Speaker 1 (00:00:02) - Good day, fellow dealmakers. Welcome back. This is part two. Every once in a while, we go from a seven minute chat to more of a long form story because,, in our seven minute chat, there's things that I want to dig in more. And as a dealmaker myself, and I know you guys might have these questions, so I invite the guest to kind of hang out for a little bit more and,, go back to the recording. So if you are interested in listening to the seven minute chat, Write the Deal chat, you could go to the the links below and go listen to that seven minutes to see if if this interview will be of interest to you. We're going to talk about a few things here. Is investing in American Made. We're going to talk about listing. We're going to, you know, take in a company public. We're going to talk about taking a public company private and then also a direct listing. So if those are of interest to you, hang in there.

Speaker 1 (00:00:51) - We're going to have a good chat. So Aaron welcome back to the deal Scout round number two.

Speaker 2 (00:00:56) - Thanks I'm pleased to be here.

Speaker 1 (00:00:59) - Yeah. So we won't go through the intro again because people can go back and dive in. But Motive Industrial right. We're talking about a publicly traded company that you guys by manufacturing groups here in the US. And you've been doing that for a little bit. Talk to us about some of the success you found with Motiv.

Speaker 2 (00:01:18) - Yeah. So Motiv actually,, started out as a different business,, going back to 2018. I joined the company that was prior to Motiv Motiv, and his earlier form was a real estate crowdfunding company called Rich uncles. And Rich uncles was formed right after the Jobs act. And if you know about, you know, as you know, you've covered real estate crowdfunding in great length. You know, investors would go directly online without any financial intermediary. They would go directly online. It would make an investment in this. So they this company started,, the founders of this company started it back in 2013.

Speaker 2 (00:01:52) - , they formed a California REIT that was focused on that lease. And then they formed a national REIT. And by the time I had come,, you know,, the opportunity presented itself to, to really transform it. And so what we did is we merge the two REITs together, and it was an external manager, and we internalized it. And that all happened at the end of 19. And then flash forward about a year until the end of the beginning of 21. That's when we became Motiv. And Motiv stands for monthly dividends. It's what we believed in. We think it's really important. These are hard earned dollars that are put to work. And people, a lot of them rely on the dividend. And, you know, it's like a paycheck. And we have that cadence in life, right? We have our monthly mortgage. We have a lot of things like that. So that's how we started. And then we started shifting the portfolio. We started selling the non-core assets that were retail and office and buying more industrial.

Speaker 2 (00:02:37) - We really focused on the unique opportunity of industrial manufacturing. Not only is it attractive from a yield perspective, but we fundamentally like it from a personality perspective. And we talk about that in our most recent press release. And then as we move forward, we did what was called a listed preferred. So we have a preferred that's listed out there called MDiv PA. And we also have our stock. So when we listed our preferred,, we did $50 million of this in September of 21. And the receptivity was strong. I could have sold $100 million that day. We didn't. We wanted to be prudent. We didn't need too much money. And having been in the industry for for quite some time and having taken a prior company, a student housing REIT private and taking another net lease republic and then selling it to another REIT had been in the space, know the REIT players for a long time. When we listed our preferred, they said you guys should take your comment because we were already publicly filing QS and KS for many, many years, but we weren't traded.

Speaker 2 (00:03:27) - We were one of those non-trade REITs just like Blackstone REIT. So we said, yeah, we're going to do this. We were getting ready. This is back when the market was still really strong. We're getting ready with that. We're going to do an IPO maybe 100,000,150. Though we didn't need the money. We thought we were going to do that route. We got ourselves already. The end of January of 2022, market starts to crumble a little bit. Rates are starting to take it on the chin. You know, the bankers we had said, hey, why don't you wait till after the March,, fed meeting? I'm like, my gut isn't that doesn't feel. That's a good sign. Let's just list. So we listed all our shares. We have about 11 million shares outstanding. We listed those. We did not lock them up. Typically when you go from a non traded re to a publicly traded REIT what happens is the bankers say lock your investors up so they can't sell their shares.

Speaker 2 (00:04:13) - Well we didn't think that was fair right. This is their money. They need to be able to do what they want to. So we didn't lock them up and that's what we did. We listed our company. We've been fighting every day for the last two years. That was two weeks before Putin invaded Ukraine. We listed right about four weeks before the fed started raising rates at a, you know, calamitous rate. It's been a crazy two years, and we've only gotten stronger, cleaned our story up even more. And in the last year, our stock has produced a 40% return.

Speaker 1 (00:04:40) - Wow. So Aaron, you guys,, you went unconventional in a in a few things. One is you didn't do a lock up period, right? For your investors. You went you went public. What was your what was your offer price when you guys went out there, what was your.

Speaker 2 (00:04:54) - 525 which was below our net and net asset value. And we've taken in the chin right now we're trading, you know, our stock our liquidation value is probably around that price.

