Henry Kaestner: Welcome back to The Faith Driven Investor podcast. Today is a special edition because we’ve got a special guest that I’ve known for a while. Looking forward for her to share her story with you. And then also William Norvell, my co-hosts on The Faith Driven Investor podcast, is driving cross-country in an RV with his wife and two very young children. We’ve been joined here by Rusty, our co-host on the Faith Driven Entrepreneur podcast Rusty. I imagine William right now rolling in with the Winnebago into Walley World. John Candy is about to come out and give him some bad news.

Rusty Rueff: Yeah. I mean, can you imagine what that Winnebago is going to look like after versus before? The damage costs (laughter)

Henry Kaestner: Oh my goodness, yes. I kind of want to welcome him when it gets back to California and then I kind of don’t want to. Right. So it’s great to have Rusty here. And so as a result of that, we’re going to have an episode that is going to be for both our faith driven investor audience and then also our Faith Driven Entrepreneur audience. And as you might know by now, we have three different properties Faith Driven Entrepreneur our Faith Driven Investor and Faith Driven Athlete. And I do know Alfa reasonably well, but not well enough to know whether she was a competitive athlete or not. And so I don’t know if we can have crossover to the FDA podcast, but we most surely have something for FDE and FDI. So, Alfa, thank you very much for joining us.

Alfa Demmellash: Thank you for having me. And I can say safely that I am not a competitive athlete, so we’ll stay in two lanes.

Henry Kaestner: And I’m not either. All right, good. So we found ourselves on the right podcast with FDE and FDI. Alfa we’re grateful that you joined us on the show today. And I’m so excited to pick your brain and hear your perspective. But we like to capture some of the background of each of our guests. And you’ve got a really, really interesting background. And you grew up in an amazing country. My father, who was a spice buyer, has traveled more than 150 countries and he says that the country that impressed him the most was Ethiopia. That’s a country you’re from. Tell us about Ethiopia and how it formed you as a person.

Alfa Demmellash: Sure. I’m so delighted to hear that your father holds Ethiopian high regard. I do as well. I was born and raised there until about age 12. Unfortunately, during the time period when I was growing up, Ethiopia was having its bout with communism and dictatorship. And so we had a really unfortunate time period of what is known historically as a period of red terror. And this was a time that was hugely disruptive to my family and resulted in my mother needing to flee the country as a refugee when I was two. And so, you know, I had a pretty amazing in many ways and grace filled household with a grandmother who practiced our faith. We have brought in anybody and everybody who is hungry and hurt. And so I got to kind of spend most of my time running around with her. My aunt, who was sixteen at the time, had taken over kind of the day to day caretaking of me. So I had this fairly independent kind of childhood. One thing that my mom did right before she left was as a condition of living, she made my grandparents and my aunt promise that they would send me to Montessori school. So that was also a huge privilege, given that there wasn’t a lot of early childhood education there at that point.

And I think this was probably the only Montessori school. And so it took, you know, basically a village to get me to that Montessori school and back. And so I also had kind of that special opportunity that I think has shaped a lot of how I view my life now.

Henry Kaestner: So a lot of people don’t know that Ethiopia is really a Christian country. Some of the earliest Christ followers are from Ethiopia. The Coptic Christian tradition is very alive and well. Talk to us about what’s unique about Ethiopia. My father, for instance, suggested that he thinks it’s because Ethiopia was really never colonized. I think the Italians were there for a couple of months or something like that. But generally, it’s a very unique culture. What is it about the Ethiopian culture that you think is unique? And then to what extent does that really influence who you are right now?

Alfa Demmellash: Sure. So I think, you know, Ethiopia, like a lot of Africa, there is a lot of internal diversity. So you have, you know, about 80 languages, 200 dialects. It’s also, you know, right on the equator. But it has mountainous regions, huge farmlands. Right now, it’s about 100 million people. So pretty populated. The thing that has been amazing and I’ve had a chance to travel quite a bit since immigrating. But, you know, the cultural diversity, it’s clothing. Food. Yeah. It’s just very, very unique. And I would say that having been in other countries in Africa, the fact that the colonial influence of the Italians was prescribed only to cafes and really delicious desserts and pizza, some of the best. Other than that, culturally, I think there was a lot that has remained intact. And the other thing is that it’s also been over 3000 year old empire. So there is this continuity, I think, that has also influenced kind of the sophistication of its cultural background.

Rusty Rueff: So take us through rising tide capital. I mean, we know you co-founded it in 2004. Give us some of the impetus behind that. But also just take us on the entrepreneurial journey from co-founding it to where you are today.

Alfa Demmellash: Yeah. So, you know, the cofounding of Rising Tide was incurred in something that actually was grounded in Rwanda. And I had been studying in college conflict resolution and just international periods where the darkest really in human history, the Holocaust then and genocides and such. And how do we actually fulfill on our promise of never again really understanding kind of the sacredness of human life. And so when I heard about and learned about Rwanda, I was really, really moved deeply, in part because some of what happened during that genocide also involved the killing of people and throwing them into reverse, saying, you know, go back to Ethiopia because there is this hermetic myth that the Tutsi came down from Ethiopia into Rwanda. And that really shook me at my core. And so I ended up in Rwanda studying both the genocide, but also some of the processes for healing and restoration that were underway, in particular, traditional mechanism of conflict resolution. So I went to Rwanda. Right. As that process was unfolding and it was a deeply transformative experience and part kind of seeing what it looks like when you have a society, a culture that is thrown into the darkest of the dark. And they have to rebuild everything from scratch. And so how do you do that was a question. And I wasn’t at all interested in economic development at that point. I thought I was most likely going to go to law school and study law. But as I sat on a hilltop and it was a genocide memorial as well, watching all of those thousands of skulls of children and yet such a beautiful country, I was really moved to understand. And then you will also see all these women who are carrying unbelievable loads up and down these hills and like, really having the thought.

