Rethink Real Estate. For Good.

Environment

Greater mass.

Mass timber is a catch-all name for a range of engineered wood products. Smaller, non-structural pieces of wood are glued together and engineered in such a way that together they become much larger and structural elements. Mass timber has many attributes. Speed of construction is a major benefit. Panels are pre-manufactured and pre-cut before delivery. These panels can be fitted and screwed into place by a small crew. An entire floor of a large building might be made up of only five or six panels. And an 8-storey building might be constructed in as little as two weeks.

A familiar mass timber product is Glued Laminated Timber (glulam), made of layers of dimensional lumber (lumber that is cut to standardized width and depth) bonded together with durable, moisture-resistant glue. These days the most frequently used mass timber product in construction is cross-laminated timber (CLT). This product, which looks like a giant butcher block, is made using dimensional lumber, cross thatched with glue on a giant press and placed under extreme pressure. CLT panels can be as large as 12 x 40’ and 12 inches thick. They are structurally stronger and lighter than both steel and concrete and have been widely adopted in Europe, East Asia and Japan. Other variations include Dowel Laminated Timber (DLT) which uses wooden dowels to connect boards together, and Nail Laminated Timber (NLT) where the boards are nailed together.

The biggest drawback of these technologies is that they use a lot of wood, making them susceptible to market fluctuations. Just recently, prices soared by almost 200%.

New mass timber products are in development and Scott Ehlert’s cassette system is one of them. Scott, co-founder of Fabric Workshop, is designing a proprietary hollow core mass timber plate column and wall system that uses 50 percent less wood fibre and will cost 10 – 35 percent less overall than a CLT structure. The box-like panels consist of two outer layers with a hollow core and an internal membrane to retain structural integrity. The advantage of the cavity is that what would normally be exposed in a CLT building – mechanical, electrical, and plumbing systems – can be integrated right into the panels. Insulation, acoustic, seismic and fire safety materials can also be added.

Fabric Workshop is based in California and while it hopes its product will help address the state’s housing affordability challenges, the company also sees an opportunity to impact California’s wildfire crisis. In 2020 the state’s fire season was 75 days longer than just 20 years before. Removing excess unnatural growth out of forests would help to reduce the severity of those fires. Right now, those small and medium diameter trees have no value but Fabric Workshop wants to create a market demand by using them in advanced cassette-based plate systems. Instead of dimensional lumber, they are focusing on another sub-product of mass timber known as laminated veneer lumber, or mass plywood, which is made from peeled timber sheets glued together.

Scott hopes that forestry industries, which have reduced by 70 percent in the last 45 years, will return to California with a much greater technological, environmental, and ecological focus. Timber is an environmentally friendly building product which offsets the carbon and environmental impacts of concrete and steel. Sourcing it locally and preventing wildfires are the icing on the cake.

Image from PxHere

Rent an (AgTech) Robot.

Mark DeSantis is a Pittsburgh-based serial technology entrepreneur, policy wonk and educator. He is also CEO of Bloomfield Robotics, a new Ag company out of the CMU Robotics Institute that uses AI and computer vision to measure the health of agricultural crops on plant-by-plant basis, or in their parlance … “crop estimation technology.”

Mark knows venture capital and financing, and how technology gets commercialized. In the last 15 years Mark has co-founded and run three other companies: RoadBotics, an AI-based product that monitors and manages roadway infrastructure; kWantix, an energy hedge fund; and kWantera, a GE Ventures-backed energy predictive analytics company. Mark also served as CEO of Think Through Learning, an online tutoring company, and was U.S. managing director of ANGLE Technology, a UK-based venture capital firm and consultancy. And as if that wasn’t enough, he also ran as the Republican mayoral candidate in the 2007 Pittsburgh election.

On the policy side, Mark served as director of government relations for Texas Instruments in Washington D.C., and operated in a number of positions in the Federal government during the first Bush Administration, including as a Senior Policy Analyst in The White House Office of Science and Technology Policy and the Department of Commerce. He was also on the staff of the late U.S. Senator John Heinz. Mark has sat on a number of boards and served as a consultant for a variety of technology companies throughout his career.

