Henry Kaestner: Welcome back to the Faith Driven Investor podcast. Special time today focusing on multifamily real estate. We’ve got two great leaders in the space, David Snyder and Steve Vecchitto. And when we think about expanding faith driven investing beyond private equity and some of you have been listening show for a while might know that my own personal background is in venture capital, private equity. But with time, we came to realize it is cause we think the private equity of venture capital might be to be able to express our faith in what we do and how we invest. There surely are other ways to do it as well across different asset classes. And maybe the best example that I go to first when I talk to somebody is multifamily real estate. So many of us are accustomed to real estate investing. We understand it. We understand how cash flows. We’ve come to understand what cap rates are. And it’s just such a great place to be able to minister to people who are in need because there’s a part of the investment we’re making. We’re investing in homes and in communities. And of course, where there’s communities, there’s great relationships. And it’s a great opportunity to love on people in a way that points to a God who loves them. And we’ve talked a little bit about multifamily real say in the past. We’ve had guests like P. Kelly on before, but today we’re going to get much deeper into multifamily real estate. I’m going to talk about that when we talk about the two leaders who really understand the space, who’ve invested in it successfully. And David and Steve, thank you very much, both of you, for joining us.

Steve Vecchitto: Thanks for having us on.

Henry Kaestner: So love to start the show by giving each of you a chance to give a brief overview of your background. We’re going to start with David. Want to start by giving us quick fly over about Continental Realty Group and the work that you are doing. And then, Steve, we’ll get right into what the work that you’re doing at Avanir Word Fundamental Realty Group.

David Snyder: We started this company in 1982. We’ve been doing it for a while. And all we’ve done for 37 years now is multifamily real estate. We don’t do any other type of real estate. One of the things I like to tell people is that we get a chance to make money by meeting people’s needs. And we specialize in their housing needs, where students and observers of people’s demographics and their needs that they have for housing. During the last 10 years, we’ve done about one point eight billion transactions, 1000 units, certified properties during a time. Over the last two years, we’ve sold off a lot of our portfolio that we bought about 10 years ago, and we’re down to around 4000 units now and expanding back up from there. So we’re involved in about 10 markets across the country and somewhat similar to Steve’s company, unexcusable, bigger than we are. We have similar amount of markets and it gives us a chance to walk alongside of people. We’re just not landlords. We’re walking more on side of people in their daily life and there’s spiritual responsibilities that come with that.

Henry Kaestner: Thank you for that, David. Steve, take us through Advenir and just a flavor of what you’re doing there. Then, I want to get back into talking about both of you and your faith journey and how you see it manifest itself through your different company.

Steve Vecchitto: David is a little more experienced than I am. We’ve only been in the business for 25 years instead of 37. Wow. We own currently about 14000 units in six states. That’s about 42 properties with a market value of around two point three billion of that, 800 million of it’s in equity and under management. We, like David, only do multi-family properties. We don’t do any other product type. We do also have our own management company. We believe that it’s essential for us to be able to operate and execute business plans to own our own management company and really be hands on. I think David’s formula works really well because you’re hands on and he’s found third party management companies that can operate in his system. So, you know, I think he’s unique to using third party management and it’s worked for both of us. You know, we think there’s a long future in multi-family properties and investments.

Henry Kaestner: Tell us about your faith journey. That’s one of the things, of course, that brought you onto the program. And you’ve been thoughtful about how your personal faith impacts the work that you guys do down in South Florida and as other five states. Tell us about how you came to know God.

Steve Vecchitto: Sure. I’ve got a storied past. I grew up in Connecticut. Roman Catholic really was a lukewarm Christian. I came down to Miami in 1996, pretty much a sinner and a heathen. And I did start at Viniar. Point in time and had a good friend who was in a church. He was drumming for Jesus and he became a special friend of mine and a brother, and we talked about faith. Then when we started our company, I decided that I really wanted to create a culture that was meaningful to our employees, our residents and our vendors and created four pillars. And the four pillars were really true fairness, love and kindness. And at that time, I was not a believer. And I have come to know the Lord over last 12 years, really, from my wife’s pushing and some other friends and I got through the Bible, you know, I started in Bible study 12 years ago and that changed my life. And since that point in time, everything has blossomed in my life from my business to my marriage, to my relationship with my kids, to my focus on what’s important and what’s not important. I’ve really left what is valuable to the world and are looking at it with a different lens. And what is it that Lord, what is it Jesus wants me to be doing in my life? And it’s turned me from being a greedy person to being a steward of what God has given me and for investors money. So it’s really changed my lenses in view of the world.

Henry Kaestner: Can I talk more about this space that you both are in? David, talk to us about the multi-family sector. I don’t think that a lot of people that are listeners appreciate how big it is in our country at least. I didn’t as an investor how big it’s in our country. The world. And just also how much it’s changing. So give us a flyover. Tell us about this industry that you guys both are experts in.

David Snyder: Well, the multifamily sector, I feel, is a very oftentimes misunderstood sector for the average investor or many investors think that the minute you talk about multifamily, you’re talking about low income housing. There are people of all demographics in the United States who choose to live in multifamily. We have very, very high end rentals. We have workforce housing. We have low income housing, affordable housing. And also just to keep pace with the housing demand, the US has to add 300000 housing units per year in the multi-family sector. And when the downturn of 2008 hit, we went through almost four years in the US where there was virtually no new housing built at that time.

So we dug a hole where we were essentially a billion two in units below what was needed. Since that time, we’ve been building and trying to equalize out that that deficit. And we’ve only in recent years gotten back up to the three hundred thousand level. There still is a high degree of intensity for demand for multifamily housing. The occupancy rate on a nationwide basis is almost 96 percent. And that’s no nationwide figure. It’s not just Boston and Denver and Dallas. That’s nationwide. So Podunk, Arkansas, you have wherever Des Moines, Iowa, everywhere is. Therefore, there are full and there’s a tremendous backlog of demand. We still have 30 percent of millennials living with their parents. We have more boomers than ever living in multi-family housing. Our current boomer generation is the healthiest that we’ve had in decades. And the healthier the boomer, the more mobile they are. And one of these people don’t want to go live in single family homes and take care of the lawn and paint the house. They’re living in multifamily and being very mobile. So we have increased occupancy there. And then, of course, the millennials, which is right now the biggest generation, is a very mobile generation and they’re creating demand for millennials. The thing that I think that many people don’t realize is the impending tidal wave of people coming after the millennials, the gen Zs right now, or within two hundred and forty thousand the size of the millennials and their demographic won’t be cut off for another two years by the time we end up with the next two years. The Jameses will actually be bigger than the millennials, and they’re only the age of about twenty two right now. So they’re just starting to enter into the multifamily stage. And we have this tidal wave of demand that is coming from a demographic basis.

Henry Kaestner: Steve, tell us more about that. Tell us about some of the personalities that are going into multi-family. So it’s it’s not just the person is just getting started. Not just transitional. I’m 50 so I’m dating myself a little bit. But when I grew up, the American dream was I own a home, and that was everybody knew this was everybody’s goal wasn’t even up for discussion. That’s all changed now. Right. Who are you seeing in your properties?

Steve Vecchitto: Yeah. Look, I think that dream got crushed in the 08 09 recession. You know, you asked what is the size of this renter base? It’s 60 million households. So we are leasing to providing housing for 60 million households and a household. There’s two point three persons on average. So apartments are essential. Right. Everybody needs a home. And we see those that are getting out of college or from blue collar workers that are mechanics to plumbers to electricians all the way through tax base. And as David mentioned, the boomers are selling their houses and saying, I don’t want the responsibility, I don’t want the upkeep cost. And I’m moving, too. We see it here in Florida. They’re moving to the coast. And large apartment communities and they’re paying anywhere from Florida, literally twenty thousand dollars a month for rents and would rather have that than have the home. So I think you have whatever our nation looks like is what the rents are based looks like.

David Snyder: It’s making our job as landlords more complex because 30 years ago, all we had to do was worry about young people. There was a there’s just transitionary housing. I’m sure Steve will agree in today’s world. He’s got boomers sitting on the same property that he has millennials and they’ve got some gen X’s. And somehow you have to figure how to meet these people’s needs, even though you’ve got all these different demographics in place and not just meet their needs, but learn how to minister to them where they’re at, whether they’re very wealthy or older or whether they’re millennials or students at the same time.

Steve Vecchitto: Yeah, I agree. We have really two categories. It’s a renter by necessity, where they have no other alternative. They can’t go live with mom, they can’t afford a house. And you have renter by choice. And I think both categories are growing just as fast. So the renter by choice says, I don’t want to own the home. I’d rather live in rental property. It’s my lifestyle that I’m renting for. The rent, by necessity, has no other choice in that demographic. Certainly are different. The renter, by necessity, probably never will buy a home. The renter by choice may never go back to a single family home.

Henry Kaestner: So which space you find yourself saying so rener by necessity, I think I get. Renter by choice. I think 75 percent of millennials now would rather rent than own a home. So the whole idea whether they’re impacted by the financial crisis or not, just they have a preference to whether it’s mobility, flexibility, just value things differently. Seventy five percent would rather rent than own before gone. Where do you find each of yourselves? Is it evenly mixed based on the properties you have, or do you focus on renters by necessity, more in Class B and C spaces or more class? How does that break after each of you?

Steve Vecchitto: Well, for Advenir, we’re probably 75 percent rents are by necessity. So we call it workforce housing and families that are making between thirty five thousand and one hundred twenty five percent of our renter base. Probably makes more than one hundred thousand dollars a year is that rents or by choice.

Henry Kaestner: David, how about you? How’s that mix work out for you?

David Snyder: Well, the challenge and the opportunity that multi-family gives us as landlords is we have the ability to walk alongside of people in their lives, to walk alongside of the wealthy. Rohner, the lifestyle runner, to walk alongside of the runner by necessity. The ones that are going through budget problems and, you know, work problems and and that we’re in a very unique position as landlords. Landlords in the 80s used to be disguised, collected rent. If you didn’t pay me, you’re gone, you know, and that’s it. There’s landlords today. We have the opportunity to be candelas to encourage successful living in the residents of our community. And not just capitalists, but we’re stewards. I mean, we’ve been given these relationships of hundreds and hundreds of people living within our community. We’ve been given those relationships. We’re going to be held accountable for what those people receive from the relationships that they have with us. And so the landlord today is a very catalytic person that is after the the economic benefit of their tenants, the spiritual benefit, the social benefit of their tenants and. At the same time, we’re driving financial value from those people that live in our communities also.

Henry Kaestner: How about you, Steve? Talked about the ministry opportunity that you see as you’ve got these people that are living in your communities. And how do you see it being different? What does it look like to live on somebody in one of your properties where it’s workforce housing? And was it looked like in another one of your properties, the love on somebody that’s maybe a millennial? And when I say millennial makes it sound like they’re like some sort of kind of like alien or something like that, although sometimes I think we experience them that way. But we’re talking about this next generation that’s really starting to lead in the workplace that would rather just not own. But that’s a different demographic. It’s a different need. How do you love them both?

Steve Vecchitto: So, you know, I love the term millennial. I have two millennial daughters and they are pure millennial. It’s all I love them to death. You know, I think it comes from a different two different standpoints. One is the culture that we’ve created in our company and the management team side. We have seven core values that we continue to train our employees in, in some of the key words that are included in those seven core values, our teamwork, customer service, innovation, integrity, humility, balance.

And if we’re training our team members how to operate in their communities. It goes it goes downstream. So they’re able to pass that on to the residents. They’re able to pass that on to the demanders that we’re working with, you know, from a spiritual side. And I know you’ll probably talk about this later, but we use apartment, life and apartment. Life has just been a wonderful bolt on addition to what we do on the management level to connect with each one of our residents.

Henry Kaestner: Tell me about their model and how you how you all employ it.

Steve Vecchitto: So their model is pretty interesting. They do recruit team members, so there’s a family or couple that will come to our community and live in our community, become a part of that community. And the cost is relatively inexpensive to us as owners. And I think the benefits are just huge. The benefit to us is higher retention, building of community social activities that they create reputation management in our business, the reputation of our community and online leasing is so important and they’re able to raise that reputation.

Henry Kaestner: So presumably also makes your online ratings go up in some of those other things, too, and I know that there are different models. I know that David has had a different approach. He’s got mission that I don’t want to talk about that here and saying. But, Steve, before I let you go, comment on what you’ve seen in your properties over the course the last two or three months, just to timestamped this a bit, we’re talking about this in May of 2020. COVID 19, has shut things down and a lot of the country is going through really a loneliness problem. And pre-covid 19, we’re headed off the charts as a country in terms of depression, loneliness, etc., and that’s only got worse. Now, of course, what are you feeling from your communities and what role do you see? Apartment life. And then I want to ask David about the same, because the way that he dresses the same situation with loneliness.

Steve Vecchitto: So I think loneliness goes to fear and a large extent and the fear is how am I going to exist with no money or how am I going to exist? I just lost my job. I’m collecting unemployment. And in some states, it’s been hard to get those benefits because the unemployment system registration has not been functioning well. So we’ve actually been reaching out to every one of our residents, helping them through the process of payment, their rent and finding out. Are there issues? Are they having problems with health? Are they having problems with transportation? Do they have an elderly in the unit that needs special care? Our teams have gone out and raised money to bring food in so that the residents can come in into the leasing center and grab whatever they need for the night. And it’s interesting because we’re now seeing residents bring in food to the leasing center as part of the community as you drive through the properties which enjoy it. What’s interesting is the parking lots are packed. Everybody is at home, right? We’re all in lockdown. And apartment life has helped with virtual social events. They’ve done video nights where they’re streaming from Netflix or some other source. And as a community, everybody’s watching the same movie the same night in our apartment, life teams have really helped. So we don’t have them on every property. And you could tell the difference of the ones we do have apartment life teams on versus the ones we do. And I’ll say the reason we don’t have apartment life teams and some of our properties is we’re still searching for that right team that’s been provided through the church system.

Henry Kaestner: David talk to us about other models, other ways for people to love on the way that you love on people in your facilities.

David Snyder: You know, we also make use of apartment life in our communities and, you know, apartment life and groups like that, they give owners the ability to pay attention to the function of what they do, which is the business side of everything. And then they have people that they provide to us that help with our purpose of why we do it and taking care of people and taking care of their social and spiritual needs and that type of thing. And an apartment life is one of the groups that helps us do that. We’ve added on more employees during this time rather than fewer. We’ve hired more part metalized staff to do nothing but just be on the phone and talking to our people on a daily basis and doing needs assessments and then that type of thing. So they’ve been an instrumental part, but we also make use of other groups and we expand also apartment life’s mission on some of our properties in that we use some of our apartment life teams as a liaison or a coordinator to bring in the local church in the area to try to adopt some of our communities and to provide different services and activities to the residents of our communities through the local church. And it’s been a very rewarding option for us because it gives a lot of people in the local churches the ability to have an outlet for ministry and multi-family housing. I mean, we’ve got some properties that there’s mechanics from the church that go out twice a month and they’re maintaining the cars of all the single moms on our properties and stuff like that. And it actually is raising the spiritual self-esteem of some of these people in the church because it gives them an outlet.