There is so much about resources, the competition for resources, scarcity, perceptions of scarcity that shape how people respond and the kinds of kind of seeds that are planted around the value of human life. And so that began my kind of question and curiosity about economics and how do we build an economy that actually values human life and values the stewardship responsibilities that we have from that kind of faith perspective and puts that at the center. And that was kind of the impetus for Rising Tide capital and saying, you know, the role of economic development in the ways I understood it is really to ground people’s interactions with the market as a place of exchanging culture, building values together, shared values. And so that brought me back into the US. And I started looking at what it looks like to build that kind of economy from the ground up and places like where I am and Jersey City and the neighborhood we’re in Newark, Trenton. These communities in one of the wealthiest states in the union, New Jersey, was kind of a call to action to say even though these worlds couldn’t be more different, you know, Rwanda and deep inner city communities in the US, there were certain similarities that really resonated with me and kind of called me to pursue this entrepreneurial or social entrepreneurial path. The whole thing started was a whole bunch of questions and listening to community leaders and members in private sector, public sector, the churches and trying to understand what the conditions that created this multigenerational disinvestment and, you know, economic failure in these communities where it came from and what it would look like to address it by recognizing people’s innate entrepreneurial talents and building community around them and making sure that they have access to the kinds of capital and markets that would help them build thriving businesses. And so in the beginning, we thought, you know, a lot of the emphasis at raising paid capital was to say, look, you know, there is a microfinance world and access to capital is crucial. And so we really we named it Rising Tide Capital with an emphasis on financial capital. And then we learned pretty quickly within a couple of years of piloting a fund that what was really needed was a lot of the social capital, the education business management knowhow. Those were not things that could be easily gotten in many ways. I mean, capital, financial capital is hard to get. But these other things felt like there wasn’t a lot of. Representation or entrepreneurial action going on there, so we decided to shut the fund and focus exclusively on building this kind of community and connecting people to sources of capital through partnerships and relationships. So that was kind of the big aha for us. So we launched a community business academy. It provides full scholarships to entrepreneurs who are trying to start and grow businesses. Then when they graduate that it’s a 12 week program, it’s an intensive look at what it takes to take an idea and bring it to market and build out, you know, a lot of the infrastructure and that product, et cetera. But then ongoing coaching and support, which is where a lot of the transformation happens, which is that long term support.

I always joke and say I’ve never met an entrepreneur that has grown something in six months or, you know, the average length is 10 years. You know, when I talk to people they are like it took us 10 years before we knew we were actually going to make it. And so being able to provide that kind of long term sustaining partnership and grounded in relationship has been where we’ve seen this transformative capacity. Now we have over 3000 entrepreneurs in New Jersey and we’ve actually, over the past few years started partnering with other community based organizations. Right now, we’re in three other states and Illinois, South Carolina and North Carolina, where we have active replication efforts going on. So they’re supporting hundreds of entrepreneurs in their communities. We work with about a thousand entrepreneurs in six New Jersey cities, in Spanish and in English. So it’s a remarkable story that I get to be a witness of.

Rusty Rueff: It’s fascinating, the stats that I think probably most of us know. If not, we sort of intuitively know that, you know, nearly 97 percent of private equity and venture capital goes to white entrepreneurs. And, you know, you’re the perfect guest to speak into that missed opportunity from what you’re doing. So we’d love to hear your perspective on that.

Alfa Demmellash: Absolutely. I think, you know, for a variety of reasons, it makes so much sense to invest in the kind of talent that’s going to keep our families grounded and fed. And I think especially during this time of a pandemic, the missed opportunities are highlighted in brighter colors. I mean, looking at the role that a lot of small businesses, especially those that are owned by people of color, play and providing essential services, you know, it’s immense. And it’s where a lot of people find employment opportunities. Over 50 percent of all jobs in the US are created by businesses like this. These are the kinds of entrepreneurs who keep communities and small towns and large urban centers knit together.

And they’ve done it with minimal, if any, capital and investment from the venture capital world, certainly. But really overall investment at every level. And so this is where I think we now have an opportunity to reset and to really say what kind of a country do we want to live in? And we’re facing the kind of small business failure rates and the fact that, you know, it’s possible.

I was looking at a McKinsey report that 60 percent or more of small businesses may not come back and the vast majority of those are owned by women and people of color. And I think that there is an opportunity to say this is the challenge of our generation. This is the thing that we have to unlock. And it affects all of us. It doesn’t know borders. Economics is very much interdependent. And so I think there is a huge missed opportunity for us to ambush their creative talents and problem-solving capacities of people in many communities which we need now.

Rusty Rueff: You know, you mentioned the Community Business Academy. Tell us more about that, because it sounds like that’s your teaching model.

Alfa Demmellash: Yes. So we’ve learned that, you know, our average entrepreneur is 41 years old, a parent with two children. Usually when they come to us, they’re actually working someplace, underemployed or trying to exit and build something, an idea that they’ve believed in or they’ve been in a sector and they think there is an opportunity to do something different. And so they come with experience, but very minimal and financial capital and social capital. And so the teaching model is really pure based, experiential. They’re doing things. We’ve also used simulation games and we’ve looked at basically best practices in adult learning methodologies. And especially when you’re talking about entrepreneurs with an average age of 41, they are coming. Preloaded was a lot of assumptions. And they’re entrepreneurs because they want to go and do things in a new way, in their own way to begin with. So rather than trying to confront that differently. Kind of create the conditions in a peer to peer way in a community based way, so they’re not having to, you know, go get into like a big building because there’s lots and lots of intimidation. Fifty percent of our entrepreneurs don’t have any kind of a college experience. So they’re not necessarily familiar or comfortable in being in the kinds of learning environments that your typical MBA would have no problems with. So our goal is to make this business education as accessible as possible. So it actually takes place on weekends and nights because many people are working while they’re building their businesses. And there is a lot of hands on building. We require anybody who joins us to actually have one focused idea, even though they usually end up from the learning experience, pivoting and shifting the model. It’s very much focused on helping them bring an idea into fruition in a way that takes into account their experiences.

Henry Kaestner: Alfa, take us back to 2004 when you’re getting started with this and walk us through what rising tide does through the eyes of an entrepreneur or pick one of the people that you work with early. What was their story? What did you help them with? And then maybe also pick a story of an iceberg that you’re working with now, because presumably some amount of what you do and equipment and entrepeneurs change over the years. But walk us through the relationships you have with those two very different entrepreneurs.