Mark’s robots are for rent. All over the world. And he believes, as do his customers, that his company’s robots will help us to produce more food on the finite amount of land we have available to us.

Insights and Inspirations

  • AgTech robots will help to maximize crops on the finite land that we have.
  • Bloomfield Technologies is renting “inspector” robots all over the world.
  • Mark’s startup is based in Pittsburgh. A few years ago that was unheard of.
Read the podcast transcript here

Eve Picker: [00:00:11] Hi there, thanks for joining me on Rethink Real Estate. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. When I’m not hosting the show, I’m running my real estate crowdfunding platform, SmallChange.co, where you’ll find impact real estate investment opportunities open for everyone. Or you can learn more about me and catch up on some podcasts at my website, EvePicker.com.

[00:00:20] Today, I’m talking with Mark DeSantis, serial entrepreneur and past Pittsburgh mayoral candidate. You might wonder how these two things come together and we talk about how. Right now his talents are focused on a startup called Bloomfield Technologies. They build robots that inspect valuable crops like grapes, helping to predict crop outcomes and helping to manage crop disasters before they happen. Mark’s robots are for rent all over the world. He’s certain they will help to produce more food on the finite amount of land we have on this earth. And so are his customers. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to Patreon.com/rethinkrealestate and support us for the price of a cup of coffee.

Eve: [00:02:27] Hello, Mark.

Mark DeSantis: [00:02:29] Hi.

Eve: [00:02:29] It’s really nice to have you on my show. It’s been a while since we talked.

Mark: [00:02:33] Yeah, you bet.  Happy to be here.

Eve: [00:02:34] So you’ve been called a serial entrepreneur and you’re on to your next venture. And this one is an agricultural technology or what we call Agtech. Right?

Mark: [00:02:48] You bet.

Eve: [00:02:49] So, what is Bloomfield Technology all about?

Mark: [00:02:52] Yeah. So we inspect plants and we determine their health and performance one plant at a time. And we do that for the world of specialty crops. So, if you think of all of the, you know, the world’s largest industry as agriculture, as many, I’m sure your listeners know, and within that industry, there’s a category of plants and crops called specialty crops. And those are all the things that you and I buy when we go into a Safeway or a Giant Eagle or a Whole Foods. So think of fruits, vegetables, ornamental flowers. But it also includes things like trees and even cannabis, all those things that are not wheat, rice, corn are speciality crops. That’s the world, two trillion-dollar market. Those crops require a lot of love and attention, specifically from inspection. So there are people who are trained to walk among those crops, whether it be in a greenhouse or a vineyard in Napa, to look at those plants. And they’re highly trained, typically viticulturists, botanists, agronomists, and they walk among those crops, and they examine them. Periodically looking for things that could damage the plant, water stress, disease infestation. But they’re also looking at the health of the plant, determine whether or not that grape is the size they expected it to be at that time of the year. Or those tomatoes are as large and red as they should be given this time of the year and these treatments. And if they see a problem, then they can tell the grower to provide a remedy, whether it’s more water, more light, more nutrients or what have you.

Eve: [00:04:21] So kind of what I do in my own garden, but on a huge scale.

Mark: [00:04:25] Yeah, absolutely. Bet on a massive scale where you’re talking about tens upon tens of thousands of acres. Well, we do that with machines and A.I., with specifically with cameras that are mounted about the size of a toaster and they’re cameras, not unlike your cell phone, they use the same kind of imaging, except they have the stereo lens and their own light source. And you put it on anything that moves. Our growers, we are in 15 vineyards in four countries, as well as a blueberry grow in Peru. And all of those customers have vehicles of various sorts. They mount the cameras on, and they just drive up and down the rows. Image, take pictures of those things and of the crops and the A.I., the artificial intelligence in the cloud does the rest. So they take those images and go through them at the pixel level. And basically the A.I. has been trained to look for all the things that that human viticulturist or agronomists is looking for when they look at the plant, believe it or not. So A.I. has now reached a point, this is my third A.I. startup and that technology, I should say, to give a shout out to Carnegie Mellon was developed over a decade at Carnegie Mellon. Little known secret about CMU is that they’ve been making ag tech robots for 30 years.