We provide Mother’s Day out programs and other things through the church and then some of our apartment life people coordinate that. They’re also coordinators for social services where we have some local social services available. They’re not necessarily faith based and they act as coordinators for that. In addition, we also have other groups that we believe in very much. And one is Crown Financial, who is involved in teaching stewardship on some of our communities and that type of thing in dealing with people and providing studies on how to budget their time, budget, their finances, et cetera. Friends First dot org is a mentoring program that is designed to help teens and young people on the properties. And then finally, Mission Ninety Eight is a group that really is somewhat similar to apartment life that they specialize in just bringing in the local church and to a point where they can serve people in the multifamily community. And, you know, a lot of people run by apartment communities without giving them a second look. And 37 percent of Americans live in apartment communities saying multifamily housing. And it’s a big part of our population that the church has a responsibility to reach out to and to include in their community also.

Henry Kaestner: Talk to me a little bit about the difference between these two different models. One is an organization like an apartment life where somebody will go and live in a community. And then on the other hand, you might have a local church that might adopt an apartment complex. When I used to go to the Church of the Good Shepherd in Durham, North Carolina, for instance, we had a apartment complex that we as a community adopted and that seemed to be able to last through any type of a turnover of key personnel as it was the church that adopted them and offered up English as a second language type of classes and things like that. David, you’ve had experience with both. Talk about the pros and cons about each of those models.

David Snyder: I think the pros about apartment life is they’re often more proactive. They’re more national. So we can have them many other states, you know, as opposed to when we deal with the church adoption concept for lack of a better term. We’re having to reinvent the wheel in each location, you know. And so a partner in life has a model that can be mobilized and news nationwide. The downside or some of the negatives of apartment life that they know, too, and I’ve discussed with them, is that local time as a ministry teams that they put on the properties are there for a two year period. And so you get all these relationships made and everything, and then all the sudden the team is gone. And it may be four or five months or six months to a new team, maybe put in their place or whatever.

But that turnover affects the model bit. That’s one reason why we’ve married our apartment life teams with the activity by the local church, because we understand that sometimes teams, you know, graduate move on to other things. But the local church provides a consistency of the effort on the properties themselves. And so even though you may have a partner or wife team that comes in and out of churches there. The church hasn’t gone away. Some of the personnel may change, but the church is there and it provides a consistent ministry provision for the people on those properties.

Henry Kaestner: OK, so this is going to be a little bit of leading question. Obviously, you believe that this is something that works or you won’t be spending money on it, but maybe I shouldn’t be so presumptuous, somebody listening to this. They’re not the family real estate property, the money that you put into these programs. How much of it do you think that you get back? How much of it do you think accrues to the benefit of the limited partners and the investors you have? And or how much of it is something that goes above and beyond that that you actually think may not add to the investment returns but is instead something that you would otherwise allocate towards ministry spend and how you do discipleship or evangelism?

Steve Vecchitto: I think I’d answer in two ways. So there is the financial benefit to the property, which ignores to the benefit the investor, and that is higher retention. So I’ve got more people staying longer. Part of the reason is the social activity that’s been created and the neighborhood that’s been generated. And so I’ve now I’ve got friends there that I don’t want to leave. Right. So I get a higher retention rate that saves money for my investors. And I think the other part is the reputation. We’re building up our online reputation for the community. So as that builds, that creates a strong community itself. That’s a financial benefit that we realize.

Henry Kaestner: So if you spend 50000 thousand dollars on an issue like that for a property, do you think you get all 50 of that back or do you say, well, that 50? I think probably 35 or 40 that back, but because I’m motivated by my Christian faith and here’s an opportunity for me to love on people. I mean, I get all 50 back, but I’m happy having 10, 15 or 20 of that be kind of like my ministry spend. Do you ever think that way?

Steve Vecchitto: No. So I don’t think it’s cost us 50. What it cost is an apartment and our monthly fee. I always have a vacant unit. So to me, that’s a zero cost. I think my return is four to five bucks and that’s pretty high on any investment you can make.

Henry Kaestner: So you may give up the free apartment, but you still have to pay them. You still pay apartment, life, apartment. Life may be a ministry, but they charge a fee. And that’s what you’re talking about, getting the four to five extra turn on.

Steve Vecchitto: That’s correct.

Henry Kaestner: Yeah. David, how would you answer that?

David Snyder: Well, you know, I think that we have a spiritual benefit, obviously, from our extra effort with our residents. And we have a good financial benefit. And the financial benefits far outweigh the costs of the programs that we put in place. The typical turnover, and I’m sure some words in Steve’s mouth, but I’m sure he’s experiencing the same thing here. The average turnover in our industry is 75 percent a year. So if you have a 400 year. Apartment community, you’re turning over 300 of those a year, year in and year out. And over the last 10 years, that’s been the American average. With our history, once we’ve been in charge of an apartment community for a year and have our apartment life programs involved in some of our other management programs and ball are turnover down. The same property turned out to be somewhere between 47 and 49 percent. So we’re literally saving 25 percent turnover san in real dollars out of 400 unit community. If you’ve shaved 25 percent off of your turnover, that’s one hundred less units per year. That’s that’s turning over. And each of those units cost you an average of about 2000 or so to turn. There’s a term cost, says 200000. The bottom line and you keep that in your expenses. I would challenge Shane. I have tried. Many of my investors are not Christians. Many are of other faiths or no faith. And they oftentimes talk about the voodoo that we do on the property. And I think we’ll keep doing it because it makes us money. So I’m very high on this type of ministry and on those type of effort by apartment life and others in this space. But at the same time, I’m very transparent, very open that it actually makes us money to be good neighbors. To be good landlords is to love people. It is financially rewarding for us.

Henry Kaestner: Okay, that’s helpful. So we’ve made the case for multi-family and because of demographic shifts, this is going to be a sector that’s going to continue for a very, very long time. And as an investor, as a space you should be looking at also made the case that investing in ministry moves the needle in terms of loneliness and depression and community and sharing the gospel and discipleship without it necessarily costing. Why do you think the concept of faith driven investing in real estate? Why do you think there’s not more of a thing? It seems to be something that people are talking about very, very recently. And yet you’ve been implemented for a long time. Why do you think that faith driven investors, people who have a Christian faith who would like to see people in the workplace minister to. Why do you think that this idea hasn’t really caught on so much so that people are saying, I want to find a real estate manager that employs these things? If I’m going to deploy capital, whether I’m an institution, whether I’m a retail investor, I want it to go to those people. Why do you think that’s not a thing?

Steve Vecchitto: I think it’s not promoted. We do it because we want to. We do it because we believe in it. We think it’s right. It’s our faith, my investors, for the most part, trusting in what we do. As David said, the voodoo that he does on his properties, they get great returns and that’s why they’re in this. And they let us operate autonomously without really knowing what’s in the engine other than they know the performance. I can open a hood of a car and not really understand the engine, but I like the car. I like the way he drives. And I think that’s been the philosophy. We’ve sort of done this silently and maybe it’s our fault. But look, at the end of the day, our faith is driving, how we operate, what our morals are. We’re trying to expand the Lord’s kingdom. Then we’re doing that through the ministry that we’re able to provide while providing housing while we’re providing returns. It just becomes a win win win.

Henry Kaestner: We’d like to close out every one of the podcast episodes we do by asking our guests what they’re hearing from God and his word and see if you tell him that have gone through the Bible again recently. And David, want to hear from you about what you’re hearing, too. And so we’ll start there. Dave, what are you hearing from God in his word? Maybe it’s something that you heard this morning, maybe yesterday, May last week for some way that you feel that God is speaking to you.

David Snyder: I mentioned this to some of the guys on the podcast, the Steve and Justin before. For some reason, God has just brought the word sanctuary to my mind. And I probably haven’t thought about that word for forever. I don’t know why, but in the last few weeks, I’ve been studying how God gave sanctuary to Moses, who gave sanctuary, you know, to Jonah, to the King David J. Gave, say, a time of sanctuary and protected him. And I just feel I’m very at peace with one of the things I have been called to do in life is provide sanctuary for our residents and where it’s a peaceful place for them to grow, for them to grow socially, hopefully. Build or grow spiritually, and you try to take steps along the line. But this is very simplistic, open droid sanctuary myself during this time of. Because I’m up here in my mountain cabin. And I’m in sanctuary. And I think that’s maybe where this came from and that I’m just so excited. And so that piece about being able to provide sanctuary or residence.

Henry Kaestner: That’s a great word. Steve?

Steve Vecchitto: And if I may actually have two that are meaningful my life today. And the first is Galatians 522, which is the fruit of the spirit is love, joy, peace, forbearance, kindness, goodness, faithfulness, gentleness and self-control. I just love that if I live my life through those words and have a wonderful life. And, you know, in the season we’re in with this Kofod, I have really been dwelling on Matthew six thirty, which says, Do not be anxious about tomorrow for tomorrow, we’ll be anxious for itself. Sufficient for the day is its own troubles. And I think the Lord gives us plenty and mercy today and provides for all we need today in with the Kofod and wondering what the economy is going to look like in our business is going to run. I could quickly run to tomorrow and be anxious about that, you know, so I go to this passage that just gives me peace that I worry about tomorrow. Tomorrow, though, and worries tomorrow. And he’ll give me mercy tomorrow.

Henry Kaestner: May that be the case for you and for me and our listeners. Great. And thank you both for your time. Thank you for your faithfulness in the market and sharing your stories with us and disinterested to see how this expands over the course next 10 years. I’ve really compelled by the ministry opportunity, and it’s just amazing to see that this ministry opportunity ministry investment on this is actually something that accrues to the benefit of investors. So much so that investors that don’t share fears like I want more of that. So super compelling. Thank you both.

Henry Kaestner: Welcome back to The Faith Driven investor podcast. We’ve got a special guest with us, Mike Silvestri. Mike, is here to talk to us all about some new and innovative financial vehicles along the concept of paying for success. Career impact bonds. Social impact bonds. We’ve spent time on this program talking about some of the traditional asset classes, public equities, private equities, real estate. But God is an entrepreneurial, creative God and has asked us to be fruitful and multiply. And so Mike is going to push the envelope and how we think about investments and how we think we might deploy his capital as we make investments that we think might make an impact in culture. So we going talk a lot about that. We can tell you about Mike’s background. But before we get there, Mike, I want to ask you, where are you recording this?

Mike Silvestri: Thanks, Henry. I am recording this podcast from a dorm at Harvard College.

Henry Kaestner: Because you haven’t graduated yet? Your résumé would lead me to believe that you have.

Mike Silvestri: They do say college is the best times, but no my wife and I actually live with our two young girls at Harvard. We’re a resident tutors. So we’re advisors for students. Of course, when they are on campus and just help kind of mentor them and be by their side as they go through their undergrad journey.

Henry Kaestner: When I was in college, we made a T-shirt that said The University of Delaware. I went to Delaware University, the best five or six years of my life. And in your case, just doing the math, harvard. The best 15 or 16 years of your life.

Mike Silvestri: I just can’t get enough of it. Right.

Henry Kaestner: That’s awesome. It’s also just making my brain swell a little bit because I remember my time in the dorms and thinking what it would have been like for a family to be down the hall. I definitely would have been better behaved. And maybe that’s why you’ve done that. I’m sure that you also have an incredible opportunity to speak in the lives of a bunch of young future leaders. So I I think actually that that’s super, super cool. Mike, tell us. We consider you an expert in some fields of financial innovation. How did you get here? What’s your backstory? What’s your background?

Mike Silvestri: Yeah, I mean, I think the story honestly starts decades ago. I mean, I think my faith, my view of my vocation, my world view honestly started in hidden corners of the world. I spent a number of summers growing up traveling with my family and with my church just to remote areas on medical missions, strips serving the poor, those that lacked access to health care. And at a young age, honestly, it was sort of confronted with the reality that the world is much bigger than my small world that I grew up in and that the deck is stacked against so many. And so I think for many years that’s sort of been wondering how can I do something about that? I would say my faith, my values, the gospel inform a lot of that, my desire to bring out justice and help make the world a better place for God’s glory. But I’ve been in particular trying to think through how can I do that in my career and ask myself, you know, where do my skills and the passions that God has put on my heart align with the needs that I see in this world? So that led me initially into consulting. I was a strategy consultant for well over half a decade, starting in private sector consulting, shifted for several years into social impact consulting before heading back to Harvard or a graduate school program at Harvard Business School and Harvard Kennedy School, where I became really interested in impact investing. Read a lot about it was very intrigued by different investing models. And a few of those models were those that are being pioneered by social finance, which is the firm that I now work at. So I’ve been there for several months now and helping spearhead our work around bringing paper success to the broader impact investing field.

Henry Kaestner: So bring us back to the time right before you went back to Harvard, where you started getting some exposure to impact investing. Tell us about some of those stories. What were some of those experiences? How did they fit in with some of those earlier ministry experiences you had overseas?

Mike Silvestri: Yeah, it’s a great question. So my initial exposure to impact investing was through a lot of the coursework that I was taking. And I’ve been reading a lot of models on negative screening. Right. Let’s come up with a package of investments that sort of. Take out the bad companies, whether that’s, you know, cigarettes, firearms, etc., and I felt like that was good, but I felt like the bar could potentially be higher, at least in terms of how do we truly steward our capital to make the greatest impact possible. And so I came across social finance and the Pay for success model, which ties financial returns directly to social outcomes being achieved. And I was intrigued by it and kept in touch with the firm and eventually found myself in a role there. But I felt that it directly addressed a lot of the longings that were put on my heart a long time ago. I mean, seeing needs in health care and workforce development and just, you know, family stability, these are issues that our society has been trying to address for generations. And we spend a lot of money. Our government spends a lot of money trying to solve these problems. But what if we could leverage the private capital markets through papers, excess investment structures to actually take proven interventions to scale and actually start to move the needle in measurable ways on these problem? So that’s what excited me and brought me to this firm could.

Henry Kaestner: Give us an overview of one to one, if you will, of the pay for success model career impact minus social impact upon what is it? What’s the concept? And then maybe just give just a couple of very quick examples.

Mike Silvestri: So pay for success in general is a set of financing strategies that ties financial returns directly to outcomes being achieved. So regardless of the investment structure to these different deals, share a set of core principles, right. You have to have clear identification of outcomes. You have data driven decision making of strong accountability for those outcomes being achieved. In many cases, you cross-sector partnerships because that’s what it takes to scale up these proven interventions and you’re leveraging private capital for impact. So in a social impact bonds, there’s the investor and they’re the ones that cover the upfront costs of scaling up some kind of social service. So imagine nurse home visitation for first time moms or permanent supportive housing for homeless individuals or employment services for men and women leaving prison. So the individuals who go through these programs and as predetermined outcomes are achieved. The government then pays for success. They only repay the investors when those programs deliver their intended outcomes. So in many cases, it’s a win win win. Right. So when things go well, the investor gets a return on their capital. The individuals get put on a path to health, safety, economic mobility, and the government only pays for outcomes that have been achieved. So in that sense, they’ve transferred all the risk to the investor. And if the program doesn’t work and does not achieve those outcomes, then it’s still a win in many cases because the public dollar has not been spent on programs that are less effective. So in that sense, either side of the coin is a win in a career impact bond at somewhat different. So in the same way, the impact investor provides upfront capital to cover the costs of the job training program. In this case, these programs are high quality programs that we’ve bedded and the ideas that we’re scaling them up to low income individuals that have historically been priced out of these programs as individuals go through those programs. And if they get placed in the job, then they’ll repay a portion of their earnings for a fixed period of time and up to a maximum payment cap. But the catch is that if they don’t get placed into a job that gets them above a certain salary threshold, then they’re not on the hook to repay. So, again, it’s a win win, right? There’s downside protection for the student. And if the student does get put into a job for which they are strange, then they get placed on the pathway to economic mobility and the investor is made whole on their investment. So we’re super excited about both these models. They’re different, but they’re both incredibly important, particularly in today’s day and age where you have rising income inequality, rising wealth inequality, and especially today with the COBA 19 pandemic and millions now seeking unemployment assistance. There couldn’t be a more pressing time for these types of investment structures to be scaled up to measurably improve the lives of those in need.

