Shekar Narasimhan- Building a Financial Advisory Career Through an Affordable Housing Lens (#120)

[00:00:09] Speaker A: Hi, I'm John Koh and welcome to Icons of DC Area Real Estate, a one on one interview show highlighting the backgrounds and career trajectory of leading luminaries in the Washington, DC area real estate market. The purpose of the show is to highlight their backgrounds and their experiences in some interesting stories about their current business as well as their past, and to cite some things that you might take away both from educational standpoint as well as lessons learned in the industry and some amusing and sometimes interesting background stories. So I'm hoping that you will enjoy the show. Before I introduce today's guest, I'd like to share a few exciting updates. Both this podcast, Icons of DC Area real Estate and the community I founded in 2021, the iconic journey in CRE are currently part of a nonprofit organization also called the Iconic Journey in CRE that was formed in the middle of 2023. Since then, we have secured nine corporate sponsors, including Rapaport, FCP, Bazuto, JBG, Smith, Kettler, Eagle bank, city line properties, Sypharth and lurch, early and brewer law firms, as well as six individual sponsors. These contributions have been instrumental in helping us grow the community and expanding our programs. I'm also pleased to announce that as of October 2024, the iconic journey and CRE membership community has moved to a new platform called Mighty Networks. This community, which connects commercial real estate professionals between the ages of 25 and 40, has grown to 65 members and continues to expand. To learn more about this community or if you're interested in joining, please click the link in the show notes of this episode and each episode going forward. Thank you for your continued support and for listening. Thank you for joining me for another episode of icons of DC area Real Estate. I'm so pleased to feature for today's show Shekhar Narisimhan, founder of Beekman Advisors, a strategic advisory firm who is a diverse real estate expertise, primarily in housing, with significant experience, who happens to have a huge heart for community service, we dive into Shekhar's inspiring journey, starting with his roots in India, his move to the United States, and how he transitioned from mortgage banking to advising some of the biggest players in our industry. You'll hear about his passion for affordable housing, his hands on work in Appalachia, and how he's been helping communities navigate the challenges of the pandemic. In this episode, we cover the lasting effects of the pandemic on real estate and construction, why affordable housing is such a critical issue, and how Shekar is tackling it. Leadership insights, including diversity in the workplace, and why meritocracy matters, the mental health challenges we're all facing, and how adaptability has become key. Whether you're a seasoned pro or just dipping your toes into the real estate industry, this conversation is full of insights on leadership, resilience, and making a difference. So without further ado, please enjoy this wide ranging conversation with Shekhar. So welcome, Shekar. I've overviewed your background in the introduction. Your life and career are very impressive. You founded Beekman Advisors, a strategic real estate advisory firm, after leading two significant mortgage banking platforms, prudential mortgage Capital and WMF Group. Please describe Beekman's business and your current role and responsibilities at a high level, if you would. [00:04:20] Speaker B: Sure. And thank you, John, for having me. You're an icon in your own right. So it's kind of unique to be on your program, your podcast, with so many other people that I've known over the years and know somewhat well in some cases and really well in others. And so big Bird advisors were 21 years young. The objective when it got started was kind of an accident of fortunes. My investment banker, when I sold WMF Group to Prudential because we were publicly traded, was Credit Suisse. And the persons who helped us do that were two people, Andy Rosenberg and Diana Reed. And Diana ends up sort of retiring in this new wave, even starting way back in the early part of the 21st century. Retirement was, what do you do next? Not retire to go play golf, if you will. And in that retirement, she leaves Credit Suisse, and she comes to see me and she says, what are you doing? And I said, well, I'm just taking a break. I've never had three weeks off with my family, and we're going to go do things, visit people, write a book. And I don't want to. And I cannot imagine doing anything in commercial real estate finance anymore after having spent 20 years in it. Thank you very much. And of course, here I am 21 years later. Diana and I started Beekman Advisors. The name, by the way, is derived from where she lived, which is Beekman Place in New York. She chose to leave in 2009 to go run PNC financial and 2007, rather right before, by the way, the great financial crisis helped them through their transitions. And now, of course, she just reemerged as the CEO of Freddie Mac. So this is her third gig or fourth or fifth. It points up the theory of change that we had at big men, which is that the people I grew up with in the commercial mortgage banking industry, including people who were iconic, Gabe Beasley, who has since passed on Paul Neff, who went into social service. Peter Donovan, who retired after a very illustrious career at CBRE. Willie Walker and his dad, Mallory Walker, who of course, still running a thriving company, and others. We assumed that something like what was happening to me would happen to them. If you want to understand that, which is I was sort of, we had a smallish, small cap, entrepreneurial company. The world was going to get larger. People with balance sheets were becoming critical. Larger companies going to gobble small ones. And at some point you decide, I can't fight the tide or I can remain small, or I want to get bigger and I want to grow this thing on my own. And there were only three choices. And we realized that since I made the choice because I was public, I had public shareholders like the Harvard endowment. You take the highest price to the highest bidder in your cell and you do your best job to protect your people. But that was not the only choice. And people were having to make these strategic choices. So we assume, hey, if I'm going to have to make that, I'm making that. There must be 20 other folks that need to. I grew up with them. Diana knew investment banking. That's how it started. John Sabine joins me later. And we become more of a consulting advisory shop. We still do m and a, but m and A is not the reason we exist. It's to help transform companies. [00:08:04] Speaker A: Yeah, it's interesting. You found a niche that other people probably thought about, but you capitalized on at the time, which is interesting in that you said, I've done enough underwriting deals, and let's take a look at companies. And I've been fortunate to build my company to a certain success. And I said, this might be an interesting time to pivot. And you have all the understanding of how to run one of these companies. And you said, I wonder if other people are thinking that way, just as you just said about maybe transitioning or merging and creating something new and different. [00:08:45] Speaker B: Yes. [00:08:46] Speaker A: Which is interesting, I think. So we talked a high level, we'll get into the details later, but as I like to do, let's turn the page way back. So I understand you're a native of India. Talk about where you grew up and how it influenced you. [00:09:06] Speaker B: And of course, first word moderate means, say, the first or twelve years dictate the rest of your life. Not sure that's completely correct. It probably does for your brain cells, but not your life experience itself and your gut. Yes. How you feel about crises and how you react under pressure. So I grew up in India. I grew up primarily in Delhi, and I was south indian because my parents came from Chennai and Bangalore. My father worked for the federal government, and we were a bit nomadic for my first five years and then settled in Delhi, and that's where I spent the rest of my adult through college career. I went to a high school that was a Christian Brothers school run by irish brothers called St. Columbus, which still is around and is still considered one of the premier high schools in Delhi. And then I went to the Indian Institute of Technology in Delhi, which used to have an entrance exam. In those days, in 1969, when you sat for that exam, something like, I don't know, 120,000 people sat for this exam, and they admitted somewhere around 10,000 students. Now, by the way, kind of a million sit for the exam, and they taken 50,000. So it is more selective by some leaps and bounds than Harvard in terms of the admissions process, but it's, of course, gotten more complicated. So I get into IIT at the age of 16, because India had, in those years, eleven years of high school, not twelve, which. It's all twelve now, and five years of undergraduate. So my bachelor's in technology engineering degree was five years. So you kind of did your high school final year as your first year of college, if you want to equate it. And IIT was hostile only, which means dorms. So we had to stay away from our families. It was very diverse because people came from all over India, and, in fact, we had students from other parts of the world as well. These were the five elite institutions that were set up when India was first became independent. Create an engineering technology class, if you want to call it that. [00:11:24] Speaker A: Was it the mit of India? [00:11:26] Speaker B: Basically, yeah. Yes, there is an equivalent. It was not as. It was as selective in its admissions and its academics, but it was very broad based. For example, the first two years before I even selected my engineering major, we had english literature and world history and geography. So they were trying to make up for the deficiencies that might have occurred across a broad schooling system, across a country as large as India, by sort of packaging everything into. But we had some of the most incredible professors. And so it was just a very. But you knew you were among the elite. Okay, when you went here. [00:12:05] Speaker A: So when did you learn the english language? [00:12:09] Speaker B: So my father, I should point out, grew up in India. And when he was very young, in the 1940s, he left India to go to McGill University in Canada, studied in Canada, traveled all over the United States and the UK, returned to India and became one of the people who was doing natural sciences and material sciences for one of the first aircraft manufacturers in Bangalore, which was government owned. Most of the large industries in those days was government owned. And did that inspire you? Yes, very much. And very much did more than that. I mean, he mortgaged his home to send me to the United States to study because he felt so strongly that the experience that sort of colored and made his life as full as it was was having spent four years of his life overseas away from the baggage that surrounds where you live, only talk. [00:13:08] Speaker A: A little bit about indian families and culture a little bit. If you can just give us a paint, a broad brush of that, and yours particularly. [00:13:18] Speaker B: Sure, John. There was a point in my life when, first of all, three things about indian families, and in my particular case, I happen to be hindu. I grew up in north India, so I was cosmopolitan already because I came from one place or my parents didn't. I had a name in India, a name almost immediately people recognize and go, oh, that name, Narasimha. That means you're from South India. You probably are. Your father's probably from Bangalore. It's that quick an idea. And so because it's so. On the one hand, never been one country ever in 4000 years and now 76 years, it's one country grabbed and sort of congealed together. There were all these things that I knew three languages when I was five years old. You had to. One of them was English for two reasons. One, obviously, my father spoke English, understood English. So did my mother. She went also to what we call a convent school in Chennai. My mother, actually, rather an extraordinary woman, was one of the first people in her generation to ever be a woman to go to college. So she went to college, got a degree, became a principal, vice principal at a school. I learned to drive, which was, by the way, incredible because I remember driving with my mother and everyone would look because women didn't drive in India in the 1960s, and she would drive. And because she wanted independence, she always told me, she said, if you ever find a partner, demand independence not just for yourself but for them, that it is clear that motored, you know, transportation is an independent. So what did my, why did we learn three languages? Because that's the way they taught it in schools. You kind of had to learn the language you were living in, which in Delhi was either Hindi or Punjabi. And Hindi became one of the national languages. You had to learn English because in that it was the medium of learning. I studied in English, but I also studied in Hindi, but I also knew Tamil, which was my mother tongue, and I also knew some Punjabi, which was the other language that was spoken by so many of my friends. So you didn't grow up thinking in one language bluntly. You taught in language, in prose. [00:15:42] Speaker A: When you were three years old, when you were first learning to talk or two, you were learning. You had three different. You had to kind of sort out three different tongues. [00:15:51] Speaker B: Absolutely. And you learned it with the people around you, the friends you had, your family, and it was just natural. There was nothing about it. Not like going to school and learning Spanish because you should know Spanish because you should know another language. It was like at home. I've always argued, my grandsons today, because of my wife, their grandmother, know Tamil, which is actually so rare that every time they speak it, when they go outside, people go, oh, wow. But you don't find that same inhibition when people say, you know, I'm an italian family for four generations, and my son and daughter know Italian. It's fairly. So we should make it natural to know language, to know something about the rest of the world. I've often said that the people in India, I could go to the hinterlands of India and ask them about the United States, and they could tell you, the state capitals, and I could go to the hinterlands of America, which I have done in and lived in, and they wouldn't know where India was on a map. So there was such a big disconnect in. But we were coming up, you were at the top. So this was always the feeling, if Americans only realized how privileged they are, we would be a great country and we would never have to even ask ourselves about greatness, because we'd obviously be here. So anyhow, so as I grew up and came through this ethos of a very close knit family, very strict father, but somebody whose value systems were very clear, it became to him, my going to IIT wasn't the objective. By getting a great education in India so that I was grounded, and then he would give me a ticket, and if I got myself a scholarship, I would go and study overseas. That was it. He was a middle class person. He didn't have, even in those days, $10,000 a year to spend on tuition. He basically said, look, I'm going to buy your ticket. I'm going to give you three months of living expenses if you want to go when you finish. Now, what happened when I finished iit was. It was such a big degree, and there were so many people who had gone right before me in 1971, 72, 73, to the United States that when I applied to schools, it wasn't hard to get in. It was a little harder to get a full scholarship. So I got a partial scholarship to Pitt. I was arrogant. I'd already done five years of engineering. I said, let me find the quickest bridge to go from engineering to something else. And that used to be called an MBA. That was the bridge. You took, that bridge you crossed over, and you could kind of do anything with the rest of your life. And no one questioned it particularly. I never abandoned engineering, but I never adopted it as my profession. [00:18:42] Speaker A: Why not? [00:18:44] Speaker B: Good question. I think predominantly because that's what my father wanted me to do. May sound really odd, but I've learned very quickly that reverse engineering works better than direct. If you want something for your children very badly, and you let them know, there's a pretty good chance they'll do something the opposite or different, which is okay. Nature of life. So what my father really thought being a scientist and an engineer was the noblest thing in the world. Now, many indian american parents today want their children still to be doctors, and, you know, sort of the fruit of labor is serving others, but doing well yourself. And my father was in the other mode of public service and so on. My grandfather was a great freedom fighter, so there was a lot of public service in the veins of my family overall. And my mother was very much about social service. So when I finish my. As I'm finishing my IIT, I'm getting admission in us colleges. I never applied anywhere else for whatever reason. I can't remember whether I ever even applied in Canada, where my father went. But I always had a fascination about the United States, and I always had a fascination for the fact that the US was actually many countries in one too many. Actually. There are many states that are countries in their own right, and that the US was always seen as monolithic was strange to me when I came from India. So I wanted to go, actually, and study in a place that was quite different than anything I'd ever been in. And Pittsburgh, Pennsylvania, was it. So there was. The other reason, which is a little bit more humorous, is my father seemed to know a lot of people in the US. He went to school here, he studied, he worked. He seemed to know people in Boston, in San Francisco, in Los Angeles. I wanted to go to a place. He didn't know anybody. Somehow. It was sort of like rebellion in its own small way, and Pittsburgh didn't know anybody. So I landed in New Jersey, went to Pittsburgh, and that was in 1974. And I enrolled in the MBA program at cats in August of 1974. [00:21:03] Speaker A: So it's just like more serendipity that you ended up there to some extent. You got admitted there, so you didn't, you know, I mean, you could have gone to Chicago or Detroit. Yes, Minneapolis or, you know, they're just, you know, there are probably 200 engineering schools around the country that you could have gone to, or MBA programs, I should say. Yeah. [00:21:29] Speaker B: And it was a desired thing to bring in foreign students at that point and to bring in folks from IIT in India. There weren't very many. I was literally the only one in my class, but very easy transition, actually, because I land at the airport, I'm carrying two huge bags, had enough money to take the bus and go to the William Penn Hotel. Didn't realize that was a good mile away from my dorms. I had to carry these two heavy bags, two elderly ladies. Later on, I would have guessed they were italian or eastern european, come up to me and they offered to help me move, take the bags. So first, after being slightly suspicious that people are going to take my bags, I kind of said, okay, but are you sure? And they helped me take my bags from there for a mile. And by the way, they were in great shape. And so I found the warmth, hospitality of Pittsburgh to be just so unique in its own characteristics. And then the school itself was wonderful. I became, I was on the MBA executive committee. I was actually the editor of the student newspaper and their consulting project, which did work with black businesses in downtown Pittsburgh. And that's how I ended up in eastern Kentucky. From there, that was the next bridge that I crossed, was making a decision not to do a corporate thing right away and having this sort of luxury for a couple of years to do something very different. [00:23:04] Speaker A: I have to get behind that a little bit. So what major did you, I mean, what was your. Was your finance major? I have to guess. [00:23:13] Speaker B: Yes. I was marketing, actually, I chose marketing. Yes. I thought accounting, which was what the specialty the school was, was awfully boring. You had to know it, but kind of like, why would you want to know more than what they gave you on a balance sheet and income statement? And you had to understand economics. Had a great economics professor, did some lost courses, found some of that really fascinating. But the most interesting thing to me was if you can't distinguish yourself and create something differentiated, whether it's on your resume. This is my first lesson, which I mentor most of my students on. Differentiate yourself. What is it about you and your background or what you can do for someone that is different than anybody else in the universe. [00:24:00] Speaker A: You know, that's funny, because I would expect, and I'm just going to be hypothetical here, coming into this country, you know, as a newcomer, that you'd want to try to, quote, fit in and not stand out. You want to be. You want to be part of the culture. You want to fit in. You don't want to be, you know, too obnoxious or too out of there. And yet you knew in your mind, wait a minute, I am different. I want to be different, and this is why I want to be different. So talk about that feeling. [00:24:33] Speaker B: Well, you know, it's somewhat reactionary. Again, a lot of my life has been shaped by not wanting something as opposed to necessarily striving for something only. So what happened was in Pittsburgh, and this is, you know, the era is important. 