Eve: [00:05:36] Oh, that’s interesting.

Mark: [00:05:37] Yeah, little-known fact. So yeah. So that’s what we do. Eve, I’ll tell you one interesting tidbit. Your, listeners may find this particularly, I think it’s cool, but so we do this for vineyards. Some of the vineyards are some of the best known vineyards in the world. So, one of our customers in Bordeaux is Chateau Palmer, which makes the famous Chateau Margaux one of his. You know, we have vineyards in California and elsewhere, but one of the most interesting customers we have is NASA. So we recently got a grant. There is actually a greenhouse, small greenhouse about size refrigerator, inside of the International Space Station.

Eve: [00:06:18] Oh, so interesting.

Mark: [00:06:20] Yeah, they’re growing leafy greens and spices and what have you. And it’s actually a program in NASA called Space Crops. So, think of Matt Damon in The Martian. That’s a real thing. They actually want to grow plants on the moon, on Mars, but also in the ship going to and from Mars because you can’t carry enough food to make the journey. It’s too long. So you’re actually going to have to grow your food on the way to and from…

Eve: [00:06:50] We’re talking x, x, x x, urban, right?

Mark: [00:06:53] Yeah. This is what I was joking with somebody, you know, they call the greenhouse world and the vertical farm world controlled environments. And I was telling somebody other day, we’re doing controlled environments a little different than a greenhouse. It’s one in space. So we’re within two years will be all goes well, you know, we’ll be sending one of our cameras up to the ISS, where it will be in the ISS monitoring the crops in the space station. So pretty exciting.

Eve: [00:07:24] Yeah. So back on Earth. Tell me about like a success story, you know, some crop your robot saved.

Mark: [00:07:33] Yeah, well, I don’t know if we’re there yet. We’re two years old, but we’ve, generally the feedback we’ve gotten and from the growers that, you know, as I mentioned, we’re in France. We have a customer in Italy. Peru and across four states in the U.S. The response is, is the following. The good news is the problem with using people to inspect on plants is twofold. One is, there just aren’t enough of them. You know, you’re talking about, I’ll use an example, a viticulturist, the person who’s highly trained to go look at grapes and vines and everything on the vine, you know, he or she can inspect about a tenth of an acre in a day. And that’s about one hundred and fifty vines, you know, so you’re talking about a very small fraction of of the total vineyard, whether it be a vineyard or apple orchard or orange grove. The other problem with using humans, and this one’s a little bit more, a still larger problem is that, you know, you’re using humans. And you know this from from your world, Eve.  If you gave five inspectors and had them look at the same thing, you know, you’ll get probably five opinions and they’ll probably be different enough to make any one opinion a little bit suspect.

Eve: [00:08:58] So it’s really about consistency, right?

Mark: [00:09:00] Exactly. So you really want to be consistent. And that’s where the machine, the machine intelligence, the A.I. really makes its benefit. So many of our growers have said repeatedly, you know, I now know the condition of my crops, my plants. I you know, I never really knew the condition because you’re imaging in many cases where imaging every single vine on the entire vineyard and knowing its condition as of Tuesday, that’s huge. Yeah, it’s big, big. And so, it’s new and different. No one’s doing this. This is you know, drones are a solution sometimes, but drones have been around. You know, farmers have been flying over crop fields, using sensors, various types for years. And the problem is when you’re up in the air, you can’t see through the canopy and all the fruit and everything. So we are the boots on the ground for the farmer. And growers have had higher yields. They’ve had better yield predictions. You know, that’s a big, big part of farming, as you know, is your…

Eve: [00:10:06] Yeah.

Mark: [00:10:06] And your grow. You want to know how many tomatoes you’d like to have a sense of, you know, how successful this is going to be and and so on. So all of those things are, you know, knowing what the yield is going to be, protecting the crops from damage from disease and infestation, a big one for citrus, particularly knowing when to harvest. That that cannabis is an example that we don’t we don’t do cannabis now. But we did previously some time ago when we first started the company and when I learned about cannabis is if you missed the harvest window by a day. By a day, you can lose 20, 30 percent of the value of the crop.

