Tech Brew Ride Home - (Portfolio Profile) Cadre.com

Episode Date: March 12, 2023

Cadre.com is revolutionizing commercial real estate investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to another portfolio profile episode of the TechMeme Right Home. This is another investment that the Right Home Fund is made. As you know, I love all of my children equally, but I'm so excited to be involved with this company.

Today we're going to talk to Cadre. We're talking to Cadre's founder, Ryan Williams. Ryan, give us the two minutes of what Cadre does, what the mission is, and then we'll get into it. Great. Well, thank you for having me, and we're very excited to call you an investor and partner as well. Cadre is a digital stock market for real estate investing.

What that means, and even more layman's terms, is we are a platform where we make it as easy to invest in real estate properties as it is to invest in a product on, say, Amazon. And we also make it as easy to sell, that is to get liquidity, to the extent that there's a match on the other end as it is to sell a product on one of these consumer platforms. And the reason I started the business is because I saw firsthand how ownership could literally change the trajectory of your future and your children's future and how a lack of ownership could have the exact same impact but in a really negative way and I wanted to change that I want to democratize access to

multi-generational wealth creation and bring premier yield-oriented real estate to the masses and that clearly started you know from a pretty personal point growing up never owning any real estate knowing of my family owning real estate and and pretty quickly seeing the difference in financial stability that ownership provided Right, you're from Louisiana, right? Batm Rouge, yes. LSU, so I'm UF, so at least we're both SEC, I think. That's right.

We all hold it against you. Yeah, yeah, yeah. But this is, you know, sometimes we don't get right into this, but your entrepreneurial story, like you started as an entrepreneur like really, really young. Like weren't you at like age 13 doing startups? I don't know if you would call it that, but like, Tell me about like, you know, the sort of entrepreneurial bug and when it hit you. Sure. I think, I believe that it's probably always been something that has sort of been present under the surface.

Because to me, being entrepreneurs is really about asking questions. And then after you ask those questions, picking a solution and pursuing that solution, I happened to ask some questions that had to deal with personal pain points for me growing up and conceived of a solution to one of those pain points is the first venture I ever started, as you alluded to, and I was 13. And that pain point was growing up I couldn't afford Nike or Adidas or Jordan headbands and wristbands. I played sports and headbands used to be a big thing, believe it or not, to all the Gen Z folks out there. And so, you know, I asked, you know, what would it take for me to be able to buy headbands and wristbands

and not have to work multiple jobs to afford $20, $30 headbands and wristbands? And the answer was I need to find a lower cost provider and wholesaler. And so I looked up a bunch of wholesalers in the area, drove 60 miles to what was akin to the garment fashion district in New York City and bought these Terrycloth headbands and wristbands, a dollar, $2 a pop, initially for myself, just so I would have the headbands when I was playing whatever the sport was at the time. And the styles of those headbands were so unique and different that they caught the eye of teammates and other people in my circle. And eventually I started buying these wholesale bands and selling them retail to friends and teammates and got to a point where I started thinking, well, someone else could just figure out where I was buying these wholesale. And I need to figure out a way to kind of differentiate these products and make them unique. and personal.

And that was the keyword personal. And so the idea was to start a personalized headband company where I would embroider your name, a logo, a slogan, you know, for a fee. And you could have your own customized headband and wristband with whatever words you wanted within reason, of course. But that business ended up being really a catalyst to me. seeing more of the country, more of the world, and broadening my horizons and also what I thought was possible because I ended up getting a lot of traction because a number of teams, high schools in the area would order these headbands and wristbands. I even pitched LSU and their band as well. And we had some folks from the school that actually ended up buying a number of orders.

and it took me to a few different organizations that actually focused on helping organize entrepreneurs business plans for them. For instance, National Foundation for Teaching Entrepreneurship or Nifty reached out and said, you know, we love the business plan idea you have. We'd be excited to help take it to the next level. And so I ended up entering a couple business plan competitions, ended up winning those business plan competitions, ended up getting some mentors in the financial world,

the operations world, ended up visiting New York City. And it just expanded, you know, my horizons. And it all started with that question of, you know, what would it take for me to be able to buy something that was more affordable and that would solve a personal pain point? And so to me, entrepreneurship, that's the essence of it. It's that curiosity. And then it's the initiative to have conviction and actually propose a solution or an idea that you're willing to put everything behind to answer that initial question.