William Norvell: Hey, Mike, William here. You said an interesting word, scale. Could you give us a little insight? What is the scale of social finance at the scale of each of those bond types, both within your organization and maybe globally, just by whatever metric that is? Just where is the industry right now?

Mike Silvestri: Yeah, great question. So social finance in the US has about 60 folks in our firm, but we’re part of a global network of sister organizations with offices in the U.K., the Netherlands, Israel, India. We together as a network have really helped bring this Nates an idea of paper success into a vibrant international movement. There’s now over 180 social impact bonds around the world. Almost 30 in the US alone. And these touch all sorts of issue areas, right? Criminal justice. Workforce development, health. Environment. And from the capital side. Social Finance US has mobilized well over a hundred million dollars an hour, close to 10 years of existence. And, you know, the average deal size can serve upwards of thousands of individuals and, you know, mobilize double digit millions of dollars, which is just extraordinary when you think that every dollar that returns, the investor behind that has some improved life at the end of it, which is what I find so inspiring. I’ll give you a specific example in Massachusetts where I’m based. We have a deal that’s taking two thousand refugees and immigrants and providing English language skills development, job training and placement services and helping them get on the path to economic mobility. This deal is mobilized over twelve million dollars and it’s already starting to repay investors and most importantly, is helping people change their lives and improving outcomes for those that are in need. Which is good for them. It’s also good for the businesses in Massachusetts that are realizing that they increasingly need to rely on immigrants and refugees for their own business success.

Henry Kaestner: Can you give us a little bit more detail behind this deal, Massachusetts? Or if you can’t there, maybe you come up with a fictitious example someplace else. I’m trying to figure out who’s paying who so I understand he purpose of this is to be able to get refugees with good paying jobs. But social finance presumably goes to the state of Massachusetts and says, listen, we know you’ve got this initiative to train up workforce. We want to help you to do it the best way possible. We want to increase your chances that this is a successful program and a good use of taxpayer money. So you should do the following. What is that? Who’s paying who? Who are the different players in here?

Mike Silvestri: Yeah. So in a social impact bond, there’s three main players. There’s the investor, there’s the service provider. And then there’s the outcomes payer. So the investors providing the upfront costs for the service to be delivered. And obviously, the service deliver it in many cases is a nonprofit with some sort of proven intervention and take that capital to scale up the service to those in need. And then at the end of the day, the outcomes payer, which had a social impact bond, is the government, in some cases multiple government agencies, is going to repay based on outcomes. Because what we’ve done as part of the deal structure is come up with the cost benefit analysis for those outcomes. Right. When you have individuals that are on the public safety net that are now getting meaningful employment, that are contributing to the local economy, that’s good for government. It’s good for the public wallet. So at the end of the day, you have the government making payments, but those payments are based out of this mindset that we’ve actually invested in prevention as opposed to remediation. Right. You’re investing in job training and placement and preventive services so that we don’t have to spend more money downstream.

Henry Kaestner: OK, we’ve got two thousand refugees. They need to get job training. I’m an investor so I’m now going to pay, say, jobs for life. Two thousand dollars to provide training for these workers. And then the outcomes payer is saying, OK, if you get our two thousand of them jobs, I’m going to pay back one point four million dollars to the original investor. But if the service provider doesn’t deliver, then I might have to pay something less than one million dollars, in which case the investor loses. You’d mentioned that in this case, the government of Massachusetts is the outcomes payer. Who is the investor and who is the service provider?

Mike Silvestri: Yeah, great question. So in this deal, this is the Massachusetts Pathways for Economic Advancement. Deal. And in this case, we actually have a number of investors who are deals bring in philanthropic capital, but also institutional investment. We have individuals that are investing through their donor advised funds accounts. So it’s really kind of braided funding across a number of different sources. And then, you know, to your point, you’re correct that the government of Massachusetts is the outcomes payer. And the way that we typically structure these deals is there’s multiple different outcomes to provide some staging. Right. You have interim outcomes. You have longer term outcomes. And so the idea is that at each point, as the project is being delivered, there’s a service is being delivered. You’re making those repayments gradually and the investor is gradually being made whole.

William Norvell: And what’s the optimal return? Are there different returns for each one or are you trying to is getting your money back the goal? Is getting a six percent return? Or does it change depending how what the different return profiles for the different types of bonds?

Mike Silvestri: Yeah, I mean, so social finance is a nonprofit. I mean, we’re mission driven and we bring on investors that share our mission. And that’s why we’ve involved over 100 investors at this point. But they also share our passion to mobilize capital to drive social progress. And nobody’s getting rich off of these deals. That said, we do target mid single digit returns. And, you know, when all goes well, senior and junior lenders are able to get not just their principal back, but a healthy return enough that these deals, we believe, are scalable. And, you know, this is a structure that has potential to be scaled across the country and even the world because of the way that it recycles the capital and aligns incentives.

Henry Kaestner: Okay. I’m still working on understanding how this would apply to me as an investor. So you come to me and say, look, I know that the state of Massachusetts is willing to pay fourteen hundred dollars for every refugee that ends up getting job and keeping it for six months. We’ve had experience with the service provider in the past that leads us to believe that we can provide you a mid single digit return if you front the money so that these refugees can actually get the program. And what is going to happen is six months afterwards, when they’re still employed, going to pay back money. And we’ve had, again, enough experience that we think that 10 percent of people going to fall out. But even with that, we’re going to go ahead and get this accomplished. Is that kind of the pitch to the investor? Exactly, yeah. Okay. And then a firm such as Social Finance will presumably charge a management fee. Is that management fee just on the project? Does it also have a success fee to it as well? Can we do it? I’m thinking about, you know, traditional private equity is so many of our listeners right now are going to try to put this in something they know. So they know two and 20 and they know, OK. So that’s right. Mike is taking my money, wants to get this outcome. And in order to do that, he’s getting paid to Antwine, probably works a little differently. But how does the social finance get paid?

Mike Silvestri: It’s definitely a little bit different from private equity. We typically bake in the management costs into the overall project cost. So it’s part of that capital creation. And typically, we segmented into the projects, design and structuring phase. And then the active performance management and active performance management is just our language for portfolio ops. Right. In the same way that a private equity investor is actively trying to work with management to make sure that the business is running smoothly or growing. We also actively work with the service provider to make sure that as we’re collecting data, that we’re course correcting and making sure that those outcomes are being achieved and we’re mitigating risks where possible.

William Norvell: OK. So question here, Mike, I’m interested. You used Win Win and I think win and maybe a fourth win for everyone. And so as a semi-trained investor that then raises some question. So I want to ask a little bit about the negatives. Know what would doesn’t work here, because right here there’s I’m really excited. Never heard of this concept to be really clear. And I’m just thinking to myself, this is amazing. This makes a lot of sense. I totally understand that. And if I could get a six percent return for something like this, that’s that’s really exciting to me personally. And so I’m interested. And if I was going to dig in and do some more diligence, what are the potential pitfalls or downfalls both of the investment? Maybe we could stick with this one in Massachusetts as we were getting to know it a little bit and also just the model. What are some of the biggest critiques people may have out there that are, say, not allowing you to get from one hundred million under billion? Right. Just loved to learn more.

Mike Silvestri: Yeah, all fair questions. And I think that as with any investment, there’s risks involved. Right. I mean, there’s performance risk is the biggest one that the service that’s being delivered and the outcomes that you hope it will achieve, it doesn’t materialize. Obviously, there’s all sorts of other risks in terms of investors pulling out, in terms of the government outcomes, payer shifting their priorities. These are also long term deals. So we’re talking about services being delivered over the course of years. And then even after the service is done, in many cases you need to track individuals over time. So there’s risks involved in that time cycle. And yeah, there’s risks across the investment structure. But at the same time, you know, the way we often think about risks and finances, know what’s the risk that I invest and things go poorly. But I think there’s also a risk that particularly for Christians. Right. What is the risk of not investing in something that has the potential to do dramatic good and measurably change a system that is stacked against individuals who are disadvantaged and in many cases, whether they can’t achieve health outcomes or they can’t get out of the criminal justice system or they can’t get a job. And what if we can use our capital to play a role in re wiring that system for good? That’s exactly what we’re trying to do with these bonds.

Henry Kaestner: OK, so like William fascinated by this feeling like I probably need to take some sort of action on this. So help me understand, as a faith driven investor, whether this faith driven investor is an individual like myself or a church. How do we get involved? And I’m going to ask you a question. It might make you feel a little bit uncomfortable, because to be very clear, I think it’s incredibly important and the Bible tells us this, that we can’t just proclaim the good news if somebody is starving or doesn’t have clothes or doesn’t have a roof over their heads. And you’re talking about things like clothing and shelter and food and what God made us for, which is really work. So some really basic necessities. Is your way to. And that may be enough. I think maybe a cross volunteer to go ahead. And just with that. Is there a way to bring the gospel, though, into this as well? Or is it not happen? Are you able to bring in service providers that might be able to administer these services in the name of Jesus? Or is that just pushing the envelope too much because is the ultimate payer is a municipality that would frown on things like that?

Mike Silvestri: I think it’s an amazing question, Henry, and I think that we should all think through these questions, because I think that my opinion is that it’s not outside the realm of possibility, but because you do have government payers involved and a social impact bond. My sense is there may be challenges with illicitly weaving in the gospel. But that said, we work with service providers, that we’re founded on faith based principles. I can also imagine a future state where churches and other religious organizations play an important role in providing these services. And frankly, a lot of our investors are motivated by faith or have their capital parked at religious organizations and donor advised fund sponsoring organizations. So I think the short answer is faith plays an important role to play and pay for success. And I would love to see it play a more prominent role. The only other thing I’d say is you think about the issues that we’re addressing. Right. And these issues are not Christian issues, you know, helping people gain economic mobility. Reducing prison recidivism, stewarding the environment. These are human issues. But at the same time, we as Christians do have certain beliefs that I would argue motivate us to care about these issues as much as anybody else. If not more, the belief that every human being is made in the image of God, even if they don’t look like us. The belief that we are stewards of God’s resources, that this money doesn’t belong to us, that ultimately we are entrusted with it. These are transformative beliefs. If we let them seep into our heart and seep into our investment strategies. So I would love to see faith and the gospel completely permeate every angle by which we think about stewarding our capital to make a difference on these problems.

William Norvell: I want to take Henry’s question. To be fair to say, when I heard you say at some level, which I think is really inspiring, is the number one role would probably be to become a service provider where you could be a link in the chain where I think about the Salvation Army Prison Fellowship, I know has job training where you could be a certified service provider and then have more people called to go love, especially now we’re approaching 20 percent employment. Feel that God is calling them to renew the dignity and work in their life through offering job training. Then you could set up a bond such as this to fund them. That sounds like a really great place for people listening to God, maybe stirring in their heart to be a part of something like this. Is that fair?

I think you build on that. I think of organizations like World Relief that are currently hired by the government to provide refugee services. And they do that very much as a part of mystery. So there is some precedent, of course, of people working towards outcomes. But I don’t think that investors are investing in these types of impact bonds. I’ve never done it. I’m really, really, really interested now. I’ve never had a guest on. Well, that’s not true. We’ve had guests on before where I like my guests. I want to invest in with a person. But I don’t know that I’ve ever felt as compelled in, like challenged as I do now. I mean, so just give me the wire instructions and let’s get this baby going. Let’s make it happen. OK, so let’s look at this a little bit more rather than just asking a question in our own personal circumstance. As you reflect on this is a Christ follower. What do you see as the opportunity as a church when you come back and haven’t seen a successful job? I think that you’ll have done 130 of these now around the world. Is that right?

Mike Silvestri: So there are 180 around the world, social finances. You know, one of the few pioneers in this space in the US alone is close to 30 deals.

Henry Kaestner: OK, so 30 deals as you come back and you look at the successful implementation. What are your hopes? How would you like to see a church get involved? Do you have faith based institutions that are part of your investor base right now?

Mike Silvestri: We do. I mean, the capital stack and some of our deals has benefited from capital, from faith based donor advised sponsors or even just individuals that may or may not be motivated by faith, among other things. I think there’s a huge role for the church to step up and to play a leading role in this space. I think, you know, I grew up in a church where we talked a lot about financial stewardship. And I often think about stewardship and kind of a binary way. Right. There’s good stewardship in philanthropic terms. Right. Am I being generous in my tithing and am I giving. And then there’s good stewardship in investing terms, like, am I maximizing my returns? But while I think that’s binary view, it’s simple and it’s easy to understand, it doesn’t easily accommodate opportunities in the impact investing space. Right. Opportunities where you can truly make a measurable impact on the lives of those in need, that the lives of people, the likes of which Christ spent so much of its time while you is here. The hit and the hurting that helped us and do that all the while getting a return on your capital so that the impact is actually multiplied. Right. It’s not just one time where you can really invest and reinvest and reinvest.

Henry Kaestner: So Mark Andriessen once said, just to help put some color around this Mark Andriessen once famously said, actually, I guess Mark Andriessen said it and then Warren Buffett famously said it. I will buy a house or I will buy a boat, a house being an investment or boat being giving. But I will never buy a houseboat because he had been asked, what do you think about impact investing? And it sounds like to me that you’re suggesting that Christ followes need to wade into the houseboat market. Need to endeavored to understand How do you balance the two? And maybe life doesn’t need to be so binary. Is that what you’re suggesting?

Mike Silvestri: I think that’s right. I think it comes down to what are your goals and what are your priorities? And I think that when we think about investing, we often assume that, well, you know, our our fiduciary duty is to maximize returns. Well, first of all, there’s no fiduciary duty to maximize profits. We do have a fiduciary duty to our stakeholders. We also have a biblical duty to all stakeholders and a biblical responsibility to care. Our society about widows, the orphans, the unemployed, the immigrants, the refugees. And so I find myself challenged when I reflect on how am I stewarding, truly stewarding the money that has been entrusted to me? Am I doing it in a way that is, at the end of the day, seeking to preserve capital, you know, preserve my own wealth, increase my comfort? Or am I being creative, imaginative and where necessary, sacrificial with it? And I think that doesn’t necessarily mean philanthropy. I think that we can be imaginative and creative and at times concessionary with our returns. If it means that we’re stewarding our capital to achieve maximum social outcomes. Right. To uplift those who are most marginalized, some of us. That, I think, is a arguably more balanced view of what our duty is as investors.

William Norvell: It’s a great place. That’s a great place to finish. You know, it’s a great challenge for for all of us and all the future investors. That’s why we do this podcast, is to get people thinking. And then there’s there’s a lot of gray and there’s a lot of different conversations to be. And I’m just really grateful for you to come on in and start a new conversation that I know I have not really been a part of.

