Steve. You go to the book and you write that down in the book. And then if there’s ever a debate about who owns the land, we go to the recording book and it’s evidence, but it’s not the decision. In every other country, the King System would say, no, the government’s going to just say, whatever’s in the book is real. And here what we say is the book is evidence. Title insurance came about in particular in Philadelphia, and Philadelphia is important because you can think about in the mid 18 hundreds, philadelphia has been around for 200 years.
Steve Berneman
There’s been a lot of property, there’s a lot of changing hands. And the book got confusing. And so, Brett, you came to me and you were like, Steve, I want to sell you the land. And I said, well, that’s great, but the book is confusing. I can’t actually tell if you own the land. I can’t tell if there’s liens or you took a mortgage. I can’t tell what’s going on. A third person showed up and the third person said, hey, listen, I understand the book is confusing, but I’m really good at reading the book, and so I’m going to read the book and I guarantee you that Brett owns the land and he has the right to sell it to you. And Steve, I’m so positive that Brett owns the land that if you pay me a dollar, I will pay you the full value of the loss if I’m wrong.
Steve Berneman
That’s title insurance. This idea that I’m going to read the history of the land and then write you a guarantee against it and that hasn’t adapted in the long history of the industry.
Brett
Wow, that’s super fascinating. And I’ve always heard of title insurance, but I never actually really understood it. I feel like I’m an expert level pro now on it. So thanks so much for that.
Steve Berneman
Absolutely.
Brett
Let’s talk now about Blueprint title. Let’s dive into it. So can you give me maybe just like, the origin story and then just explain what the product does and help the customers that you serve?
Steve Berneman
Sure, absolutely. The origin story is so I was an entrepreneur in residence. I always say my wife refers to eir as glorified unemployed person. And so you have all this time to think and I was looking at real estate, this is 2016, and friends that I’d gone to business school with had made so much money in real estate, and I just thought, I need to learn more. What I kept coming back to is this really horrible experience I had when I bought my last house. And I also had an investment property. I had a condo in Nashville, and just the purchase was terrible. And as I started talking to friends and other folks, what I found out was everyone thought that the actual closing of their house was terrible and no one understood why or how it was terrible. And then when I started talking to real estate professionals, they said, well, yeah, title insurance, yeah, it’s terrible, but that’s just the way it is, right?
Steve Berneman
And that’s just the way it is such a motivational phrase for entrepreneurs. And I just started diving in and started learning, wait a minute, a 90% oligopoly insurance. There’s no other vertical that regulators are okay with. A 90% oligopoly distribution is totally fragmented. There’s no technology. And what I love are industries that are so antiquated that you can apply ten year old technology and suddenly be cutting edge. And so if you think about the way that most people buy and sell a house, you go into an escrow shop or a title shop, and you sit down at a little wooden table and they hand you 150 pages that you’ve never seen before and a blue pen, and they say, start signing, right? And if you just think about that moment, there’s so much you can fix there. And on top of it, when you start learning about the title insurance piece of closing, well, there’s so much you can fix there.
Steve Berneman
And so I started learning and starting it together. And the origin really was this realization that for me, the fundamental problem in the title and closing industry is the relationship between the underwriter and the agent. That’s where all the money flows. That’s the lack of need for innovation. And that if you were going to solve this, the real way to solve it would be to build a full stack provider. And while that’s a unique thought in title, it’s not unique insurance, right? There’s plenty of you think 2016 root existed and Lemonade existed and Metromont. There were lots of examples of, well, how do I build a full stack provider that can really solve the solution? And fortunately, I met some people who helped teach me more about title. A local title agent named George Mutter, who remains my mentor and good friend in the industry.
Steve Berneman
He’s been a real estate attorney for almost 50 years here in Tennessee. And with his kind of guidance, I just opened a title shop for a year of all of 2017. I sat in a windowless room and taught myself how to be a title agent. I was able to get some builders and contractors, developers who would use us as clients with some friends help. And what a fundamental year got to go so deep into an industry that I otherwise knew nothing about. And I credit that foundational year of not having employees, not having anyone to rely on, kind of forced me to really do a deep dive.
Brett
Wow, I love that. So you’re really getting your hands dirty there for an entire year.
Steve Berneman
Yeah, and frankly, getting stuff wrong. It was our first escrow hire in early 2018. Famously, it’s a startup, right? So we both had laptops and she was on the other side of a small desk for me. And like 5 hours into her job, she looked up and just said, like, I am so glad you found me because you don’t know how to do any of this. I am having to fix everything you’ve ever done. And she absolutely saved us. But yeah, it was great to learn and make mistakes.
Brett
Nice. I love that. All right, let’s talk about traction now. So what kind of traction have you seen so far that you’re okay with sharing?
Steve Berneman
Look, we’ve been gathering clients across the country. Blueprint, as an agency, is live or licensed in 30 states. We also own an underwriter, as I’ve mentioned, and then that underwriter is live in eleven states. And so we’ve really been able to grow the footprint. We haven’t talked much about our market focus. Our market focus is on small and medium sized businesses that transact in real estate and the easy way to think about that is anyone who looks at a house and thinks of it as an asset, not as a home. And so those are builders and developers. It’s investors and wholesalers. REITs, prop, tech refi, and hard money lenders. It’s everyone who transacts into real estate. We are the absolute, I would say, market leader. Right now in SMB real estate investors, our ideal client is doing anything from five to 200 transactions a month.