Alfa Demmellash: Sure. So in 2004, an entrepreneur who is coming to raising paid capital typically has heard about us because my co-founder Alex and I had basically papered the town with notices to say, come and explore your dream with us. And we’d built a number of community based relationships with nonprofits, particularly those who are working with the formerly incarcerated end groups that didn’t feel like entrepreneurship or business ownership as far as they would see it in their mainstream was for them. So we would have that entrepreneur come into an orientation session that usually lasts about four hours. So we’d have about 100 people in a church basement and they’re going through and actually getting asked the kinds of questions that they never had. And that was also a big aha for us. So, you know, being asked, what do you want to do when you grow up essentially as an adult was a question that had not been asked of them. And so what we were seeing from those entrepreneurs is like a real surprise by the level of upfront investment of time and energy.

And we didn’t try to sell them on just our idea. We actually showed them the ecosystem of other support services that exist. So they really had to choose us if they wanted to be on the journey because it was going to be intensive. And so they would go through an orientation process and then they had to apply.

We also learned some early lessons on like free and programs for all entrepreneurs and only the grandmother and the eleven year old showed up that first orientation when we said everything was free. And so we shifted our tactics and said, you know, you have to apply. You have to be accepted into it. And so there was a process for that. And then once people were accepted, we would notify them. And so this entrepreneur would get a phone call from us. And those early days were amazing because people would like the hour, dropped the phone and screamed that they’d gotten accepted into something that was as rigorous as what we are proposing. So that early entrepreneur, usually service-based, you had, you know, people who are coming and trying to start everything from pest control to even some very early tech, whether it’s installing, you know, computer Ethernet connections, et cetera, for like very, very basic technology for schools, et cetera. And so those were the kinds of entrepreneurs we were working with. And fast forward to today a lot of those processes and so far as the orientations and the rigor and the application process is still the same.

Definitely. You know, it’s been 15 years. And so the use of social media and a lot of other platforms to connect with people. I mean, when we have a Facebook alumni group of nearly a thousand entrepreneurs that are selling with each other and connecting with one another. And so we have a lot more visibility into the activities of our entrepreneurs today than we did in the past. And so we’ve been able to shift and pivot things, particularly in what we do with people once they graduate.

Rusty Rueff: I think all the things you’re talking about, our listeners might kind of look at it and go alright lots of statistics. And we know our urban entrepreneurs have a lot of activities going on out there. But take us right down into the entrepreneur themselves. You know, tell us a story or multiple stories, if you’d like, just about the entrepreneurs that you’re working with and how this is coming to life for them.

Alfa Demmellash: Absolutely. So, you know, one of our entrepreneurs who is amazing. Her name is Angela McKnight. She actually came to us because she had her grandmother, who was in a senior housing and she was working with her grandmother to help with administrative needs. You know, mail would come in, things will pile up and there is just overwhelm and in handling those administrative responsibilities. And she realized that this was not a problem just for her grandmother, but also for a number of other seniors were living in that complex. And so she had started doing this for them of as a support from helping them think through their benefits and just like open the mail and respond and communicate. And so she heard about the Community Business Academy and came to figure out how to set up a business. She called it Care About You and started the service exclusively focused on elders. As time went by, she actually realized that a lot of the seniors were eager to have her services and perhaps the administrative services alone were not actually the reasons why they were so eager. They were often isolated and lonely. And so she stresses she wants to figure out how to put this into the business model, more like it looks like more of a social enterprise or a nonprofit. And so she created a side nonprofit, Angela Cares, that actually supports seniors with isolation. And one of the key projects that she’s been running for many years now is connecting high school seniors with seniors and housing complexes and throwing them senior problems, actually. And having this kind of multigenerational exchange of stories. And then fast forward a few years later, I got a call from her saying, hey, you know, I’m thinking that I might run for office. And I said, wow, you know, you’re running the business. You’re running the nonprofit. You’re going to add, you know, legislative potential leadership into this. And she said, I really see some of the long standing policy related issues here. And so she ran for office and got elected as a sitting assembly woman for New Jersey. And she’s gotten reelected since then. And she is one of the most active legislators you can possibly imagine. And then she’s also teaching classes in the evenings. So she teaches one class in the evening alongside many of our other instructors. Today, 90 percent of all of our instructors are returning entrepreneurs. We’re giving back. And so that’s just one example. And I will also tell you that a number of our senior leaders within the organization now are raising graduates. And so we have our program innovation person, our chief of staff. In fact, our executive director for New Jersey, who we just hired, had come to us to start a food cooperative and that had translated into actually interest than public policy and economic development. And so now she’s in the nonprofit sector right alongside us. But that entrepreneurial energy and, you know, we have schools that have been created by our entrepreneurs and pest control companies, construction companies, you name it, they’re active.

Rusty Rueff: You know, man did CNN get it right when they named you a hero. I mean, I just think that the way you think about serving others and helping them to get capital to grow their businesses. I mean, it’s a phenomenal story. It really is. And I know you care about the future, too. We were together at the Praxis event. There was a lot of talk about the future tide and what’s that mean for the urban entrepreneur. So why don’t you take us through future tide?

Alfa Demmellash: Happy to you know, future tide has in many ways become now tide. Present tide. So Future Tide Partners was a concept that we started developing a couple of years ago when we started seeing the trends in exponential technologies and automation and really started thinking about, whoa, you know, how weird, let’s say take one of our entrepreneurs who owns an auto repair shop and really thinking about the kinds of investments she was thinking while making, you know, opening a second auto body shop and maybe taking out whatever savings she had for retirement included to invest than that. And we were saying, should she do it? Should she not? I mean, because we know we’re in conversations where we’re talking about self-driving vehicles and, you know, what does it look like for the hundreds of thousands of auto repair shops across the country and the local business owners who own them to think about the next seven to 10 years when there is this rapid acceleration and the adoption of exponential technologies that could make their business models obsolete. And so we really felt like the conversations around that issue were being hard at varying levels of government, but with very little connection to the day to day realities of what this would mean for the millions of small businesses that employ the majority of Americans. So that concern was what brought us to the future type discussion. And in many ways, with this pandemic, what’s happened? So our concern with future tide was to say how do we raise appropriate levels of awareness and education without creating crisis and pandemonium about the loss of jobs and generating more fear, but rather looking at a lot of the opportunities that are also inherent in so many of these technologies. And so in many ways, I think what we had anticipated we would need to do over the next five to seven years to educate cross-sector leaders and investors to take the long view with us and help us think through how we can invest in a future of entrepreneurship and job creation that addresses what we were seeing as being a significant impact on employment. And now here we are in this corporate world, and the reality that we can work from home remotely is facilitated by and large by many of these exponential technologies. At the same time, simultaneously, we know we’re facing this massive challenge of huge unemployment figure. So that 20, 30 million Americans who filed for unemployment. These are numbers that approach Great Depression levels. And those were the concerns we had literally, you know, in the weeks beforehand to this pandemic. And so on the one hand, the positive thing is that we don’t have to spend five to seven years raising awareness so we can check off that box. I think now what’s been accelerated is the need to really problem solve. So this is why we’re really excited to have conversations around what investment needs to look like and really wanting to have more conversations with our fellow entrepreneurs in the tech space to say, hey, help us think through this, because this is about all of us. This is about our children’s flourishing and their ability to put their God given talents to work at some enterprise or another. So this is a big, big conversation and I’m seeing it come to actually quicker fruition than I imagined. So we’re taking people through frameworks. We’re having cross-sector conversations, and especially in the philanthropic space, including kind of this fund for the pandemic relief that I’m working on. I’m really using the future tidelands to help guide our team and our volunteers and, you know, the state’s leaders at every level to say, you know, what we’re solving for is not just the problem of what’s happening today or 30 to 60 days from now, but really kind of the longer term trends that have been in play for a while but now had been accelerated on a massive scale offer.