Henry Kaestner: Yeah, I am, too. And this makes me think that this is a great opportunity to hear from our listener base to lots of different opportunities here. I think that most of our listener base knows of service providers that are working towards social outcomes, many of whom have very much a crisis center message to them. I’d love to hear back from the ideas that they have, maybe service providers they know they can really deliver. And then I’d love to go back to Mike and just say, okay, so we’ve found a universe of service providers that are doing these things. How do we construct a vehicle? How do you construct a vehicle and then have more folks know about it? Now, you would, of course, suggest, Mike, that that might be interesting, but there actually are 180 different vehicles that already exist where the church can participate right now. I do wonder, though, if there’s more of a pure play on working with some of these ministries. But let’s hear from the audience. And, you know, great time for you all to get onto the site. Faith driven investor, dawg. Leave some comments and leave some comments in the notes that this podcast. But I’ve been challenged in a way that I’m not frequently by guests. And so, Mike, I really appreciate that.

Mike Silvestri: Thanks for having me.

William Norvell: Yeah. You’re not off the hook yet. Oh, he’s not. Our last question, Mike. We’d love to ask as we love to connect our listeners with our guests through God’s word. We think it’s just amazing to see how God continues to show his words, living and breathing. And so if you wouldn’t mind if we take a second and think through. But a place in God’s scripture where he may have something coming alive to you in a new way could be this morning. Something you read could be the season, something you’ve been meditating on, that he’s just point your new direction. If you wouldn’t mind that be awesome. If you could share with our audience where he has you today.

Mike Silvestri: Thanks for the question, William. You know, I think on the answer to your question, that verse, Mivah 6:8 comes to mind, which I think I’m always challenged by. And I was challenged to memorize it as a young kid, but I’m challenged because it’s so simple. And for people like me and maybe folks listening to this, I imagine that it’s easy to overanalyze and overcomplicate things sometimes. Even some of these deals that we’ve talked about are very complicated. But, you know, God tells us in Micah 6:8 that what’s required of us is to act justly, to love mercy and to walk humbly. And that’s a pretty simple command, but it’s also an incredibly difficult one to obey. And so I offer that simply as a verse that challenges me and hopefully challenges those who are listening as how we can go about our daily lives, go about our work and go about our investing.

Henry Kaestner: Welcome back to the failure of an investor podcast. I’m here with William. William, good morning.

William Norvell: Good morning.

And we’ve got a special edition today. We’ve got three guests on to help us unpack what I think is a super important topic with regards to faith driven investments with real estate in particular coworking. So today we’ve got Trevor Hightower, Peyton Day and David Salyers on the show. So glad to have you all with us. Thank you. What we want to do is at the beginning, we want to give you each a chance to share your story, provide some background, and then women can ask the questions that we want to get everybody’s input on as we explore this idea of getting out there and investing in coworking on the for profit side. What makes it a great investment and then what makes it a great ministry opportunity is people come in as they form their businesses, get together, have meetings, have fellowship and community. So, Trevor, I want to start off with you at the beginning. Tell us about your personal journey and then tell us about what craft coffee is in your strategy.

Trevor Hightower: Well, thank you. Henry and William would love to. Let me first say I’m a regular listener of the three faith driven podcast. So much so that my daughter Grace asked me what Bible verse I would be sharing today at the end of this podcast.

Henry Kaestner: That is awesome. That is my love language. Thank you for listening.

Trevor Hightower: Maybe that’s not a good thing because that means I’m listening to podcasts instead of being present with her. So it could be more there. But I am deeply indebted to the great work that you guys are doing and listen to your guests and want to emulate their lives. And as I’ll try to share in my story. It was ideas and content like yours that God used to help shape the redemptive vision for my work. So thank you for your great work. So Jesus rescued me when I was 27 on a wood trip trail in Hermosa Beach, and I had transitioned from being an Air Force officer to working in commercial real estate. So the gospel of grace completely reordered my loves and desires. And I grew up knowing Jesus. So I thought this meant I needed to go into ministry. And thankfully, I had a mentor who graciously said to me he was actually in the ministries that God has agents of reconciliation and restoration in every domain in society. And Trevor, he might have you and real estate for a reason. And I remember thinking to myself, I have no idea what he just said, but that is awesome. Whatever he said. I am all in for a lot of the framework, the rhythm, the framework really helped birth in me, a passion for the reality that there’s no sacred secular divide. And so I was fortunate that my career in real estate started during the Great Recession, which allowed me the opportunity to be gritty and find places to add value and grow. And I worked for a publicly-traded in the office space and then worked for CBRE in leadership as a managing director in the Houston office about the time I was working for CBRE in Houston.

A mutual friend of ours, Dave Blanchard from Praxis, gave a talk that I listened to where he said something to the effect of, you know, if every entrepreneur. But I inserted to real estate developer could see a trend line and get in front of that trend line and create market value. How much more of a responsibility and advantage do we have as Christ followers that know that the ultimate trend line is heading towards new heavens? And they were? How much more of a opportunity do we have to get in front of that trend line and whatever? Now, in my case, real estate. And so that was in 2016 and I was already starting to see a major shift in how our corporate users were utilizing their space. The trend lines of shorter lease terms and more flexibility. The growing gig economy had already convinced me that shared office space coworking, that would be a huge part of the future of the office asset class.

But what really excited me about the operators I saw that really did it well and differentiated their offering was their emphasis on connection and community. And so with Dave’s prompting in the Lawrence prompting, I created a coworking space that the vision of it was to create that higher vision of connection and community. Accidentally, it happened to be in a multi-family building. So we reimagined the front entrance way of a multi-family lobby in an amenity area and found out that those uses really traded a lot of synergies when they worked together, especially if you’re operating it with intention to create connection and community. I met my now partner, Riley, who is had another great concept of a specialty coffee and coworking space combined, and saw really great synergies there. And we met in a really God ordained way and decided to. Merge those concepts together, where especially coffee and coworking, that would go into multi-family building and reimagine amenity spaces and lobby areas to really bring connection community in those multi-family buildings. So that is craftwork and what we get to work on today.

Henry Kaestner: So more revenue throughput in underutilized space, bringing in some community fellowship, adding some value to the property owners as they provide another amenity and some great business in ministry correspondence. OK. That’s awesome. Craftwork. David, I want to move over to you, David. You’ve got a great background, a very interesting background, one that some people can have some familiarity with. What am I talking about? And what’s your background?

David Salyers: Well, interestingly, Henry, my career started four hours after college graduation. I graduated on a Saturday morning. I started at a little company called Chick-fil-a four hours later. I had met Truett Cathy during my college career when I was a junior in college, and we’d kind of both pursued it. But what was fascinating is Chick fil A was not a startup at the time, but it was close. The headquarters was in a converted airfreight warehouse and they had run out of room in the warehouse. So they cut a hole through the wall, pulled up a mobile home. And my first office was in a mobile home attached to that warehouse. And I had no idea what I just signed up for, but it turned out to be much greater than anything I could have imagined. I think true could have imagined then kind of being a chicken salesman. Now for most of my life. But here’s the main thing I want to tell you as a 21 year old kid. If you had asked me what would be the most remarkable career possible, I would have told you get out of school, make as much money as I could, as fast as I could, and retire as early as I could. That’s kind of the paradigm that I had. I thought life couldn’t get better than that.

Instead, go to work for Chick fil A and Truett Cathy. I found something a hundred times better than that, something I could not have imagined as a 21 year old kid even exist. In fact, some I wouldn’t believe existed had I not seen it play out before my very eyes and really role model by Truett and the Chick-fil-a organization. Instead of finding the job, I could retire from early. I found the job I wouldn’t want to retire from, and that thought had never crossed my mind that there could be a job you wouldn’t want to retire from because my whole world is a 21 year old was all around money and true, its whole world was around mission. And if you find a job that’s in alignment with a mission, it is the job you wouldn’t want to retire from. And, you know, it’s fascinating. I remember going into true its office when he was in his late 80s. Say true it man, your four one K fully funded. What are you still doing here? He would tell me why would I stop doing something I love this much. He said, if you love what you do, you’ll never work another day in your life. And so kind of a message for me when you go back to the Bible and you ask, where does God first mention the word work? You know where it is. Oh, where Genesis one, where God had everything exactly the way he wanted it work was part of that equation. When life was paradise, work was part of that equation. So what that tells me is that work, ideally, if done right, is designed to be a source of satisfaction, fulfillment, enjoyment, contentment. All of that is the way work should be. But for most people, that’s not the experience that they’re having.

Henry Kaestner: So along the way, you talk about mission. I want to get back to this where you find a mission and purpose in it because you’re bringing into the present day. But less we go over some Chiclet story. Part of your mission is to save the lives of millions of cows. Tell us what that means.

That certainly got added along the way. Well, we want people to eat more chicken. Save those lives. But you’re right. I mean, in a sense, it’s kind of a comical look at what Chick-fil-a is all about. In fact, the corporate purpose of Chick fil A is to glorify God by being a faithful steward of all that’s entrusted to us. And a positive influence on all who come in contact with Chick fil A. Notice, it mentions nothing about chicken. It mentions nothing. It’s being a faithful steward and a positive influence. And that’s the way that we’re going to glorify God through work and by doing work that way. What we’ve done is created jobs that people don’t want to retire from, jobs that are fulfilling, rewarding, exciting, engaging. In fact, if you can believe this, in an industry known for turnover, we’ve got a 97 percent retention rate at Chick fil A, 97 percent retention rate for the corporate staff and for our Chick fil A operators, the independent contractors that run each location, 97 percent retention rate.

David Salyers: David, tell us about how you think about real estate. How do you think about faith driven investments and what you’re doing right now?

Yes, so let me segue from a Chick fil A background, I took early retirement from Chick fil A two years ago. And the main reason I did that is I feel like to those whom much is given, much is required. And the easy thing for me to do would have been to stay at chick fillet, enjoy all the rewards of a long career there and all the fruits that are now being enjoyed by that corporation. But I felt like because so much of being given to me, what’s required of me is to go out and help recreate the things that I was able to enjoy at Chick fil A. And so what we’re doing at Rome, which is Peyton and I’s concept here, we’re trying to recreate the environment of chick fillet, but make it available to entrepreneurs, to major corporations, to nonprofits, etc.. And so Rome is a coworking facility built on culture, built on hospitality, built on all the principles that I saw make Chick fil A what it was. And what we want to do is create, first of all, for our own employees that kind of job opportunities that I enjoyed it chick fillet. But more importantly, we want a role model to all those who come here, what that looks like. And we think it’s contagious. We think people see what Chick fil A has to offer. I notice when people come on tours when people would partner with and say, wow, this is so amazing, I want to go recreate it. So what Rome is all about for me is recreating and helping others recreate the incredible culture and the incredible results that I was able to enjoy for so many years at Chick fil A. But making those more publicly available, because right now, as great as Chick fil A is, there’s a limit to the number of people who can be employed by Chick fil A. So how can we take that and scale it? So for us, for me and I want to speak for Peyton, but for me, what Roehm is, is an exercise in scaling culture, hospitality and creating a world where we reinvent. In fact, our mission at Rome is to renew and inspire the way the world does business as partners in the story of accomplished dreams. So we want to use Rome as a platform to renew and inspire the way the world does business, i.e. what I got to experience the job I wouldn’t want to retire from instead of the job. I can’t wait to retire. How do we create a culture and an atmosphere where that is common, that you’ve got people that love what they do and so they never work another day in their life? And then how do we partner with others to help them do that? So we want to create that for ourselves and we want to partner with others. And we do it for everything from individual entrepreneurs to growing organizations to non-profits to even major corporations that use us as an offsite facility for meetings, et cetera. But our goal is to use the real estate as a platform to do something far more important than the real estate. It’s not about chairs and tables and meeting spaces. It’s about culture and renewing and inspiring. The way people think about work and the way they execute work and the way they try and use work is an opportunity not to extract value from others, but create value for others.

Henry Kaestner: Peyton, I want to move back over to you as David talks about roam and its mission as suspected. Listening to this podcast understands the impact and the importance that David sees in being able to articulate your mission and be able to reflect back on it and come back and make sure that all of your initiatives flow from that. I think that must come from some of the Chick fil A legacy that you’ve got. Peyton, you come from a family that’s focused on hospitality. Tell us about that and tell us about the idea for the formation of Roam.

Peyton Day: Well, thank you, Henry. And my story is different than David’s and my first job out of college. Honestly, I was working for a leader I didn’t believe in. In a culture, I really didn’t want to be a part of pursuing a cause and I could care nothing about. And needless to say, I wasn’t successful in that culture because in my life I had seen a father. My dad was my mentor, Cecil Day, and he developed a hotel chain. And of course, Chick Fillet was also just true. Kathy and the influence he had a chick fillet was certainly someone I wanted to emulate my life, a young Asian. As it turns out, my father and Kathy were good friends. You know, it’s never been stuck with homes back in the late 50s. And so it’s just an interesting twist to see God’s hand and how David now we bought each other.

But nonetheless, I was part of this what I’ll call a toxic culture. And I saw that there was a better way because I’d seen this from my dad at a young age. And people like to Kathy. My father was all about integrating faith and work.

And he did that in his own way. One way he did that was for every hotel guest that stayed in our hotels, for every single location. We had a chaplain on call. This is back in the early 70s for all 200 locations. You know, David. The United States. And so what was interesting to me. This is a nine year old boy just watching that and saying that’s really neat to see that he’s having a positive influence on guests that are staying in a hotel that really spoke to me. Because when you think about it. Hotels are a place where a lot of people go to contemplate suicide or divorce or lots of other things that are not good. And yet he used that as an opportunity to reach out to people in the most desperate of times. And so I saw that modeled at a young age, and it was attracted to me as a young person coming along. I said to myself all or be like my dad one day and do more than be like people like Truett Cathy of Chick fil A.

And so for us at Roam, when we came across from David and I did not come up with the original idea for Roa,. These were for IBM ers that were sent home because these big companies were trying to save on the cost of fixed office space. So they were IBM was ever sent home to work. And when they went home, they found it difficult to get work done because the baby’s crying. The U.P.S. man is ringing the doorbell. The blower’s for the landscaping is loud outside all types of distractions. And so these guys said there must be a better way. So instead of working from the home, they started going to coffee shops. And this is back in 2008. And so it was from there, they tried to go to coffee shops. And we all know that Starbucks or coffee shops can be a difficult place to have a meeting. So they said there must be a better way. So their original concept was a coffee bar with meeting rooms around a small meeting rooms. And so and Dave and I got involved in 2010. I knew I was interested. My background was with Marriott. I had the opportunity develop Marriott Hilton Hotels. And I knew that this was a very interesting platform for impact because first of all, it had all my passions, real estate, hospitality, entrepreneurship and non-profits ability to get back.

And I walked in and just basically cold call. These guys got so intrigued by it that they invited me to do some hospitality consulting. And as fate would have, it is God’s providence would have it. David walked in nine months later and he fell in love with it. And we were able to be in a position to body ownership. Then from there, we started expanding the footprint to offices to meeting space, to catering and larger meetings and so forth. And so that’s how we got involved. That’s why we got involved. It is a very unique platform for impact, because whether you’re Republican or Democrat, it really doesn’t matter where you are on the political spectrum. What I love about wrong is it’s good for the ozone. It’s good for controlling emissions. You’re creating jobs. You can do a lot of good things. And as Gaited said, our vision is to renew. It’s part of the world, does business as partners and the story of others dreams. Well, everyone that walks in a room has a green. As a nonprofit, as an entrepreneur, as a large company, and it’s our goal, the role that we play is we want to partner with them on that journey.