Speaker 2 (00:05:04) - You know probably a little bit less now because the market's gotten softer. But it's north of 20 and we trade it I know today we might be right under 15 bucks. Yeah. And that so we did the right thing for investors by not locking them up. But that hurt the share price.

Speaker 1 (00:05:18) - Yeah because some investors who didn't have the long term vision in that they got out right off the bat right away and the stock plummets right. Like and for for the CEO of this of these kind of groups. What was going through your mind when you saw. All right we opened at 25. This is cool. Hey I'm doing everything for the investor. Right. We're going to do monthly dividends. We're not going to do a lock up. And then you see that dip. What's going through your brain when that happens.

Speaker 2 (00:05:43) - Well it was even more crazy. So if you ever look at our chart and this is I'm glad I get a chance to tell this story because you look, we came out at 25 the first day we closed at 80.

Speaker 3 (00:05:52) - Oh.

Speaker 2 (00:05:53) - Right. Boom, boom. The next day 60. Here's the weird thing. There were no shares to trading. We had, we there were no shares that we didn't offer any shares to trade. There were no shares trading. What we found out is that in this market, a dealer has a five day settlement period instead of a three day. So if you go in the stock market and buy your shares, you got to provide the funds right away. Are you going to have shares if you're selling short deliver right away. They have extra days to go get that inventory. So someone wanted to buy the shares. They sold them to them. They didn't have possession of knowing that they would get them in time. About 6000 shares traded hands multiple times a day, all the way up. People thought we were a tech company. We were hashtag or dollar sign., motive was trading along with Roblox and Tesla Day. We shut up. So that made it even worse for our investors, who on the third day could sell their shares and they're seeing 60 and 80.

Speaker 2 (00:06:45) - They just put market orders in, flooded it. Right. And I get it. If I had stock it was at 25 and suddenly it's worth 60. I'm going to sell. Yeah. And they sold and they sold and there was no volume and it just crushed. And we've been hit ever since then. And so what was going through my mind was, what the heck is going on here? Why no REIT should be worth 80 bucks if it's valued at 25. And it's been it's been a fight. But luckily we're fighters, right? There's 11 of us at this company. We're all we've all we're all Battleborn. We know what we're doing and it's been a fight. And you got to do what's right for investors and the long term investor. It's getting their dividends, closing the value gap. We will work diligently to close that value gap. Or someone will buy us and close it out.

Speaker 1 (00:07:26) - Yeah. So when I look at my stock account and my app right, I love trading, right.

Speaker 1 (00:07:32) - Like it's fun for me. And I love it when I see this huge spike, right? I'm like, oh, on paper, man. And then, you know, like if I didn't sell at the right time and it goes down, you know, I'm looking at, you know, my this is ridiculous that my that I look at it this way. But sometimes my net worth in terms of that stock app or whatever attached to my, my worth. Right. Like my my self-worth. Yeah, yeah, yeah. So you see this going up. You're, you know, you've got all your own, you know, preferred stuff and you see it go up to 80. Dude, in your head. You're the king of the world, right? What was.

Speaker 2 (00:08:12) - I didn't think that. I thought that was a fluke because that didn't make sense to me. Just like when it's trading where it is now, it doesn't make sense to me, right? I know where intrinsic value is.

Speaker 2 (00:08:22) - And so I'm a fair guy. If, if, if the stock price is trading well above where it should, people should sell it, take their profits because it's dislocated in price. If it's if it's well below where it's trading, they should buy it and they should be prepared to make their profits. I long run, I believe that the, the equity markets are more efficient than not. In the short run. They're very inefficient. Right. If you look at rates you look at our name. It trades like this all the time. Someone, if they're were savvy enough, could probably make some money on that. I'm a I'm a longer term investor. I love to trade on the margin of different names. I mean, obviously, but I'm a long term investor. I keep reinvesting myself because real estate is about income. A lot of times people make it about speculation. You can speculate in the stock, you can speculate on trade. But really real estate is about long term income and appreciation.

Speaker 2 (00:09:10) - And and you got to be in it for the long term to make it work. And if you've got a consistent covered dividend that's paying boom. Sleep well at night.

Speaker 1 (00:09:19) - Yeah. Yeah. Super cool., so this is going up. You've got you know I love that your battle ready Battleborn group of 11. You guys are you guys have been in the game. You've done a few different things. So now it's under value. Right. So you're going hey, this doesn't make sense either. Didn't make sense at 80. It's not making sense at 1473 as what I'm seeing it now right. Like so what goes through your mind when your value dips below what you think it should be based on your Nav and based on all your your analysis? Like what is your thoughts there? Yeah. You know.

Speaker 2 (00:09:55) - There's days that it's you wake up and you look at this because I live in the, the West Coast. And so the markets trade trades opens at 930. So 630 I'm up a little bit before that.