Henry Kaestner: I know that your faith influences much of what you do and why you got this started. Can you talk about what it looks like for your faith to manifest itself and how you talk about faith with young entrepreneurs that are coming through your program?

Alfa Demmellash: Yeah. You know, we’ve been very fortunate given the communities we focus on. They already come to raising tide with, you know, deep, deep, deep faith backgrounds. So we are grateful that their expression. Of their gifting. What they’re trying to achieve and the lens through which they see their journey as an entrepreneur, as being one that is guided by their faith. And so that has enabled us to be, you know, was our being a faith based organization to nourish practices that can bring people together in a way that really allows us to confront doubts that are endemic to the entrepreneurial journey. But even more now where there is so much uncertainty that people who are of faith in many ways have the practices and the mindset of being able to confront this deep doubt and uncertainty from a place of faith, that the very definition of what faith means is to walk on water, to walk on deep uncertainty.

So that has been our approach. And myself personally, I have been guided by my faith alongside of my co-founder from, you know, our earliest. This is what brought us together as friends and what enabled us to even think that we could start something like rising tide, which was to really pray and listen for and recognize that we are really not in charge, that this is so much bigger than us. All of this is so much bigger than us. And so the practices of being able to pray. And we’ve brought even in this time of crisis right now, we have twice a day. Neutral. But meditation sessions that we’re inviting people into deeper reflection. So we’ve been doing that since week one of the pandemic. And it’s enabled us, I think, to create the space for reflection and for greater connection to, you know, to the larger master of what’s going on. You know, the strategist, the master strategist here.

Henry Kaestner: So speaking to the master strategist, is there anything that you found in the Bible, anything that you found recently in your devotions, maybe today, maybe this week, maybe recently, that you really feel that God is speaking to you?

Alfa Demmellash: For me, I’ve been meditating a lot on Paul and meditating on what it means to see in the right ways and to be the light in these times. I also read Oswald Chambers. I don’t know if you read My Utmost for His Highest. Yeah. So that’s the daily dose of being brought into humility, you know, in these times, because it’s very much the case that when you’re an entrepreneur or a social entrepreneur, as you know, to get very quickly into fix it mode and think that you can actually, you know, do things with your own powers. But it’s that reminder on The Daily that this is about God first and then following.

Henry Kaestner: Yeah, well, we have of course, this is an audio podcast, but we have a video interview going on right now. And I just showed Alfa that, in fact, I have a new copy of my utmost for his highest, the daily version, which is really something that I think that another interviewee had recommended. And I went out, bought it, and I’ve been really blessed by it. So thank you for sharing that, Alfa. Thank you for sharing your story with us. Please tell Alex that we say hi. Congratulations on the new headquarters move. Congratulations on the work that God has done through you in serving so many entrepreneurs in our cities and just grateful that you spend time with us.

Alfa Demmellash: Thank you for having me and thank you for what you all do, each of you and you, Henry, for continuing to raise the flag for the faith driven entrepreneurs among us and showing hopefully that

Henry Kaestner: Welcome back to the Faith Driven investor podcast. We’ve got a special guest with us today, Sid Mofya. Sid, am I anywhere close to the pronunciation of your last name?

Sid Mofya: You’re as good as it gets.

Henry Kaestner: Which means not exactly. Didn’t completely get it. But I met Sid through a friend, maybe nine or 10 months ago and connected with him. And if I’m honest, I didn’t know much about the country that he hails from Zambia. I surely had never heard of the Zambian kwacha, which is their unit of currency. But it seems that since I met Sid everybody I meet and that’s an exaggeration, of course, has something to do with Zambia. And so we’re actually getting ready to make our first of investment out of our family to Zambia. I’ve been meeting people in ministry in Zambia and now I can point it out on a map, and I’m very proud of myself for that. But Sid one of the things we’re trying to do in getting the background of every one of our guests is to understand where they hail from, what formed them. And we’ve got a unique opportunity with you before we get into what you’re doing at Draper to understand this country of Zambia. What’s unique about it?

Sid Mofya: Great question. It’s great to be here. Thank you so much. So I was born in Zambia in the late 70s. And I say the time because it’s about 20 years after Zambia had been independent from the British and after the British had been basically ruling Zambia for, I guess, close to hundred years, depending where you come from. So I was growing up in effectively post-colonial Zambia. So I grew up in a small town, which was a mining town. We mined copper and that’s the main product that comes out of Zambia and that’s the mainstay of the Zambian economy. My parents both worked for the mining company there. I went to the mine school and my whole schooling in Zambia was through the schools that were put on by the mines to train more Zambians to come and work for the mines. So that, for me, meant I got a better education than the regular person who went to a government school because that those schools were well resourced. So I grew up speaking both English and my local language, and I think in both languages. I’m one of four children. I’m the oldest of four. And all my brothers and sisters also went through that whole school system in terms of how we grew up. I guess our parents were, I would say, middle class. So they had decent jobs. They lived in a decent neighborhood. But Zambia is a poor country. It’s at least in living memory has always been a poor country. Lots of infrastructure gaps that need to be filled.