Eve: [00:10:47] Oh, wow.

Mark: [00:10:48] Yeah, and that’s a plant, by the way. That’s a crop where you’re talking anywhere between one and six million dollars an acre.

Eve: [00:10:58] Wow.

Mark: [00:11:00] Yeah, farming is changing dramatically and A.I. and robotic technology are driving that. It’s happened in the past, Eve. There have been waves of technology advancement in farming. You know, when you think of I always tell people this when you think of technology, the kinds of things that that allow humans to do more things, most of the advances up until the 19th century were in farming. You know, if you think of all the marvellous inventions that have helped humans do more with less and all those wonderful technologies, the vast majority of them been in farming over the last millennia or two.

Eve: [00:11:46] So interesting. Yeah. So this is a really mundane question, but I want to know what the robots look like. Did they look a little different than Rosie on the Jetson’s?

Mark: [00:11:57] Well, you would be disappointed. I can tell you that right now, anybody that’s imagining you know, like the robot butler.  No, no. You would be you would be incredibly disappointed, Eve. It looks sort of like a toaster, maybe more like small microwave with two eyes and a rim around the edge of lights of LEDs. So no arms, no legs that’s provided by the ATV or the tractor. There’s a little antenna sticking out of the side. It does look like a techie thing. I mean, when they show up on the farms, people look at that. And their first question is, what in the world is that thing?

Eve: [00:12:42] So they must be designed, designed to go over a whole variety of grounds, like rocky flat, mushy, buggy.

Mark: [00:12:51] Yeah. These things are, I call it farm hardened. You know, anyone has been on a farm, knows it’s a rough it’s a, you know, it’s a rough place. So we’ve built these things. It’s very robust, you know, pieces of equipment that have been dropped and kicked and gotten dirty and rained on and and so all that’s been sort of designed in.

Eve: [00:13:17] Cool. So I have to ask, how much does it cost to deploy one of these?

Mark: [00:13:20] Yeah. So we charge our growers anywhere, somewhere in the range of two thousand dollars per month.

Eve: [00:13:27] So they don’t buy them, they rent them.

Mark: [00:13:28] Nope. Rent.

Eve: [00:13:29] Ah, rent a robot.

Mark: [00:13:32] Yeah. And that’s, believe or not, there’s a, you know, when people, your, some of your listeners, are in the software as a service phrase that probably a lot of people have heard that. Well, there’s now a whole industry called robots as a service. You’re not selling the technology. You’re just giving them access to it. There’s even something called FaaS now. It’s called farming as a service where you actually have a piece of land, and you think there’s a way to earn some money. A company will come in and be the farming entity on that piece of land. So you’re the owner, you reap the share, the profits from…

Eve: [00:14:16] Kinda like you’re renting a building, but you rent land instead.

Mark: [00:14:18] And exactly.

Eve: [00:14:19] It’s interesting.

Mark: [00:14:20] It’s exactly that. Yeah.

Eve: [00:14:22] So I have to ask, is there a plan for tiny robots, for urban gardens?

Mark: [00:14:27] Maybe someday. I mean, it’s funny you say that. So, what we’re probably going to do someday when we get to enough size, we will make a phone app version of this that will be free. So what will happen is we have cameras, as I mentioned, the hardware that’s to do it at scale. You’re talking about farms of one hundred to twenty thousand acres. But if you want to use it in your backyard, you know, you’re not going to go buy a bigger machine. You’re what you would want, though, is access to all of the smarts. And because cameras have pretty good lenses for small scale data collection, what will probably do is will make the app freely available to anyone who can, you know, wants to download it. And then they can use their cell phone camera and they can benefit from the analytics. So if you have tomatoes and we’ve done, you know, vast tomato grows around the world, we now have, because of the way A.I. works – it’s learning, we now have all that wisdom from all those tomatoes from all over the world. Well, you can get access to that for free through your phone app for your own tomato garden in your backyard.