Speaker 2 (00:10:05) - I'm looking at the, the trade starting and then 500 shares might make us go down 2% or might make us go up 2% because we don't trade a lot. And when it's really down, you're like that. Some days, if you're not careful, it feels like a punch in the gut. Right? You got to remember that it's Mr. Market, as you know, as,, Warren Buffett and Ben Graham used to talk about. Mr. market doesn't necessarily very emotional. Fear and greed. Fear and greed. Yeah. And we get it. And there's a lot of different players who are some people are buying for some reasons. Some people are selling for other reasons. And it doesn't mean one thing, but when you see it get knocked out, it doesn't feel good. I gotta admit, you're frustrated. You want to. You want to tell the world, hey, this is worth more. There's there's there's dollar bills on the ground. Pick them up. Right. That's kind of what you want to say.

Speaker 2 (00:10:46) - Like there's dollar bills. And that's what I do. Every time I reinvest my dividends, I take money. I keep buying shares because like, this is this is money. Good. I like money good. At least that's my personal view. I put all my eggs in my basket. I spent a lot of time focused on it. That's how I view. Like I treat people's money and like I hate it when it's down to I feel I take it personally, like, damn, I wish I could have made it better. I treat it as if that was my mom's money or my grandma's money, and that's all they had. And I don't want to I don't want to screw that up. So I'm we're very thoughtful about the decisions. But that said, when you're a small company in a really rough market, it's hard. It's a real challenge to make the right decisions, because so often small companies either become smaller companies or they get gobbled up. Right. And if we get gobbled up and they close that value gap and someone buys it, you know, closer to where we're really worth, fine.

Speaker 2 (00:11:36) - All our investors win. But in the meantime, I've got to keep fighting, fighting, fighting so that we become a bigger company.

Speaker 1 (00:11:41) - Yeah. So speaking of fighting your latest earnings report, you talk about calf kicks and, you know like you take it you take a unique approach on on how you, you know, share your your information out there. How does calf kicks in investing in industrial. You know us made companies like how did how does that even align. Talk to me about that.

Speaker 2 (00:12:03) - Yeah. You know and that's probably a byproduct. In fact I've I've been for you know, well over 20 years a real well, well certainly 20 years for, for MMA and even longer is boxing. I've been always been a fan of combat sports. Yeah. And I and I love the analogies that can come from, you know, two,, honed athletes put themselves together and fighting it out. Right. There's a lot of parallels to to daily living and. Well, anyway, Calf Kicks is just talking about, hey, you know, we've done a lot of great things.

Speaker 2 (00:12:33) - You know, we've we've changed our portfolio. We've grown. We've closed that back of our stock as I've mentioned, is I've been up 40% year to date., or in the last year. Excuse me., and so we've done good things and we're fighting the fight and more people are hearing about our story, and we're just not, you know, we're not afraid to keep fighting. But sometimes you get you you get injured, right? You get kicked or you get punched in the face. And I what I talked about is how as UFC has evolved, particularly the calf kick has become the jab for your lower body. So we all know in boxing, if you keep jabbing, you keep jabbing. You can keep your you can keep your opponent at bay. Maybe you can do some damage. You keep the distance and you get yourself ready to set up that other strike. Well, a calf kick is the same thing. And if you've ever watched a UFC fight, a couple loaded kicks into your calf.

Speaker 2 (00:13:19) - You can't even stand on it. Right? And so what we talked about is, is we we bought an asset that didn't turn out right. Right. And instead of just sugarcoating everything and talking to you only about the things that went well, I said, hey, it was like getting kicked in the calf. And a good athlete, a good someone who can be a champion, gets kicked in the calf once or twice and then says, hey, I'm going to change my stance, I'm going to check that kick. I'm going to do something that doesn't allow me to happen that again. So they improve their game. So a lot of times people say any form of adversity means you're failing. To me, that means I'm getting better. And so what we talked about was very candidly saying, hey, there was a property bought. They tried to do a Spac. They timed it wrong. It didn't work. They ran out of money. They're filing for bankruptcy. But we have a property that's still money.

Speaker 2 (00:14:02) - Good, right? It's what we what we put into it. It's well below its appraisal and we've got people interested in. And it's an over improved property now. But those things happen, right? Even my 25 years doing this business and having gone through GFC and gone through different cycles and started out doing real estate at Blackrock, institutionally, I you the learning cycle in real estate is long and so you always try to avoid mistakes. But when you do get them, you try to learn from them. And so that was the story I was talking about, trying to relate it to something where people understand that you can get kicked in a calf and it can really f and hurt, but it doesn't ruin you. You can still fight.

Speaker 1 (00:14:35) - Yeah, I think, you know, I see a lot of CEOs when they when they talk about a mistake. Right. They'll they'll try to sugarcoat it. They'll try to hide it. They'll, they'll, they'll try to avoid that. And you just took it right in the ring.