19, 74, 75. Tony Dorset is the running back. Yes, Pittsburgh is about to win their first national championship in 40 years. NCAA, the Steelers have just brought in Terry Bradshaw, and they got to win their first Super bowl with the Iron Curtain. Football was the craze. So if you didn't know american football, you were, like, behind the eight ball. So here I am sitting with people, and that's what they talk about. I had no idea what it was. Nobody else in the world plays this football, by the way, and nobody. And the rules are fundamentally esoteric. So the idea that people just go bang their heads and there's this small thing that creeps between them and has to cross some line just was bizarre. So I learned it. So this is a learned sport for me. I read a book. One of my friends, Tom, said, here's the book. Read the damn thing cover to cover, and then I'll help you when the plays come in, the play calling, so you'll understand it and then play some touch football with us. Which was, again, pretty bizarre because I had grown up with cricket. I played a lot of cricket. I played table tennis because I was a champion and I did soccer. I did not know american football anyhow, so I learned football. So again, this was not something I knew. I had to learn it. And once you learn it, you then actually understand it. Once you understand it, you start to engage, which is the same thing with anything else in life. The other thing was girls. I mean, the guys would spend all the time talking about girls. I didn't know any girls in India. The concept of dating in 1974 was kind of like a foreign concept. So there was just these disconnects, not so much culturally, I would argue not ethically, but culturally. And if you don't get it, yes, you should assimilate. I would argue if I had not learned football, I would be a lesser person. I'd have fewer friends, et cetera. But the flip side is, I don't have to be the guy who goes to every football game and is passionately watching every single thing, either. I can enjoy it to an extent and then walk back and go back to still enjoying cricket and still enjoying a good game of ping pong, you know. So I found myself moderating myself from being too, like everybody, and yet not so different. But when I use the word differentiation, I mean nuance. If I can tell you one thing in the course of 15 minutes that you may not have heard before, that's differentiated already. And you can do that rather easily with life experience. You can't do that just by reading books, though. You should know one thing, John. When I was eight years old and between the ages of eight and 16, I used to read five books a day. [00:27:45] Speaker A: Wow. [00:27:46] Speaker B: I was a bookworm. I used to wear very heavy spectacles. I would read a book when I was walking on the street in the bus. Apparently I was a real bookworm. And the reason I became a bookworm was I didn't have a lot of friends. So rather than trying to engage in creating friendship, to me, the easy thing was withdraw. But how do you withdraw? You would draw into a book. And so I would read. I would always speed read, and I could read a lot very quickly and absorb it. And, you know, it's small, little benefits you get in certain ways. It improved my memory speeds as well. So even today I can read a 300 page document in about 20 minutes and tell you what's relevant in it fairly quickly, depending on what it is. Obviously I have to know the domain or the subject matter. So those were skill sets that I found differentiated me. And when I can use those to my advantage, I want to get you to have a conversation with me. And if I want your interest or something from you, much higher probability of getting it. [00:28:47] Speaker A: Well, it sounds like if you read that much, it was not just one subject. You were multidisciplinary in that. [00:28:55] Speaker B: Yes. [00:28:56] Speaker A: So you could read fiction. You'd read, you know, and then you'd read really deep, technical, obviously, to get a degree in IaT, very deep, very hard subjects. And then probably philosophy and other things, too, because if you did that, you had to understand all these things, how they all work together. [00:29:17] Speaker B: So I recommend reading Plato at the age of ten. And I recommend Walt Whitman by, by seven my seven year old grandson is reading Whitman with me now. It's hard. It doesn't have to completely make sense, but what it does is it opens your eyes. You start to read and think about things that you would beyond your pale. And that's what my mother. [00:29:45] Speaker A: Your analogy of opening your eyes to me is opening your imagination. And to me, the imagination is the, is the most powerful substance that humans have beyond all animals. You didn't have the imagination. And to me, curiosity and imagination are the spirit of life. So what you have there is, and that's what I encourage all the community members that I have, to open up your imagination and keep being curious, keep asking questions, keep digging and reading and all that. Anyway, we go out on that subject for a long time. So Pittsburgh to Appalachia, talk about that evolution and why. [00:30:34] Speaker B: So the why story is unnecessarily long. So I'll brief, undo it briefly and I'll tell you what happened there. More importantly, I was running this student consulting project, and there was a professor there named Sam doctors. And Sam doctors was on the president's at that time, Jimmy Carter's White House Small business initiative, or initiative for rural Communities. He comes to me one day and he says, what do you want to do when you finish it? And I said, what I'd really like to do is I obviously need to make a living, but that's just minor. I'm alone. I don't have obligations, but I want to do something different. He said, well, you could go to work for us steel. Or by the way, in those days, us Steel and Arthur Andersen were it. That's where you went when you finished your MBA. You had MBA engineering, you went to us steel, you had MBA accounting, you went to author Anderson. Yeah. So I said, no, I don't want it to be the one of those. He said, okay, would you like to do something different? How much, how old are you? I was 21, by the way, when I went to school, 22 when I graduated my MBA. So I had already done, by the way, I had a couple of PhD offers from pretty big schools, and I chose not to do it, much to the chagrin of my parents. My uncle, who was a PhD himself, and I went, no, no, I'm going to go get life experience, whatever that is. So, coincidences, accidents. John Rosenberg was running the appalachian legal and defense fund in eastern Kentucky. He's still alive, by the way. They both are. Sam doctors and John Rosenberg. And John calls Sam and says, I need an MBA student to come here and spend a month and the reason I need that is because we are helping this small town buy itself from a coal company. And these people, while the best well meaning people in the world don't know how to go about doing that. And worst of all, I have lawyers on my staff. They don't know a damn thing about finance or marketing or structuring. So Sam comes to me and says, listen, I'll buy your ticket to go there. It's one way ticket, by the way. John Rosenberg will pick you up and house you. You go there and you spend at least five days, okay? Minimum. And you help figure out if there's something here to be done. If they like you, you like them, they'll figure something out for you. Otherwise, come back and go take the job. So I did that. Now, what was strange about the experience was that I had grown up in a town in Delhi in those days was like 6 million, 7 million. Pittsburgh was about 1 million. And I was going to this town and I didn't have any idea that the airport was 2 hours away. Literally. I got picked up by this girl named K Adrian. She drives me and we keep driving and I'm going, haven't we reached it? And she said, no, no, no. It's 120 miles where I went, Prestonsburg, Kentucky, and Floyd county and David, the small town, were 2 hours from Lexington and 2 hours from huntington, West Virginia. The two airports, that was it. So you end up there. It's obviously so surreal and different for me, but that's what I actually enjoy anyway. I loved the people here. It was. This town used to be a model town. 200 homes, thriving community bustling with over 1000 people just 20 years before, owned by a coal company. Coal triples at either end. Both of them had completely run out of coal underground, digging, you know, coal mine shafts. Many of the people living in the community, all the young people had left. There were literally only 50 families left. The water was putrid. They had to use well water and it was drying up. The sewage was floating in the creeks, the houses were falling down. They chose to organize and buy their community. They wanted to buy the whole thing. And there was a company that was willing to sell it to them. They needed 120,000 to buy it. And they needed to know how to buy it, repay it, and then fix the water system, the sewer system, rebuild the house. Bottom line. I ended up staying there two years. I came back to Pittsburgh, packed my bags, bought myself a car and went there. And I lived in, actually a catholic mission called St. Vincent's. For the first six months. And they helped me out and I stayed there. And then a whole bunch of good things happened that allowed me to go live in a garage and, you know, anywhere. So, bottom line, we arranged to have every single person get a loan to buy their home and rehab it. And they took the proceeds of what they paid for their home and paid off the 120,000, borrowed 100,000. After fighting with the EPA for about a year about whether a small town like this could afford a large sewage system. Because in those days, the EPA's requirement was the effluent coming out of the system was 99.9% pure. We had a raw sewage in the creek, and there was a swedish system that was only going to cost $100,000 to build and bring, but it wasn't approved by the EPA. So because of the local congressman, we get this guy, big irishman named James McCullough, who ran something at the Department of Housing and Urban Development, and he was the head guy for what they called the building, you know, the code, the housing code in the United States. We fly him down because congressman tells him, you're going to go there. He sees the creek and he says, I get it. 99% effluent would be pretty damn good. Red acid is coming out of the deep mine. Raw sewage in the creek. We're building a plant that's going to 99% clean this up for 100,000. They wanted to give us a million dollars, but it wasn't the million dollars. It was that it was going to cost $30 a month for the sewage maintenance bill. And we knew we couldn't afford it, long run, it would default anyhow. So where did my engineering come in? I figured out how to get the water system done and get a brand new sewage system that had never been deployed in the United States, in the mountains. And that was actually an alternative to the large systems we have that don't work very well. And just because standards were built in Washington and not for local communities. So, fantastic experience. We got the first subdivision approved. We built 30 new homes. We created. I wouldn't call it a thriving community, because a thriving community has to have job growth. Young people. There are young people now, but there aren't that many. There are not yet enough people there that go, wow, we should grow up here and bring up our family here because it's a great place to live because the job growth isn't there. So Appalachia is one of those places in the United States that's still behind. And by the way, it's communities of some remarkable people. And when I left there, I stayed two more years in eastern Kentucky doing similar work, but across four states. And I don't know that anyone has ever seen an indian kid running around at the age of 22 or 23 doing these things. But it was just the most life changing experience. I met the most incredible people and did some of the most incredible things. I'll never do any of those ever again in my life. [00:38:48] Speaker A: What you just told me was one of the most incredible stories I've ever heard of somebody at that age. To go into that environment. It's almost like a peace Corps story to some extent. But what it tells me is that there's something inside you that started really young, probably even when you were in grade school, that you saw, and maybe it was in India that you needed to do something about. Maybe I'm wrong, but, you know, what I've read about indian culture is that the poverty is. I mean, you saw poverty in Appalachia. I'm sure in India it was even worse. [00:39:30] Speaker B: Oh, it was the difference, John, between having one car and two meals versus having no car and maybe one meal. That was the difference in the poverty levels. [00:39:40] Speaker A: Yeah, I mean, I. You know, I mean, and the thing is about the caste system in India, which I don't want to get into, but. Oh, my goodness. And, you know, the analogy is that there's a caste system in this country now, to some extent, and it may not be as religiously set up or structurally there, but it's there. [00:40:07] Speaker B: Yes, every country has it. Every country has it based on social strata or unfortunate, because as human beings, for some reason, we desperately need to win. And I see this with young people here all the time, that winning is everything. And the notion of a win win is not part of the lexicon. And until we learn, I have never in business succeeded long term. I've never done a merger or an m and a deal where both parties didn't feel they won. Otherwise, it would never have happened. So illogical for us to think as human beings that we're always going to win every game, win everything, and the other party's always going to lose. The pie can be made bigger and shared more, and everyone can still be highly contented, but that's not how we think. [00:41:02] Speaker A: Well, I don't know if I agree with that completely. I think that you can meld people to think bigger and the zero sum game exists, and you try to avoid that game as best as possible. So what I counsel young people is to avoid zero sum situations as much as possible as you can, because there's always more in this universe, not just in this planet, but this universe. To me, there's, if you think outside the box, keep thinking that way, because the box is always bigger than you think it is. No question. [00:41:42] Speaker B: No question. And you have to always have hope, right? You always have to be hopeful. Yes. I'm an optimist by nature. [00:41:51] Speaker A: What's life for if you're not optimistic about what the future is? You know, to me, go after it, get after it. So I'm really encouraged by what that story. It's really an amazing story. So why did you leave then? After two years there? And what happened to two years was enough. [00:42:16] Speaker B: Two years in David was enough. There was a local person ready to take over. The community needed to build its own bench and leadership and outsider doing it for them was actually as bad as not doing it at all. So the fact that it's still there, the St. Vincent's mission is still there 50 years later, is part of what I take pride in. You know, that it did survive and last, even though it hasn't thrived. Again, I want to be cautious that you don't declare big success, you declare Small S's. Along the way, I left to go run a christian charity, actually called housing and economic development in Berea, which was in the center, most central part of Kentucky to do this sort of work with nonprofits and local governments in West Virginia, Tennessee, Virginia and Kentucky. It's called central Appalachia. It's still, I think, in the 49 counties, maybe the poorest in the United States other than the Mississippi delta. And in that work, drove 50,000 miles, by the way, a year for two years, helping to build capacity. How do people recover from floods? How do they take advantage of resources from the US Department of Agriculture and build homes with the rural development? It used to be called farmers home administration. How do they take advantage of resources from heartland? How did they do skills training so that people who build these people were really good with their hands and no shock, but there were federal government regulations against people building their own homes because it was. I mean, this makes no sense to me, but that's what it was. We actually got the law changed so that people could build