And it's a lot easier to build a business I found when that question is personal. And it's something that is meaningful. And it's something that probably also is true for others as well. Because clearly that wasn't the only one who didn't want to pay $20. for a Nike headband. And, you know, there was product market fit, I guess you could say, for the idea. But it's because it was a personal pain point. And when I was able to actually give other people the solution to the same personal pain point, it became all the more meaningful. But also, I feel like, you know, something like financial literacy and like thinking about,

like, the democratization of financial opportunities, as you were talking about at the beginning, was something that you were also, I've learned, you know, interested in at day one. Like, when you were in college, like, I think you started a financial literacy, like, club or something. Like, yeah. From the very beginning, did you have a sense in terms of, like, what you just said, this problem to solve, this pain point involved stuff around personal finance? Yeah. I mean, being, you know, quote unquote entrepreneur, which is sort of how I began, I guess,

labeling myself. I thought the natural transition when I was in college was to focus on, you know, business or finance because the biggest part of, you know, my kind of constraints running my company were financials. And so I was pretty shocked to learn that I didn't know anything about the basics of finance as a college student. And that became really clear to me when I started speaking to people who would come to college to recruit undergrads for investment banking jobs, whatever the case might be. And they would throw out words and jargon like leverage or underwriting or, you know, or ballot sheet and three statement models.

And so, again, I would intern in these conversations, I'd be completely lost and literally have no idea what the people I was speaking with were saying. And again, I felt like couldn't it just be me who was confused. There had to be other people who grew up working class like me, maybe didn't have family members and the financial services space who were not familiar and with the jargon in the industry.

And, you know, kind of were a step behind everybody else. And so to me, it was really about leveling the playing field and figuring out how to help others step into these conversations. And eventually these industries with insights and information that would allow them to be successful. It's like language. You know, if you don't speak the language, I don't care how intelligent or smart you are,

you're not going to be able to communicate with other people who speak a different language. So when I was an undergraduate, I ended up starting this organization aimed at creating greater financial literacy and understanding amongst undergraduates. And the real novelty behind it was I recruited Harvard Business School professors and MBA students to actually teach curriculums and the basics. It was like a boot camp for finance 101. And they had never taught undergraduates before at Harvard College. And so that was something that I was really proud of because while it looked like a success

and I was in media and all the like, which was nice, people didn't see all the work that went into the pitch. I had to make to the professors to teach these curriculums. People didn't see the work that went into trying to teach myself. some of these concepts and, you know, putting these curriculums together, putting them online. And, you know, that's oftentimes the reality of being an entrepreneur. People don't sort of see what happens behind the scenes, the grittiness of it, the fact that you're way more likely to get a no than a yes in almost every situation and circumstance. And this is no different in the case of starting this organization up.

But ultimately, it ended up being the largest pre-professional organization still exists. There have been thousands of students that have gone through a very top financial group. And I like to think of the alum is hopefully better off as a result because they were able to learn some of these financial services concepts that they don't teach you at liberal arts schools. But we're really important, especially for those who didn't grow up coming from these worlds or coming from wealth or money. So that was a nice example of entrepreneurship in action, solving a personal pain point, but a pain point for a lot more people and hopefully leveling playing field as well. Directly to that end, and I know that we're, I think we're skipping ahead to post-college. But you also, like, I think you were getting into commercial real estate and things like that in the south

and trying to invest in real estate and things like that. And you had a hard time securing loans. And so, again, personal pain point of, like, that sort of direct access to the levers of the ability to, you know, make money and be financially, you know, bring yourself up to the next level. Like, that's another thing that you, personally experienced and maybe informed cadre?