And when I was a kid, I felt that because there was I think when I was about 10 and I didn’t know this is what was happening, but the government had defaulted on some big debt. No, you don’t do that. And there was a time when everybody around us. My friend’s parents were losing their jobs. And my biggest fear was that my parents would lose their jobs and then we would have to move from our house and go live somewhere else. It didn’t happen, thankfully, but I remember that time being a very difficult time for just getting the basics like sugar and salt and so on and having to line up the big, long lines to try to get those basics. And then we kind of got out of that. And since then, it’s been a period of growth for the country. There’s still a lot of gaps to fill, but there has been a tremendous amount of growth in the last thirty years. And if you go to Zambia now, it looks a different place to what you’d have seen in, say, the 80s.

So that’s kind of where I grew up up until college age and then I left Zambia and went to the UK again. I was privileged to have a scholarship from the mining company to go and study in the UK, went and studied chemical engineering. And the goal was for me to come back and work for the mining company. But while I was in the UK, the mining company was actually sold to a different owner. And the new owners did not want anything to do with the people that they are paid for to study. So I got a free pass to then go to a lot of different things, which I’ve been doing since.

Henry Kaestner: So you could’ve been working in the mines now?

Sid Mofya: Absolutely. Yeah, that was my destiny.

Henry Kaestner: More proof that God loves you. I know. Presumably there are lots of great careers in the mines, but the mines losses clearly are…I want to get back to Africa here in a bit because that’s been much of what you and I have talked about in the past. But fast forward, if you will. What do you do right now? Tell us about the Draper venture network, because actually that doesn’t have a lot to do with Africa necessarily. But once you explain what you do right now for your day job and then let’s let’s talk more about that and let’s talk more about Africa.

Sid Mofya: So I work for an organization called the Draper Venture Network. It’s a pretty unique organization in the venture capital ecosystem, because what we are is an alliance of different firms around the world that are all investing in early stage technology companies. So we have currently I think it’s 20 for now. We brought on some new funds, funds that are investing all the way from seed stage through late stage venture capital. They all have their own investment thesis.

They invest independently, but they are part of an alliance that looks, I guess, similar to the airline alliances where, you know, sensitive times we talk about airlines, but, you know, the airline alliances, those shared codes, they’ll share assets, but they are still independent companies. They have their own key now and we’re similar. So I work for the team that’s based in Silicon Valley that basically coordinates collaboration between all these different funds.

Henry Kaestner: And so there are advantages of some of these small firms getting together and some of medium size. But in terms of technical expertize or relationships or deal flow, it tell us more about what it advantage is when you’re part of that larger network.

Sid Mofya: Yeah. So the big reason that smaller funds, for example, would join is because the bigger funds and the whole network as a whole provides them a stronger connectivity to the centers that they want to be connected to. So, for example, as part of my job, I spend quite a bit of time in Silicon Valley talking to large corporations that either are native to Silicon Valley or have set up operations in Silicon Valley with the goal of working closer with the technology ecosystem. So they have people whose job it is to go find companies to invest in or do pilots with so they can learn more about where are the next threats coming from. So I build relationships with these folks and then these relationships become our network relationships. So a small fund in, say, Chile doesn’t need to do that because the network has those relationships and because the network has a big critical mass of relationships we had where attractive to the corporations for wanting to work with us, because when they’re looking for solutions, they can come to an organization like us that has thousands of companies that we’re invested in globally.

Henry Kaestner: So you’re working with, say, a venture fund that’s in Chile. And they’ve found brilliant young entrepreneur who’s invest in storage devices. But because they’re in Chile and while there’s a lot of great commerce going on in Santiago, it’s not Silicon Valley. They call you and say, we’ve got this new investment and they could benefit from getting some counsel. They could benefit from having maybe some supplier relationships. And then you go to work for them.

Sid Mofya: Yes, absolutely. So we would plug the entrepreneur into our portal, which has all the information that we have access to. So it shows them all the people that we know that we can connect them to. It shows them resources that we negotiated on behalf of our entrepreneurs for them to be able to get no preferential prices on some of the things that they need for their business. And it gives them a way to connect with other entrepreneurs in our network. And the fund or the company can call us at any time and say, hey, I’m looking for a connection at company X. Do you know anybody? Can you help to connect us? And we do that.

Henry Kaestner: Got it. Do you ever share deal flow? You know, when I think about running a venture fund, the most important thing for somebody running to fund isn’t fund raising, is not negotiating the deal. It’s not LP. All those things are important. The most important thing is really getting deal flow. If you can get great deal flow, all the other things seem to happen. Do you ever have some of your member funds who say, gosh, I got this interesting article or came across this and it’s not really in our space, but maybe somebody else in the network has some expertize here?

Sid Mofya: Yeah, absolutely. We do that quite a lot actually, and we do syndications among the network members. So there are two types of sharing deal flow. This is not a fit for me, but it could be a good fit for somebody else to share that deal. Or this is a fit for me. But I really want to bring on other network funds to invest with. And we do both of those with the kind of co investing. Sometimes it’s limited by geography because our funds, each of our funds, has a geographic footprint. And so it depends on the company. And, you know, whether, you know, if it’s a Singapore company, which you may or may not be interested unless that companies may be doing business in Chile. So there’s all these combinations and sometimes, you know, lightning strikes and we get more funds investing together.

Henry Kaestner: OK. So I want to go back to Africa. But before I do that, I know you well enough to know that you’re really motivated by your Christian faith. And clearly that has applications in some of the things that we’ve talked about in Africa. But how do you see your faith manifests itself in the work that you do right now at Draper?

Sid Mofya: Good question. I think for me, it’s. More how I do my work. My approach to my work.

Henry Kaestner: Tell me more about that. What does that mean?

Sid Mofya: I think for me it means I wanted to do well by people. So the people that I work with, I’ll make promises that I keep. Yeah, I will try to do my best. Yeah. Basically trying to be a good person. And I’m not sure I don’t do it all the time, but that’s my goal. I really kind of go into relationships with trust. Trusting the other person to hold their end of the bargain. And sometimes that doesn’t pay off. But I think I’m naive like that.

Henry Kaestner: So you’re in a space you’re in Silicon Valley where I characterize this particular geography as having a God complex. There’s this famous scene, by the way, for our listeners from the movie Malice, where Alec Baldwin talks about this God complex, your back on vid clips or YouTube, and you’ll find out. But when firms out here are working on things like Khalikov, the initiative to end longevity or we’re talking about sending people to Mars or we’re talking about hyper loops or all these different things, or quantum computing, you know, just amazing the strides that are being made in technology, those that are in it can almost get a God complex, especially entering longevity. This last final frontier between us in immortality. Do you get that feeling that Silicon Valley is a godless economy or do you get a sense that God is at work and are you hopeful? Tell me about your experiences, as a Christ-follower and investor in this kind of larger ecosystem?