Steve Berneman
And that is the absolute fastest growing segment. And so we want to keep building our brand and position there with that market because we absolutely believe that’s the future of real estate and then, frankly, the present of real estate. But I’ll tell you that statement about no one owns 1% of the market. We’re not even close. No one else is either. And that’s great news because there’s so much room to run.
Brett
Wow.
Steve Berneman
Interesting.
Brett
And when you’re speaking with these potential customers and prospects, what’s that AHA moment where they just really understand what you’re doing and understand the value that you can bring?
Steve Berneman
It’s understanding their business. The AHA moment is title insurance is a one size fits all product. It is designed around the consumer mortgage, what I call the sort of bank of America Wells Fargo 42 day mortgage process. That’s the average contract to close time on a residential purchase. When we go to our client base, we say, listen, 42 days. You want to buy this in eleven days, and you’re going to do it with cash, or you’re going to assign the project, or you’re going to bring hard money, or it’s going to be seller finance. You need someone who can have the templates and workflows to understand your business, because the more transparent we are and the more we get out of the way, the more projects you can do. And so we’re designed for your business. And that AHA moment is when we show them the savings that we can generate.
Steve Berneman
If you’re buying a house in Phoenix and we can save you $1,000 AI transcription costs because our underwriter has 40% lower rates, well, you just stretched your equity cash. And if we can close that deal in eleven days instead of 27 days, it means your team can focus on acquisition disposition instead of being worried about transactions. And so that AHA moment is, hey, look, log in immediately, see your savings immediately, see how easy this is, and stop worrying about title and closing. Got it?
Brett
Interesting. Makes a lot of sense. All right, next question for you. As I’m sure you’ve experienced, bringing a technology product to market isn’t easy always. So what’s been your greatest challenge so far and how’d you overcome it?
Steve Berneman
One, we’re an insurance company, and so I was ignorant as to the regulatory burden of starting an insurance company. And that’s not a tech answer. So I’ll pivot to your tech question. We’re asking people to change a really deep seated belief that title and closing is a difficult manual process. We’re asking people to believe in a product and say, listen, I understand that you’ve been doing this for 20 years, and the only way to find out information is to call and demand it. What we’re telling you is change your mindset instead of calling, log in. If you want to connect to the API, and I can deliver it directly in your system, even better. But log in, go and see that the document you’re looking for is right there. The status is right there. In fact, every task we’ve taken on your file is delineated right there.
Steve Berneman
Give yourself that confidence. That’s a really hard thing to do, Brett. It’s hard to get people to change behavior, even if what you’re offering them is improvement. So from a tech standpoint, we change features that we think are going to be killer features, and then we find out people didn’t understand the feature, and we actually have to dumb it down and take some of the feature ability away to better deliver confidence. And I think that’s a continuing journey and absolutely something we’re not nearly there on.
Brett
Nice makes sense. And last two questions for you. What excites you most about the work you get to do every day? I can tell that you’re excited. You can hear the passion in your voice. I’m excited to hear your answer here.
Steve Berneman
It’s really fun to work in an industry that people have to use and they have to buy your product, but they absolutely hate your industry because the bar is so low. Right? It’s unbelievable. We get these Google reviews or we get internal emails, or people will call in and they’ll just say, like, I bought 50 houses last year, I’m going to buy 75 this year. This is the first time in history that a closing actually happened the way we wanted it to and expected it to. And so internally, we’re like, so you’re telling me the bar is just meet expectation. I don’t even have to beat expectation. That’s encouraging. And it’s also really motivational to say, how do we improve something that is just such a drag on people? I want people to buy and sell more properties. How can I reduce friction? How can I make them less concerned about it?
Steve Berneman
It doesn’t matter how boring the industry is, that’s inherently a fun thing to do.
Brett
Nice I can imagine. Last question for you. If we zoom out into the future, what’s the five year vision for the company?
Steve Berneman
Every single year, title insurance has larger revenues than the year before. Caveat that won’t be true this year because of 2021 versus 2022. But there’s this giant up into the right just revenue grab in title insurance. Blueprint will have succeeded when we’ve started to pierce and shrink the industry. So the five year vision for the company real estate transactions should be self service. We’ve got to be at a place within the next 24 months, not 60 months, where you can log in, upload a contract, never have to talk to anyone, but own your transaction all the way through. In the same way that you can buy any other asset on the Internet. We’ve got to be able to do that in real estate and correspondingly as we can deliver and reduce premium prices across the country. And that’s not a short thing. That’s a full five year that’s a ten year vision.
Steve Berneman
If we can cause the shrink of title insurance, AI transcription costs across the country, we’ll have started to do some good. And so that’s the vision and what we’re on a path towards.
Brett
Amazing. Super exciting, Steve. Unfortunately, that’s all we’re going to have time to cover for today before we wrap up. If people want to follow along with your journey, where’s the best place for them to go?
Steve Berneman
Blueprinttitle.com. We’ve got a lot of information about us. We also for the one person for whom wedded your appetite. To learn more about title insurance, I’m going to put a plug in for the Blueprint Academy. Our content team has really done an amazing job to build content and information and tutorials about closing and title insurance. And according to the SEO ranks that they like to show me, it’s absolutely one of the leaders in the industry. Now. To learn more, please go to Blueprinttitle.com, jump over to the Academy tab and keep learning. Amazing.
Brett
Well, thanks so much for your time. This has been a blast. I’ve learned so much from you. I’m definitely an expert now in title insurance and look forward to seeing you on this vision.
Steve Berneman
Thanks so much, Brett. Great talking to you. All right, keep in touch. Bye.
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