Speaker 1 (00:14:48) - Right. Like let's go and let's just talk about it. We made a mistake. Yeah. And it's a mistake. So, you know, because of that mistake,, what how do you approach the the fight differently? Right. You got kicked in the calf one time and you're like, that shit hurt. What do you do differently?

Speaker 2 (00:15:05) - Yeah, and I talk about that. So the lesson I learned from that is what we what this was, was a property based in Saint Paul, Minnesota., great location. Bought it. Really smart. They improved it there. This company was an indoor vertical grower. So they're growing microgreens and arugula for in the markets that don't have year round growing seasons. And they were running a gun and they put, you know, close to $15 million of capital improvements in there. Added refrigerated space. You know, it's built on top of an awkward really good building. They just ran out of money because when they did this Spac, a lot of people don't realize this.

Speaker 2 (00:15:37) - And I'm sure you've covered this, is that the SPACs, when they came out, a lot of them were left with legal bills, right? And the and the investors had the right to take their shares back. And so this happened right in the middle, you know, early last year, worst possible time. People are like risk off, right. SPACs were failing. And so they got they got caught short. And you know, they had to stop paying rent. But we have a property. So we went to what we learned is we wouldn't do a pre-revenue business unless it had substantial credit behind it. Right. Great that the vertical grower, we see the benefits of it. But it was still it was nascent. It's still you know, we don't have the £800 gorilla in that space yet. And so that was a lesson learned there. And the other one is, you know, let's just, you know, make sure that they don't have that financial. The other part was it was a related party transaction.

Speaker 2 (00:16:22) - , we got source from someone we knew. We won't do that again. Didn't didn't affect the decision, but it doesn't look good and right. And so I have to be really transparent and honest with my investors to say, hey, that one I got wrong. We're not hurt from it yet. There's no economic loss yet. I don't think there will be either. But I got it wrong. And so I need you to know that I got it wrong so I can be admitting to that, and I can make it better so that it won't happen again. Because if I don't talk about it and you know, it's there, there's going to be a discord. And I don't want that. Yeah.

Speaker 1 (00:16:52) - For sure. Now you're you've got skin in the game in this too right. Talk talk to us about, you know, being a CEO of publicly traded company also having skin in the game. Why is that important?

Speaker 2 (00:17:04) - I think it's really important. And there's a lot of people who look at these metrics like insider ownership.

Speaker 2 (00:17:09) - And that's why we have these form fours. The SEC makes us do a form for anytime I buy or sell share, I get to report it right away, and I just buy shares as frequently as I can, consistently as I can, because if I'm not willing to have my interest aligned with the shareholders and that do well in the stock, then I'm not really well aligned. And the REIT space particular can be prone to people, you know, just taking in salaries and managing these portfolios and not really trying to make,, their investors more money. And so I want my interests aligned. And it's just how I am. Every company I've been, I've always tried to take any form of compensation. I can,, in stock. And then I also invest. So, like, you know, I took and I feel the pain, like when we were at 25 and before I, I took, you know, a million and a half of my own dollars and just bought company shares back then, well, before we knew we were going to listen all these things like that.

Speaker 2 (00:18:02) - Right. So I feel the pain just like our, our legacy investors. Yeah., and that's what makes me even tougher and better. And it's also the thing is I got. My eggs in this basket. I'm thinking about this 24 over seven. How do I make it better? How do I do? How do I do? And so, you know, I think the investors win in that regard.

Speaker 1 (00:18:20) - Yeah. Yeah I love this. Now you at one point you took a public company private. What does that look like? I've, I have not done that. And I'm curious as to you know, why would you do that and what was the process and what did you learn there.

Speaker 4 (00:18:36) - Yeah. That was a, that was a that.

Speaker 2 (00:18:39) - Was an interesting there's a could be a book about it. So the company I had joined,, as a chief investment officer was called Campus Crest. Campus crest was based out of Charlotte. It was one of the three student housing REIT's at the time.

Speaker 2 (00:18:49) - This was,, go back to 2014, so I joined them. They had already been public for a couple of years. Their share price was really,,, lagging the market., they were a vertically, vertically integrated student housing. So they would buy the land, build this thing, and then own it., but they had levered themselves too high. Their balance sheet was kind of a mess. The story was kind of a mess. And so I came in there and started working what I didn't know until I got really into it that it was probably more messier than we thought, which resulted in the CEO and the CFO getting ousted. Right. So then we got this high drama thing, this one of only three student housing REITs, we had activism going on. We had a joint venture that hadn't been completed. And so for about two years, I just, you know, I literally slept on the couch in the office. And we just worked and worked in fixed problem after problem.