Sid Mofya: I think God’s at work, even in people that do not profess God. You know, anybody who sets out to try and find an all time cure for cancer, in my mind is doing God’s work. Whether they say I am doing this because God told me to do it or I am doing it because I want people to be healed of cancer or even if they say I’m doing it because I want to make a lot of money. I believe God is at work in all of that because I think God is so brilliant and works in all those situations.

Henry Kaestner: I spent a lot of time thinking about it and I found another guy that’s living out here and trying to process it. You know, I think that’s actually a really interesting take. I go on runs in the morning and increasingly I’ve been listening to books on audible, on articles and things like that. But right now I’m reading or listening to the book. The Future Is Faster Than You Think. By Peter Diamandis. And he’s got a coauthor whose name I can’t think of right now. But he also wrote Bold in Abundance. And Reading and Listen to these things gives me the sense of just the amazing work that is being done. And a lot of times people aren’t giving credit to the author of all these things and seeing how God is at work in this technology. And I get a lot of sense of that in Peter, his work in particularly as we talked about how he spends a lot of time talking about Chalco. One of the things that I was really interested in that got me on a run yesterday was talking about in 1844 when Samuel Morse invented the Telegraph. And the first words that were broadcast over the telegraph wire were, what hath God wrought?

Which does speak to this concept that you’re talking about, of course, which is God using us to accomplish his work for his aims. And as you have this broader sense of where he’s working and what is the meaning of all these things, I think that the scientists out here are increasingly saying, you know, everything can’t be explained by science. Actually, the more complex things get, they actually speak to something greater than just a finished. Kind of like walking out of the ocean. There’s something more at play here. And what is it about the human brain that is uniquely human? And how did it happen? So I’m getting my sense when I’m talking to folks that they’re starting, even though they’re actually answering all these questions and kind of confronting these final frontiers. They’re also, at the same time, more open to faith. And there have been and that’s why you see these emergence of faith driven employee resource groups, which, by and large, if from Apple, didn’t really exist out here until two or three years ago. But now you’re going to Google. You got them a Facebook, you got them a salesforce and Intuit. I understand that they’re doing praise and worship music in the Dropbox lunchrooms on Fridays. So I’m hopeful, as you are at seeing God work through all of these things. And I think that more and more people are trying to understand how is he working and investigating the faith in it, maybe for the first time in a long time. People in Silicon Valley, as they’re inventing or understand, they’re really co creating and are open to what does it all mean? So, okay, let’s get back to Africa. You and I connected over Africa with this heart towards faith driven investing. What does it look like when we as investors might understand we can participate in the work that God is doing in the world, bringing about his kingdom on earth as it is in heaven? Some of those things that we’re seeing maybe in so many technologies. But how does that work in a continent that is going to count for more job creation and growth than any other place in the world, more than India and China combined over the next 20 years? My hope is that as the listeners podcast will say, gosh, you know, Africa seems like it’s very far away. It is. And yet there’s so much hope and so much potential and our sense that I got from some of conversations before that. You also have a hopeful expectancy of what is it look like to invest in a ecosystem and entrepreneurial ecosystem providing capital, but also hope through a hope in jesus. Talk to me a little bit about that. And how much of you is still in Africa and how much of your hope and your spirit is still there and what are your hopes for the continent?

Sid Mofya: Well, what a big question. A lot of me is still in Africa and I still do quite a bit of work with folks that are working in Africa, mostly from a distance that I work with an organization called Lions Africa, whose main task is to bring exposure to ways to give investors exposure to African entrepreneurs for them to see what’s happening. So they host an Africa wide competition which results in 30 finalists, and then a big conference to have those finalists present and then choose five winners and then bring those five winners to Silicon Valley to basically go tour everything. Google, Dropbox, they come to our Draper offices and they get exposure to how entrepreneurs in Silicon Valley are working and those entrepreneurs get mentorship. So that’s kind of one way of connecting the ecosystems.

I also work with a venture fund called CRC Venture Capital. So I’m an investor and an advisor to the fund. And CRT in venture capital is one of the leading lights as far as early stage investing in Africa goes. So they invest very early stage seed stage and series A companies and some of the tech successes to come out of Africa. Companies like Andela, you might have heard about who are training young great Africans to be developers for large Fortune 500 conglomerates, but still based in Africa and every, you know, a lot of money. And I think they’ve given the Proofpoint that there’s potential for building companies in Africa that can compete at a global level by tapping into the African human capacity. Another company that Sciarra invested in is a company called CPS in South Africa who are similar to Thumbtack, but specifically for domestic work. So it’s connecting homes to domestic workforce and they’ve created 15000 jobs with that company. So, you know, things like that give me hope that, you know, entrepreneurs who apply themselves and work with others, they can do pretty remarkable things. I also work with a fund in Zambia called the Kaleena Education. And this one is a play on microfinance. So the question is, can we use microfinance to fund education and have like an insurance kind of a product which helps families manage their cash flow so that typically in Zambia and many other African countries, school fees are paid on a three monthly or semiannual basis. And typically, for most households, they’re living hand to mouth.

But they. So even when they have enough cash overall to pay for the school fees, the cash doesn’t flow at the right time. And this creates an insurance like product so they can manage their cash flow and pay for the school fees for their children without having to worry about it. So that’s an experiment to see if something like this could work. And I know the entrepreneur is doing that, actually went to school with him and is a brilliant entrepreneur. So I have a lot of hope. I guess the flip side of that is I have hope in the human capital that’s available in Africa. And you alluded to that this is where most of the jobs in the world are going to come from. The flip side of it is that the infrastructure lags everything from, you know, just roads and health care, infrastructure, financial infrastructure, even, you know, to support all these businesses.

That’s lagging. And that’s where I think connecting capital that can help develop that is really key. And I think for investors that are thinking about Africa, I think that’s an interesting place to be investing in. I would say if you’re looking at investing in the continent as a small to medium size investor, move towards infrastructure, you know, build factories. Because when you build a factory, factory means roads. Factory means power systems. Factory means the water systems being built around that. And that builds an ecosystem around them. But not only that, it also builds the capacity for value creation to remain in the country instead of going outside. You know, typically for the African countries that are creating raw materials that they export. We capture, I think, 10 percent as generous of the value generated by that industry. You know, for example, the chocolate industry is 100 billion.