self help housing. That is, I'm good with my hands. I can help build my own house and reduce its cost. And we built new homes that way with self help. So, long story short, how I got into housing is literally part of the story of Kentucky is it became so obvious to me that having a home, having a place you actually owned, and I'm not. I'm a big guy on rental housing, as you know, in apartment finance. So it wasn't. The fundamental concept of housing was stability. You had to have a place called home to have a family. You had to have a place called home to go from, to find opportunity. You had to have a place called home for your children to come back to. And it never made sense to me that this wasn't just a fundamental right, that we figured it out for all Americans. And yet, in one of the counties that I worked in, Manchester, Clay County, 80% of the homes in 1976 didn't have indoor plumbing, seems bizarre now. Good news is that in the 50 years since then, we've solved a lot of these problems in America, and we don't really have slums anymore, but we still have an acute problem with affordable housing. So here I am 50 years later, talking about the issue, but in a very different public policy dimension about how do we build a million units? And there I was, building one home at a time. So that's the natural transition to saying, how did housing become so core to my being and my passion? When people ask me, do you care about business, politics, life, family, all the above? I care about my passion as affordable housing. [00:45:55] Speaker A: That's interesting. You had grassroots about as grassroots as you could possibly be, except maybe in rural India, if you'd done it there. [00:46:08] Speaker B: And by the way, I tried to go back, John, after this experience, after four years in central Appalachia, I went back to India and spent a month and a half looking for work, doing something similar, saying, maybe it's time. My dad said, go four years young. Mandy, I did it. And everybody in India first, they first were like, why do you want to come back? That was question a. But once they got past that, they went, nothing you've done in the United States is applicable here. It was really heavily dissed that this didn't, that what I was doing here was at such a different level with so much more resource and so much more opportunity for it to be meaningful. Whereas in India, it would have been so difficult, so hard. None of the skill sets I'd learned or the competencies I'd gained were compatible. So that's why I never went back to India. Yeah. [00:46:59] Speaker A: I mean, you've got 4000 years of history there. This country only has 400 years. [00:47:07] Speaker B: That's right. [00:47:08] Speaker A: It's a different. Your roots are much deeper there. And as you said, India has only been a country for 76 years and you have I don't know how many countries or tribes, maybe going back far enough tribes basically, that had wholly different cultures. So knitting that together is probably a. [00:47:29] Speaker B: Lot harder, much harder, and much slower, but it's happening. So that's the good news. Yeah. [00:47:34] Speaker A: Yes. So you came to Washington. Why and how and what brought you here? [00:47:40] Speaker B: So I got recruited to come because they were creating a program at the federal level using a lot of the same toolkits we had created in Kentucky and central Appalachia, where they were combining self help housing with financing that was at below market interest rates with nonprofit and local governments around the country. And they said, you should come run this program. When I came to interview, actually, it was an organization called Rural Housing Alliance Rural America, a nonprofit that was getting a big grant from the Department of Labor and hired to do this work in, I think, twelve states. The funny part of it was that I kept saying, well, I've only lived in eastern Kentucky four years. How am I qualified to do this? I came here and found that, like, I was one of the few people who had ever lived in these places for four years. It was quite a revelation that so many people living in Washington had roots elsewhere, but they really never lived there or lived the experience. And so I was obviously qualified because I just came from there, and I had hosted all these people coming from the government to see what we were doing. And they said, here's the toolkit. Can you expand this and build out 30 to 40 more organizations with similar capacities? Pick the organizations and help them build capacity. So I traveled the country basically a year and a half, two years doing that, and then things changed abruptly. The consequence of elections. I mean, Reagan defeated Carter, became the president, and everything that we had been doing came to a grinding halt because things were changing in the administration. And so I had debated whether I should move back into a rural community. By this time, I had gotten married. I had an arranged marriage with a young girl from India, and we had settled in Washington, DC, and she was willing to move. And we actually debated moving to Jackson, Mississippi, and building a whole different. Yes, see, I'm used to doing things that are somewhat non traditional, and we ended up not doing it, staying in Washington. And then I ended up continuing my housing career here itself. So. But extraordinary experience at the local level, at the federal level. But it was really the last time I ever worked, even indirectly, for the government. Thereafter, it was all private sector. [00:50:14] Speaker A: I mean, I'm thinking this is just really puzzling to me because I think that you come to the United States you get a master's in business, okay? Wall street, you know, all these great opportunities working for the major corporation. You go to rural Appalachia, you learn housing at the really grassroots level with people with no plum indoor plumbing and, you know, clean water and all this stuff. Then you come to Washington and you want to, you know, do this around the, you know, on the poverty levels around the country and do it. And then you have an arranged marriage, which I'm guessing, I'm gonna guess, speculate that your in laws were thinking, hmm, who is this guy and what is he? That was all that. [00:51:10] Speaker B: Yeah. My mother said, you know, if you don't move from Kentucky to a place like Washington, DC, I can't get you married, because I can't explain it. My father in law, by the way, was the administrative head of a major state in India. And then he became the cabinet member, a health secretary in India. He was chairman of the, who studied at Harvard, by the way, so very erudite. Also had friends. So one of my coworkers, Peggy at Rural America, walks in my office one day and she says, I got this really strange call from a classmate at Harvard named Tom Timberg. And she said, I said, oh, what was that about? I said, tom Timbuk. That's a very familiar name, but I don't know him. She said, no, no, he says he knows your maybe father in law. Are you going to India to get married? I said, well, I'm thinking about it. My mother's trying to arrange it, and I'm going to meet a number of girls. Which girl is this? He said, I don't know anything more than that. He was just asking, are you actually a decent guy? And he was asking all these very strange, intimate questions, like, does he have girlfriends? [00:52:20] Speaker A: Does he, does he drink? [00:52:22] Speaker B: You know, what about his? Does he have a real job? You know? And I was being checked out without even knowing it, right? So Peggy Borges tells me the story. I write to my mother and say, who are these people quizzing these people? And she says, well, if you were marrying your daughter to a strange guy in a strange job in the United States, wouldn't you do that? I said, yeah. I mean, it sort of seems like basic DD, right? So I go, okay, okay, got it. Anyway, that's the girl I ended up marrying. Her father was extraordinary human being. And again, you know, India is that kind of multidimensional place. It's rare to find these people, but it's not that uncommon. You'll find 100 of them, 5000 of them. And, yes, and my reason for arranged marriage was I felt my children, my grandchildren would lose their culture unless I married somebody from India. And my mother persuaded me that the only question was, could I find somebody who was compatible with me? And that required going there and meeting and spending a little bit of time. But my entire trip was one month. I met, got married, came here, she got a visa, and came three months later. And so December, you know, we got married in September 1980. She was here in December. And all this stuff with the election happened after that, and we decided to stay in Washington. And that was the, you know, and she's a dancer. She's whistle married, of course, and it's been 44 years. [00:53:59] Speaker A: It's, you know, that's, that's just culturally, to me, complete, you know. Yeah, I just. [00:54:11] Speaker B: So I do have that traditional streak somewhere, right? There's this one bone in my body that says, oh, that's traditional. And then there's all this other stuff that says, oh, no, no, I totally need to be different. I keep trying to prove that. [00:54:29] Speaker A: All right, so you, the transitions continue here. So, so you're in Washington. You realize that President Reagan now is in the White House and things are different. There's not quite the emphasis on the social Jimmy Carter kind of thought process. So business kind of rose its head, apparently, to you, right? [00:54:54] Speaker B: Yes. Why? [00:54:56] Speaker A: Mortgage banking. And how did you get into it? [00:55:00] Speaker B: So I created at the largest housing co op in the United States, called Greenbelt homes. Greenbelt, Maryland was built as a planned city. I became the first, went as a deputy, and then became the general manager during a major in place rehab program. And the problem with co ops outside of New York was they didn't have any financing so that they could transfer and sell their units. And this was a market rate cooperative, meaning you could sell your unit to anybody who wanted subject to the approval of the co op board. But there was no financing available. It was called share loan financing because you weren't financing real property, you're financing a share of stock and the lease, a perpetual lease to the unit. So after I became general manager, realizing we were just creating this pyramid scheme where people were taking back loans, and so there was not any natural market, we created something called the Share Loan Service Corp. Which became one of the first co op financing for share financing. And that's how I got to know Fannie Mae. There was a lady at Fannie Mae in 1984 called Beth Markus that created something called share loan financing at Fannie Mae, a secondary market. We became one of the first customers. In order to access it, we had to partner with somebody as a co op, and we partnered with the National Consumer Cooperative bank, which was supposed to be doing this and didn't have a retail wing, so they actually invested in it. [00:56:41] Speaker A: Okay. [00:56:42] Speaker B: And then we partnered with the national. [00:56:43] Speaker A: Co op bank before. [00:56:45] Speaker B: Right. And by the way, that's where I went next, taking this share loan thing to them, creating mortgage business, and became the corporate vice president for real estate there. So that's the transition. But one of the more unique things we did in the middle of all this goes back to my thinking about government and the role of government, which, of course, has evolved in eastern Kentucky. It was the sole reason people existed. If there was no welfare, if there was no black land benefit, if there wasn't government intervention, there was no economy, whereas in Washington it was. We often did things despite the government or in spite of it rather than because of it. And here was a chance for the government to step up and do something useful. Prince George's county actually was the first housing authority in the United States to float single family bonds, that they put an allocation in it for share loan financing. And we had to go to standard and poor and Moody's and get it rated for them. And I remember standing in New York, which I hadn't done until then, explaining to them what share loans were and why they were the safest investment, how they could rate the bonds. Anyway, we did get financing. A small sliver created share loan service Corp. And did it with the co op bank after that. [00:58:07] Speaker A: Let me ask you, because New York is the center of co op housing in this country, certainly. And maybe it derived in Europe. I'm not sure where co op originally started, but clearly the banks in New York were doing it and have been doing it for probably over 100 years. I'm guessing co ops go back to the 19th century. [00:58:29] Speaker B: Yes, they do. Yep. [00:58:31] Speaker A: And so there was a culture there. So I'm guessing that lady you talked about at Fannie Mae is a native New Yorker. I'm just a guess. [00:58:40] Speaker B: Probably not. I don't think Beth was from New York necessarily. But what Fannie did was get pressure to create a national secondary program from the savings and loan industry from New York. And so when we went to them and said, we're in Maryland and we want to sell you share loans, they went, oh, good, now we can call this a national program. And the banks in New York were looking to offload because they were loaded up with the loans and they needed a secondary market. And that's why by the way, Fannie and then ultimately Freddie Mac started share loan financing programs. But we were among the pioneers of that. The other problem was there was no laws dictating enforcement. So we had to pass a model law in Maryland. So Maryland has one of the few model cooperative laws in the country which specifically talks about share loans and how you perfect a share with the UCC and you perfect the lease and you can record the lease and all that sort of stuff, because otherwise you can't create a secondary market if you don't have security and if you can't enforce your security rights. So we did all of that work. Public policy in terms of state legislature, Fannie Mae in terms of secondary market, built a company in between to provide access to it. And of course, that company is now national and is doing business all over. Thats what I went to the Co op bank to run, basically, is when the co op bank realized thats interesting, they came to the board of Greenbelt Housing and said, we want to buy the rest of our interest in this, your interest, but well continue to provide financing here. And they turn to them and say, we want to hire this guy to run it. And we had a very interesting six month transition where I left there and came, by the way, that co op is still thriving, et cetera. So again, I like in most cases, it never happens all the time to leave things in a way that they continue, if there's any valid elements to it, long term. And sometimes that's impossible, but many times it has happened in my life, and I'm very proud of that. [01:00:52] Speaker A: It's interesting. The culture of a co op compared to a condominium is an interesting analogy. I look at a co op as kind of like a club, like a social organization, to some extent more so than a condominium situation, which is really just individual ownership. They're bond together similarly with an association. But it seems to me that a co op to admit someone in is more of a social thing than an economic one. To some extent. [01:01:26] Speaker B: To some extent. But the reason why co ops are different is because you have to do. You have so much more linking you financially. They carrying charges in a co op that pay for the property taxes that pay for the improvements in all the common areas. You don't own your unit. So even major improvements require that they be budgeted and financed. So the budgets of co ops are bigger, the interdependencies are greater, the enforcement rights are different. So it does lead to a very different culture. Also, because of financing constraints, co ops never took off in this country, we kept thinking that doesn't make sense because things you would really love to believe. Think about it. Wouldn't you love to believe that in America, having mutual interdependency while maintaining privacy would be the norm? We've got at least the privacy peep down. We don't have a mutual independency. [01:02:31] Speaker A: But that's the independent nature of the american. Absolutely. [01:02:36] Speaker B: Yes. [01:02:36] Speaker A: I understand culturally, 400 years in this country. [01:02:39] Speaker B: Yep, yep, yep. And it's not. And it's going to change. It has to change because it has led to such a level of divisiveness as well that ultimately will cause us more harm than good. And so there has to be moderation. [01:02:55] Speaker A: You talked about green shoots before we even talked about. My thought is our millennial generation, perhaps the. Even the group behind them, Gen Z, the Homelanders. I've just finished a book called the Fourth turning is here. I don't know if you've read that book. Yes, it's. You know, he talks about these various generations of people. My sense is that generation might look at american culture a little differently than our history, and I will see how it evolves over time. [01:03:29] Speaker B: Things tend to actually remain more the same than they change. As you get older, you realize that they change a lot, but they actually don't change that much. [01:03:38] Speaker A: You're right about that. So how did WmF group come to be? [01:03:45] Speaker B: So WMF was the product of a lot of these experiences. When I leave the co op bank, I want to be an entrepreneur from there on. I have never hesitated on. I really don't want to, quote, work for someone. Now. You always work for someone, right? Whatever, however you want to define that. But I created a company called Clark Financial Services with a great partner and a couple of investors. We took some of the elements of what we were doing with co op financing, blanket loans, share loans. We took some of the elements of multifamily finance, broadly moved it in through a single family prism, continued the relationships with Fannie Mae. And our bank at that time that had was supporting us was the National bank of Washington. Because I'd left the co op bank, I left on good terms. But still, when I left and a whole bunch of people left with me, that wasn't going to be the long term strategic partnership for me. So we found another bank. It happened to be led by someone I knew. And he said, well, why don't we work together? So they didn't have any ownership, but they provided warehouse lines, they provided support systems, they give guarantees. So we could become a seller, servicer and sell loans. So we kept an office in New York, we had an office in DC, small group, 16 people. Friendship Heights, DC was our headquarters. As again, same thing started to happen to me then. That has happened three times now since then, which is everybody else started entering the business and they were larger and they were offering more to the client base and it got harder to compete being