Absolutely. There's a saying that, you know, to make money, you need money. And it's it's so true. You need capital. You need access to capital. You don't always need access to as much as you may think you need from what you read about with, you know, all these fundraisers. And, you know, I've been for sure in certain cases swept up in,

you know the the fundraising mania in terms of always wanting to to raise more and thinking it's important you know to to to kind of constantly be being you know on the on the fundraise trail but i do uh i do think that uh you know output is never greater than input and um you know i i realized pretty early on that i was going to have to work incredibly hard to capitalize or finance any venture i pursued because in the case of my first real estate business, I was a college student. I didn't have any collateral. My parents didn't own any real estate. I had no liquidity. I was, I guess people would consider more of a risky borrower. And so, you know, I had to talk to more than a dozen banks. And she mentioned almost everyone said, no. The one bank that ended up saying

guest was a black-owned bank called Citizens Trust where, you know, I know the CEO and chairman today still very, very well. And they saw, I guess, some of themselves and me and gave me a shot. You know, they ended up issuing me a loan so I could buy a portfolio of real estate. And the backstory to that was, you know, as a college student, I learned enough about real estate through the financial organization I'd started up very tough financial group to know that it was a space you can make a good amount of money and um and i was visiting one of my roommates who's from Atlanta during a break and notice there were all these foreclosed homes in his neighborhood and we both decided that this would be an amazing opportunity to start raising money from our

classmates who had a lot more liquidity than us and trying to buy some of these homes with the intent of renting them out to other people in the community. And so, you know, we would hopefully buy well, buy it, what we're then pretty distressed prices, rent out to people, maintain the social fabric, and get people the opportunity to buy the homes back and, again, do well, do good. And by and large, we were able to actually accomplish that, you know, buying dozens of homes and units throughout the southeast.

But the big acquisition that we needed to make to take that next step was buying an apartment community, multifamily, if you will. And that's really what required a commercial real estate loan. Everything we were buying to that point was sort of cash unlevered. And when you're trying to get capital on the debt side, you need the banks to believe in the credit of the borrower. And I was different. I was unconventional in a lot of ways. And I was used to always being unique, whether that was just socioeconomically, ethically, just how I looked at the world even. And so I knew I would have a challenging time getting someone to say,

okay, this is a very short shot way for us to earn the interest that we're going to charge and get our money paid back. But I never expected it would be as difficult as it was. But I think what it highlighted is, you know, if you can crack through some of these barriers and you just stay persistent, all you need is one person, one investor, you know, one partner to believe in you. And that can make all the difference. And so in this case,

that one bank ended up lending me the money I needed to buy this apartment community in Atlanta. We ended up buying it, selling it for a pretty sizable profit a couple years later. And that became the basis for the track record I would use when I was going out to start cadre, which I wanted to do at a different scale. Well, right. You're talking about people believing in you, which is, of course, key, but then there's also the belief in yourself. So I am, again, skipping ahead in your career a little bit. You're on the Wall Street track. You're working for banks, big names, etc. And at age 26, I think it is, you decide to start cadre. Like, you could have stayed on a track, right? So what is it that, made you, and I foregrounded this by saying believe in yourself, but that's a risk

as opposed to a track where it's on rails, and I'm going to jump off the rails and go over here and build my own track. What was it that made you want to do that? Yeah, I remember very clearly, vividly.

I just turned 26, and I was making more money in capital than I ever thought possible, really through two means. One was I was working at Blackstone and real estate private equity. And two, I had my kind of side hustle with you with my real estate portfolio that my roommate and one of my best friends from college was running day to day. And we were doing really well on both fronts. And you're right. I believe that I could have in a very sure shot way,

been financially independent, made a good amount of money, just staying on that conventional path and trajectory of working at a big financial institution. But I'm an entrepreneur. There's a reason why I had that side hustle. There's a reason why I wasn't sleeping much rather so I could focus on growing the business while also making sure I thrived in my day job. And at times I felt like an entrepreneur sort of trapped within an institution. And I think that was because to succeed at a lot of large financial institutions or companies, period, you kind of have to be conventional, right?