Eve: [00:15:42] So, you know I, over the last year, I became an avid gardener, something I thought I would never do in my life. It’s a great, great hobby when there’s a pandemic going on. But I’ve been using a plant app to identify plants in case I think they’re weeds and I’m going to pull them out. Extraordinary, pretty extraordinary. So can I be the first one to test your app?

Mark: [00:16:05] Absolutely, Eve. I hereby, I’ll go on live and just right here publicly say you will be the first.

Eve: [00:16:13] I mean, It’d be fantastic because you’re dealing with all sorts of, you know, mildew and moles and bugs. And it’s hard.

Mark: [00:16:22] You know, there’s a. you know, I’ve been in this ag tech now thing for two years, so I know, you know, a very limited knowledge, dangerous amount of knowledge, which is a very little bit. But one of the statistics I learned that really kind of stayed with me is, you know, for those listeners know your population and the world’s about seven billion, it’s expected to grow to 11 billion in the next 30 years. So that’s a 40 percent increase in population in 30 years. And somebody has done the calculation on food production. And what they concluded is that we will need to grow, we will need to grow more crops in the next 30 years than we have since the beginning of agriculture ten thousand years ago.

Eve: [00:17:13] Wow.

Mark: [00:17:14] Yeah, but it’s an even bigger challenge. And the bigger challenge is we’re going to have to do it on less arable land. So, there’s no Iowas or Ukraines left in the world with dense, rich soil left. So we’re going to have to do it on probably less arable land than is available now. And with fewer of the tools that currently are common to farming. The fertilizers and what have you are with all of the requirements for sustainability that are increasingly the case around the world, those tools will be less available. So somehow or another, we’re going to have to get more with less if we’re going to feed the world. So that’s really probably what’s driving this Agtech revolution I commented on earlier.

Eve: [00:18:03] Mm hmm. Interesting. So who thought up this robot?

Mark: [00:18:08] Well, I ,you know, I was fortunate to have met two people, one of Dr. George Kantor and who is a 20 years researcher at Carnegie Mellon, very well known in the Agtech space roboticist and one of his grad students, Tim Mueller-Sim. Tim and George had spent years developing variations of this technology in the field at Carnegie Mellon. In a literal sense in the field. And they had built all the robots that you’re imagining that you want to see, they’ve actually built those. So, the ones that crawl around or can pick a cherry without crushing it, all that, you know, they developed a lot of those things, field tested them and pretty cool stuff. But one of the lessons they learned is, you know, farmers don’t want to buy robots, yet. And that’s, you know, for people that love robots and build robots, that’s tough stuff. But they concluded, hey, look, we still want to help farmers. So what we’re going to do is we’re going to carve out the perception piece of that robot, the eyes and the brains, if you will, the A.I. in sensing and we’re not going to sell that to them. We’re going to sell a service. And we know that crop inspection, especially in specialty crops, is an essential routine in every specialty crop, just the way it is in your own garden. And so they said we’re going to carve that out and sell that as a service. So it was pretty, pretty thoughtful of them to kind of you know, it’s played out that way that the growers have resonated. So, you know, it’s probably the classic example of academic researchers transitioning to entrepreneurs. And, you know, that’s hard to do.

Eve: [00:19:59] And that’s where you came in, right? Because you are a serial entrepreneur.

Mark: [00:20:04] Yeah, yeah. And so when I met them, I came in as an advisor. And I think, Eve, I was like, I don’t know, 20 minutes into their first presentation and I, you know, I said to myself, OK, I’m just going to advise, see what. 20 minutes in, I’m like, oh, I’ve got to do this. So I just like, you know, I just can’t help myself and I don’t regret it for a minute. The two years it’s been I have flown by and I’m thoroughly enjoying this.

Eve: [00:20:35] So how do you hope to scale this company?

Mark: [00:20:39] You know, great question. So that’s the challenge every tech company has when they think of the all the benefits they could bring to the world, but then they don’t necessarily think through how everyone’s going to access this this wonderful tool. And for us, you know, for a lot of entrepreneurs like us, our strategy has been initially to knock on doors. The good news is because this technology had already been sort of field tested, we had a few leads with some vintners in California that led to them trying it and then them telling other vintners. And before, you know, we’ve got 15 vineyards in four countries,

Eve: [00:21:18] So no Facebook ads.