a one horse pony. So the National bank of Washington, which has this relationship with us, looks at us just like National Consumer co op bank looked at shared home services and says why don't you become part of us? But you know what Shekhar, if you come here, you're going to be running a little bit bigger platform. So I was brought in, folded our team in. We continued the share loan in a single family kind of modus operandi. We continued the blanket loans as part of a multifamily focus this company had. They called it Washington Mortgage Group. WMG was a subsidiary of a holding company for the National bank of Washington. And I was there for less than a year before the bank itself goes down, the holding company goes into bankruptcy. I was in 1989, okay. But before that we were doing fHA business. We had gotten the Fannie Mae dust license by buying one of the companies. There was a guy at Fannie Mae called Larry Dale who was running multifamily, calls me up. [01:06:44] Speaker A: Weren't you one of the first dust lenders? [01:06:46] Speaker B: Yeah, among the first six or seven, yes. Yeah. And so we took over this company's portfolio called AGM, become a dust lender. That was in literally in July of 1989. In August, I'm literally, I'm driving to vacation. I'm in Baltimore. We've gotten that far. And the news says national banker Washington seized by FDIC. I told my wife, I said, and my son, I said we are like turning around. And that's what we did. So we turned around and we came back and there it was. The problem was the bankruptcy of the parent meant that we were subject to the whims of the FDIC. I got a very nice call from Fannie Mae, from a guy called Tom White. And Tom says, you know, shekhar, we really appreciate everything that you've done and what you've built. But you know, until this cloud lifts up, because there's a 90 day look back provision in bankruptcies, we can't do any business. You know that, right? I said no, no, no, I know that. So I got 90 days here. So let me look at this as the greatest opportunity of my life, 90 days. I assembled our whole staff, which is like 50 people, entire organization. And I said, we got three months. We can't do any business. We have a servicing portfolio. We have some income coming in. We can pay our bills. That's it. But we can't do any lending. How would you like to reimagine our business? It was huge. It was the best planning sessions we've ever had. No interruptions except for people calling from the FDIC and the creditors and the lawyers serving papers and saying, give us your records. It was, like, amazing. We said, we want to build a national mortgage banking company focused predominantly on multifamily, maybe commercial broadly, but multifamily in particular. We had to build it on the backs of our GSE and agency relationships. So Fha, Fannie Mae, Freddie Mac, because the stickiest value proposition in servicing. So we were creating value. But how do we finance our way out of the bankruptcy of the parent? Convince the FDIC to let us go cleanse ourselves, if you will, so we can do business. I had to go find an investor who had some deep pockets and could help us recapitalize, but was going to let me and the team run the company and own the company. The rest of the. At least 50% ended up because of a banker in Boston, by the way, named Tehr Newberry. Finding a saudi investor. One of the members of the royal family went to Riyadh, cut the deal, and went to the FDIC and said, here we go. Well, pay you back all the loans, so we'll clean out all the lines. This is how much we can afford to pay you, and we're going to buy the company and recapitalize it. And Fannie Mae, will you approve this if we do it? [01:09:54] Speaker A: Okay, hold on. Saudi? [01:09:57] Speaker B: Yes. [01:09:58] Speaker A: So you know where I'm going with saudi investors, right? [01:10:01] Speaker B: Of course. [01:10:04] Speaker A: Lending is against their faith. [01:10:06] Speaker B: So how do you. [01:10:07] Speaker A: How do you sell that? [01:10:09] Speaker B: Well, they were just doing. They were just investing in the company. They weren't lending any money. The fact that the derivative exists out of what you invest in is not against Sharia law. It's just technical. It's all technical. So they were investing. They owned a piece of the company. He said, on my board, one of the funniest stories I tell about WMF. In our first evolution, 1990, we go into business as Washington mortgage Financial Group, changing name slightly, only we're still based in Vienna, Virginia, same people running it. One of the funniest stories is Fannie Mae. About six months into this, we're now back in business, got warehouse lines. Larry Pendleton at RFC is giving us warehouse lines and the business is now beginning to come back, etcetera. And people were very supportive. I will tell you, in adversity, you find out who your friends are. I have not really found out who my enemies are. I found out who isn't a friend, but I don't consider them enemies. They're just people who said, yeah, let it blow over and we'll talk to them again. But then I knew who my friends were because they kept calling and saying, you're going to come out of this and you're going to be fine and I'm going to be there for you. That's different. Right? So six months into this, in 1990, I get another call from Fennyway and they say, you know, we love you and we're so happy you're back in business, and we're so glad that you're focused on affordable housing, by the way, and I'll tell you that story in a second on how that happened. But you only have two members of your board and we really are uncomfortable with that. The two members were this gentleman named Mohammad al Tuaidri, who was from Saudi Arabia, and me. It makes sense to have more board members. We had two board members. He controlled 50% of the company. I controlled it and I ran it and life was good. We had to agree on everything of importance. So I said, Jesus, what do I do now? So I went and found Jack Riley. I said, you know what were missing? Ive got a Hindu and Ive got a Muslim and I got somebody from Saudi Arabia and somebody originally from India. I need an Irishman and I need a Catholic. So for a period, literally, of six years, the board consisted of Mohammed al treasury, Jack Riley, who created rally mortgage and myself. And our Fannie Mae was very happy. Jack was an iconic figure in his own right, became a great, great friend. And we used to eat spicy food deliberately just to tease him because he went red when he ate spicy food and the other students enjoyed it. So the evolution of the company was very simple. We were very focused on being the biggest company. That was the goal. Here was an industry that we thought was in its fledgling stages. There was literally only one company that had Dovan Millennium that had a billion dollars of servicing. There are five now that have more than 100 million. 100 billion. So this was long time ago. But in 1990 we said, oh, no, we could be the biggest. How are you going to be the biggest? Well, you have to have money, capital, you have to have the right team, you have to build nationally, you have to have all the licenses. So we bought Freddie Mac license, we bought one of the largest FHA companies and became the largest FHA multifamily company. We started to buy commercial mortgage bankers. We bought eight companies, sold, I think three, but we basically became a full platform for commercial real estate, multifamily finance. And by the time we sold in 96, when my partner exited his investment, we had already grown to 10 billion, and we were doing $2 billion a year of business. So when that sale in 96 occurred, it was because of a guy named Rod Hellere, who had created a company called NHP Financial. NHP was a government spin out, if you will, because it was created around the time of the tax deduction financing mechanisms. And he had taken that company and built a property management business, sticky because the ownership of the assets, they only owned 20% of the assets in a separate company, 80% were owned by limited partners, and they had a 15 year contract to manage properties. So it was a property management annuity business, affordable, focused. He said, join me. We've just gone public on Nasdaq 96. His principal shareholder was the Harvard Endowment. The second largest was Capricorn investments. And they said, join us, we're going to build something really huge, large, blah, blah, blah. By the way, I learned a lot about what promises like that mean. I've explained. So we then in 96, we sell in 97, I got a call at about 01:00 a.m. from one of the Harvard Endowment board members who says, sheikh, I have some news for you. We can't say anything because it won't be released until tomorrow morning, but we're selling NHP to AIMco and we'd like to not sell WMFG, which was kept as a complete siloed. So we had less than a year in that, quote, public ownership for in a small cap company. And Aimco bought both the partnership interest in the private company as well as the property management business. That's how they went into the affordable space, Harvard. We ended up spinning out at the time of that merger into an independent public company in December of 20, no, 1997. [01:16:04] Speaker A: You learned a lot from that, I'm sure. [01:16:08] Speaker B: I learned that nothing is permanent. You play the cards as they're dealt. You don't try to keep wishing for something different. Being a small captain, we create a lot of excitement around going public, because the only other company that was public that looked vaguely like us was Ambrasco, and that was it. And thats why im so proud of what Willy has done, by the way, because he has taken this to the next level, which I wouldve thought I wanted to do, but then I realized I didnt have the stomach for. But the beauty of being public is that you have currency. The bad news of being small cap and esoteric is no one covers you. Youll never raise capital. So the advantages of being public are diminished by the cost. So it was a wonderful experience, an expensive experience, and ultimately, we ended up selling it to a much larger company that became public prudential insurance in 2000. And so that's my quick 15 year history of WMF, which was, I stayed with PRU for three years because it was part of the deal. They needed somebody to run this agency space for them, and they wanted somebody to build out a separate managed business of assets, because they were going into third party management heavily that would focus on core mortgages. So they have a general account that invests in mortgages. They wanted third party money alongside it, and then they wanted the agency business so you could build a broad distribution platform for all these assets that you could create. And they had 100 year plus history and a deep balance sheet. So I was there for three years, helped them do some m and a, by the way, because they didn't have a lot of people who've done m and a. We might be, and you should ask them, but we might be the most successful acquisition they ever did. [01:17:59] Speaker A: That's interesting. Can we go back a little bit to the WMF platform? I could. Your roots were multifamily and, well, more single family, and then multifamily. And so you went through what I call the worst client, worst crisis in my career was 1980, 1991 92. Commercial mortgage banking basically disappeared almost altogether. I interviewed Ethan Penner, who was the progenitor of the CMBS industry, and he talks about no one could get a commercial loan or any commercial property of income producing asset at all anywhere. And so he went in as a bond salesman. He was a bond salesman at Grecsel Burnham, and then went on to, he was at Morgan Stanley, and he met with a the rating agencies one day he said, we can't rate any package commercial loan that you can do. I said, okay, here's the Empire State Building, I'm bringing it in, and we're going to ask for a $50,000 loan on the Empire State Building. You're not going to give me a credit for that. Just an outrageous request. [01:19:20] Speaker B: Right. [01:19:21] Speaker A: And so they said, yeah, I think we would. And so he was able to at least get some, you know, amazing credibility there for that. So in my mind, he was, you know, there it is. So he able got that thought process across the board, and, you know, so at that time, it was just an impossible thing. So your roots, because it was all in the single family, multi, it wasn't as dramatic. And then I interviewed Tom Bizzuto, who talked about the multifamily business, which he was at Oxford and basically was at HUD when he first started his career. So he knew the roots of that industry and stayed in that lane the whole time of his career. But he said we were the dwarf stepchild in the corner in the capital markets, you know, in the multifamily space. And, you know, and that was throughout the early nineties and, you know, the course of Oxford and all the syndication business in the eighties and all that. [01:20:30] Speaker B: And. [01:20:32] Speaker A: And then suddenly in the late 1990s and early two thousands, the multifamily business say, ah, this is it. Panacea now. [01:20:42] Speaker B: Yeah, absolutely. [01:20:44] Speaker A: So it's, it's interesting to hear your career going through as a multifamily only platform. You were kind of not in the trough like the commercial industry was. It's interesting. [01:21:00] Speaker B: And the other thing quickly to note there is that it was, it was backed by housing rules. It was essential housing. When we at WMF decided on what we wanted to make a statement about to our clients, even though we were doing $3 billion a year, including multifamily, initially, some single family, and then we abandoned that and commercial real estate, all the food groups, the logo in every office. We had 18 officers around the country quoted the first paragraph of the 1949 housing act. The Congress of the United States hereby declares that every American has a right to a home that is safe, secure and well maintained. And that was in every one of I 18 offices. And people would come in and say, don't you do other things? Yes, that's our North Star. That's what we care about the most, is. And so that comes back from my roots, obviously. But everybody believed in it, that this was a mission. We had a mission. We had to make money. We had to do well, we had to make returns for our shareholders, but we had to serve our clients well. But the main thing was ultimately, the people who we cared about the most were the people who lived in what we financed. [01:22:35] Speaker A: Well, it's interesting. I started my career at Prudential Insurance company. So when we started, we were really the first major institutional investor in real estate. I mean, we set up the first pension fund advisory group. PrU was a pioneer in commercial real estate. They were really the leader. There was no other institutional investor like theme. Now, Metlife, of course, was right there too, and they were doing much larger deals. We were much broader spectrum, doing a lot more different things. But it was interesting that the emphasis was the multifamily was kind of as, like Tom said, the stepchild in the corner. I mean, we did multi. We certainly did it. But, you know, office, retail, industrial, those were really the mainstay. [01:23:27] Speaker B: Oh, absolutely. Hey, there was a guy at principal life who, I don't remember his name. Principal life CIO, 1995, at a conference. [01:23:35] Speaker A: No beds. [01:23:36] Speaker B: No beds, yeah. You remember that? [01:23:38] Speaker A: Oh, I know. Well, I've done a lot of business with principal. Yeah, banker was banker's life before principal. [01:23:45] Speaker B: Yes, exactly. [01:23:47] Speaker A: So, you know, I met with them real early on and he said, no bedste, no. And we're not doing any hotels, none of that. Nothing with a bed in it, which is a totally different philosophy. [01:24:01] Speaker B: Everything has changed. Everything has changed. And Prue didn't feel that at all, because Prue had done the examination of what happened in the nineties and they found, they did their wonderful analysis and they said this, the lowest volatility is in the apartments because they've diversified. Rental, duh. Anyway. And so therefore we want to be in beds, in apartments. [01:24:25] Speaker A: The irony of that statement is that, you know, apartments are one year leases. [01:24:31] Speaker B: Yes. [01:24:31] Speaker A: And that was the argument up front was, that's too unstable. I mean, you know, rents could go anywhere. How do we predict that? [01:24:39] Speaker B: How do we predict that? Exactly? [01:24:40] Speaker A: But at the same time, they're doing hotel deals. How about the rents changing every day there? So, I mean, another question. [01:24:48] Speaker B: Absolutely, yes. [01:24:50] Speaker A: It's just, you know, it's a mindset thing. [01:24:52] Speaker B: It is a mindset. And it changed. And it changed so dramatically that somebody like Willy Walker could enter the picture. You know, when you think about the ethos there it was life company with Walker downlopp. It was Green park financial, the dust, which was off to the side, but doing its thing, valuable because Mallory was on the board of Fannie Mae, and you should do this, and thats a business you should be in. And then Willy comes in and he goes, these should be together, one distribution platform. And then, as you know, and I mentioned to you, we helped him with three different ethos over the years. And then a fourth more recently was, how do you become full service multifamily? You need Fannie Mae, Freddie Macfhae. That was column financial. How do you become the dominant player or one of the dominant top three players in agency, you have to create a bigger platform. That was the CW capital merger. And then how do you diversify your distribution when youre competing against the behemoths that have these huge investment sale brokerage operations and get to the client earlier than you do well to create that, that was the anglo financial and then the build out that he's done since then. [01:26:10] Speaker A: What's ironic, Shekar, as you're talking, is that you set the table for Willie because you did everything that he's done. [01:26:19] Speaker B: To some extent, he and I agree on that. It was smaller, it was in a different era, but there was a lot of similarities. That's why I'm so proud of what he's done, frankly. [01:26:31] Speaker A: I can see why. Because of what your story you've told, because you went public, you were involved in all that. [01:26:39] Speaker B: You built the whole agency networks. I mean, I chaired the first fanny dust advisory committee because, and then Howard took over who was at Green park. The reason why this is significant is that as I evolved in Beatmande, we thought we could do something that was different. Because look, I'm independent now. I'm not a beholder. I don't share. I belong to all kinds of trade associations and I go to meetings, but I'm not owned by anybody. It means I can testify in Congress and tell the truth there. I can say what I believe. And yeah, people may not like it, it may not immediately help their business or may hurt their business. But if they don't want to do business