And we’re an advocate for them. We look at ourselves as an extension of their brand. And so we are servant leaders that are other people centered in order to carry out that vision. So that’s how I got involved and why we got involved. And it’s a very, very interesting platform for impact. And it was until I was forty nine years old that I was able to intersect that passion, purpose and talent. I believe when we talk about three concentric circles and the intersection of those circles, that’s the best role for us. Well, this is a very unique role for me and ideal. And so David and I, we endeavor to be leaders that others believe that I’m creating cultures that people want to be a part of pursuing a cause that people can get excited about. And I believe and I learned this from David. Businesses don’t succeed or fail. People do. I got that from David. I think David got it from Truett Cathy. And I’m pretty confident that Truett Cathy got it from God because it’s such a powerful concept that if you take care of the people, if you set them up for success, give them those are excited about your passion, about on purpose. Then you have something really, really special. And so that’s what we’re trying to do it wrong. And it’s been a real honor to be able to do this with David.

William Norvell: Amen. This is William here. Thanks so much for sharing that story and is someone who’s been to a couple of your own locations. It really is a unique experience. And a part of this podcast is really thinking uniquely about real estate and some of these assets. But another guy, John Marsh, on the Faith Driven Entrepreneur podcast about a year ago that really talked about how to revive a community through real estate. And so I want to dig into that a little bit more. And for those that don’t have seen Rome yet, you have your traditional freestanding building, which is really interesting to walk into. And it kind of feels about like I would expect. But the one I remember most was one of your locations. Sort of in more of a shopping mall area. I don’t know how to say it. You may say it better, but the transportation that I experience walking into that, I’ll be honest, I’m a little skeptical of. Oh, man. They put one in a shopping center. That’s a little interesting. Didn’t expect that. When I type this into the Google Maps, I kind of thought it was going to be a beautiful building somewhere. But what you did with the culture and what you did with the location, once you walk and you really are transported and you forget where you are and that’s amazing. And that really took some thought and some innovation, in my opinion, to really take a step back into how could we look at a space in a different way. So we’re going to dig into that a little bit on the swing. Back over to Trever for a second. And you mentioned how you’re working with multi-family units. And I want to dig into a little bit of the spiritual integration side of things. We heard a little bit of what you’re doing and what it looks like. How do you think about integrating faith and work through that? You mentioned Dave Blanchard, a frequent guest here, who I think has inspired many to think about things a different way. How do you see it? Craftwork today?

Trevor Hightower: Well, yeah, thank you. William and I also have visited Peyton and his team in Roam and can attest to their culture and their people is what really brings the space to life. And as beautiful as design and esthetics are, it’s the way that you feel cared for by the people. And that’s one thing that we really have focus on craft work. So we’re a B to B to C company. Our B2B side is we partner with multi-family owners. So high rise, mid rise owners and the way that a typical real estate owner thinks about their multi-family development as well. We need to compete to attract a similar demographic by creating bigger, more expensive amenities. And we try to come onside them and say, you don’t want to be in the menotti’s arms race. You want to be and a connection arms race. You want to be an experienced arms race. And we really believe in this flows from our spiritual intent that you can bring to life. This what typically goes way underutilized, if utilized at all, kind of lobby and amenity area. You can bring it to life with a hospitality focused, human centered operation. And so what we essentially do is reimagine the lobby and amenity area into a specialty coffee and Corrigan’s space. But our missional intent is we have people on the front lines who are our mission is to generously see all the people and the spaces that we operate. So our team is diverse. We have many believers. We have nonbelievers who are on that front line. But all of them are really passionate about our mission to draw people out of isolation and into community. And, you know, no one does this better than Chick fil A and Rome, but we really try to emulate the best practices around training and hiring and equipping our teams so that when a coffee. Customer or a member comes into contact with a craftwork teammate. They experience something very different, which is they feel genuinely connected.

William Norvell: Absolutely. That’s great. I want to swing it back over to Peyton to talk about, you know, the special integration yours. And I’d be remiss not to mention one story has this funny image of the people. I was in one and then peyton was generous to give me a tour. And you meet some of the people and they do strike up a conversation. One of the coolest Faith Driven Entrepreneur moments that I’ve experienced. And there were then the investor podcast here. But the faith driven family was talking to the host at room, Mary London. She’s mentioned that she used to work in Kenya and some other places. And at the time, Henry was actually doing a Faith Driven Entrepreneur event that night in Kenya. And I said, well, you know, randomly, we have an event that night and she e-mailed out a bunch people they were able to come. Amazing to see what God does. And I just mentioned that story to say Roam feels like that kind of place that you can just be alert to what the Holy Spirit is doing at any moment. Some craft workers as well just it’s an amazing opportunity place for the spirit to work. And so I’d love for you to probably tell more stories than I campaign about how you go about that and how you built that culture intentionally and how it continues to thrive today.

Peyton Day: Well, I think it goes back to the saying, you know, people don’t care what you know, they’re more concerned about how much you care, make you care less about what you know. And I think for us, you know, we do our best to hire, again, people who love serving other people and who take great joy in that. And that starts with leadership in ensuring that we’re hiring people who are committed to serving others. That’s where it starts. And then from there, we really try to point them to this vision of this bigger vision of renewing, inspiring how the world does business. And they live that out in their own way. And we give them a lot of freedom. We’re big believers in giving people autonomy to make decisions. And without autonomy comes responsibility. And we think about this ratio of autonomy divided by responsibility equals one. And that means that oftentimes I think we as leaders, we can be too heavy handed, too much of a micromanager. And so for us, we try to push decisions down through all levels of the organization such that they can address those problems. And oftentimes, I think people are concerned about giving people the autonomy to make decisions. But that’s not the problem. The problem is, in some cases, they’re either not trained for how to address the problem or in other cases you may have the wrong person. So what we try to do is hire leaders again, give them the vision, give them a lot of freedom and latitude within those guardrails to make those decisions. And then we turn them loose to do what they do and use their destinies to do that. And so day in and day out, that’s what happens at Ron. So stories like you just shared with you. You know, David, I had the honor of hearing every day we have one lady whose mother was passing away. And it’s just a heartwarming story. It’s actually on our website. But somehow that same Mary London that you’re talking about got wind of that and found out that her mother was dying. And she wrote the most beautiful handwritten note that to this day. This lady talks about and she just talks about how that was what she needed at that moment. So every day, you know, we have the opportunity to be a positive impact on those we come in touch with. And as I mentioned to you earlier, this is a unique platform for doing just that, because at a Chick fil A drive through, Davis mentioned this before, you had to maybe a 30 second encounter with someone at a Chick fil A drive through.

Well, in many cases, David and I and Trever have the opportunity to impact people over entire day or over an entire week, much longer extended period time. So from a ministry standpoint, we get a lot of touches with people. And because of that, we’re able to forge deeper relationships. And that’s one of the things I love about this model. It is a very unique platform for positively impacting those. We come in touch with.

William Norvell: Amen and jump back over to. David would be equally remiss not to ask you, you know, why you love cowls and dislike chickens. But that’s a conversation for another time. But we would love to know a little bit about your banking experience there. Oh, Henry?

Henry Kaestner: No, no, no, no. I’m right with you. I just want to make sure you and pass over that. I mean, it’s one of the greatest marketing campaigns of all time. We’ve got a guy guests on the show that had served at Chick-fil-a in the marketing department during the birth of the whole chicken cow thing. I want to hear about it.

William Norvell: Yes. So that’s where we’re going. That’s the end of the question. I have long lead ends, as you can tell. But Henry is better again to the point. And so we’d love to hear about that as well.

David Salyers: All right. We’ll talk about that is interesting. The first 20 years at Chick fil A was all mall locations. And we used to talk about marketing at a. All as a captive audience marketing strategy, in other words, it wasn’t our job to bring people the mall, but once they showed up, it was our job to get them to eat while we were there, and about 70 percent of molesting was impulsivity. But once we got out in what we call freestanding locations out on the street, we now had to become destination marketers. You know, in other words, we had to get some I get up off their sofa. Get in their car and drive to us. And it’s completely different situation. So as free standards started to become the largest portion of the offering that we had, we realized we had to revamp our marketing and we began a national search. And we started with one hundred and twenty agencies that we looked at and we were able to narrow it down to 20 that I personally went and visited. And from those 20 visits, we narrowed it down to three. And what you’ll appreciate about this is the three that we narrowed it down to, all three of them. We’re really good at their craft. But what we’re really looking for is a cultural fit at that point. And we felt like the cultural fit. We weren’t have a long term relationship with an agency which in and of itself is very different. Most agencies is high turnover. What have you done for me lately? It’s, you know, come in and pitch your business at your expense. And we weren’t in a completely different relationship. And where I can go into lots of details, but we did something that all three of those agencies had never seen before, which a lot of what chick fillet does is counterintuitive. It’s the opposite of the way most everyone else is doing it. So we decided to pay each of those three agencies to do a project for us so that we could simulate what it would be like to work with them. And we spent a couple of months working with each agency to get a sense of what it would be like to work with. Contrast that the way a normal agency would work is you come at your expense. And usually they’d spend six figures pitching your business and you don’t give them any information. You know, it’s almost hands off and come impress us. We said we want to do just the opposite. We want to dig in with you. We want to give you everything you need to be successful. And let’s see where it would be like to work together. And so out of all that, we ended up selecting the Richards Group out of Dallas, Texas. And the Richards Group was similar to Ticketfly. In a sense. It was a privately held business. One guy owned the whole thing and they were much more concerned about doing great work than how big a check your writing. And that’s exactly what we wanted. When I first met with Stan Richards and went out to Dallas at that time, we were at a big disadvantage because relatively speaking, we would have been like on a list of the top hundred fast food chains. At the time we signed up with the Richards Group, we would’ve been much closer to 100 than never once. We weren’t a very desirable client is basically because we’re really small. We had a really small budget. So to overcome that, we went in and we said I said, Stan, we may never be your biggest client. We want to be your best client. Tell me what that looks like. And he went on for about 20 minutes telling me what it would look like to be his best man. And you could tell he had a gleam in his eye. And that was a very attractive question for him, because it wasn’t about the size of our account. It was about the quality of the work they could do. And for a guy like Stan, almost like what Payton was talking about a minute ago, we wanted somebody who was very missional in their approach and he was very excited about doing great advertising and great work, getting great results. And it wasn’t about the size of the check that you would write. So net net is a cow campaign was not the original campaign they came up with. It was several iterations later that they came up and actually was a combination of three different billboard ideas that they had done. And that was another thing all of our competitors were doing. Lots of television advertising, radio advertising. We said, let’s pick a medium that we could dominate that no one else is using. And the one medium that no one else was using really in the fast food business at the time was billboards. They would use them as directional as what we’d call, you know, next exit go. Right. But no one was using as a brand building opportunity. And we got inspired by billboards we saw out in L.A., in Orlando, these 3D billboards. So we basically told Stan we want to do a 3-D billboard campaign as a brand building campaign. And that intrigued him because his background was graphic arts. And so this was a graphic art opportunity. Long story short, they did a number of billboards, three different billboards, kind of came in to focus. If you want to do another, I could actually bring and show you the three billboards. But pieces of those other three billboards kind of came together in the mind of one of their creatives, a guy named David Ring, and they came up with the eat more chicken idea and we were thrilled with it. But the problem was it was totally off strategy. It was a great idea. That didn’t align with the strategy that we had. And we said, well, you know what? Sometimes if the idea is big enough, you got to throw out the strategy. So we tried it and we tried it in Atlanta, Georgia, right before the Olympics because we were looking for a great billboard because the world was coming to Atlanta and that one billboard was between the Atlanta airport and downtown. Got more recall than all the other billboards we had done put together to that tab in the research that we did afterwards. So I think the big aha moment was going from a billboard to a campaign idea. And that was the big leap, was how do we take it from a billboard and take it into the stores and make it a long term campaign. And they came up with some great ideas and we worked together. But it’s really a story of culture and teamwork and not focusing on the size of the check, but focusing on the size, the opportunity and what stand would tell you. To this day, if we were to get him on the podcast here, he would say, you know what? Chick fil A’s to this day is not my biggest client, but he’s a billion dollar ad agency now world’s biggest privately held ad agency. He said Chiclet to this day and write me the biggest check. But he said, almost every client I’ve gotten since the Cal campaign has come as a result of the Cal campaign. So you were their best customer? Yeah. Exactly. All these other customers, he said the first thing they want to know when they said our stand is tell me about the Cal campaign and create a cow campaign for us. So even though we were saying that the work led to him getting all the other checks, you know, and a lot of ways since that time.

Henry Kaestner: Well, I’ll tell you, it’s another billboard that really got me hooked on Chick fil A. And it wasn’t the more chicken. It was a billboard that McDonald’s had up in Durham, North Carolina, when it just said open Sundays. I thought, oh, my goodness. How did they do that? And so I have not eaten in a McDonald’s since. And I love chick flick. OK, so if people tune in in this podcast right now. No, we’re not talking about retail marketing. We’re talking about faith driven investments. And so I want to talk, of course, about the big elephant in the room, and that is that you all have found yourselves in an industry that has been probably a little bit more higher profile over the course of last nine or 12 months with the challenges that we work has experienced. We’ve got an audience of investors. Can you make money in coworking? Trevor, we’ll start with you.

Trevor Hightower: That’s an easy question. Thanks, Henry. So what we see with Covid 19 these past 10 weeks is a lot of the trend lines that we were following are massively accelerated. So you can look at remote work, for instance, remote work was already a trend line that was heading in a certain direction. And then we had a mass adoption overnight of remote work. And so I think at least for us at craftwork, what becomes important to the model is something that other Kirchen operators have adopted as well. It’s more of a management agreement, partnership model where you are sharing and the upside and also sharing and the downside. The least model is difficult when you encounter a little bit more of a challenging market like we’ve been in. But I think one pivot that we’ve really focused on as a service provider to come alongside our multi-family partners is to create more of an agile, less capital intensive model that essentially craftwork can go into the existing lobby and replace a lobby with a hospitality experience and then operate the existing amenity space as a corrick in space. And what this does for the owner is it allows them to differentiate their building in a increasingly competitive environment through creating a layer of service that’s focused on connection and community and hospitality. And so we think in the new normal post-covid home is going to become increasingly important as some level of remote work is going to increase for all workers. And where people work is going to be important so that amenity space within their multifamily building does become important. It’s not highly utilized now, but if it was really curated and really layered with service, with the type of hospitality that’s groups like Rhome or Rappard could provide, then I think it becomes very differentiated, differentiates one asset to another. But I think the key is that partnership approach with the landlord.

Henry Kaestner: Got it. David Payton talked to us about roam. Talk to us about your model. Tell us about where you’ve been in terms of capitalizing what you’re doing and what your prospects are, what you see as you think about expanding. Can an investor that might invest in a room or a craft worker that has a co-working idea, can they not only see that as a great opportunity, provide amenities and fellowship and community where ministry can happen, but can they make money and invest in it as well?

David Salyers: Peyton, why don’t you start and I’ll finish?

Peyton Day: Well, first of all, I would agree with Trevor said the answer. Yes, I do believe remote work is going to be accelerated for all the reasons that Trevor mentioned. I would also add that at some point we sincerely believe that meetings will come back. They may look a little different in my mind. If you believe that the Masters is coming back or NBA basketball or the NFL, you have to believe that meetings also will come back. They may be smaller. People may need to social distance more. Without a doubt, people may need more elbow room. Certainly, cleanliness has become a much bigger issue. And so for us, our model is based on diverse constraints. And that’s what’s so interesting about this. Even when you think you’re bulletproof, you’re not right. You think you’ve got it all figured out.