Speaker 2 (00:19:40) - And what could have been easily the demise of the company, where you would have had wiped out the equity. What we eventually did was we ran a process and we got it sold to Harrison Street, which is a very large and prominent private equity shop. And, you know, return capital to our investors and, you know, paid off the debt. And,, it was a it was a journey,, where you had, you know, the process to go private is typically in REIT land. It's there's a lot of social issues. Right. It's hard to do M&A with REITs. It's hard to do,, to take something private if they don't want to. Right., and so, you know, what I did is to try to align with the shareholders that we had a lot we had common shareholders, we had debt holders, we had preferred holders. And so you have a lot of different constituents. It's like how do we how do we not be stubborn and destroy value. Right.

Speaker 2 (00:20:33) - And how do we execute. And so what happened is we were the first of the three student housing rights. There are now no student housing reach out there because ultimately this is an asset class. It's probably better private because you take high class class, you know class A buildings. You get them all fresh from the beginning of the school year. You give someone who's got no economic maturity or physical and maybe limited physical maturity. They destroy the unit. And then you got two weeks to turn it around and do it again right at the end of the school year. And it's kind of a crazy asset class. So it's now private across the board. They were all all taken private. But we were the first. And it was a it was a it was a fun journey even though it, you know, probably created a little bit of scar tissue.

Speaker 1 (00:21:11) - Yeah. Yeah I bet. Well, as a, as a dealmaker, you learn from getting kicked in the calf and taking stuff on the chin and and it makes you resilient.

Speaker 1 (00:21:19) - But it also, I think makes you a better deal maker a better investor. Right. Yes. So now you had this next opportunity to, to be CEO of, of a publicly traded, you know, company before you said yes, what was going through your brain like, you know, before you before you said yes and accepted that role.

Speaker 4 (00:21:38) - Yeah.

Speaker 2 (00:21:38) - So you know what? I sort of looked under the hood, kick the tires. I've learned as my my evolution goes on where, you know, you get you sign a nondisclosure agreement, you get access, you want to make sure you know what you don't know. And so as opposed to just relying on what might be publicly available, I and I, you know, I talked to people there, I looked at the assets and I thought, is there a path forward? I think the key how I work, generally speaking, is I always try to underwrite the worst case scenario. And if I can accept that worst case scenario, then I try to incrementally improve on upon that, right, so that the outcome will be better.

Speaker 2 (00:22:12) - , and that requires you to think iteratively, like there's branches in your different, you know, binomial sort of branches in terms of if I say yes to this, what does that mean? And things like that. So it's a lot of iterative thinking. But I looked at this and say, hey, do they have fundamentally good assets that weren't terribly mispriced. They meaning that they hadn't way overpaid for them,, that their leverage wasn't too high and that there was what you call good bones. Right. And if you think that there's opportunities in the past where I've said, no thanks, this is this is a Hail Mary that I don't want to try to attempt. Right. Yeah., it doesn't mean it doesn't come with a lot of work and had to roll up sleeves and and get things done, and we've done that. And I liken it to like, if you're walking out into a field and you take a rock and you turn it over and there's a bunch of squiggly things underneath there, right? You know, you kind of have to do that.

Speaker 2 (00:22:56) - You got to turn over the rocks and say, okay, what do I got here?, and we did that systematically. And we're still in that journey. We're, we're we're towards the end of that journey in terms of cleaning it up and making it better and making it sort of relevant., but it's been a five and a half year journey.

Speaker 1 (00:23:10) - Started out as a mini IPO, right? You did crowdfunding back in the day. If you bring to the origin of the story. Yeah., now for for people out there who are looking to, you know, raise money for their company and they're looking at the crowdfunding versus maybe, you know, IPO and go in traditional friends and family A, B, c right to public. Right. What are what are some of the things that, that you've learned along the way. And, you know, some advice you could share with people you know, here's if you want to go crowdfunding, here's some things to look out for. And if you want to just do this traditional, more traditional path, this is what I would look out for.

Speaker 1 (00:23:47) - What are your thoughts?

Speaker 2 (00:23:49) - Well, there's two ways to think about it. There's the investor side and then there's the sponsor side. Right., from the investor side, there's basically three primary ways you can own real estate. You can own it direct title that's with you or somebody or not, but you own title. So you have ultimate control and ultimate responsibility, right? You got trash and toilets and all these things you got to deal with, but you can decide all the things that you need to sign in. The middle route is sort of this semi-public private fund route where you simply have a GP and an LP and you're in a fund. Those are finite life. You're going to give up control., but you're also going to give up responsibility on the margin. But, you know, it's going to have to go full cycle, right? So there's a inherent trade involved if it's a three year deal or a five year deal, whatever, it's a trade. The last bucket is publicly traded real estate, which is what we're falling in now.