You're not really incentivized to do things differently or to see the world in different ways or to take risks or to invest in initiatives that may have asymmetrical or a lot of downside, but also a lot of upside. And at least in my life, I've always been able to succeed when I did things differently and when I didn't follow the pact. And, you know, I think the same was true in the case of starting cadre when, you know, it was a huge risk. And, you know, 95% plus businesses, startups fail within a few years. And so, you know, I recognized that. I knew that was a risk. But I also knew that if I wanted to do something transatlantic. transformational that was actually deeply personal to me, which is democratized access to real

estate investing so more people could have better futures. I was going to have to break out and there's never a good time to do so. The longer you stay at these firms, the tighter the golden handcuffs can become, the easier it is to sort of settle into, you know, the nine to five. But I had aspirations that time and still do of hopefully reinventing and transforming the very industry I was working in. And I knew I couldn't do that within the confines of Blackstone. And so it was that unconventional orientation and willingness to better myself, given some of the other initiatives I had started, some that succeeded, some that failed, many more failed for what it's worth and succeeded. But I also knew I couldn't live with myself if I didn't break out. And, you know, in this case, build what was akin to a blackstone for the masses,

outside the confines of my office. You've said this many times. So, you know, democratization, access to real estate as, you know, a wealth creation engine. When I ask people, is the vision or the mission that you started with the same today, I don't know that either answer is better than the other. Some people are like, the mission today is the same that it was 10 years ago. Other people say, the mission today has changed and evolved because what I had to learn, changed and evolved, right?

So which side do you feel like you fall on, and it could be both. I mean, I'm sure there are things that you have tweaked in terms of what the vision for Cadre is. But where do you fall on that? Like, are you still diamond focused on the original vision or have things pivoted in your mind to some degree? Yes, I would say that the original vision for the business is different. from the vision today. And it's different. I probably was not nearly as ambitious

in what I was looking to accomplish early on as what I'm looking to accomplish today. And there's some good reasons for that. And I think in any entrepreneurial journey, there's going to be circumstances that change, the world changes, regulatory dynamics change. And that can actually directly impact whether or not the vision you have is feasible or not.

In my case, what I was looking to do early on was broaden access to real estate investments. And, you know, broadening access meant, you know, bringing more individuals into real estate investments. But by and large, we're going to be accredited investors because while the 2012 Jobs Act had come out, there was still a lot of constraints around, you know, what you actually could market from a private placement perspective. and it was really tough and frankly not economically feasible to go to the masses. And so, you know, our vision and mission has evolved now where we want to make it as easy for any individual irrespective of your accreditation standard to invest in real estate as it is to buy a consumer product on you name your favorite website, our e-commerce website.

And that's a function of a lot of regulation changing to make it easier. for the average individual to invest in private alternatives like real estate. It's also a function of us building a pretty strong brand and track record where we've had institutions invest on our platform, the largest endowment in the world's investor and a client. And so there's an element now of, okay, we built the trust, we've established that we've been able to actually offer direct access to real estate, some of the most discerning investors in the world, now we can actually from a position of strength bring it to people who have never been able to invest in apartment buildings, you know, fractional stakes of apartment buildings before,

or fractional stakes of industrial warehouse centers at low minimums. So I would say that the vision has actually expanded since I started because of the regulatory environment becoming a bit more accommodating for people who are looking to bring access to new investment offerings, The fact that we've been able to actually achieve more success on the higher end of the market in terms of net worth for investors. And because of the brand equity, we've been able to create and build as well. But I think anyone who tells you that the vision or the mission is identical, day one and seven or eight years later or will be identical, seven or eight years later is implying that they also know what the world will hold. And I think with anything we've learned the last couple of years is that no one actually knows what the future will truly hold. Oh, boy, did you just sag into my next question, which is, you know, a lot of our portfolio companies, most of them, you know, are seed, even maybe series A level.

So I haven't really asked people about the challenges of COVID times. But I don't even want to do that because this is more a question about. if you're an entrepreneur and there's like like COVID times was like a literal act of God force measure sort of thing but you're also operating an environment where we're recording this on Tuesday March 7th the Fed chair that talked about interest rates today which has an impact on your business as an entrepreneur where you're dealing with acts of God huge regulatory geopolitical things. What is that like versus like what you just said at like, you know, buying a product on your favorite website or creating an app or something like that?

Is it, it's obviously harder, but is there some sort of, is there some sort of like strategy or like Zen way that you've thought or you've come up with to deal with? Our business could change tomorrow for reasons that are completely outside of our control. There is no Zen way that I've come up, that I've been able to manage the stress of building a business, where you're literally pushing a boulder up a hill and you have no idea what a climate's like at the top of that hill or what's coming down or what's on the other side of that boulder, let alone what's at the top of the hill. And, you know, you've got a lot of people pulling you down in the process as well. And so it's, it is really, really challenging.