We’ve got all these revenue streams. And then, wham! Here comes covid 19. And so the next opportunity, virtual platforms, member services. We’ve got to find ways to create value for our membership. And by definition, value is what you get over what you pay. So every day we wake up thinking, what can we do to add more, more value to the membership? Even on a post covid environment. Now, I believe that a vaccine changes a lot. But I do believe while the last 10 years we’ve seen densification in real estate think we work one personally, 50 square feet. The office that I wanted to be a part of when I was growing up was a 200 square foot glass office. That’s what we wanted. But the last 10 years, we’ve without a doubt moved to densification, more people and smaller places. I don’t think there’s any question that we’re gonna have a period of detoxification. The question is, how long will I go? I think the vaccine will change a lot. Getting kids back to school are going to change a lot. But ultimately, I believe that this model is what people are looking for. As Trevor mentioned earlier, it’s flexibility. It’s giving people the ability to work from home, giving people options of different work environments in which they want to be productive outside of their home or a traditional office. People want to create. They want to collaborate. People need to be together. And we believe that the coworking platform is certainly an answer. And it’s on friends. And we don’t think it’s going away.

David Salyers: And what I would add to that, Henry, is prior to the Corona virus, all of our locations were profitable, several highly profitable. Obviously, during the Corona virus, we’ve had to shut down certain revenue. The meetings, part of it, that kind of thing. But I do feel like the new trends coming out of it. Trevor, I would totally agree with you. I think what this is doing is making everyone rethink the way they do business and the way they have approached business historically. So I think it can be an accelerant for coworking in that I think we could be much more on trend with what people want. I think they don’t necessarily want to have to go to an officer today, but they also don’t want to have to work from home every day. I think we’re a nice in between. And I do think historically, a lot of businesses have thought in terms of centralization of the workforce. Everyone comes to one office to work out of one place. And now we’ve experienced massive decentralization. And there are certain things people really like about that decentralization of office. But I think now they’re going to desire more of that. But I don’t think they want total decentralization. I don’t think they want total centralization. I think what a lot of people are going to want coming out of this is some combination of the two. And I think that’s where the opportunity is. Anytime you have a major world event like this, it kind of takes everyone back to zero. And the scrappy entrepreneurs are the ones that succeed. And we’ve got a whole team full of scrappy entrepreneurs and they’re already coming up with new ideas to Payton’s point about how do we create value, add new ways for people. Yeah. So I’m cautiously optimistic that we’ve got a lot of exciting things in the future and certainly ripe for cover. To answer your original question, can it be profitable? 100 percent of our locations were before growing matters.

Trevor Hightower: Yeah, I’ll just add to what I hear David and Payton saying is that the benefit that coworking industry has relative to traditional office space is a maniacal focus on the end user. It really is what Payton was saying, this combination of hospitality and office space. And so what I just heard Payton and David describe is the ability of a good coworking operator to really Kivett is to the end user to attract what we anticipate. Being a larger supply is a benefit relative to a traditional office user. Really, they’re going to probably have a challenging time in a recessionary environment with a little bit less demand for traditional office space. So the key is to really focus on end user experience. And I think that what we all really on this call is that it’s not mutually exclusive, that end user experience and really creating something that is spiritually beneficial for people, which is training places of connection and community.

William Norvell: That’s really good. That’s interesting. I’m fascinated to watch how this industry shakes out. I mean, I agree with everything you guys have said. I also think there’s going to be new customers, as you mentioned. There’s going to be more work from home. There’s going to be a reimagining at some level, maybe not for every company, but for many companies. I would imagine what work looks like and what teams look like and what office spaces look like. And I could see coworking. Being a big part of the solution there, it’s probably easier would be my guess to set up a social distancing policy when you have disparate companies in a space already, you know, and you can kind of set up offices and things like that. And that’s really fascinating to watch. And I thank you guys for walking us through that time and for sharing with us, because it’s really going to be a hot topic. I think just the future of work in general is a hot topic right now. And I think many of us also believe or my wife’s in medicine, you know, coronaviruses is something that will likely happen in some way, shape or form again. Peyton, you mentioned cleanliness and and all the things. It really is a future defining event, in my opinion. And I think coworking has a great place to play in the middle of that. And so as we do turn to an end here, Trevor, you already foreshadowed the event here, so you’d better be ready. It’s coming to you first. We would love to know. We always love just seeing how God bridges our listeners and our guests and how his word is always continually alive. And we would just love to know where God has you. Today could be this morning, something you read on the way to wherever you may be working from could be a passage or story that God has had you in for a season of today or years, even sometimes our guests have said they’ve been meditating on something for a long time. So if you would bring our our listeners into your world a little bit, they’d be great. And then we’ll go to David and Peyton.

Trevor Hightower: Thank you, William. Yeah. I am fortunate that I had my daughter Grace prompt me, and I always loved this part of the podcast. It’s a joy to share what the Lord has been counting on in my heart. This is something that has been ongoing for me and it’s really rooted. And I get into the beginning part of my story, but grew up in a very chaotic environment and at an early age, probably not similar to a lot of entrepreneurs and investors listening performance. It’s always been an idol of mine and performing for others. And when the Gospel invaded my heart, it was such a release of freedom and peace that I had just obviously I described it as know warm water poured over a very restless soul. And so I’ve noticed that the best growth in my spiritual life is it really comes in reminding myself of that gospel. It’s the gospel not only saved me and reminded me of who I am and Christ, but it’s also what propels me and gives me motivation to change. And so the verse that I literally read every day is Corinthians five. Twenty one for our sake, he made him to be sent here and, you know, sent so that in him we might become the righteousness of God. And that verse and Romans eight one. I have to remind myself every day of the Gospel not only that Jesus took my sin, but then it is something incredible. He gave me his righteousness. And for a performer like me and I’m sure a lot of those listening, that is just the best news ever, that it’s not my work, it’s his work and that it’s already finished. But what I’ve noticed is that if I really let that sink from just the words on the page from my head into my heart, then all of my relationships, from my wife to my children, to the people I get to work alongside and serve here at craft, where those relationships are all dramatically improved because I’m no longer thinking about myself. Ideally, I’m truly beyond grateful for like good God has given me. So it’s been the best business tool ever that I’ve had is to remind myself of the gospel. And that’s one of the verses that I literally read every morning.

David Salyers: You know, it’s interesting. I go to North Point Community Church with Andy Stanley and he did a sermon series a few weeks ago that really posed a challenging question that I’ve been pondering this whole crowing about. He said, you know, one day this is one of those times in life and in history that all of us will look back on and have a story about, you know, it’s a little bit like 9/11 or, you know, other times, you know, where everyone is focused on something said ten years from now, what story will we tell about this time? And I thought a lot about that, William, about will I be proud of the story I tell, you know? Well, I’ve just spent time in the basement hunkering down and or will I have seized the opportunity because, you know, the greatest value we can create many times during people’s most challenging moments. And I’ve noticed that God seems to do his greatest work during our personal, most challenging moments. And I’ve seen a lot of that going on where a lot of the scrappy entrepreneurs out there are taking advantage of a time when there’s a lot of despair and a lot of hurting people. And that’s our opportunity to do some of our greatest work. So the question on my mind has been, will I be proud of the story I tell 10 years from now about what Payton and I and Roam did during the Corona virus? And we use that to help shape our whole culture. And what we’ve done during this time and. Seize the moment, carpe IDM, you know, seize the moment and then combine that with the fact that Chick fil A, we always used to talk about that every life is a story. And we used to say, how can we use our business as an opportunity to improve the story of those we do business with. So we’ve been trying to figure out how can we use this opportunity to improve the story of not only our own employees, but those we serve. And finally, true, it lived his whole life. His favorite verse was Proverbs 20 to one. A good name is rather to be chosen then great riches. So we try to use all of those thoughts to shape our decision make because all of us have had to make a lot of decisions during this time, some tough decisions. But I want to make sure we look back on the decisions that we made during this time and we’re proud of those decisions. And those decisions helped improve the stories of those we do business with. Those decisions helped improve the stories of our employees, etc.. And how do we make sure that we maintain our good name during a time when it’s not easy sometimes? You know, we all have difficult decisions to make during this time. How do we balance that with a good name? And that’s what we’ve tried to do. I think that’s what we’ve done, Peyton. And, you know, we’ve had to make a lot of hard decisions, but I think we’ll look back 10 years from now and be proud of the decisions that we made during this time to do the right thing for the right reasons. Even when it hurts.

William Norvell: Amen. Peyton, do you have something that God’s telling you today to pass along?

Peyton Day: Well, yeah, I have actually two things, and I’ll make it really brief. First of all, it’s something that David was talking about earlier in his talk. And this idea around, you know, the work is broken and going back to Genesis two. And when you really think about it, I think it’s incumbent upon all of us as leaders to provide environments where people can thrive. And if we’re going to ask employees to spend one hundred thousand hours of their life working, it only makes sense that we would provide an environment that is fun, meaningful and purposeful. And we you look at the numbers, 70 percent disengagement in the workplace. Imagine what it would look like if 100 percent of the people were fully engaged to what they do. And so it’s just a constant reminder. You know, I think David and I share this and I know a lot of your listeners share this and I know Trevor does. It’s just feeling some burden that we have. You know, as leaders in the workplace, not necessarily a burden, but an opportunity, a blessing to be able to provide environments where people can thrive. So my heart goes there quite often. And then the second thing is I go to something I heard recently from Tim Keller where he did a talk on Psalm 11 And it’s this idea around when the foundations of the world tremble. Sometimes it seems like God is out of control, but he is not. And while we’re all going through uncertain times today, guys are in control. He is the author of Our Lives. He knows what you and I are facing. And he will be our daily bread. And by definition, because he is our daily bread. He’ll be our weekly bread, our yearly bread and our life bread. And he’s going to give each of us whatever we need to face the challenges that we’re facing today. And on the other side of this, we’re going to come out better because God has done a great work in these days. And I truly believe that’s what’s going to happen in each of our lives.

William Norvell: Amen, great work. Well, thank you all for joining us. This has been a fun roundtable event to talk through a really hot topic right now. And then we went around a lot of things. And David, also appreciate you with the Chick fil A cup. You know, can’t see that. Not everybody has video, but he’s he’s live in his marketing roots there.

David Salyers: I’ve got my shirt with the roam logo.

William Norvell: Staying On brand. This has been this super fun. I hope to have y’all back at some point in here how things have changed and how God has shown up, I hope and look forward to that day and four, five, six months, whatever that may be, where we can come back and say this is what God did in response to all of those things that we were praying for and looking for and trying our best to love and serve as he would have us. And so thank you.

Henry Kaestner: Welcome back to the faith driven investor podcast. We’ve got an edition today that is probably a little bit overdue, and that is that we’re going to talk to some folks that are in the businesses professionals helping customers from retail through an institutional understand how to process the world of faith driven investments. A good number of our audience, of course, are direct investors and are in in the process of figure out how did they do angel investments, how do they pick out funds? And I think that we can all realize pretty quickly, that’s pretty intimidating stuff. There’s a lot there’s incredible amount of complexity. There’s incredible amount of selection. And through the grace guy, that selection is just increasing. And so the question then is where do I go to get some good counsel or how do I talk to somebody about my own particular needs rather than just reading an article about where I might invest in the latest trends or listening, of course, to a podcasts like this. How does that really impact me in my own financial situation? So faith driven advisors that are in the investment world are incredibly valuable and they view what they do as a mission and a ministry. And we’ve got two of the very best with us today. And I’ve been looking for this episode. Eric and Rachel, thank you for joining.

Rachel McDonough: Thanks for having us.

Henry Kaestner: Tell us a little bit as we get started just a little bit about each of you. Where are you calling from today, what your background is? We’re going to start back in my hometown of Durham, North Carolina, to Eric, who is a friend and neighbor in. And then we want to move to Wisconsin and hear from Rachel about what she’s doing. But, Eric, tell us about what got you to this spot where you are full time ministry in the financial marketplace.

Eric Chetwood: Yeah, yeah. Well, first of all, Henry, I think I speak for Rachel when I say I feel really grateful for you and your team because you guys have really let out in the faith and work discussion, at least for folks in my circle of influence. And many of the guests that you have had are heroes of mine. So I feel really humbled to be speaking with you all today.

Henry Kaestner: Well, before you go on. Thank you for that. That just helps me feel that much better about having had you on the show. That was awesome. Thank you. It’s awesome to serve.

Eric Chetwood: It is really a humbling experience. But for me, I would say that my story after college at USC, I spent a gap year doing a Bible program in Denton, Texas, right outside of Dallas. And that year was really one of the most amazing investments of time that I could think of. And I give thanks to it for this day. But I knew that at the conclusion of that program, I wanted to come back to North Carolina and specifically play out my life in Durham, North Carolina, because I joined the church here during college and I wanted to come back and be a part of what God was doing through the summit church. And so after coming back home to join an advisory team in 2004 with an amazing mentor and boss who later became my business partner, who taught me what it looks like to love Jesus in this industry and how to care for clients holistically. So, you know, I got certified from a planner designation in 2007. And really the only other significant data point in my story would be that our team left our wire house in 2005 and started an independent registered investment advisory firm, which has given us a lot of the freedom to implement some of the initiatives that we’ll talk about today.

Henry Kaestner: Rachel, tell us a little bit about the same on your side to your background, how you found yourself, where you are today.

Rachel McDonough: Sure, I am an unlikely candidate. If you look just at the data from my background, I guess unlikely candidate to be a financial adviser. I was raised as a missionary kid in Kenya, East Africa. My parents as missionaries did not have a lot of wealth in this world. Maybe they stored up some treasures in heaven, but the balance sheet was looking a little lean. I remember we would come back on furlough to the United States and have a free lunch, get government assistance to get a free lunch at school, and then we would go back to Kenya. And I was obviously the rich kid in Kenya. So I’d go this back and forth from rich kid to poor kid in Kenya. I would have other children and come up to me in Nairobi and ask me for money. And I always had at least a little bit of spending money in my pocket. So it really made an impression on me at an early age about what it means to have wealth and what it means to be wealthy. I learned a lot about some of those intangible lessons of internal wealth and external wealth and what it takes to, I guess, transition from having money to being in a place of abundance, of being able to use that money to create something good in the world. So I was taken with that idea very early on in my career. As you know, how do we actually use the money that God’s entrusted to us to make a difference in the lives of the people around us? So fast forward a bit. After college, I took a job as a receptionist at Merrill Lynch in downtown Minneapolis, and I got bored with that after about the first 20 minutes. And so I started studying for some licensing exams. Much to my surprise, I passed them all quickly and I marched into the director’s office one day and said, I want you to hire me as a financial adviser. And here’s my 20 arguments of why you should do that. And to my surprise, he didn’t need any of my arguments. He just said, yeah, OK, you can have a shot. So there I was with no family money to start with and no book of business to inherit or purchase. And somehow, by the grace of God, there was always enough provision. I would always bring in just enough clients to meet all my hurdles. And shortly thereafter, a much like Eric the Lord released me from that warehouse and I went to the independent channel at Raymond James and then from there followed the Lord again to make a change to Ameriprise Financial, where I served today.

Henry Kaestner: You’ve had some leadership positions at Ameriprise, correct? You’ve gotten together with other groups of faith driven advisers there.