Speaker 2 (00:24:34) - And that is permanent equity. I can make an individual decision. I have control of when I want to get in and out of this. I don't have control of the price. I don't have control of the operations. But I also have no responsibility. Right? I have full liquidity. I can do whatever I want, depending on what you want to own. There are certain types of assets won't fall in the public bucket and they won't fall into the, you know, so the other two buckets now the individual buy your own property. You can't crowdfund the fund space is the crowdfunding right. That's the sort of semi-public private it's aware sometimes they're doing reggae's and they're filing, sometimes they're not. But it's the mechanism that you get. You have to go to a portal. Crowdfunding has changed so much in the last 11 years, right. We've seen a lot of them go away. Right. So some of them consolidate. And so the the nature of crowdfunding has changed a lot. But if you look at the history of crowdfunding, almost all the deals were multifamily.

Speaker 2 (00:25:27) - And why is that? Well, because,, two guys can can easily identify an apartment complex. Maybe they've worked on it before. They understand the model, they can go get 70, 75%, you know, government backed financing, which is a high leverage profile. Like in our profile, we're 48% leverage, right? Our our minimum property is probably a $15 million purchase price. And going up, you know, so I can't you can't jerry rig a you know a small manufacturing bootleg it it's a bigger scale thing. So it's conducive to that public market. But if you did these things, you know, and then they, you know, renovate the units and they get a higher rents and it works. It works great until it rates. We're starting to see some capital calls and some of those crowdfunding deals. But a lot of crowdfunding was multifamily. So it depends on what you want to buy. If you're a sponsor, it depends on how big you need to be or what, how much capital you need.

Speaker 2 (00:26:11) - If you need a lot of capital and you need it consistently. Public markets, right? It's always the cheapest form. It's the most expensive to run, though. A publicly traded company has public SEC costs and has audit costs and has all a lot of more brain damage and a lot more skill required than it does to go buy an individual property or to do funds. So it depends on where your risk and your proclivity is and what you want to do. But they all work, they're all viable and they all.

Speaker 4 (00:26:35) - They all worked.

Speaker 2 (00:26:36) - Together.

Speaker 5 (00:26:37) - . Yeah.

Speaker 1 (00:26:38) - So when it comes to running a public company you mentioned the cost to do that. You got your PCAOB stuff, you got your 10-K 10-q. Anytime you know earnings you have to you have to do a lot of work just to keep it. And you also have to keep certain thresholds out, you know for for Nasdaq and and such for the, you know, the many IPOs, the Reggae's, the reggae pluses and for for that, you know, there's, there's, there's, there's less like reportings and audit stuff that you have to do.

Speaker 1 (00:27:09) - But there's a thinking and I'd love your opinion on this if I can lower the, you know, if I could increase the pool of capital by making anybody can invest for 100 bucks, right. That I think that that hit us with crowdfunding. I think a lot of people thought that just because anyone could invest for little is 100 bucks, that there was going to be this massive flow of of money coming in. Did did that happen? Did you guys experience that or you know, where there's some learnings there.

Speaker 2 (00:27:42) - Lots of learnings there. And I think for the space I mean I've touched reggae plus before I've done some regs. I think, the idea behind Reg on paper, when I first came out with a job, SAC was brilliant. It was meant to work. It didn't work as well., the cost to do a six month filing where you, you know, you have one KS and one and one QS versus quarterly. Yeah. Is is less, but it's still high. Right.

Speaker 2 (00:28:09) - You still. If you're going to be public, you still have to go through the SEC rigmarole, right? And it's there for a reason. The SEC rules are meant to protect investors. Some of them are more arduous than others. Right. So in the last six months, we've had the climate disclosure rules come out. We've had, you know, cybersecurity rules come out. And these add just so then you got to hire a consultant. And they cost a lot of money. So even if you're a rig you still have to do these types of things. And I think to your point is just because someone can come in for 100 bucks and they don't have to be accredited, it doesn't mean you're going to get them. And people forget that customer acquisition costs or investor acquisition costs are real. And then if you're a crowdfunding company started from scratch, you got to spend a lot of money to get people to pay attention to you, right? And say, why would I go there? Versus I already have my Edward Jones advisor or I go onto my Robinhood account, I can see all these things.

Speaker 2 (00:28:58) - And you got to say, I got to fight for viability. And so it's a lot harder than people think it would in so many big and small companies have tried it and with various levels of success. Right. There's a handful of A+ out there that have gone sort of like GI PR is a publicly traded company on the Nasdaq. They started out as a A+. They're still out there. They're gotten bigger. They got a $20 million market cap now. But it's been a fight. Right. And they I think in hindsight they probably wouldn't have done that that route.

Speaker 1 (00:29:26) - Yeah. Yeah. It's it's it's such a great idea and this idea of democratizing and and lowering the, you know, the investing route. It's such a good idea. And I would love to see people do it well. And I have a few friends that that run these kind of companies that I'm cheering them on. And, you know, some are doing well and some are not. It's work.

Speaker 2 (00:29:46) - It's work. It's not it's not a panacea that people think it was.