And I think the African countries that export cocoa don’t make five billion from the exports. So there’s a ton of value that’s simply being exported. But an investor who brings that value creation and keeps it in the country. That’s huge things for the economies. I think I kind of went on a wondering.

Henry Kaestner: Well, not at all. And I have no idea what question I ask, but I really like where you’re going. Because when we think about when you get to experience with this, of course, by being associate with the mining industry in a country where mining has been a big deal. Mines have traditionally been thought of as exploitative. And with this new wave of investment, it is interesting to think about, well, what is a redemptive lens for the guys from Praxis that I’m such a big fans of? Talk about a redemptive lens to investing. What’s a redemptive lens toward putting an investment capital to work? And your suggestion here is that something as basic as factories. So a lot of us in Africa that are thinking about being serious about investments, think about this whole concept of leapfrogging, leapfrogging over the traditional telecom infrastructure into mobile and thinking about how Safaricom got started in mobile payments and things like that. And yet you’re suggesting something that I don’t think a lot of us have thought about, which is, yes, there’s probably opportunity jump for 100 years and think about software as a service and how the digitization of the economy is going to matter in places like Africa. But let’s not lose sight of the fact that we need to have roads and electricity in a way to think through redemptive investing is something as basic as a factory that spins out chocolate bars that are fully wrapped and branded and put in a case and then delivered right to the market in London or New Yorker or San Francisco. And so I hadn’t thought a lot about that. I think that that’s super interesting.

Sid Mofya: Yeah. And the other thing that that does for an economy is bring control in the economy. So right now, a lot of the African countries, you know, they go where the wind goes and there’s very little control in determining. So what do we do with our resources? So what tends to speak is the money. So the money says, oh, you should just keep digging and keep digging. But if we have agency, then we would say, no, we’re not going to dig some more. We need to preserve this for our children. But right now, there’s not a lot of agency, but something like that brings a lot of agency, which in turn, you know, circles back to governance and all that, all those good things that. We weren’t on the continent.

Henry Kaestner: So a lot of people, when they think about investing in Africa, they think about South Africa or they think about some places in maybe North Africa. My heart’s been drawn to East Africa and South East Africa or Zambia’s. And I love for you to comment just a bit about what that region looks like. I see each of those different countries having its own type of economy, own type of system. There seem to be some things that have worked well in Kenya. I wouldn’t say it’s the be all and end all. And yet some things seem to work there and other things don’t work in other places. In Rwanda, of course, they had a genocide and yet there seems to be some stability coming out of that. Was it that makes different countries work or not work in Africa? And if we’re thinking about the larger geopolitical context, what needs to happen in order for there to be joint progress?

Sid Mofya: I guess there’s several things that immediately come to mind. And I just mentioned them now so that I remember to come back to them. One is leadership. One is geographical integration. And the third is probably education from a leadership point of view. It’s pretty clear that countries that have had strong leadership towards growing economically and Rwanda is a good example. Kenya is actually a good example as well. They have grown leaps and bounds because they’ve strengthened governance. Then when the government is strengthened, I think the human capacity is amazing. Amazingly resilient entrepreneurs, they work hard after they’ve been living in the UK and they returned to Africa. We were living in Tanzania. I would go to the big open air market and I would just go speak with people because I just wanted to know, you know, what’s the entrepreneur locally about? What do they think about what are they concerned about? And I’d go to the open air market at this point. I’d learned enough Swahili that I could pass as a local person and I’d go speak, just ask questions. What do you do? How long have you been doing it? And it quickly became apparent I had gone with that initially with a little bit of a savior complex. You know, I’ve learned lots of things that I’m going to come and work with entrepreneurs and teach them.

And I quickly learned. There is very little teaching you can do with somebody who actually understands the lay of the land that are playing in very, very well. And I quickly learned, well, I don’t have a lot to teach. There may be some things that, you know, I could help with, but not a lot. You’re smart, you’re driven and you work so hard.

There’s really no big difference between you and an entrepreneur elsewhere that I’ve seen in other places that I’ve lived, except you’re working with different cards that you’ve been dealt. And part of that is governance, which allows the entrepreneur to then be able to raise capital and know that, you know, they’ll be able to pay that capital back. And the financial infrastructure allows them to basically operate a business. But that is lacking. And in countries where that has been built, Rwanda has done a lot. And, you know, you can argue about whether or not Kaigama style is good or bad. I think net net, it’s good because basically it drives the economy to a goal. He has a goal and he drives great grades towards it and he unites previously fighting parties towards that goal.

So that’s governance. The second thing was geographical integration. And so each of the African countries are generally small countries, small economies. So Zambia. Twelve million people. Zimbabwe, about the same. Tanzania is bigger, 45 million people. Kenya, I think, is about 30 million. So they are reasonably small economies. So, you know, GDP per capita across the sub-Saharan subcontinent is about fifteen hundred dollars a year. So there are small, small economies. And what tends to happen is. There’s a lot of trade happening within the country, but not a lot of cross-border trade, even between Zambian, say, Tanzania, which has no good road connection.

There is some, but not a lot, you know, compared to other economies like Europe, at least before Brexit, but probably still even now. But, you know, I think it’s something like 70 percent of GDP that comes from cross country trade. In Europe vs. 10 percent, I’m not sure of the number, but it’s really, really low in sub-Saharan Africa. So there’s a big opportunity there with just the countries working together or folks creating companies that are geography agnostic and can work across different borders. An example of a company like that is one that CRC actually invested in called Floods Away and Fuddle Wave is an integrator.

So they’re a glue. So if you’re a developer in Kenya, you can have somebody in Kazakhstan paid by connecting their payment system to your payment system in Kenya. So they basically pull up all these different payment systems and create a glue which allows all that all those transactions to happen. So the more we can see companies like that and the more we can have the geographical integration between the countries to allow freer movement of goods and services across the borders. And that’s going to be huge.