Rachel McDonough: Yes, I currently serve on the leadership team as a vice president of the CFAN Network. That’s a Christian franchise advisory network. There are eleven hundred of us at Ameriprise Financial Advisors have raised their hand and said, yes, I’m a Christian. I want to figure out how to bring my faith to work and live at the intersection of faith and finance and be well equipped to serve Christian clients who come into our practice and celibacy found that work has really become a group of friends and had the honor and the privilege to help train them and equip them to take values based investing or faith based investing and apply it and implemented in their practices through quarterly webinars and newsletters and some one on one coaching.

Henry Kaestner: Eric, you talked to at the beginning about your relationship with his friend and mentor, now partner, Rick Adams. What was it that he taught you about integrating your faith with the vocation you’ve got?

Eric Chetwood: Yeah, I think one of the things was just that how we care for clients comprehensively and that can for clients comprehensively is a lot more than just rates of return and standard deviation that it is speaking in to really all of the way that money impacts people, which money impacts people relationally, it impacts people emotionally, especially during this current pandemic. So being able to care for clients in every way that money impacts them is one of the ways that we can really reflect and represent our savior.

Henry Kaestner: Well, both of you have been a great encouragement to me and your involvement in the larger movement of faith driven investing. And Rachel, you’ve served really well and with great leadership in some of our working groups. And Eric, you’ve written an article for FDI. I am talking about how you see God calling us to live fully integrated lives. Talk to us a little bit about what you mean by that, about fully integrated lives within the context of finance, or maybe not just within the context of finance, but just what do you mean?

Eric Chetwood: Yeah. So one of the things that I have really loved about listening to you guys in this podcast is that you all examine integrating faith and work from so many different angles and living a life that doesn’t segregate the sacred and the secular. And I would say that that’s a topic that I really enjoy talking about just because I used to have a very disintegrated, compartmentalized life where I saw my relationship with God and personal ministry over here and then work over here. And that worldview caused me to buy into a lie. Early in my career. And that why is this? That work is something that I endure. So I can make a paycheck in order to fund the activities that I’m actually passionate about. And I think that lie is very prevalent in our culture. And I think financial advisers are really complicit in that, even in how we frame the retirement discussion. You know, Mr. Card, do what you have to do so that you can retire and then do what you want to do. So whenever I hear that logic, it’s usually a sign that someone doesn’t understand the integrated purpose that God has for them. And it will be very difficult for them to experience the abundant life that he promised. So for me, I didn’t understand the theology of work, and because of that, I didn’t really grasp God’s full purpose for me. I didn’t see all of the redemptive opportunities in my job as a wealth manager, and they were right in front of me because I was looking for them. And that led me to kind of a crisis of confidence and work, feeling very meaningless and empty. And so over the course of some time, I learned something that just dramatically impacted my life and career. And I learned that all of us, you and me and Rachel and everyone joining us, regardless of their profession. If you’re a follower of Jesus, you’re in full time ministry. And, you know, where do I get that? Ephesians for specifically eleven and twelve, says that the primary function of a posture or a minister is to equip the Saints for the work of the ministry. They are to equip the Saints for the work of the ministry. And that statement just has massive implications. It means that our pastors should not be the only ones doing ministry. It means that our pastor should need to be the primary ones doing ministry. It means that we, the Saints, get to the ministry. And that means that everyone listening to this is both empowered and expected to be primary agents of gospel, ministry and reconciliation. And Henry. And till we understand that until I understood that this democratization, until we see ourselves as the aroma of Christ in real estate or a kingdom of priests and wealth management or as ambassadors of price and private. We miss out on. Part of the great adventure, we miss out on the joy of knowing that we’re fulfilling our integrated purpose in life. So the first application for us is financial advisors is to recognize that our relationships with clients are, by nature. One of the most intimate professional relationships that they have and that no one may be other than their doctor is allowed in to their hopes and dreams or abilities. The way that we are. So God could potentially use us as financial advisors to make a bigger impact in a client’s life than any pastor or priest.

Henry Kaestner: That’s an awesome thing to lean into. Rachel, I know you well enough to know that that’s something you absolutely subscribe to, too. How do you see that actually working out with your clients? What does it mean when the rubber meets the road? Client comes in, you’re having that meeting. How is it that you even just approach this concept of a more integrated life and the meaning of purpose? And is Eric just said, you know, you’re invited into this special relationship to understand their hopes, their dreams, their fears and their anxieties. How do you see that mission’s been part of the Saints being equipped to do the work of the church?

Rachel McDonough: Yes, I agree with Eric and Eric. I love your passion and enthusiasm. I share it. I think that our role is a very pastoral role and it’s a role of coaching as a role of helping clients to hear God for themselves. So as the word of God tells us, we don’t actually need a human teacher per say. We have the Holy Spirit and he promises to lead us and guide us into all truth. And we have the word of God, which is sufficient for instruction in every area of life. But what an adviser can do is come alongside a client or a couple and really help them to lean in and listen. Right. I remember some of the greatest memories that I have as an advisor are times when I’ve just been able to almost be outside of the conversation, just facilitate a setup for a husband and wife to come together before God in prayer and discover his plan and his purpose for their life. One of those examples was there was a couple. The husband was a civil engineer and the wife was a CPA. And they had some extra money that they talked about potentially investing in public securities. And as they talked further. The wife really said, you know, more than anything else, I have faith and confidence that God has given my husband tremendous capacity for creating wealth and creating jobs through his business and his company. And I would rather see us reinvest this money back into his work that I believe God’s call them to and bless them to. And she must not have said that to him out loud before because, I mean, he was almost moved to tears. And that was just the result of us, not me having some kind of tremendous insider wisdom, but me just saying, come on, Dad, we need you to show up and do what only you can do to be the shepherd of your sheep. And the word of God is very clear, says my sheep. Hear my voice, my sheep know my voice and the voice of a stranger they won’t follow. So we should, as believers, come to God’s word and come to our decision making in real life with the expectation that we can anticipate the shepherd’s voice being present to lead us in a personal and relevant way in day to day decision making.

Henry Kaestner: Hear, hear. That’s awesome. Eric, I want to ask you, Rachel brought up this illustration about a husband or wife working together. Are there times that you’re invited into people’s lives that you feel like you’re a little bit of a marriage counselor first?

Eric Chetwood: Sure. You know, it’s amazing that the husband has his own risk tolerance and his own financial goals and aspirations, and the wife has her own risk tolerance. And surprisingly, in the humor, you know, God’s creation, he normally allows people who are diametrically opposed to marry each other. And so a lot of times you yeah, you are dropping financial grenades, so to speak. You’re asking questions and then maybe even ducking a little bit. And that is, you know, an area where so many times I tell people that our role a lot of people think that this industry is all about financial analysis and it is to some degree. But I feel especially in the last few weeks during the Kovik crisis, I have felt more like a therapist than I have a financial counselor. And so, so many times people will come to us in the last questions that really aren’t necessarily financial. They’re just about life wisdom. And that’s why it’s so intimate. And that’s why it’s so far to get to walk through different chapters of life with books.

Henry Kaestner: Rachel, as you do this and you walk through different chapters with different people and it’s had hundreds and hundreds of conversations with individuals and with couples and with families. How has it impacted the way that you yourself think about me? You talked about, of course, your upbringing and being rich and poor at the same time. But as you’ve gone ahead and just heard the collective responses about financial planning and how to think about generosity and investments from your clients, has that changed the way that you think about money, too?

Rachel McDonough: I would say the biggest influence on the way that I think about money has been, you know, hopefully the word of God. Right. That’s the right answer. But also, Kingdom Advisors has been a tremendous blessing to me and the wisdom of Ron Blue and Rob West and some of the other leaders thought leaders there.

Henry Kaestner: For those of us who don’t know, who are listening, who don’t know what Kingdome Advisors is, what is Kingdom Advisors?

Rachel McDonough: Kingdom Advisors is a fantastic organization for financial professionals. And they created a core curriculum. I know, Eric, you’ve gone through it and I have as well. This CKA certified kingdom advisor curriculum, is kind of like the biblical version of the CFP, I guess. And that allows us to really take a deep dove into God’s word to develop personal convictions on several different topic areas, to read the scriptures and then pause and listen for the high spirits voice to make decisions on different areas of life, such as giving, managing debt, spending choices, investing choices and so on, has been a tremendous resource. They’ve created lots of things that can be shared with clients as long as you’re if you’re a financial advisor. Of course, you need to check that with compliance, but they’ve been great tools and great resources for our clients and that’s really had a huge impact on me. The client conversations themselves. I would say have just given me a tremendous amount of depth and understanding and appreciation for the level of each person is at a different place. You know, it’s really a journey. This is a financial journey. And our job, my job and Eric’s job should be to meet that person on their journey, whatever stage of the journey they’re at. Not with condemnation or judgment or you should do this and you shouldn’t do that. But help me understand how you thought here. Helped me understand where you’d like to go. And then let me come alongside you and help you and assist you to complete that journey.

Henry Kaestner: Eric, what do you think is the biggest mistake you see a lot of your clients make in the way? Just that they think about money and planning?

Eric Chetwood: Yeah, I would say a lot of times having a short term mentality and allowing the headlines of the day to determine their investment decisions. I know that that’s something that you guys have talked about a lot. That’s why one of the things that we say to clients is that outperforming the market is not a financial goal. It’s not a financial plan that their behavior is going to have probably more to do with their investment outcomes. Specifically, the discipline to hold tight to a quantifiably data driven financial plan. Their ability to adhere to that plan is going to have more to do with their long term financial success than any market timing or stocks.

Henry Kaestner: Do you ever find out that you work with clients that don’t yet have a faith and you get an opportunity to share within the reason for the hope that you’ve got?

Eric Chetwood: Yeah, absolutely. So our book is probably maybe 50 percent of our people are believers and 50 percent of them are not believers, some staunchly opposed to faith in the gospel. And so one of the things that we talk about a lot as a team is that even if our clients don’t yet love Jesus, that doesn’t change the fact that Jesus loves every single one of our clients and that we can be if we are the aroma of Christ. You know, that means when clients interact with us and the way that we care for them, we do everything for them as if we were doing it out to the Lord. And as they interact with their sets, they smell us, if you will. They ought to be able to smell love and joy and peace patients, kindness, goodness, faithfulness, gentleness, self-control. And because we’re able to speak into so many areas of their life, not just their finances, then we’re able to be that aroma or we strive to be that aroma and reflect well on our king.

Henry Kaestner: So I want to ask you both something that’s obviously it’s top of mind for all of us on this podcast, which is this concept that we might be able to invest guides, resources for his glory, participate in the work that he’s doing in his kingdom, and not just necessarily being of the mindset that, gosh, I want to make as much money over here and then give it all away here. But that very process of stirring the wealth and investments might provide investment capital to different enterprises that are being used to transform culture. So any thoughts what you guys are seeing in terms of trends? Is this something is becoming more mainstream or more clients talking about it? Just want you both riff on that a bit.

Rachel McDonough: I have a couple of statistics to share on that. So there is currently about 51 trillion dollars held by Christians who have specifically expressed an interest in aligning their investments with their values. And as we know, money, especially in the financial services industry, really has a voice of its own. Money talks. What would happen? I just want to think hypothetically, what would happen if we saw 51 trillion dollars exit a particular industry like pornography or abortion. And it’s not all about what you’re against instead of what you’re for. I understand the importance of embracing positive investments. But what would it do? I mean, that’s an easy thing. The exclusionary screening, the ability to screen out certain types of industries or certain companies from our portfolio is becoming increasingly easy and accessible to investors of all sizes. So what kind of a message could we say with our cumulative voice and then with the shareholder advocacy that’s been going on as well with certain fund companies just actively behind the scenes? Even if we don’t personally engage with those companies ourselves, we know that we can easily hire a mutual fund company who’s going to engage on our behalf and express our values, the values that are portrayed in the Bible. And if we have the ability to do that. Why not? You know, I think we should not ask ourselves why should I engage in this activity of using investment vehicles that have a values alignment? But why wouldn’t I? Especially as far more products are being created that have better and better performance. And the fees have come down substantially. There is just such an opportunity for us to give our clients the gift of not only having a relationship with their investments that’s based on returns, but also a relationship with their investing activity that’s based on their values and a way to live out who they are and have a greater sense of wholeness in their investing.

Eric Chetwood: Yeah, I mean, I’ll just add to that for us. This is something that we’re growing in and we’ve grown in very recently because I think a few years ago, as we were looking at the investment arena, faith driven funds and ETF and things like that, it was pretty slim. And there wasn’t a lot of track record or at least that I saw there wasn’t a strong track record. And so we have revisited that because this is absolutely that we want something that we want to at least provide to our clients and make sure that they are living in integrity, that their investments are congruent with their belief system. And it’s something that we’re growing in for sure. And I’ve been very encouraged. I think Rachel probably knows more about this space than I do. But I’ve been very perche saying that the universe of available investment options or fund options that are specifically focused on redemptive investing is growing. And the track records are getting better and better and the internal expenses are decreasing. So I think that’s a positive for financial advisors who are listening to this, who are open to the possibility that they might incorporate those into their portfolios. And one of the things I think Rachel made a great point on is that in the event that you’re not in a position where you’re managing a portfolio where that’s outsourced, you know, to the advisory team within a bigger warehouse or something like that, you can absolutely be an advocate for some of the fund companies, Henry, that you guys have had on this podcast. You know, even tired and thrive, Praxis and Timothee and Inspire and Nabay, Maria and others, God Stone to be an advocate for them to have access on those trading platforms, I think is really important that all of us can be a partner.

Henry Kaestner: I think that a lot of strides that have been made in a lot of the warehouses, in a lot of the larger platforms for financial advisors to incorporate more faith friendly, faith driven investment vehicles. And yet, because of compliance, anybody’s on a platform like that will never be able to have complete carte blanche on the things they do. Believing that angel investing and finding faith driven entrepreneurs in your own community is a great place to be able to put your shoulder to the power folks, to be able to mentor, to be able to get actively involved. By really having skin in the game, be strapped to the mass. I got to be careful about mixing metaphors here. But are there ever times where you see that you need to encourage your clients to investigate other ways that they might be able investigate according their faith that are beyond your own abilities as financial advisors on a specific platform?

Eric Chetwood: Yes. So I think one thing for us that I was very encouraged to see was just the opportunity to within donor advised funds, specifically a partner that we’ve used in the past, National Christian Foundation. Being able to have exposure to some private equity vehicles within those donor platforms. And I think that is really encouraging. And there’s always going to be a conflict of interest whenever you have an advisor who is compensated as a percentage of the assets that they manage. There’s going to be a conflict of interest there to redirect some of those funds elsewhere. But as long as that is acknowledged and. You know, walking through that with the client to say, hey, I do think that their private placement, real estate investment, that I was having redemptive component to that. I think that absolutely has a place in your portfolio. I do think that that private equity component that has a redemptive quality to it has a place in your portfolio, because when we as advisors only focus on, oh, I don’t want to lose assets, then we’re giving in to a scarcity mentality and we are doing what is right for the client in building those allocations in a way that is truly diversified, then I absolutely believe that God will replenish that in order that I just add to this isn’t about private investment, but one of the things that I’ve been seeing that clients have really appreciated has been understanding what’s inside the fund wrapper.