Speaker 2 (00:29:49) - Right. It just it's a better it can be a better vehicle to offer more opportunity for more investors. But you still got to you still got to track them.

Speaker 1 (00:29:56) - Yeah. And what I'm not doing is I'm not giving financial advice here. You know what I'm what I'm saying is as I'm learning this stuff, like I learned the pros and cons and I'm invested in both sides of it, and I, I think that this is such a cool world. What I'm learning and and I could even my, my brain's like a diesel engine because I'm learning, you know, I'm going through investment banking, licensing and stuff like that. I'm I'm learning a ton when it comes to you learning. Talk to us about your learning journey. Like how did you get into chief investment officer, CEO of publicly traded company? Because man, I'm I feel like I've got so much to learn and it's a lot. So how did you approach this and what was your journey like to get there?

Speaker 2 (00:30:39) - My my journey has been very non-linear.

Speaker 2 (00:30:41) - So, you know, flashback to I was in high school in Hawaii,, and got a job at a real estate office. So Remax Agency and this is I'm dating myself quite a bit here, but this is when they used to do bulk mailings. So you'd print out. Yeah, on a dot matrix printer and you put out a bunch of addresses. So I started out just doing real estate, got my real estate license really early and loved real estate back when the Nikkei and the yen were really strong, I was traveling duplexes and for plexus to Japanese investors in that market went poof. And I was like, oh wow. You know, I just, you know, I was so didn't know, you know, it was just going up and you didn't, you know, and then it went down and there was really no way to short real estate in that context. So you couldn't make money on the downturn unless you waited until it hit bottom. Then I joined the military. I was in the Air Force a little bit,, and then got out and then, hey, decided, hey, I need to figure it out.

Speaker 2 (00:31:29) - So I went, got a job at Charles Schwab, became a broker. Charles Schwab did that, but I hadn't even gone to college yet. And then I didn't go to college until I was 26. And then I did my undergrad,, in accounting cloud through that in two years, and then went right into my MBA at rice, got an MBA in finance, and then there I had,, they didn't hire rice, wasn't getting hired in Wall Street. I mean, it was a good school, but they were all going to Enron and El Paso Energy and all these things like that. But I was I got a job at Lehman Brothers back when Lehman Brothers still exists.

Speaker 1 (00:31:59) - No kidding. Yeah.

Speaker 2 (00:32:00) - This is during the dotcom area. So this is before this 1999. Got the Lehman Brothers for the summer between your first and second year as an MBA. And there were seven rice alum. And so I had dinner or drinks with all seven rice alum on there. And I was just networking and working hard and the last dinner I had was with a gentleman by the name of Keith Anderson, who was a co-founder of Blackrock, and he said, hey, we don't really hire MBAs, but we'll you should come look it out.

Speaker 2 (00:32:21) - So I joined Blackrock. This is when Blackrock had. 200 billion under management, 500 employees, you know. What are they? They got 10 trillion now. So they've grown quite a bit. And and we were right below Blackstone on the on 345 Park Avenue. Started out working there. Didn't know anything. What I was doing, you know started I have to work on the fixed income desk modeling current default swaps and doing things like that. And it was really intriguing to use your brain, but it was boring because fixed income is like little tiny basis points movements. And I'm used to real estate, which has got some, you know, optimism and some sex to it. So,, eventually I leave Blackrock, I go to a firm called Green Street. Green Street is a research firm in Southern California. Right. And and I was there for about 18 months and then went back to Blackrock when Blackrock had acquired a real estate. So I've gone so I've done in these times is I did client work, I did modeling work, I did, you know, business development, I did,, portfolio management.

Speaker 2 (00:33:13) - And then I became chief of staff at Blackrock Real Estate division, helped organize the company, you know, get meetings done. Just a real basic things. I was a young guy. Did product development structured rights. So I learned how to build REITs and put things into them and get them launched and did that. And then I left, went to a company called coal. Coal was a out of Phoenix. Coal was a one of the largest non traded REIT shops. Help them sell a portfolio to another company, internalize their manager, list it and then sell it to another, you know, which eventually is now part of Realty Income. And then that's when I jumped into the chief investment officer at Campus Crest. And then when I came out to the West Coast again, you know, I did the crowdfunding thing. I just jumped into that. So I've taken a lot of linear paths. I've done public private debt, equity,, retail, institutional. And each step along the way I was like, how does this fit in? Right.

Speaker 2 (00:34:06) - Because I've seen guys who had one gig and they stay all the way through, and that's how they got there. And I was like this and that and that. And I think what it was, is I wasn't aspiring to be a CEO or a chief investment officer or do that. I just had this insatiable desire to learn and to get better and to really hone it. And it's it's like a craft, like any craft. No. I've been doing this for over two decades. And so I'm just now starting to feel like I've got a mastery of a lot of the nuances of of running a REIT, of trying to do the right thing. And each day is a humbling day, right? You each day you're like, how do I make this better? How do I do it better? And that's just my DNA., and so I don't know where the future will take me, but I do know that, you know, my being able to make decisions, which has a lot of stress, but you're knowing that you're trying to do them the right decisions for investors, and you're trying to do that every day.