Henry Kaestner: So you mentioned something there that I want to campaign on a little is the savior complex. Many of our listeners are familiar with a book that Brian Fikkert wrote. That’s called When Helping Hurts. I think a corollary to that might be when investing hurts. You’re an investor in Africa. And Dallah, you’ve come across a lot of folks in America that would like to invest in Africa, too. What are some of the mistakes that are made there? And what counsel would you give to a faith driven investor that might be listeners podcast who wants to get involved in Africa?

Sid Mofya: I think some of the mistakes are thinking that Africa, or at least the economics in Africa are the same as the economics they understand so well in the economy that they work in.

Henry Kaestner: Give me some examples of that. Like somebody comes in from America and just assumes that it must work like this, but in Africa actually works different. Can you think of any examples?

Sid Mofya: So say you have, let’s say, a factory that’s not performing well. And you have 4000 employees at that factory. And efficiency is not that high. You know, in the 40 percent efficiency, capital efficiency or operational efficiency. And you can see as an investor that just cutting the workforce in half will. Improve efficiency to the point where the company will be solvent.

And that might work elsewhere. I mean, I think it’s tough even in Western economies to do that. But it’s tougher, even more so in Africa, especially if you factor in the fact that most people in Africa are not formally employed. Most people are running their own businesses. So if you have a factory that employs 4000 people, you’re probably accounting for eight to ten thousand entrepreneurs that are working with that factory, their suppliers to that family, their contractors and so on. And each of those employees that you have is accounting for another 10 people in their household. So the decision is a bit more complex than just saying will improve efficiency by reducing our workforce by two thousand or by half or whatever. So I think trying to get to the root of the complexity of the decision making would be helpful. And that takes time and spending time with local people to really, really understand what is going on. The other confounding factor with those kinds of decisions is as Africans and I’m speaking as an African, we have incredible resilience and incredible flexibility.

And I also have to say, quite honestly, a lot of the times we don’t feel we have agency in a decision that is being made. And so if the investor says, well, this is what we have to do, they may not get the feedback. If they don’t dig deep enough, that tells them you’ve missed some major factor for your decision and I think your decision is wrong. So decision making, I would say, you know, have a good number of Africans and a good number of Africans that are willing to tell you the truth. And part of that is with time and training and with communication, they become comfortable doing that because sometimes the risk of telling the truth is so high that it’s like, OK, now that’s the decision.

Henry Kaestner: So I’ve seen that I went to a seminar that we did on Faith Driven Entrepreneur ship and future of universities. Two days in the Fairview Hotel in Nairobi is awesome if you ever do a conference, by the way. And we had a number of Africans that were there, but we also had a number of folks from America and Europe. And for maybe the first day or so, the conversation was erroneously focused on the Westerners who had different ideas trying to figure out how to deploy capital. And it wasn’t embarrassingly until the beginning part of the second day, we said, hey, let’s actually check in here. We’ve been involving Africans in the conversations, but we had thought that some of their silence on different things meant that they thought the ideas were good. And it wasn’t till I said, listen, before we go any further, let’s make absolutely sure. And then we were also present. He said, actually, there’s three other ideas that you may have thought we thought were good are actually terrible and horrible, and here’s why. But we had to really work on extracting that. Whereas a Westerner might otherwise, you know, just take by the fact that people are nodding their heads as they must. And so I’ve experienced that. So I want to ask you about this other dynamic that you talk about and just wonder if there’s an inherent conflict in that which is so you have a factory that’s not performing well in the West. We might go ahead and say, how do we think about streamlining this? How do we get more efficiency? How do we work in more automation in that the end result of if that implementation is done well is more efficient. Deployment of capital mean more innovation, more creativity, maybe more market validation in the economic divide which goes on. If in Africa. So much of the informal economy is there’s more than just the two thousand players in the factory. There’s all these other people. How does a factory owner in then in this type of conversation with investor? How does an investor in their factory acknowledge the informal work force and engage them, enfranchise them more earlier on? Because maybe there is a special thing there to harness that maybe make an advantage, because otherwise, if you say, well, you can’t lay off some people, you can’t find efficiencies in their factory, then theoretically then African factories won’t compete on the world stage because they’re never made more efficient. So you must have to you know, can you do a jujitsu move with that whole thing that you think would be this elephant on your back of all this informal workforce? Can you turn that into an asset?

Sid Mofya: That’s a great question. And I think one that companies are trying to grapple with. I think that’s the way forward. I don’t know the answer. And I’m certainly not saying we cannot look for efficiencies and find efficiencies. I think we have to. I think what I’m saying is the answer might be different, too. Hey, I’ve seen the numbers for the workforce efficiency, so let’s go there.

Henry Kaestner: OK, so I want to stop here in light of the most recent conversation and say I’ve been asking a lot of the questions so far. Hopefully you’ve gotten to know me well enough to know that I really actually do have a desire that I think that guy is put in to be involved in the African continent. But there’s a very good question, just like at the Fairview Hotel, that I’m asking the wrong questions. Where I’m thinking about the wrong way. So let me stop. What are the right questions. How should we be thinking about it? What might I have missed? What might our listeners have missed?

Sid Mofya: Yeah, I think. Your willingness to engage with some of the difficult, intractable questions that we haven’t found answers with. That’s probably what we need more investors to be doing. Just an ability to just slow down and say, well, is there more that I’m not seeing here? You know, as you’re making your investments in Africa, I think that’s a great approach. Is there more that I’m not seeing? Because it tends to be more that we’re not seeing.

Henry Kaestner: Thank you. OK. What in your quiet time or your devotions? Time reading God’s word. What are you feeling that God is speaking to you about now? And it could be in a Bible. So you’ve done recently. Maybe it’s in your time with the Bible this morning and maybe last week. What are you getting a sense that God is talking to you about right now?

Sid Mofya: Now, I think for me, the biggest thing right now is. Time and the battling of time. So our daughter was born a month ago. And that brings a very sharp focus on time and attention. One of my focus in my time on I tend to be the kind of person that wants to do everything.

And I can’t I focus on the very few important things and for a time, you know, I just finished my paternity leave and that month just went by so quickly and could easily have been six months on paternity leave. But really just valuing those moments and that time with her and with my family, there’s nothing more important.

Henry Kaestner: Hmm. Thank you Sid it’s been great being with you. Thank you for your time. Thank you for your investment in our relationship. As we try to wade into that awesome content. Thank you for introducing me to the country of Zambia. And God bless you and looking for your next conversation.

Sid Mofya: Thank you for having me. Great to chat with you.

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.