with us because of that, okay, that's fine. See, I mean, it's all adult, right? And what I'm saying, why I'm saying all this is when I look at our role as bequend advisor, it's been thought leadership. In 2005, I was watching the evolution of LJ Melody into CBRE with Brian Stauffers as the head of something new called head of capital markets. He grabs Peter Donovan and brings him in and makes him the head of a Fannie because that's how they got a Fannie license. They go, Holy Toledo, they'll make it work. And 40% of their lending business became connected to the investment platform. But they did it by some very simple but difficult things. Compensation, co. Location, blank, blank. I said, that's the future. So if you're a debt platform and you don't have the distribution access to the investment sales, you're going to lose. We started hyping that conversation and then we did a whole bunch of transactions around it. So thought leadership consulting. We did Ara into Newmark and then helped with what happened with Berkeley Point and now Newmark multifamily. So we get involved in these seminal things. But it could only happen, John, because I could have a vision beyond running one company to a larger industry. [01:28:53] Speaker A: There was a template, though, for the LJ Mel, the CBRE holiday familial really was the first to do, in my experience in doing both sales and mortgage banking and doing what they did. They kind of set the table for that industry. And there was almost an ethical issue with them to some extent too. And maybe you're familiar with this issue. Yeah. And as we know as mortgage bankers, when we were one, we knew going in we were dual agents. [01:29:26] Speaker B: Yes. [01:29:27] Speaker A: And so the dual agency issue is a problem. And for the listeners, just to explain this, as a mortgage banker, you're representing the lenders that you service for, but at the same time you're hired by a borrower who is looking for finance and so he or she is hiring you as an agent to represent them to bring money. Well, there's an inherent conflict there if you're trying to bring capital from one of your correspondent lenders and or your relationships on the servicing side to that borrower. So that's an inherent problem. And you almost, and not until probably halfway into my end, my career at the BF saw company and mortgage banking did we have to disclose that in a legal document as part of our agency agreement with our borrowers at the time. And I got fired by a couple of clients as a result of that. He said, wait a minute, you can't bring me one of your corresponding, that's, that is a conflict. Got it. Attorney. And he said, no, I can't continue the relationship because of that. So it's an interesting conflict. But, and I, you know, holiday Folia was the first one that basically told their borrowers, you know, when they or their, or they're more of their sales people or their sales clients. So if they're getting a listing on a property, you are going to use our mortgage banking firm and the buyer of that property is going to use our firm to help them arrange financing for this acquisition. [01:31:16] Speaker B: I tell you why I never had a problem with it because of two reasons. One is I believe honestly that transparency solves a lot of problems. So if I explain to the person who's paying me what they're paying me, what they're paying me for, what is the value that I'm providing and disclose it for a long period of time, in the mortgage banking industry, we were not disclosing that people were making money in many different ways. And that was a problem to me. Not telling people that we're selling a loan at a premium and that's part of the origination fee. Not telling them that there was a trade being made on the servicing, those were problems to me. Disclosure transparency addresses one kind of problem. The second was when we were offering, we became one of the few people in 1999 that said, we are going to always offer our borrower multiple choices, even if they don't ask us for it. You could call me up and say, I want a Fannie Mae loan. I know you do. Fannie Mae loan. I want a Fannie Mae loan. The job of our loan officer was to say to you, done. I could do that. I'm also going to show you a Freddie Mac court and FHA court, and a life company court, and a CMBS court, and a bank court, and a debt court, if I can get provide those, because I owe it to you for you to know what your choices are and what the nuances. We used to do that routinely. [01:32:45] Speaker A: That's what a mortgage banker should do. [01:32:47] Speaker B: Well, number one, if you do that and you are transparent about how you make money, I think you can represent both very, very sufficiently and very well. Now, did it make all the agencies happy? By the way, we were also one of the first companies that went to a commission structure for loan officers. It was invented for us by Michael Hirschberg Ferguson Partners in 1995 in something we call plan 2000 at WMFG. And we said loan officers because I was always interested in having a few loan officers that did a lot of business and then a whole bunch that did some business that could gravitate there. [01:33:31] Speaker A: Because the idea Ferguson is a head hunter at that time, they used to. [01:33:36] Speaker B: Do a lot of consulting and advisory work, and we hired them to do our strategic planning for us and so on. [01:33:43] Speaker A: That's interesting. So how did they figure this out? I mean, what did they use as a model? [01:33:50] Speaker B: Single family model? We use single family. We use non bank specialty finance. We studied a range of industries and how they evolved and said, how do we attract the most talented people? We cannot limit their upside if we're going to attract the best talent. That was it. [01:34:07] Speaker A: Align incentives. [01:34:09] Speaker B: Align incentives. It's variable comp with a low base, fringe benefits. So you can live, but you're not thriving. In order to thrive, you have to do more. You're going to reach an elite status, and at that point you can earn even more. But we're not going to cap your earnings. That's a little bit of what we invented as well. Along the way. We also invented, by the way, the credit facility where Fannie and Freddie could do something for a larger institutional borrower because the world was institutionalizing. Reits were coming into Borg and figuring out how to do. We did the first unbelievable hundred million dollar transaction with Berkshire Realty in 1995 that, you know, and then since then, you know, like, I don't know, 100 billion has been done. [01:34:55] Speaker A: So is this like a bank line? [01:34:57] Speaker B: Yeah, it was like a bank line, except you were allowed to substitute. You could do floating rate, fixed rate agencies had this power because of their federal guarantee that they didn't know existed and how to use it exactly in the securitization market. And all of a sudden we were doing getting them into businesses that were lower risk, lower reward, but easier to duplicate at do at scale. [01:35:22] Speaker A: Turning them into an investment bank is what you're doing. [01:35:25] Speaker B: Exactly. So we did all of that. And then the Beakman story has always been the most interesting to me because we've caught every wave. There is the evolution of the service company and the diversification of revenues, the emphasis by those companies now on recurring earnings. How do you create a company, a public company? A large public company needs a core basis of earnings that occur every year somewhat, no matter what. If they have that, they can be a significant and large public company. But still, in our industry, even today, we only have, you know, what a mid cap is, right? It's 10 billion. Now. There's exactly one company above that in our industry right now, still, all these years later. So I aspire that we will have a company that is large, diversified, strong recurring earnings, solid, one of the best places to work in America kind of thing. One of the best. If you think about banking and non banking and specialty finance, you say, I got to go there because that offers me the best career path and I could actually be there ten years and thrive. And my earnings are not capped other than by ambition. [01:36:42] Speaker A: Well, youre a, you're painting a scenario that someday, and hopefully in the future, we can have a profitable company that focuses on affordable housing in a methodology that kind of is somewhat of a public private structure that doesn't burden the tax holder, the taxpayers in this country, too much, but also provides a social benefit for, for the pub private sector. Now, Amazon recently has had a program. I interviewed Katherine Buell, who wrote a six page memo to Jeff Bezos and said, yep, I see it. Let's do this. They invested $2 billion, probably largest investment of private sector in housing probably in the history of this country, I'm guessing. [01:37:33] Speaker B: And John, they just added another billion forward back. [01:37:36] Speaker A: Yeah. Yeah. And you know, why is Amazon doing that? [01:37:45] Speaker B: Enlighten self interest. [01:37:48] Speaker A: Well, let's get back to the roots of Amazon. The customer comes first. Today is day one. I mean, if you read Jeff Bezos annual letters, he wanted to solve the customer as much as he could. The customers comes first always. And who is the customer? And so where is the largest demand right now in all of housing? There's no bigger demand than the affordable space that I can think of. [01:38:19] Speaker B: Absolutely. We're short units we haven't built and we can only build at the high end. And the cost of regulations and also the extraordinarily archaic systems we use to build unbelievably old land use, zoning, construction materials. So I once heard the CEO of a company that doesn't exist anymore called Katera, who was trying to reinvent the housing, building space and material space to say that if the rate of innovation in housing, basically the way we build houses, was the rate of innovation for building an iPhone, it would take 4000 years for us to get an iPhone. It sounds a little stark, but the truth of the matter is we're still using stick belt, we still use the same trades, we still build it. Yes, we've improved, we've gotten faster. But then there's also been all this government intervention, both local, state and federal. This can be solved. This problem can be solved. It's man made problem. Man made problems can be solved by man and women, you know. [01:39:30] Speaker A: Well, I've been intrigued by the affordable housing space for quite some time and in many ways. But, you know, I interviewed Vicki Davis. Yes, she led, you know, the state of Maryland's housing group at one point prior to that, she was with Trammell Crow, I mean, in multifamily. So she has a very interesting career talking about that. And I challenged her. I said, so what is it? You know, how can we make, make it profitable to be in the multifamily affordable workforce housing space? And she comes at it just like you do from engineering. She has like three degrees in engineering. She's an amazing educated person. And she says, you know, we can create value in places that you don't really know you can do. And that's sometimes re entering the physical space into places that are very special. She's doing it here in Washington's, you know, the former Walter Reed hospital with Hines right now. And it's quite a project that they've done there and they're continuing to make it happen anyway. It just, you know, she looks at things differently and to me that's what it's going to take. It's going to take a little different perspective on things. [01:40:56] Speaker B: No question. Absolutely. [01:40:59] Speaker A: So I wanted to get into that a little bit more. So let's talk about some transactions, if we can, and some of your deals. You talked about Walker and Dunlop. I would say that what you did was a template for Willie, it seems to me, because you weren't able to get the scale because of the capital markets at the time, obviously, and things that happened to you. But now he was able to transform and make it happen, become a public company. And his personality is such that. [01:41:35] Speaker B: He. [01:41:35] Speaker A: Wasn'T going to take any prisoner and he was going to be, you know, and he, in his podcast with him, it was clear that he had some obstacles. He had to get out of the way. Certainly did it. He had, he built a policy internally that he was probably the only episode where I probably should have said this, is that the language here is a little severe. Yes. [01:42:01] Speaker B: Right. [01:42:02] Speaker A: But he got that out of the way. [01:42:06] Speaker B: But there are others who have done it in their own way. The CEO of Colliers and what he has done, spending basically a billion dollars building an asset management business alongside a sleepyish investment sales brokerage business, something that hes now building on the debt platform side. But the diversification of revenues, the growth, I mean, hes now a $7 billion pocket of the company. He was a $2 billion company just five years ago. [01:42:33] Speaker A: Did you help them? [01:42:34] Speaker B: Not bad. Not bad to spend. Well, we've sold him things. We admire him from afar. We look at his model, but we've been involved, but not as much as certainly with some of the others. The other one that I admire is Bob Celentic and CBRE, how they have built what I would call not only a recurring fee model but a recurring talent model because everybody knows in our businesses that the talent does exist in its people. But how do you create something where you don't just have to re up everybody every x number of years? [01:43:12] Speaker A: Well, I'm also a CB alum, so I was with CB in the early eighties. It was a completely different company. [01:43:21] Speaker B: Oh, absolutely. Yes. It was heavily indebted. It was sleepy. It was thinking global. [01:43:27] Speaker A: They were the largest brokerage firm in. [01:43:28] Speaker B: The country even then. Yes, right. [01:43:32] Speaker A: We were the big dogs. We come into a market and CB had their own culture and it was unique. There was no other culture like Seabeed's culture, Grubanella copied us, and it was quite something. But the early nineties crushed it. [01:43:50] Speaker B: Yeah. [01:43:52] Speaker A: And they had to change. And as you said. And they did. And they did. It took time. No, at least three metamorphoses in that, in that ten year period, I think. [01:44:04] Speaker B: No question. So there are people who have taken pieces of what they had and they haven't built it from scratch, necessarily. They've taken it, readapted it, fixed it. You know, I mean, in the world we live in, I mean, there is a Cushman Wakefield, and Michelle is doing a great job there. Theres clearly a new mark with Barry Garson and what hes trying to do there and his focus on talent. So there are companies that are emerging in the multi billion dollar space. Theres Hassam Naji with his focus on research and just building the largest distribution system in mankind and wondering whether you could stitch all that together. So the point is there'll be companies in many shapes used. But what I continue to see is consolidation, consolidation, consolidation. [01:44:53] Speaker A: Let me talk about one that I'm very familiar with. [01:44:56] Speaker B: Yes. [01:44:56] Speaker A: And this is somebody that I've known for almost the beginning of his career, and then his protege, who now runs this company. And this is Bellwether Financial, which is started in Ohio, Cleveland, as a mortgage banking firm and then was acquired by enterprise, I believe, ten, maybe 15 years ago. [01:45:21] Speaker B: Yeah. Eleven years ago we did that deal. Yes. [01:45:24] Speaker A: Yes. So enterprise is a company that has its roots with Jim Rouse is from a, you know, philosophical and philanthropy level, was a regional mall developer and said we need to invest. Of course, he built Columbia, which was the largest land community in the country, and he saw the housing issue, of course, developing from that, being a land developer. And he said, you know, we need to do something about affordable housing in this country. So he set up enterprise, and that became his legacy. And that was dedicated and still is to affordable housing. That's really the major, perhaps the largest private sector affordable housing developer or investor in the country. One of two or three, yeah. [01:46:16] Speaker B: And it's as run as a nonprofit. [01:46:19] Speaker A: And I think you were or are on the board there, if I'm not mistaken. [01:46:23] Speaker B: That is correct. I'm on the board of trustees. [01:46:25] Speaker A: Okay. There's, again, a continuation of your passion in the affordable housing space. [01:46:33] Speaker B: Of course, we help them. We've helped them grow. Yes. [01:46:38] Speaker A: Their acquisition of Bellwether is an interesting one because why would they buy a traditional mortgage banking firm? So I want to ask you that, since you helped engineer that and then their expansion plans. And the irony, of course, there is a Todd Harrop is somebody I've known since almost the beginning of his career, who was the head of production there. And his now boss was his protege, DJ. [01:47:06] Speaker B: Yeah. [01:47:07] Speaker A: So a little story, a little side personal story about DJ. I saw him when he was an analyst there at Nationwide when he came in, nationwide insurance company. I was a correspondent in Nationwide. I've been for 20 years, well over 20 years. I was a correspondent to them. So I knew, I saw Todd when he was an analyst going up all the way to run the group. And then, of course, DJ. But I knew DJ was kind of special when I met him. And the last time I physically saw DJ Effler was in Michigan Stadium on 2003, the big house, when Michigan beat Ohio State for the last time in probably maybe ten years at that point. And he, of course, being a native of Ohio and a Columbus native also, and a buckeye, was very disappointed that day. And of course, I'm in a Michigan alum. A lot of fun that day, I can understand. And Todd and I had a standing bet for almost 15 years on that game. So anyway, we have a personal, deep relationship. [01:48:18] Speaker B: Yes. [01:48:19] Speaker A: So I sat down two years, four years ago. He said, I'm looking to buy a mortgage banking firm in the Washington, DC area. I said, really? So I introduced him to Columbia national and they said, no, we're not quite ready for that. And then all of a sudden I get the news and I just, I don't know where I found it. I said, oh, my God, Phillips is going to be sold to Bellwether. And I said, oh, isn't that something, now that I'm setting the table for you here. [01:48:54] Speaker B: So, sure, look, it was simple. I knew enterprise. I was called by Ron Terwilliger, who was chairman, and Charlie Warhan, who ran enterprise community investments. And they said, we have this small mortgage company called Enterprise Mortgage. It does have a special affordable license for Fannie and Freddie, and it's doing some fha small office in Atlanta. We want you to take a look at it. And this is how we usually get assignments and help us figure out what