My best advice is staying present and not getting too far ahead of yourself, not looking to the next meeting, the next hour, the next day, the next month, the next year, and giving it your all in the exact moment that you're in. And then, you know, if your all is not enough, and there have been plenty of times where I've, you know, worked relentlessly and it wasn't enough, not getting too low on yourself. And the same means, if you get a big win or a big break or, you know, the pandemic accelerates your business, not getting too high on yourself either. And so that's kind of been the philosophy I've tried to take to every day is, you know,

live in the moment, be present, never get too high, never get too low. And then just remind myself that the most important attribute to being, you know, a successful entrepreneur, in my opinion, is the ability to absorb uncertainty and ambiguity because building something that hasn't been created or something that aspires to reinvent an industry or reinvent a way of doing a process, it's just by its very nature going to be filled with uncertainty because there's not a path that you can travel that's been already walked for you. And so you have to be able to deal with. with the fact that every single day,

there's going to be something out of your control and recognize that all you can do is focus your efforts on what you can control and know that the unexpected will absolutely happen. That's one thing you can bank on. It just is hard to know what that can always be. And that just has to be something that you bake and you embed in your mentality getting up every single day.

But staying present has been the best way and staying in the moment and not even looking ahead to my calendar, because that can become overwhelming and anxiety-inducing, is how I've managed really to lead the team that we've built and created, and also to stay somewhat sane in the process. Well, let's end with this, because one of the reasons that I was excited to invest now is I feel like your original vision, you're at an extent. or an inflection point where it's on the cusp of coming to fruition even more.

So people that are interested in cadre, cadre.com. But tell me the state of the product right now. Like if I was interested in this and investing in real estate to the degree that I'm not asking you to reveal anything coming down the pipeline or whatever. But like, what are you excited about for Cadre at this moment? Yeah, I'm excited for a number of new investment products we'll be launching that will allow us to reach a much wider range of individuals and institutions that will allow us to reach individuals around the world. So we're launching at least two new products that people will be able to invest in, you know, where you'll get your own sort of think of it as like a digital real estate ETF in some ways, diversified portfolio of buildings and high growth sectors around the country, multifamily, industrial, leisure hotel, that will be more accessible and inclusive, irrespectful of things like accreditation

standards or where you live. And the reason I'm excited about that at this moment in time is because I do think we are in one of the most exciting and potentially lucrative investment windows of our lifetimes. And, you know, people talk about, you know, rates increasing. And yes, there absolutely is stress and dislocation and concern on what that means for existing portfolios. That also means there's opportunities to buy at prices that you never be able to buy otherwise. You know, as owners of real estate need liquidity, but can't get it because of, you know,

all the reasons we discuss with interest rates. and macro uncertainty, that presents an opportunity for platforms like ours to give people the ability to buy stakes in buildings they otherwise would not be able to buy, to provide like rescue capital, if you will. And so for that reason, I'm incredibly encouraged because I think that in this cycle, we actually will be a platform that will allow the everyday individual to be able to benefit from some of the growth and value that will happen in these, these buildings over the next year to two years in a way that they couldn't during 0809, participate in the recovery, participate in the upside.

We saw that a lot of institutions got bailed out in 2008 and 2009. And a lot of institutions that got billed out were able to thrive as a result of that. But the everyday individual, you know, they lost their home or they were, they lost their job or, you know, they had no way to invest in any of these, these assets that were incredibly discounted and cheap. well, this go around, we want to change that. And I'm excited about the products that we'll be launching. And you can go to cadre.com to get a preview of a couple of them. And then people can sign up and learn more about real estate,

but also learn more about investing on our platform. And hopefully leveling the investing playing field. That's really what it's about. And it's about letting more people have better financial futures that are stable. And then also creating long-term wealth. That's the best ending I could think of. Ryan, thank you so much for coming on sharing the cadre story. And like I said, I'm excited, hashtag proud investor, all that good stuff.

Thank you, Brian. I really appreciate it. Grateful for the opportunity. Grateful to have you in our cadre. And I appreciate the opportunity to share a little bit of my story.