Editor’s note: ‘Charlotte Beat’, which focuses on executives and high-tech firms in the Queen City area, is a regular feature on Wednesdays. In 1997, Doug Lebda left the Darden School of Business at the University of Virginia and moved to Charlotte with his wife Tara to begin LendingTree out of their home.

The idea of an online lending exchange was new and untried, but attitudes about the Internet were changing, and it was the halcyon days of the tech boom.

By February 2000, the firm went public as the Internet frenzy soared to new heights.

But that’s not the end of the story.

The company suffered with everyone else when the tech market went bust, with stock prices falling to about $3 after an IPO of $12.

Now, the tide seems to have turned. While other tech firms have disappeared or shrunk to ghosts of their former selves, LendingTree has bounced back. Lebda, 32, announced the company’s first profitable quarter in April of this year, and stock was selling at between $14-$15 last month. The success has attracted institutional investors, who now own about 40 percent of the company’s stock.

Last year, LendingTree received more than 1.4 million transmitted loan requests, and 292,228 of them were closed for a volume of just over $12 billion. Since the company was founded, it has facilitated more than 5 million loan requests, representing $21.6 billion in closed loans.

Lebda recently talked with Local Tech Wire about his firm:

How does Lending Tree work?

LendingTree is not a lender, but a lending exchange. Consumers who visit our site choose which loan product they want, whether it’s a mortgage, home equity loan, auto loan, personal loan or credit card, and complete one simple loan qualification form (QF). The information from the QF is processed using our filtering technology, and the consumer is randomly matched with up to four lenders. Using the filters enables each lender to target consumers who meet their specific lending criteria, thereby decreasing the time and cost involved screening applicants.

Once the offers have been made, usually within one business day, the consumer is contacted via e-mail and told that an offer has been posted. The consumer can then choose the offer that best suits their needs by just clicking a button. Once the consumer accepts, the lender contacts the consumer to continue the loan process. Each lender completes the transaction differently, using their proprietary loan decisioning system.

What’s the story behind the founding of Lending Tree?

LendingTree came to fruition as a result of my own frustration with a personal mortgage. I felt the process was needlessly confusing and time-consuming. I thought, “Why should a consumer go from bank to bank to find the best loan offer, and then go back again once the rates change?” I felt banks should be competing for consumer business, and they should do so in an environment that encourages them to provide multiple, competitive loan offers.

Was it difficult to sell the idea to banks and/or consumers?

In the beginning, it was challenging to sell traditional banks and lenders on the idea of an online lending exchange where they would compete for consumers’ business. They viewed LendingTree as a middleman that would come between them and their customers. Banks were not confident in the Internet as a medium for conducting and responding to loan requests, and they were skeptical as to whether the consumer adoption rate would be high enough to warrant the investment. However, since our inception, all of the major national and regional banks and lenders have committed resources to the Internet as a result of consumers’ willingness to utilize it. Today we have more than 160 banks and lenders on the LendingTree Exchange.

Why is the firm based in Charlotte?

Charlotte is the second largest financial center in the country and home to the headquarters of some of the nation’s largest financial institutions. LendingTree chose to locate here for that reason, in addition to access to a local pool of talented executives and the high quality of life.

You’ve begun turning a profit this year, and your stock price has rebounded significantly. To what do you credit this?

Staying focused on our core business model — providing consumers with choice, convenience and value and empowering them to take control of the loan process. We also ensure that the lenders and real estate professionals with whom we connect the millions of consumers from our site adhere to the very highest in customer service standards. LendingTree has always conducted our business in the same disciplined manner.

You recently received a patent for your Lend-X software. Do you see much of a market in licensing it to financial institutions?

We have seen some very positive results from licensing Lend-X to financial and non-financial institutions. Since Lend-X is the proprietary technology that powers the LendingTree site, it provides us with the perfect ‘success story’ to market to potential clients. We currently have 33 Lend-X clients (priceline.com, Freddie Mac, Bank of America to name a few) who have licensed Lend-X to power their own loan centers. We also have a number of lender clients on our Exchange who have also adopted Lend-X to power their own sites.

How much are you spending on your TV ads? How long have you been running them, and have they been successful?

LendingTree launched the original ad campaign in February 2000, right after the company went public. The initial advertising budget was $50 million, which was used to build brand awareness nationwide. Since the launch of these ads, our brand awareness has catapulted to 59% national awareness among adult consumers, aged 18-54, and 70% brand awareness in targeted markets.

LendingTree launched the second phase of its advertising campaign in August 2001. In addition to the brand awareness success, we have also been able to significantly reduce customer acquisition costs for the lenders on our Exchange over the past two years. For example, the cost of customer acquisition has been reduced from $93 per transmitted loan request in 2Q 2000, when we launched our brand campaign, to $22 per transmitted loan request in 2Q 2001, a decrease of 77%. This cost remains in the $22 to $23 range.

What does the future bode for LendingTree?

LendingTree achieved EBITDA profitability for the first time in 1Q 2002. While this is a major milestone, we don’t intend to rest on our laurels. We intend to remain as the dominant lending exchange empowering consumers, lenders and related service providers and have set a long-term goal of generating $100 billion in closed loans by 2006. In order to do that, we are continuing to discover ways to ensure that each borrower receives four competitive loan offers for each completed QF, as well as continually monitoring the lenders on our Exchange to ensure that they are adhering to our “Best Practices.” Additionally, we are creating a benchmark study that is focused on increasing closed loan volume for lenders by implementing a streamlined customer service program from Lender clients.

Web site: www.lendingtree.com