it is. Can it work? Can it be scaled? It wasn't an m and A assignment. That's how it usually starts for us. So we take a look. I'm sitting in front of the board, which consisted of a very large number of people, most of whom weren't in mortgage finance. And Ron says, why don't you just bluntly tell us what you think of Emi and I said, I was looking for the pimple on the elephant's ass and I couldn't even see it. And they said, what do you mean? I said, in this industry today, in 2006, you have. It was actually, yeah, it was actually 2010. I think they did the deal with Bellwether in 2012. They're doing $100 million a year lending. They have $500 million in servicing. It's nothing. You're not making any difference. If your purpose in doing this was to serve a particular nonprofit, affordable community, there are many others doing more of that. If your purpose was to create a value company that could generate income, that could support the mission, you're not doing that. You're not scared. So they said, okay. The board then huddles. They're probably slightly offended by what I said, but I got it across in a couple of slides in one sentence, and they come back and Charlie says, okay, now we want you to help you find the merger partner. Who could we do this with but still retain control? We want our mission to prevail, but we don't want our management to prevail necessarily, meaning we understand our limitations and we're not it, but how do we do this? So we looked at 100 different companies across the entire spectrum, not talked to all of them, but looked at them, narrowed it down to a few, and had conversations. And the finalists included Bellwether, which was a spin off of the national bank, which had gone, been bought by PNC. And PNC already owned arcs and Redcap. I mean, there were all these conflicts going on, and this was coming out of the financial crisis. Ned and Debbie had pulled Bellwether out and taken some of the life company relationships and the Freddie Mac relationship and created a company that was now a true mortgage banker. But they had an office in Atlanta and they were primarily in the midwest, and so it was small. Ned said, I'd be really interested in doing something because it gives me access to Fannie Mae, gives me access to a bit of a balance sheet, but controlled by a nonprofit. Whoa, how's that going to work? How do I do this? It was interesting because where the convergence was and our job is to find convergence, was that the clear path that Ned was on was thinking about this like a law partnership or a doctor partnership, where the problem for mortgage banking firms is that when they grow, they really cant keep their people. The talent has flees because they groomed people, pay big checks and buy them, if you will. How do you keep people? And he said, I would like a company where a significant portion of the company is actually owned by the people who produce the business, and it's recurring. So we have to create a mechanism where they can sell, where they can buy, where the new people come in and they can own. I said, you're only going to do that if somebody commits to owning you for ten to 20 years. And thats not going to be a typical private equity shop. It may be a bank, but a bank will want to control you. And by the way, do you want to be owned by a bank? He goes, hell no. Were all bank refugees? We came out of Mellon bank and Bank of New York and National bank anywhere, and so were not going to want to be owned by bank. So I said, ok, then, here it is. So after getting through that hurdle, it took a while to get the deal done, but Ned and Debbie, in effect, it was a reverse merger because Lamar seats was there at enterprise representing them. But Ned and Debbie ran the business, and now DJ Effler and Todd Harrop are running the business. How did it grow? Predominantly by using their stock, private stock, but having a liquidity and an asset value that they could demonstrate to people pays a dividend because that's what enterprise wants. Then the other thing that we did for them in 2020, right during COVID by the way, was enable them to sell a portion of it to Fifth 3rd bank. So they are uniquely owned by management, a nonprofit that controls the board, and a regional, a significant size regional bank that has a big balance sheet. And they are opportunistically one of the few companies that doesn't have the kind of turnover that the larger and smaller guys have because they have ownership, they have a real stake in outcome. But at the same time, they have the challenges of having to grow, having all these overlays. Their goal has to be multifamily, is more than 50% of their business. They need to be big and affordable. They need to also service their bank clients, and they have bank regulatory constraints that might prevent them from doing some things. But they have this unique positioning with DJ and Todd of being a mortgage banker. Thats truly where the people who work there and produce the revenues can call themselves owners. And thats why Philips sold to them. Thats why they bought a company in Charlotte, they did a merger with a company in Minneapolis, they airlifted people in Los Angeles, all because of this. It's culturally compatible with our industry models. It's got a longer term future creation. You can build a bench when you know people might be there five or ten years. You can create a different kind of company. So that's one of the contrasts in our industry is that we're creating all these models, you see, and each of them could work long term, each of them might not work, but we'll see. That's why I love where I am in Beekman advisors. I have this wonderful 30,000. I can look inside and I can look outside, and I can do both at the exact same time. [01:55:53] Speaker A: But what's, you know, having enterprise as a parent, you know, you have this affordable housing lens that you have to really almost, I mean, that's got to be the mission of the firm. And so, you know, but it's also. [01:56:09] Speaker B: The mission of the firm to get what they call unrestricted income. Because a lot of what enterprise lives on is grants. And those grants all come with strings for a purpose. This is a significant source of unrestricted income, which allows them to support, for example, public policy, advocacy, research, things that many times grants and grantors don't do directly. So this is very important to enterprise in terms of cash flow, return on investment, but much more important, cash that it generates every year that can be granted back to the parent. So it's called capital on a mission. They do care about affordable housing, but it doesn't have to be the sole thing that bellwether enterprise does. [01:56:57] Speaker A: Why can't you get the capital then to become the Amazon type player in affordable housing at enterprise? So go sit down with Wall street. Heres the biggest problem in all of real estate is affordable housing. So lets sit down with Morgan Stanley or Goldman Sachs or somebody thats able to raise multi billions in capital and say we need a vehicle to solve this problem. And if we get Fannie and Freddie to back us with some kind of insurance, not necessarily money, but just kind of a backing that's quasi governmental, set up a whole new affordable housing type instrument to finance these, you know, and it could be on the equity side as well. And I look at my friend AJ Jackson, who I just interviewed, and they've set up an interesting model at JBG Smith, but it's more of a debt model. They're getting into the equity space a little bit with his new enterprise there, the new setup. [01:58:09] Speaker B: Setup. [01:58:10] Speaker A: It just seems to me that with the smart people out there, you can solve this problem. Now am I off? [01:58:17] Speaker B: Well, there's multiple problems. There's a whole problem with just building enough, this whole problem with income subsidies. There's a whole problem with how funds are allocated by the government. There's a cost issue. So there's multiple problems. But the answer to the problem is there are people with great intellect. Bob Simpson wrote a paper with some folks. As you know, treasury has been working on this. I don't think capital will be the constraint, but I think that you need people at scale. Scale. And that's one of the things that you would think. John, what I would say to you is the problem isn't going to be capital. The problem is the infrastructure to produce the units and maintain them long term. There needs to be structural change. [01:59:07] Speaker A: You served at one point, the chairman of the Virginia Housing Development Authority, and talk about your service there and what you would have, what you have been able to accomplish. How does the BHDA compare with other state housing authorities and what makes it special? [01:59:25] Speaker B: So governor asks me, will you serve? I said, yes. I did not expect to become the chairman during COVID which was fortuitous in some ways, because it's one of the first times that being asked to do something in public service, voluntary, of course, and my knowledge of what the subject was and my caring about it coincided. You very often in public service, do things for resume or platitude or whatever, picture ops. But this was real. VHD is one of the finest state housing finance agencies in the country. It's well run. It's been organized so that it is independent of any government appropriations in the state. It is political because the board is appointed by the governor with the consent of the state senate, but it's still run pretty autonomously. And $8 billion balance sheet lends somewhere around $2 billion a year, half in multifamily, half in single family. Also allocates tax credits across most of the state. Allocates makes enough money that we have a part of, money called Reach, which allows us to basically underwrite the difference in cost between a tax credit project, what it'll take for it to make economic sense, to keep affordable for minimum for 30 years. And we have the capacity to put that kind of money into deals so we could be a one stop financing shop from during COVID the governor approaches me. His name was Governor Ralph Normandy. He was a doctor. Told me, he said, listen, for the moment, just imagine that I have only one objective, and that is I'm a public health physician. I want to keep people in their homes. I want you to help me just do that. So what will it take for us to accomplish that goal? And what we did in Virginia, which was pretty remarkable. In less than 30 days, we moved $8 million in grants to social service organizations who were directly talking to tenants we built one of the largest tenant bases in the country, actively could talk to tenants through a messaging app and text. We built an online, which had already started because of other reasons, a rental counseling program that we then put 30,000 people through, helping them with budgeting, helping them with safety and security concerns, linking them to other social service providers, etcetera. The objective was simple. Ralph Northam thought the crisis would last three to six months. It ended up lasting, as you well know, well over a year and a half. And Virginia had one of the worst track records for evictions and one of the poorest rental laws in the country. We fixed all of that. The state committed over $100 million in addition to, we were the leading state in the distribution of emergency rental assistance. We kept our landlords alive. We kept our tenants afloat. We built a nonprofit service system in between that kept afloat as well. If we had not done what we did early on, it would have cost four times as much and taken a year longer to recover. But I think the COVID eviction moratorium went on too long. I object to things that cause moral hazard, that destroy the relationship between landlords and tenants. Long term, we are still suffering the aftereffects of some of that. So when you can be in a state like Virginia, which is sort of blue purple, but bluntly is governed, well, you want a good government. You don't care whether it's Republican or Democrat or independent. You just want good government. Good government should want what is best for its citizens, all its citizens, but particularly for the subsets that can't speak for themselves. And so I'm very proud of the work we did for two years when I was chairman, because we enabled and met what the governing objectives were, and we did it efficiently. We avoided fraud. We did it better than most states did. And we did it because of a great organization and a staff and a governor and a cabinet that was willing to support that. [02:03:51] Speaker A: What, two years was that? [02:03:53] Speaker B: This was literally 2020 through 2022. [02:03:57] Speaker A: Through the pandemic. [02:03:58] Speaker B: Through the pandemic, yeah. Just go fortuitous in your life. I've done public service. I served on one commission for President Obama that was meaningful in certain ways, but this was my life's work. Collapsed into two years. [02:04:12] Speaker A: Wow. [02:04:12] Speaker B: I would go to Richmond literally every other, every month. Every other month, even during COVID and we would sit in separate rooms and we would actually say, how do we solve this problem? Not what is the problem? Not should we try just what the heck will it take? Solve the problem. And we did we created templates. We did things that were remarkable. Crisis brings opportunity. It also brings challenge. You have to overcome them and do it. And we did it. [02:04:40] Speaker A: So, Shekhar, what about the pandemic? I want to talk a little bit about that. It had a significant impact on this country socially and economically. The office market has probably changed forever. More than likely, the urban markets will take several years to recover. Residential construction is challenging until land values make it feasible. What are your thoughts about the pandemic's short and long term impact on the markets? [02:05:11] Speaker B: I think long term we go back to a different normal because I think, in fact, we might be there or close to it right now on the economy stuff, where we have a normalized yield curve, we've had the inflation with supply chain shocks. We are sort of drifting out of that. The curious thing about our business was that construction continued. It was one of those industries that everybody agreed we could still continue. And so we actually did, a lot of buildings did it often more quickly than we have ever done. People were actually finishing up early. The problem was that materials cost was just skyrocketing. So you had, of course, issues, but people were glad to be employed, people were glad to be outside. So we had this aberrational moment when a lot of construction, remember that we've just had the biggest surge in multifamily construction since 1973, over a million units being delivered in a two year period. And it happened partly because of COVID meaning you could get it built and people were driving on empty roads and getting there faster, and leasing was being done contactless on the web, and people were making decisions very differently. I think there's been some major societal impacts, and I've experienced it on a personal level. I think there's a mental health crisis in this country because, in fact, if you're to believe the surgeon general, he says the number one illness in America is loneliness today. Yes, I think we already had that. And people were getting more isolated. And then now you can live inside your phone kind of thing. Right? So there was a whole tendency to drive people into smaller and smaller universes. But what has happened because of this? Children got affected. I mean, imagine a scenario where you didn't go to school physically for a year and a half. Imagine a scenario where you didn't meet kids. So I had, during this period of time, my five year old just had been birthed by grandson, and he was two years old when I took him to his first, to a playground. And we used to go to playgrounds that were very quiet, hardly anybody was there. And then he would be masking, by the way, these kids were masking easily. They walked out, they put on their masks. No indications at all at this particular playground in Fairfax county, where he is standing behind a little girl who's 6ft away with ponytails, and he's looking at her, and she turns and she sees him. Her mother is standing on the other side of the swing set and this playset. And he looks at her, she looks at him. They look at each other like they're creatures from some other planet. Like, what is that? Something like me my size. And then he. He's very gregarious. So he calls out, he says, what's your name? And she doesn't say anything. And her mother says to her, tell him your name. So apparently they exchanged that about 35 minutes into it. They're playing together now, of course, with all the care in the world and all of that. But you know what? These are kids. The mother and I happen to get closer to each other, and she looks over at me and she says, you know, is that the first time your grandson, because she knew I was older, has seen a girl? And I said, yes. I said, I think so, because he. He has two. He had an older brother, and all the other people in his life are adults. And she said, you know what? This is the first time my little girl is seeing any little child. I said, wow. Yeah, they've grown almost two years old, and here they are. They've sort of missed that whole period. So think about people missing graduations, right? Missing the stuff we went through at the ages, young ages, particularly, and then teenage ages. So I think something got missed. Something is lost. I don't know. It's recoverable. I cannot tell you. I know I'm not a sociologist. I cannot tell you. I know what all of that could or could not mean. But at the same time, I would make an argument to you that humans are so freaking able to adapt. [02:09:58] Speaker A: Absolutely. [02:10:00] Speaker B: We're going to get there. We'll get there. It just has, it's caused these ruptures that I think you can see it in the divisiveness in our politic, in our dialogue, in our discourse. We are now doing courses in college, I'm told, on how do you have peaceful dialogue? What does civil society mean when people behave with each other and don't attack each other? I mean, my God, okay, like, my dad would have whipped my tail if I had misbehaved and said something about somebody without any knowledge. But really, that's not the norm. So some of that just got exacerbated because of COVID But we did so much. We learned so much. We figured out how to keep people in their homes. As I told you, we figured out how to make sure that shelter became high on the priority list of things for human beings, for their families, for states and local governments, not just the federal government. [02:11:05] Speaker A: I would agree with just about everything you said. I actually think that the adaptability of the human race is such that I look back at events in my lifetime and the pandemic being the most recent dramatic one. But I think of 911 and the reaction to that in this country and how that was a pretty significant event. The Vietnam War was a pretty significant event that had, I think both of those had pretty significant long