From October through March, Gary Bartholomew watched a lot of CNBC - a lot of stories about dot-com start-ups crashing and burning.
"Profit warnings kept coming out time and time again" and the companies had no chance of turning things around, said the founder and chief executive officer of the Internet mortgage technology firm Basis100 Inc.
But instead of being shaken by this carnage, Mr. Bartholomew says he is upbeat.
"There was a weeding out," he said in an interview. "If you didn't have a valid model, you're out of business now. The sector has come out, but managers are picking the winners and we're seeing institutions buying back into our stock."
Mr. Bartholomew has an ambitious strategy: Corner the Canadian market for end-to-end automated mortgage technology and at the same time expand in the United States, gradually automating the loan process there.
Basis100, which was founded in 1998 and is based in Toronto, already has technology that automates the entire mortgage loan process in Canada, from the time a customer fills out an application to the preparation of closing documents. The only steps it has not automated are the servicing and selling of the loan into the secondary market, which does not exist in Canada. (Most lenders there hold their loans in portfolio.)
Basis100 is not as diversified yet in the United States, where all it does now is sell automated property valuations to lenders for about $20 each online through a 10-year-old company it bought in February 2000, Solimar.Net. Its purchase of the Tustin, Calif., company was Basis100's entry to the U.S. market.
Like many dot-com players, Mr. Bartholomew is no stranger to hyperbole. He touts his company as a "leader" in the Canadian market and in providing automated valuations in the United States. But it still has much to prove, and could start by generating more revenue than Solimar, whose 2000 revenues of $8.4 million were nearly two-thirds of Basis 100's total. (Mr. Bartholomew said his other operations should end 2001 having brought in a larger share of the income.)
What is more, while Basis100, one of few technology firms competing for business from lenders in Canada, appears to be in a good position to flourish in its home country, the United States market is much more competitive and highly fragmented.
Mr. Bartholomew said he could not provide "aggregate figures" for his company's U.S. market share.
Richard A. Beidl, a leading independent analyst, said the good news for Basis100 is that it has developed all of its end-to-end technology and is ready to put it in place in Canada. It has signed up more than 300 national lenders and commercial banks in the United States, and Mr. Beidl said it could be in a position to take advantage of the nascent automated valuation business. Freddie Mac and Fannie Mae have recently been pushing for automation by introducing loan products that do not require a traditional appraisal or waive it altogether for an up-front fee, he said.
Since hitting a low of 57 cents in December, its stock price has more than tripled. It was trading at $1.89 a share midday Tuesday.
Mr. Bartholomew said his company can cut the typical bank's mortgage processing costs significantly. Businesses will flock to Basis100 once they see the savings its products can generate, he said.
But Mr. Beidl said it might have a hard time gaining traction with its mortgage origination technology in the United States competing against the likes of Ocwen, Alltel, Ellie Mae, and, possibly Freddie Mac, which recently bought Tuttle Decision Systems, a company that markets end-to-end technology for mortgage brokers.
Sounding a lot like the big mortgage companies south of the border, Mr. Bartholomew argued that Freddie should stay within its charter of providing liquidity to the secondary mortgage market by purchasing mortgages from lenders.