Rachel McDonough: So, so many of the investments that advisors use with their clients are not individual stocks for other their ETF or their mutual funds. And that’s a great idea. If you don’t have time to be tracking individual stocks all the time. Right. So by using a fund, though, we kind of remove investors one more step away from the companies that they are owners of as being shareholders. And so I think it’s important. I’ve been including in the quarterly agenda with my clients quarterly review agenda. I’ve just been adding in a little segment at the bottom of each meeting agenda that says know what you own and reintroducing clients to the companies that they own, not X, Y and Z Fund, but the individual companies inside of the fund and telling the story of the companies to the clients. So one that I put on an agenda recently revealed a medical technology advancement that had happened through one of the companies that was inside of a mutual fund that a client owned. And as I sat across the table from her, she got really quiet. Now, all of a sudden, she just said, well, you know, if I could do that with my money, I don’t even care if it makes money or loses money. And it’s not that we’re advocating that you should see your investment dollars as charitable giving dollars. But what a value and a blessing for clients to be able to have a positive impact even with their investment dollars. For most of us are giving dollars are a smaller bucket than the dollars that we need to invest and save for the future. And so if we can have a positive Kingdome impacts, not just with the charitable dollars, but with the investment dollars to start to understand what’s inside the wrapper and understand that those are businesses and that as shareholders we are business owners. It’s really been a powerful and positive experience for clients.

Henry Kaestner: I think that’s a great illustration. You touched on something there about the difference between investments and giving. And I want to delve into that a little bit. I know each of you both enough to know that where you stand in terms of storage versus ownership and that kind of concept, and you’re both familiar with Randy Alcorn and his work and things like that. What are some of the tools that you use to work with clients as they wrestle with things like structure versus ownership, may wrestle with things like this? Should I tie? Is the tie enough? How do I think about generosity? And just how do you wear some of the different techniques and tools that you’ve used when you find an opening with some of your clients? To be clear, I understand, because I’ve heard from both of you attorneys, attorneys, yes. You need to listen first. You need to hear what they’re saying. And yet there must be times over the engagement with a client, the relationship with a client. Do you get an opportunity to encourage them towards generosity or maybe even challenge them if you’ve worked with them for a very long time? How does that work out? And are there tools are there different things that you use to bring that topic to bear?

Rachel McDonough: Well, Henry, I think that the financial plan is the perfect tool and the perfect platform to do that. When you set out a financial plan with a client and you’re saying, OK, here we are here your retirement goals, here’s what you’ve saved, here’s what you need to live on. It’s just a really easy and natural way to have the conversation about what else would you like to do besides survive? It’s a great time to talk about those charitable goals, the desire for a kingdom impact. Clients have passions. They have passions that God’s place on their hearts. And when you give them the freedom and understanding that actually they have capacity to do more. I have not found that clients are tight fisted. I have found that they primarily need to understand that they’re being responsible, but that they already have an inherent desire to be more generous.

Eric Chetwood: That’s good. I think the only thing that I would add to that is that because our relationships with clients are so intimate. One of the things that I found really helpful for myself and for clients is to share with them how I’ve grown in my understanding of generosity. And I’ll give you a personal example. You know, a couple of years ago, I read the book, God and Money by Gregory Barber and John Cortinas, and it absolutely wrecked me. I mean, wrecked me in a good way and how that changed my view of stewardship and generosity and how that changed my view of really releasing my business to be God’s business was very helpful for me.

And to share my journey with clients was helpful. And so we provide them resources like God and money. That’s actually one of the KPI that we track. How many copies of that did we give away today? How many copies of Every Good Endeavor by Tim Keller? Have we given away how many copies of How to be Rich? By this day we have given away. And that’s one of our KPI is one of the other resources is that we have a chaplain for our clients. A lot of companies have chaplains for their employees. Henry, I know that you’re a big advocate of that. We have chaplains for our clients because we do work for many different chapters of life with clients. And when we see that a client gets a cancer diagnosis or they lose a spouse, they don’t care. They don’t want to talk about the internal rate of return or the standard deviation of their portfolio. They want to talk about bigger things. And so when they share that with us, you know, we hurt with them. We pray with them if they’ll allow us to. And then we say, I want you to know that we have a chaplain on staff who is trained to help you process this. And they want to come and sit next to you and process this with you in a non-threatening way. But that is another resource that we can use and leverage to guide our clients to a Shulem relationship with money.

Henry Kaestner: That’s awesome. Rachel, I don’t know that I ever appreciate the fact that you grew up in Kenya and that you had that type of background and that experience. And now that you’ve been more more exposed to faith driven investing. What are your hopes for what the development of investment vehicles might look like for the kind of guy that you grew up in?

Rachel McDonough: I think Africa will always be on my heart and my mind. It has a way of getting under your skin. I was really excited. There was a culvert, 19 bond that was invested in by one of the mutual funds that we’ve used. I was excited to see that I would even be more excited to see, you know, some type of for profit endeavor to bring clean drinking water and increased amount of economy to the continent of Africa. Well, I grew up in Kenya. I did spend a few weeks in the country of Ghana. And we really see that business and developing economy is the way that there will be a sustainable ramp out of poverty and for Africa. And so we did a fish farm project to try to create some jobs and kind of create some. Bonhomie in one of Africa’s least developing nations and just being there for that few weeks. With the focus on incorporating business and the gospel was a tremendous impact on me.

Just to see, you know, what would it mean to give real people their dignity back by allowing them to produce income and produce revenue for their families? You know, I’d love to see some mutual funds dedicate a small percentage of their overall a, um, to economic development in the continent of Africa. I’d also be really excited to see some things happening in the private sector that, you know, people could invest and expect a return, but also, you know, really see Africa lifted out of poverty.

Henry Kaestner: Guys, you’ve been around this ecosystem long enough to know that. We ask every one of our podcast guests things that they’re hearing from God in his word, maybe today, maybe yesterday, maybe this week, but some way that you feel that he’s speaking to you through the Bible. And I’d love to hear what that’s been looking like for each of you.

Eric Chetwood: Yeah. So one of the things that I’m learning right now is that I have a tendency to needlessly complicate what God asks of me. I realize that I have a big to want to do things for God rather than just enjoying being with God. And so one of the things that I’ve been meditating on is what Jesus says to the disciples. You know, one day when right before the ascension, he says two things. He says you will receive power and you will be my witnesses. And so I’ve been thinking about you and on what it means to be an effective witness. And one of the comforting things for me is that you don’t really have to be particularly smart or articulate or even talented or rich. The only thing that you need to do to be a witness is you have to be willing to relay what you’ve seen and heard. And that’s it, because the power he said in the previous verse, the power has already been taken care of. And so I think that manifests itself in a variety of different ways. Day to day. But being willing to be a witness and being the aroma of Christ again. You know, I think about, yo, my wife smells great and she has this perfume that sometimes at the morgue, I give her a hug and then I’ll come to the office and sometimes I will smell her perfume at various times throughout the day. Sometimes other people will smell her perfume on me. And in the same way, in the same vein, I cannot be the aroma of Christ if I’m not communing with Jesus. And all the things that we talked about earlier were the fruit of the spirit comes out of that daily communion with you.

Rachel McDonough: I love that. It just sounds exactly like what that’s been laying on my heart and a lot of ways. I’ve been reading this book, The Secrets of the Secret Place, by Bob Sorgi. If anyone needs a little Kickstarter to their quiet time, I think it’s a fantastic usually one or two or three pages to just give you some keys to ignite your personal time with God. And we know that it is out of the abundance of our intimacy with him and only through our abundance of intimacy with him, that we can really have something valuable to give to clients. But I would say, like if I just looked at the scripture, that’s been kind of a guiding scripture for me over the past 10 years. I would say First Corinthians, chapter three verses ten through fifteen. So by the grace God has given me, I laid a foundation as an expert builder.

This is Paul writing and someone else is building on it. But each one must be careful how he built for no one can lay a foundation other than the one already laid, which is Jesus Christ. If anyone builds on this foundation using gold, silver, precious stones, wood, hay or straw, his workmanship will be evident because the day will bring it to light. It will be revealed the fire in the fire will prove the quality of each man’s work. If what he is built survives, he will receive a reward. If his burned up people suffer a loss, he himself will be saved, but only as if through the flames. That verse is just so powerful and so haunting and so inspiring at the same time. I love the concept of gold. You know, before building with gold. You think of a goldsmith. They don’t build quickly. They build with quality. And so sometimes, especially in our culture, we tend to be busy, busy, busy and not so much in Kenya. Kenya, there’s a more laid back culture and a less hurried pace. But here in the United States, we just tend to go, go, go 100 miles an hour all the time. I think what that does is it distracts us from the important things, the things that will last, the things that will have eternal fruit. And yet Jesus told us in June 15. It is to my father’s glory that you bear much fruit, the fruit that will remain. So we know that our goal as believers should be out of our intimacy and our abiding relationship with Jesus. There should come through our. Lives an eternal fruit and eternal quality to our work that will last even far after our lives on this earth are done. And what an awesome challenge and one awesome ability to just call labor of a thought in our lives.

Henry Kaestner: Guys, it’s been great having you on the show. I’m encouraged by your partnership, by your friendship, by your faithfulness. By the way that you’re getting out there and you’re really leading. Rachel, I think about eleven hundred people on a platform that you get a chance to minister in addition to administering your young basin. Eric, I love the way that you’ve been thoughtful about integrating your life in the thoughtfulness that you have with Rick about promoting and encouraging generosity and through different resources and just the way that you do life on people. This has been encouraging for me. I’m grateful for both of you and your time.

Eric Chetwood: Thank you. This has been a joy.

Rachel McDonough: Thanks. You too. Eric.

Rusty Rueff: Welcome back everyone, to the Faith Driven Investor podcast. If you were able to attend the FDI conference this year, we’re so glad to have you join us because today’s podcast is going to feel familiar, but we think you’ll probably want to hear it again and again. Finny Kuruvilla shared how capital creates influence and what it looks like for faith driven investors to steward that responsibility. Well. It’s a poignant reminder for all of us, and we’re grateful to him and the whole team at Eventide for thinking through this topic. Listen in. Enjoy. And let us know what you think.

Finny Kuruvilla: How do you change the world? I’m not looking for platitudes or nice sentiments. I’m looking for tangible, practical strategy rooted in sound principles. Our world is changing rapidly and not always for the best. Thus, for good reason. There’s a lot of talk today about how to change the world for the good. There’s a lot of young people who hope to use their lives to change the world. And there’s a lot of older people who want to use their influence to change the world. So how do you actually do it? Let’s first dispel two common myths of world change strategies. First, the power to change the world is not found in politics. Politicians make lots of promises they rarely keep. They’ve got to make lots of deals and concessions to get them elected, which in turn makes them beholden to other constituencies. And then on top of that, politicians have their fingers up to figure out which way the wind is blowing so that they get reelected. But what makes that wind blow? Politicians in general are much more reactive than transformational. The second myth is that world change happens because of autonomous individuals, especially in America, where we tend to lift up rugged individualism. It’s easy to fall for this myth. In his book To Change the World. Sociologist James Davis at Hunter makes a compelling argument that the real power to change the world lies with institutions. Certain institutions have concentrated power to shape hearts, attitudes and beliefs. Think of school systems, churches, Hollywood, social media or the news. Certain institutions have concentrated power to affect how you spend your time. Think of professional sports leagues, for example. By the way, these leagues are for profit businesses and how many millions of hours that people spend watching those activities, or how many young people dream of being like Michael Jordan or LeBron James? Renaldo. Serena Williams. There’s other institutions that have concentrated power to shape spending. Think of the people who make commercials. Think of all the online businesses like Amazon or brick and mortar places like shopping malls. It’s difficult to overstate all of these forces. In fact, we’re a little bit like fish that swim in water, but we can’t tell you what water is because it’s our only experience. In the book of Colossians. Paul talks about Dominion’s principalities and powers that are both visible and invisible. These forces define and shape our existence. And if you can change these forces, you can change the world. I’m going to be focusing mostly on business here, but I want to illustrate world change with two historic examples. Let’s start with the very famous voyage of Christopher Columbus. Most of us know he wanted to get to India, but this enterprise of trans oceanic sailing was risky and expensive. You needed investors to supply the capital for such an endeavor. So Columbus traveled all around Europe looking for investors. He unsuccessfully went to France and England to procure these investors after failing there. He eventually got support from Spanish investors. Make no mistake about it, this was very much a business proposition. Columbus took their capital and in exchange for his labor, he arranged a contract where he personally would get 10 percent of future revenues from such expeditions. And he also got the option to invest in one eigth, a future commercial businesses that came from his explorations. Now, the rest of his voyage is history. But I want us to think for a moment about an alternative narrative. What if Columbus secured French investors? Central and South America today would be French speaking and have a very different culture. What if Columbus secured British investors? Central and South America would be English speaking and Protestant, not Catholic? Think of the hundreds of millions of people affected by this small group of investors and explorers. These investors that backed Columbus changed the world. As a second example, consider the British East India Company that was formed in sixteen hundred. Many people consider this to be the first modern corporation financed with a complex mixture of stocks and bonds, and they even had an exchange through the influence of this company. India would go on to become a colony of England that has affected the culture, the language and the politics of India. And you may not know that India has the second largest English speaking population on the Earth. Billions of people have been changed by the geopolitical power of these corporations. Now let’s jump to the future. Consider the modern multinational corporation. How much has Google, Facebook and Nike changed our habits, our desires and even our vocabulary? Companies were funded by venture investors as well as public investors. These investors changed the world through these companies. Want to change gears a little bit and talk a bit more about some of the ethics. The thesis that I’m going to lay out is very simple. By willfully becoming an owner of a company or an owner of a business, which is what investing is, you are sanctioning and benefiting from the company’s activities and practices. This ownership confers an ethical responsibility to the investor for the activities and practices of the company. Investing has long been, however, divorced from this original and basic purpose, which is supplying capital to support businesses. Instead, most investors today are trying to profit from the market itself rather than any productive and intrinsic value of the underlying companies. Basically, investing today has become about making money. The mantra is low cost, low fee products like ETF and investing has become commodities and depersonalized. Frankly, most people don’t even know what companies they own. Investors have forfeited the power to change the world using their hard earned capital to convince you of a more modern example of the positive power investing. I want to share one last example of what can happen if we work together. Let’s go to the year 1971. In 1971, Christians were having a growing concern for apartheid. If you don’t know what apartheid is, it’s an Afrikaans word. That means separation. It literally means a part hood. It’s basically institutionalized racial segregation. Apartheid was practice, of course, in South Africa. And the government had already ignored U.N. sanctions and embargoes. But a group of Episcopal shareholders filed a shareholder resolution with General Motors, a well-known car company. Many people believe this to be the first example of modern shareholder Abigail. They enrolled the help of a Baptist minister whose name was Leon Sullivan. He was an anti-apartheid activist. And Sullivan proposed specific resolutions for the General Motors board that they ended up adopting because of this Episcopal shareholder resolution after GM adopted these resolutions. Then Ford and Goodyear followed suit. Thus, one of the key instruments in the fall apartheid was coordinated investor pressure from Christians think of the many, many problems that we face today, lack of access to clean water, polluted air, difficult jobs, diseases like cancer, Alzheimer’s infections like coronavirus, educational systems that can warp students minds, misinformation and confusion in the media. Every one of these problems could be fixed through institutions, specifically virtuous businesses and a strong church. These are the sleeping giants that we can enable through our investing and participation. Right now, we need all of us to deploy our capital in positive ways to shape the world for the good. Using biblical principles that promote human flourishing. So let’s use investing as a tool to positively change the world.