term effects, and I still think that we're feeling them today, some of them from each one of those events. And there are more. For instance, Donald Trump was there twice, now had an assassination attempt. I've lived through, let's see, one actual assassination president and another almost assassinated Ronald Reagan. So we've seen violence in the society. So the question is, you know, and I also grew up in Detroit and saw the 1967 riots there. And then, of course, most major cities in 68 after Martin Luther King was assassinated. So we see really social, a lot of social disruption in this country. But it's funny, people's memories sometimes are short on most aspects of that and they get over it. I'm not sure about the pandemic, though. I have a feeling that there's going to be some long lasting effects and getting to the real estate industry. And this was, as you alluded to earlier, we did have some consolidation already in the office market. And so there was this intermediation going on between office and residential, which is going to continue. And I think, you know, the hospitality move, it got slammed initially and then was probably the quickest to recover of all. [02:13:06] Speaker B: Yeah, I know. And remember, we predicted the demise of retail, and look where retail is now. [02:13:11] Speaker A: Retail bounded, rebounded really nicely, beautifully. [02:13:14] Speaker B: Yeah, yeah. [02:13:15] Speaker A: But they figured things out. And so I interviewed Don Wood of federal, and he said we set up ways of getting merchandise to customers. [02:13:23] Speaker B: Absolutely. And it changed. It allowed them to create lower cost models. [02:13:28] Speaker A: Exactly. So again, it gets back to the overall theme of adaptability. So I agree that, but the question is, and this trends are short term, how do you take advantage of them and try to align all the opportunities that are there? So you think back during the pandemic, you had no clue that the retail market would rebound this quickly, had you known that or had you anticipated that? Imagine how you could have taken advantage of it. And you said during the construction, never slowed down. Everyone thought, well, whoa. But certain things had to continue. [02:14:10] Speaker B: You just couldn't stop everything. Yes. [02:14:14] Speaker A: Anyway, so it'll be interesting to see how it all plays out. I'm going to get into some other issues now. [02:14:21] Speaker B: Sure. [02:14:21] Speaker A: Shifting to your personal board experiences, how did you earn the opportunities you've been given in participating in corporate boards? As a smart and bold indian american leader, with your educational and professional credentials, you stand out clearly and perhaps in an earlier era might, quote, fill the quota of either a woman or a minority. Talk about how you've seen that change over the years into the person you are instead of your ethnicity or gender. If you could address that. [02:14:53] Speaker B: Sure. Look, I came to this country because I wanted to belong, being a meritocracy. I did not come to this country because I felt, oh, I'll be discriminated against. [02:15:06] Speaker A: Contrasting to the gas system in India. Is that okay? [02:15:13] Speaker B: Or a system where it says you have to allocate resources. There's scarcity, and you must always say, oh, if you don't get this much, you'll get nothing. America always represented to me a place where you kept talking about growing the pie. You said, if my economy is 1 trillion, it should be five. If it's five, it should be ten. If it's ten, it should be 20. That's the american way, and that's how you grow. That's how everybody grows. Now. Does everyone grow the same? No, not at the same level, blah, blah, blah. But that's so I never really. I did. You could. It was noticeable in banking and in mortgage banking that it was dominated predominantly by white else. That was obvious. Did it cause me discomfort? No. Did it cause me to wonder why others weren't in the room? Yes. Did I intentionally support others who I thought deserved to be in the room, who looked either different than I was, but more not, didn't belong to the stereotypical white male category? Absolutely. Have I done all of that because I believe in equity or some ideology? No. Because I think at the end of the day, hard work and merit should prevail, and so. But if not given any chance, it can't. So everybody needs that chance. So my entire engagement. So I've been very lucky. That's how I describe how I've gotten opportunities. I didn't ask to become CEO of WMG. I was handed the job because the guy ahead of me was leaving. I happened to be there. And I was asked, would you take this over? I've often asked myself, was I really qualified to do that? Well, probably not. I was very young. I didn't know much about this. That and the other. You figure it out. I was asked then, you know, we go public and was I qualified to be a public company CEO? I wasn't quite sure, but I didn't express those doubts, like, on the screen or something and sit in front of John Cohen and say, john, I don't know why I've got this job. I said, let me figure it out. And the best way for me, I think if you understand this, you know, everything about me is who do I surround myself with? That I'll, that will not just do what I say, but honestly will add much more to what is created. And if I can figure out how to find those people and make that happen, I'll be fine. [02:17:53] Speaker A: You don't want. Yes, Ben or ladies. [02:17:55] Speaker B: No, no. [02:17:56] Speaker A: You want somebody's going to challenge you. [02:17:58] Speaker B: And you want somebody who's going to enhance whatever you present. So I, you want people who can finish your sentence, but add something to the sentence at the end, of course. And that's obvious. It's very obvious. It's just hard to do. [02:18:11] Speaker A: It's not obvious to everyone, though. So. [02:18:15] Speaker B: And let me just say it's intentional. It's, you got to do this purposefully. [02:18:19] Speaker A: I agree with you. [02:18:21] Speaker B: I am often on calls which you would argue if you listen without any context, you'd say, these are contentious, he's saying something controversial, or he's being provocative. And I, people use that word with me a lot, actually. I think it's completely not true. I'm actually disdainful of the current establishment. I truly believe that people who live within their silo do what they do, and they're probably just fine people, as they say, but they're never going to get out of that and do something that changes the world. And so how do you not allow yourself to fall into that trap? One, in my life, I have been blessed. People call me up and ask me to do things, whether it is on public policy or it's on corporate boards or it's nonprofits or speech making, and they often get me out of my comfort zone. So recently, I was asked to do a role play a few hours ago on why I would join an organization that I'm already part of. And this is on a board call with some very esteemed people. And it was just somebody saying, hey, I'm going to send you a little script. And I said, no, no, no, no. If we're going to do this, I can't do it for the script. I'm not going to read. I'm not an actor. So tell me the context. Context? Yes. And we did it. Five minutes. Why would I, yes or no? Join this organization and pay these dues, become part of this court club. And what was fun about that was that I could do it lightheartedly, but I could also do it with the assumption I'm going to learn something, and people on the screen are going to learn something from me. So that's why people ask me to do things. I think, honestly, I don't think it's because I have these credentials. I think those matter. That's checkerbox. Check these boxes. Does he have this, this, this? Okay, he's qualified. Now, what could he do to enhance my business, my opportunity, that of those around me? He's going to ask me a few questions. He's going to challenge me, and he isn't going to just say yes. So I think lots of opportunities. [02:20:36] Speaker A: Yeah. So transfer that as a mentor to young people, that idea, that thought process. How would you share, what would you recommend young people do, given opportunities that you've had and how you. And how to look at them that way. [02:20:56] Speaker B: I used three things. I said, first of all, character. If I cannot be convinced that you have good character and ethics, and I don't want to do business with you, that's a gating issue. The second is you always need to have this wound. I call it my second c is control. But it's not control of its self control. If you know yourself, you know where your own boundaries are and how far you can push certain people, and you'll find out pretty quickly that some people are more prickly than others, and they listen better, and they don't listen. But knowing how to express yourself and exhibit self control in any context, it's an art, not a science. But if you know how to do that, you're going to always be the one that people listen to. Or, this is funny, I cannot tell you in the last 20 years of my life, how many times at events, I've been asked to have the last word. And after the first ten or twelve or I of this happening, I started, I actually said, why do they want me? Is it that no one's listening? Or is it expect me to say something provocative? And I finally asked one of the organizers of an event that I went to with a thousand people in the room, why? Why? Why is it. You had a panel and then you said you're going to speak last. Why last? And they said, oh, shekhar, because you're so, so good at bringing other people into the conversation. They said what you do is you're sort of listening to them and you're just wrapping it all up and you're presenting it and somehow it becomes cogent. If it wasn't until that moment I thought that was such an incredible compliment. I should tell you, I didn't ask for it in that way. I didn't say, tell me how wonderful I am. I just said, so why last? Why? Because I was trying to ask myself that question. I didn't know I did that. Actually, you should know. I did not know that. What I was doing was sort of wrapping everybody into the closing. And, you know, John said this and Susan said that and Lily said this. And that's how all of it makes sense. If you believe in this and then drop it on the floor and walk away and everyone goes, that made sense. That whole hour suddenly capsules. So apparently I have that ability. That's pretty special. So if you have that ability, you keep doing it. Right? [02:23:34] Speaker A: You use the word self control. I'd like to think that the word confidence probably overrides that to some extent. To me, what you're showing is confidence. That you, what your assertions are, what you believe. And that's your statement. [02:23:54] Speaker B: There it is. By the way, my third c for young people is closing. So character confidence closing, however you want to call those, if you don't know how to close, you will go in circles all of your life. You will never get to a place where you're satisfied. You just, you've got to close chapters and open new books. [02:24:17] Speaker A: That's an interesting concept, because I struggle with that myself and I look at life and I say, how do we know it's over? And, you know, people ask me, are you retired, John? And I said, no, I'm not retired. My mind is still active. And until it's inactive, and I, hopefully it never will be, other than take my last breath. But I'm never done. [02:24:50] Speaker B: No, you're not. [02:24:51] Speaker A: So the question is, what does that mean, closing? I guess the thing is, how do you stop one thing and then move on to the next? And then the question is, what is the next? [02:25:03] Speaker B: Sometimes you don't know, but unless you close the chapter, you don't open another one. So I now read, just so you go back to my earlier analogy about reading five books a day. I used to read them seriously, serially, I now can read five books at the same time. Now it takes me much longer than a day. I don't have enough time and I've got too many other obligations. But I don't read only one book. I'll read portions of a book and the same way move to something else. And why do you think that is? Because I always ask myself why questions. It's because I get bored much easier. My attention span is so much smaller. So if I just stuck with something, unless it was thrilling and then falling and dragged me and it was short most of the time, you know, I want to read, absorb, forget, move on, read, absorb, forget, come back and relive. That's what I mean by closing. It's not exiting things, it's knowing when you can stop something and restart it later. And that's how you do multiple things. But that's also how you hold this portfolio of life in all its different buckets together. And you allocate your time and your wealth, you know, and your heart. [02:26:26] Speaker A: I mean, you think about the things we do every day. We sleep. We can only sleep so long and we try to sleep enough. We eat. We can only eat so much. [02:26:38] Speaker B: You allocate with reason and you can allocate inadvertently. I'm trying to do it more again. I'm trying to be intentional about everything I do in my life. [02:26:50] Speaker A: That's a great thing. I don't know if you're a fan of a fellow by the name of Naval Rabbikant, but he has. He's an interesting writer. He's an indian fellow and he's got the almanac and he has. He's a philosophical guy. He's a very successful businessman. His company is called Angellist. So he's. [02:27:12] Speaker B: Yes, I know. Angelist. Sure. [02:27:13] Speaker A: Yeah, that's his company. And you should read because you're. Your thinking. It reminds me of his a little bit. I also think of, you know, I read Sidharth Siddhartha again recently. And so I think about indian eastern philosophy. I was exposed to it when I was young and often think about it. And then there's another fellow by name, Anthony DeMelo. I don't know if you've ever heard of his writings. [02:27:38] Speaker B: Yes, absolutely. [02:27:40] Speaker A: About awareness. So he. It just seems that your culture brings forth forth ponderous thinking. That is interesting. It's very deep, meditative type thinking that I've not heard in other cultures as much. Anyway, I'll bring that out. So, shifting gears again. Networking is such an important part of this in any business. How would you recommend young people to start and build a network? [02:28:11] Speaker B: Please don't think that Facebook is a network. [02:28:14] Speaker A: Right. [02:28:15] Speaker B: So know what doesn't work. It is not a network. [02:28:19] Speaker A: Why is it not a network, in your opinion? [02:28:22] Speaker B: Because it doesn't allow for anything that involves thought. It allows for a lot of things that involve action. Saying what you believe, telling people what you're doing, but there's nothing about it. That's a two way street that establishes any kind of relationship or what I call controversial dialogue. I therefore, if you accept that most of life has to be about personal interactions, it's not necessary that everything be in person anymore. We did, after all, invent video tools. One of the long lasting effects of COVID is just what we're doing, which is we may only be 6 miles apart, but this way has a confidence level and a social interaction level that it replicates that. Not 100%, but 95%. So encouraging people to think of networking as going to places, being in a new setting, meeting people you don't know, know, meeting people you likely would never meet, trying to figure out within all of that, are there common threads. That's just human, right? It's not unlike any other race. But if you don't do that, you can't possibly grow a career, because how will you meet the people that can become your mentors, your partners, your associates, youre, your investors, your clients? So if you lose that ability, which is why it's so important to have conferences and trade shows, sounds like a bore after you've done 100 of them. But Lordy, if you can figure out how to navigate through them. And, you know, by the way, all of us learn how to navigate the certain conferences, I don't actually attend a thing. I actually just take a suite and meet people. Seems to work fine for me. And there are other conferences where I actually want to go on the floor and walk through it and meet people and attend sessions and learn something and then go back into cocktail parties. So go to places where you have to learn how to navigate. What's the best experience for you? What's the highest ROI for you? And if you do that, that's called networking. That's how you build a Rolodex of contacts and relationships that are affiliated. [02:30:51] Speaker A: There are tools, of course, part of it, and I think it depends on your age and your experience in an industry or what you're trying to pursue. So if you are an early stage person, be very open minded and listen more than talk. But once you've developed confidence, you could set up a suite, people will come to you because they're curious about what you have to offer. So as over time, your networking skills change and how you interact obviously changes over time. So it's just there's rules. And then the other thing is, how do you overcome the inner fear that you have approaching very. A strange setting and people, and being in a room of strangers, how do you approach people? How do you feel confident that you can make a good impression? [02:31:51] Speaker B: When I first started running a company, and I will say it to you, and I probably have never said this outside of my family or my wife, I didn't like public speaking. I thought I was really bad at it. In fact, I would get up. [02:32:07] Speaker A: Yes. [02:32:08] Speaker B: Want to be very heavily scripted. I needed to know who was in the audience, which you didn't very often. And all of a sudden, here I am running this company, and much of the time you're winging it, and you're suddenly speaking to 60 people, 100 people. You're doing PowerPoints, you're also answering questions. You're doing town halls, you're on television, you're doing interviews. You don't know what on the record are off the record means. So suddenly you're being handled, if you will, as opposed to handling yourself. I overcame that with literally only two things. Damn hard work and practice. So the hard work was, I would write down what I was going to say. I would imagine the audience. [02:32:58] Speaker A: Right. [02:32:59] Speaker B: I did practice and rehearse using techniques about how do you avoid getting distracted in a large audience. How do you pinpoint somebody? Identify with them, look them in the eye, bring the audience with you, drop your voice, raise your voice, all that stuff. When do you tell a joke? How many jokes do you tell? What's okay to tell, what's not for the right audience? And now it's natural, it's easy. But I keep telling people, that's not a small example. There's 100 things in your life, all of which you should fear because you're not good at it naturally. You're not just born with this. [02:33:40] Speaker A: There are some people that are. They can walk and entertain from the time they could talk. [02:33:47] Speaker B: That's