Speaker 2 (00:34:57) - It's rewarding. And so if I'm doing that and I feel rewarded and I can do a good job for investors and I'll keep doing it.

Speaker 5 (00:35:03) - Yeah.

Speaker 1 (00:35:03) - So you met with a guy,, the the alum, the last one right before. And he goes, we don't hire MBAs. Like, what was going through your head when when he said that? Like, why? Why did he approach that? Why did he say that or she I don't I just assumed it was a he okay. Yeah.

Speaker 2 (00:35:18) - So Wall Street typically has they have an analyst program. They have a program. Right. So if you go into investment bank you're right out of undergrad. You get into the analyst program and usually that's a two year up and out. Right. So after two years, maybe three years depending on the program, if you're if you're if you're not selected to go up, you're out. And so what happens is a lot of the analyst program, they go there for two years or three. And then they go on to business school.

Speaker 2 (00:35:38) - Right. And this is I mean, this is a well-run process where, you know, all the Ivy leagues feed into it and you go, you know, you go, you got your undergrad a great school, and you go to get your MBA at a even greater school. And then you jump off and you either go back to banking or go into PE or hedge fund or something like that. So most of them have an analyst program. Some of them, if they're really bigger organizations, have also an associate program. So the associates are they go recruit on campus for MBAs and they hire them. And then this is a fast track. Ideally you're a little bit more seasoned and they're going to get something out of you. Blackrock was relatively small at that time and they didn't have a formal need to be hiring associates. Because associates or MBA programs tend to be costlier. You have to have more organization. They were into an analyst program. So they they made me they called me an associate, but I was stuck with the analyst program.

Speaker 2 (00:36:22) - And you know what? I didn't give two FS because I just wanted a chance to learn. Here I was at a shop that I was a rice alum, and it was great. There was, and I learned a lot. I learned a lot from the people there. You know, one of my biggest mentors was her name was Barbara Novak, another co-founder of that firm. She taught me a lot. I don't think she knew she was teaching me a lot, but she taught me a lot about how to be, to do and act. And I'm certainly no beer of her. But I learned a lot in that organization. And so, you know, it doesn't really matter what the title is. It doesn't necessarily matter what the pay is. It really matters what the opportunity is.

Speaker 1 (00:36:57) - Yeah, yeah. Super cool., I have a office at the home and I'm looking and I see my six year old son just staring at us like, hey, I think he's going to come say hi to you.

Speaker 1 (00:37:09) - Yeah, come here to my friend. We're on a podcast. Come on. What's your son's name?

Speaker 6 (00:37:15) - Hold on. Say hi.

Speaker 7 (00:37:17) - Hi.

Speaker 2 (00:37:17) - Hi. How are you doing?

Speaker 1 (00:37:18) - All right. Good. What advice do you have? Yeah.

Speaker 7 (00:37:21) - Say thank you, daddy. Mama.

Speaker 1 (00:37:23) - Okay. I'll take. All right. Shut the door, buddy. I'll go. I'll go give him.

Speaker 2 (00:37:28) - I got four kids myself.

Speaker 1 (00:37:30) - Usually. Like what? I'm doing an interview. It's either dad, wipe my butt or something like that, though. Well, cool, I love it so, Aaron. Man, I absolutely love our both our conversations. I think I've got to go take care of some family duties right now. So for for people who want to connect with you, do a deal and, and maybe check out more about what you guys are up to. Where could they go to find out that information motive.com.

Speaker 2 (00:37:55) - Motive com. That's our website. You can also find us you know you'll find an email there.

Speaker 2 (00:38:01) - Management and motive.com. You can send us emails. We'll try to respond to every one of we can as fast as we can. if you want to look about what we do, what we do, go to the investors section, read the press releases are publicly available. We're no nonsense. You're going to find our style to be very folksy. And that's not a gimmick. That's just who I am. I can't be anything but genuine, right. And some people are going to love it. Some people are going to hate it. That is what it is. Yeah.

Speaker 1 (00:38:26) - No, dude, I love I love your style and I love your transparency. And I'm so thankful to have this time with you together. And,, hopefully we could do some more,, for the world of dealmakers out there. As always, reach out to our guests, say thanks for being on the show. This is super valuable that they that they share their time with you. So connect with them and say thanks.

Speaker 1 (00:38:45) - And if it,, if they're working on something that interests you, their contact information will be in the show notes below. If you'd like to have a conversation on the deal, scout about the deals you're working on. Head on over to the deal. Scout. Com fill out a quick form. Get you on the show next. Till then, we'll talk to you all on the next episode. Bye everyone.