fantastic. I love it. I definitely wasn't. I was inhibited. I was scared. I always felt I would flub it. I would say something wrong, whatever, and I did all of those things. And then I learned, and I said, no, I can fix this. And a year into it, you could fix it. So hard work, persistence. Absolutely. The most important thing is rehearsal. I used to rehearse in front of a mirror, absolutely memorized the entire thing, and then I re change it. Whereas I was going. So I made my brain think differently, I made my voice modulate differently, and then I changed my mannerism so that it was more attractive. And I could now sit in a room with a lumber of people, not have to actually raise my hand or raise my voice, and everyone would listen. [02:34:41] Speaker A: Well, I'll make one final other point about public speaking that's interesting. Martin Luther King, when he spoke his most famous speech of all time, which was on the national mall, was not the speech he wrote. He was told by one of his aides, a lady, tell us your vision in his ear. In essence, before he actually, he started talking, he started saying something, and. And then he changed his tone. [02:35:11] Speaker B: And that's when I have a dream. [02:35:13] Speaker A: That's the words he used. Next, I have a dream. And it was all extemporaneous. Okay, so. [02:35:24] Speaker B: But you can only be extemporaneous when you already have confidence. [02:35:28] Speaker A: Yes. [02:35:29] Speaker B: When you have. [02:35:30] Speaker A: Well, he was a preacher. [02:35:31] Speaker B: Yes, absolutely. [02:35:33] Speaker A: A brilliant human being, obviously. [02:35:35] Speaker B: Obviously. [02:35:36] Speaker A: And a person that just had a passion beyond very few others as far as nonviolent communication and his way of conveying things. So he's obviously a unique human being. [02:35:49] Speaker B: Absolutely. [02:35:50] Speaker A: As far as public speaking goes, he just pivoted right there extemporaneously, which is a pretty amazing skill, actually. So anyway, I don't want to go off topic too much more. [02:36:03] Speaker B: Yes. [02:36:04] Speaker A: So how do we, how do we change the mindsets? Accentuate differences among people, highlighting their strengths as contributing people both in business and society. You alluded a little bit to that, but tell me what you thought. [02:36:18] Speaker B: We bring them into our conversation. We do choose not to ignore, and we, we listen better. There's a big difference between listening and hearing. So I, you know, my wife tells me that, too. Listening requires mine, and hearing just requires your ear. So I don't think it's complicated. I think it's not even a learned skill. It's what we grow up with. What we need to do is get everybody to slow down and recognize that it's an equal priority to action. Listening is as good as action, and listening is part of action. So I don't fear that we've lost that skill because of COVID or because we've become such a rigorously busy society where we have 100 tasks a day. I think what I find is that I no longer make lists in the morning. When I was young, I write down sort of my top three things. Somebody in business school told me to do this, you see top three things that I wanted to accomplish that day, and I'd get up in the morning and go, one, two, three. And when I did it, I don't do that anymore. Not because I don't have three, but because I have too many. So how do I play the game while people are changing around me and my environment keeps shifting? I don't have three. I have some simple sort of principled ways to approach things so that everything you do should be, to the extent it's possible, a win win. I don't have to win for you to lose, and you don't have to win for me to lose. And if I can convince you that in almost every interaction will both be just fine, and then imagine multiplying that to ten or 20 or 50 or 100 people. So it's really been rewarding, because I therefore get asked to do things people want. If I can go now to a conference as an example, and perhaps this actually answers a couple of other questions you have. One of the things I do is I don't necessarily go to the conference because I need to network, because most of the people there that I need to know already know who I am. I might meet somebody new that I get. Wow, that's interesting. But more often than not, I can just go stand in a corner, hold a drink in my hand, and people come up to me. That's a point of privilege. And how you utilize that is you actually spend your time, but therefore with people who want to spend time with you. But I always agree with you or think like you. So can we continue to just keep doing that? Because that accentuates my strength as a listener, that accentuates their desire to be with me, which is whether it's because if they need something or because they heard something, you know, the number of people that come up to you and say, you know, I saw you speak, what, ten years ago? How come you're not sitting up on the podium every time they go? Because it's other people's turn, and it's completely logical. And yet I'm here. So you want to chat? Let's go. No. So I have very little fear of those interactions today. And again, perhaps 20 years ago, I would have been much more inhibited. [02:39:40] Speaker A: Yeah, well, unfortunately, your open mindedness is not a pandemic, which I wish it were, honestly. But I know we've kind of fallen into these tribal trap traps that we're in right now, and people just are blind to open to alternative viewpoints often. [02:40:04] Speaker B: Absolutely. [02:40:05] Speaker A: And it's just, it's frightening to me that's happened. [02:40:10] Speaker B: Scary. And I'm worrisome that it would continue for as long as it has. But again, if you have optimism and belief in the human race, we will overcome this. [02:40:23] Speaker A: Yeah. But we've seen trends over the years. And, you know, this is, I just finished a book called the fourth turning is here, which is about kind of the evolution of society and the fourth turning being a crisis time. And that's kind of where we are right now. [02:40:44] Speaker B: No question. [02:40:45] Speaker A: And the analogy is 1939 to 1945, or actually, maybe earlier than that, 1930, maybe to 1945. That period of time is the last time that we had a major crisis period in this world. And, you know, we know what happened during that period of time. [02:41:04] Speaker B: Yes. [02:41:05] Speaker A: So is that. And then you go back 80 years before and keep going back for the last 500 years. The pattern is pretty interesting. [02:41:15] Speaker B: The pattern's interesting. [02:41:16] Speaker A: Yeah. [02:41:16] Speaker B: History does repeat itself. Yes. Yes. It rhymes, but in different ways. [02:41:20] Speaker A: Yeah, it rhymes. It doesn't necessarily, you know, it's not. [02:41:24] Speaker B: Identical, but it rhymes. You're right. [02:41:26] Speaker A: Yeah. So the question is, you know, what, what's forthcoming with all these tendencies that we've seen? And I'm, my hope is we can overcome what could happen. But let's see. [02:41:39] Speaker B: Yeah. [02:41:39] Speaker A: All right. Now I'm going to shift to some personal things beyond the subject we talked about. What were your biggest wins, losses, and most surprising events in your career? [02:41:52] Speaker B: Well, probably among the more what I would consider wins is that I have found myself in the fortunate position many times in my life of being asked to do things that I didn't ask to do. Now, that sounds like a strange thing. It's not like people now think that the only way you get anything is by demanding it. You have to raise your hand and say, I should get a promotion. You should raise your hand and say, I should be chairman or CEO. And while that is true, if you do not demonstrate ambition, you won't advance. That is true. But I feel like the art of creating an aura that you're capable is equally important. And so most of my wins have come from people asking me to do things that I never thought I would do, taking them on, proving to them that they were right, whether it was becoming CEO of a company or chairman of the board of a couple of enterprises, starting things from scratch. People ask me, why did you do that? I was the first chairman of the commercial mortgage bankers board. And it's because a guy named Jim Anderson calls me up and says, you got to do this. Thing. You helped to create it. And I said, no, it's a long time for me. I've just taken over. I'm now the CEO of a public company. He goes, no, no, no, you should do it. And my methodology to doing it has carried even 30 years later, 25 years later, they're doing. I said at that time that the best thing to do was to have vice chairs who are already ready to succeed you as a voluntary job and to only have you in there for one year. Well, you know, believe it or not, that's what I, they're doing today, 25 years later. And so I feel really good about stuff like that, as I've told you before. But somebody called me and offered me that and persuaded me to do it, even though it wasn't the perfect timing. I've just had that kind of luck. And I feel like luck and opportunity have to coincide with your being in the right place at the right time. [02:44:09] Speaker A: I think what you've done is you've earned it. And so the question is, how do you earn something? There's a question. And to me, earning something means that other people believe that you are capable. [02:44:23] Speaker B: Yes. [02:44:23] Speaker A: And how do you build that belief? By demonstrating it in actions. Demonstrate not necessarily in words, but in actions. [02:44:34] Speaker B: Demonstrated in action. So that there is never a question. And it's about your otherness. It's about people truly believing that you're doing this not just for yourself, but for others, whatever the causes. Is it the industry? Is it the trade group? Is it your business? Is it your employees? There has to be a strong sense of that otherness in you. Yes, I used to make speeches and I still do, about why should CEO's engage in politics or public policy to be more exact. And I would listen to people tell me how they found it aborted and it was distasteful and all of that. And I would say, but isn't it true that in order to get anything built in America, we need approvals from local government, the planning board and money from so and so? And then, you know, you go to Fannie Mae, which also, by the way, is the government is sponsored enterprise and you do this and you do that and all of that is policy. And it can be changed on you and be detrimental not just to your business and your livelihood, but to your community. And yeah, I said, you have a position, what I call a platform, a bully pulpit as the CEO to go talk about those things in a way differently than others. You owe it to yourself to take 10% of your time and allocate it to being helping the others, because it will come back and rebound, be worth ten times as much to you. I always believed that that was obvious to me, but apparently not obvious to everybody, you see. So I think that's so most of my wins and most of the surprise in my life have come from that. Last is interesting question. I think my biggest failure was, and in business was that I wasn't ambitious enough. Yes. And it may sound strange, I was always extremely ambitious about wanting to do well. But, for example, I never dreamt about, I'm going to build a $5 billion company, and I actually should have. And when I look back on it, the reasons why we never went from. From here to here to here was because I always thought this was terrific, because it was unique and nobody else had done it before. But I never kept thinking, not only will people come chasing this, but they can surpass it. So one of the reasons why where I am today is so gratifying is that I can see other people doing it. And I've recognized that's not an inhibition I should allow them to have. [02:47:16] Speaker A: Well, I would look at it as that you're scaling something different than assets or you're scaling a reputation. And so the question is, how do you measure that? And so that's not the easiest thing to measure. [02:47:33] Speaker B: I think you measure it not just by the success you have with others, but I think to a question that you haven't asked me yet, it's by balancing your portfolio in life. So life has many complex pieces. Life has family in it, which is terribly important. It has your business and the people that you work with and the clients yourself. Very important. It has the community and all the other activities you might do, philanthropy and so on. Yes, all these are so how you find yourself allocating time and time and money go together and money to each of these endeavors and doing them really well to the best of your ability, at any rate, the minimum sort of defined requirement. I have been so lucky in the last 20 years of my life after becoming independent, if I want to use that word always, because it means I can say what I believe. My first amendment rights are not going to be abridged by somebody else. I believe very strongly that that right of independence has given me the freedom to manage this book that I call my life in a way that is satisfying to me, not every day, not every week, but certainly when I look back in a year. Wow, that was pretty good. That helped me accomplish all my things, for example, even though I may be going out and doing work on weekends. I'm always back on Saturday night because why? Because I have my three grandsons on Sundays, and that's the one thing I can't miss. They want me there. They will be pinging me on Saturday night wherever I'm traveling, and saying, when are you getting home? Aren't you coming back? We have a sleepover. Look, these things are all fmRo. They are young. They want it, they're going to grow up. They won't need it while they want it. While I'm able. Boy, find that time and make that your priority. And then I will answer your 30th, your next question, which really is the one that struck me as the most interesting. If I was thinking about where I would be if I had changed some things when I was about 25 years old, what would I have changed, John? And I don't know that many people can answer this well, so I will just try. The one thing I probably would have changed is that I would have got married younger. Interesting. And why that? [02:50:16] Speaker A: How old were you when you got. [02:50:17] Speaker B: Married just years later? 27. [02:50:20] Speaker A: 27, okay. [02:50:21] Speaker B: And what happened was that that was because I debated whether I was going to go to India and get married. Get married here, perhaps that. But now people are getting married older and older. You know, they're getting married in their thirties, some of them. [02:50:37] Speaker A: Both of my children were in their thirties. [02:50:41] Speaker B: Not unexpected. That's what's happening in America. But as I you ask, it's your question. You know why? Because if you're going to grow your life, do it. Don't do it alone. You can find a partner. It doesn't have to be your wife or your husband or your partner. It could be somebody else. But just don't try to grow. It's so hard in this world, given where we are in society, given the complexities of change, to do everything yourself alone. If you can find somebody who's compatible with you and do it with them. Why? Says fast. So that would be my advice. It sounds very strange, but that's the first. [02:51:30] Speaker A: You're the first person of the 120, almost. I've interviewed that have said that they want to marry earlier. [02:51:39] Speaker B: You know what you should do? [02:51:40] Speaker A: Find a partner that's interesting. [02:51:42] Speaker B: Grow with that person. Make it happen. Maybe in ten years. You say, that's not the right partner anymore. But you know what? For ten years, you will grow faster, much faster together than you would have alone. So never, never discount the importance of that kind of societal togetherness. We just abandon that in this era. And they were wrong. That's a failure. [02:52:06] Speaker A: Well, that's interesting. I'm wondering if that may come from your culture a little bit. [02:52:11] Speaker B: Possibly yes and no. Because in India, you will be. You know, India's come very urbanized, very few people, and they. And they both work. [02:52:23] Speaker A: Arranged. Arranged marriages is not a United States thing. No, it is. [02:52:28] Speaker B: You're absolutely correct. Yeah. [02:52:29] Speaker A: So, yeah, I mean, I think it is cultural. [02:52:33] Speaker B: But when I look at what my son has gone through, what others have gone through, I say to them, why don't you do this five years earlier, and they were too busy. There was no pressure, which, of course, again, is societal. And the strong feeling was, I can do this on my own. And I go, look how much further you'd have gotten if you'd started earlier. And that's why I give that advice. It's nothing done freely, and it is not given with disdain that you're not doing that, but it's given with, if you had done it, would you be better off? [02:53:09] Speaker A: Well, here's my final question, which is well known. Almost all my guests know about know it's coming. If you could post a statement on the billboard on the Capitol Beltway for millions to see, what would it say? [02:53:24] Speaker B: So I thought about this, and you had sent me the list of questions. So I have to admit, I did have some planning. I think I would just put one word, and I'd put it on every billboard, I put it up on every highway, in the intersections of the bridges, and it would be believe. Well, Ted Lasso. [02:53:50] Speaker A: Ted Lasso's comment. [02:53:51] Speaker B: Yes, it's Ted Lasso's word. I can. It's unpleasurizing like hell. [02:53:57] Speaker A: Yes. Well, you're not the first guest to do that. [02:54:00] Speaker B: Okay. [02:54:01] Speaker A: My first was Bob Murphy. He was talking. [02:54:03] Speaker B: Oh, yeah. [02:54:04] Speaker A: Bob Murphy said that. And the show had just been. Was brand new. He said, john, you gotta watch this show. [02:54:11] Speaker B: You gotta watch this show. [02:54:12] Speaker A: I've never seen it. [02:54:14] Speaker B: Symbolism of that sign above the door as people leave and can tap it, touch it, what it really says. And by the way, it doesn't say, I believe. No, it just says, believe. [02:54:26] Speaker A: Believe. [02:54:27] Speaker B: You have to believe in everything around you, in yourself, in others. And if you do, you can accomplish anything. Which really trails back to that point I'm making about partnership early. If only you don't isolate yourself early and you actually learn to partner in a intimate way, in a total, trusting way with others, your life will go better, faster, and be more rewarding, not just for you, but for others. Not original, but I would put that on every billboard on the capital Beltway. That's great. [02:55:04] Speaker A: Well, reflecting back on this interesting conversation, believe, is a really good way to end it. And I really appreciate your time, Chakar, and this has been really, really interesting, and I appreciate it. [02:55:18] Speaker B: Thank you. Thank you, John, very much. Appreciate it. Talk to you soon and stay in touch.