Mark: [00:21:20] No, no Facebook. You know, it’s funny. I think that it’s interesting how sometimes that PR is a startup and I’ve been guilty of this as you can almost get too much. And what happens is you get too much too early. And then when you meet investors or customers, they find out that the hype, you know, of your business is way ahead of what actually is there. So we were careful not to sort of get ahead of ourselves. But one of the things that we’re starting to do now, which is working is, is, you know, people use this phrase partnering. There are entities right now that buy large marketers that buy crops and then resell them to package them and sell them to the Whole Foods, Safeways and Giant Eagles of the world. And they have an interest in several things. One is in knowing that what the yield for that farm is going to be, if the sooner they know that, the better they can price it to the Whole Foods of the world. They also want to ensure that the crop that they’re buying at the beginning of the year is of a sufficient quality at the end of the year as to make that worthwhile. So they have an interest in knowing the condition of the crops, knowing the yield and various other things of the person from whom they’re going to buy those crops. So they came to us and I can’t name them yet. Someday soon, a big, big entity, global entity, and said, hey, we want to pay you to give your service to our growers. They can have access to all the analytics. They can get all that for free because we’re going to pay you and we get the benefit of knowing what the yield is going to be and the quality is going to be from that same data and then we resell it. But then there’s another addendum you’re going to find interesting. And this is new and different. This is very new. So what they’re telling us with this marketer is saying is people like you and me, when we go into Whole Foods or Giant Eagle or wherever we shop, we are increasingly want to know the history of that apple or that pepper, in other words, we want to know, OK, is that pepper really organic? We want to know where it came from. And when we say where it came from in this, believe it or not, this is where it’s going. The grower, the seller, the Whole Foods of the world wants to know what tree that apple came from.

Eve: [00:23:55] You’re kidding.

Mark: [00:23:56] I’m not kidding.

Eve: [00:23:58] I mean, is there a move towards buying more local in supermarkets as well as farmer’s markets?

Mark: [00:24:05] There is an attempt to do that. The challenge with buying local is, and this is some of the issues around some of the larger issues that people are struggling with is it’s pretty hard to compete with a Driscoll’s. You know, which is a massive grower when you’re trying to reach that quality level. There’s just a point at which a small grower just doesn’t have the scale.

Eve: [00:24:28] Yes.

Mark: [00:24:29] To match the quality of a massive grower like a Driscoll. So so there’s that. But there is a desire by the to grow the grocery stores, the places where we shop, to try to at least incorporate some local production. And so you’re seeing that play out. The challenge is we as consumers still demand our quality. As much as we want to buy local, as much as we have a desire to help keep that local ecology sort of functioning business, ag ecology functioning, we still like our quality apples. We still want to want to get the best quality we can for the price. And so there’s a bit of a challenge there for the you know, for the local growers. What’s seemingly happening is and I think this is another feature of just our own preferences as people are fussier and fussier and fussier about the quality of their produce, which is great. And so where there’s an opportunity for the local grower is rather than try to compete at the low end, they compete at the high end.

Eve: [00:25:43] That makes sense.

Mark: [00:25:44] So they go after the really premium crops, the kind that, you know, that I’m not, you know, five-dollar tomato or whatever.

Eve: [00:25:56] Yes. Yeah, interesting, so you must have done the math, because this is what I’m thinking, if everyone deployed one of your, every farm, deployed one of your robots. How much more food could we produce?

Mark: [00:26:09] Yeah, good question. You know, if you do the math conservatively, if you can increase yield just on believe it or not, I mean, the farming is it is a challenging business, whether you’re a giant grower or small. As you know, a lot of resources go into farming in the margins are pretty thin. So that means if you can increase yields, say two or three percent, you can dramatically improve the profitability of that farm dramatically. But that yield increase of two or three percent over time, in other words, you can do that on a fairly continuous basis, can add up to a lot. And that’s where food production is. It’s at the margin. You know, it’s at the margin of getting more with less. And by more with less, I mean, not just with less arable land, but with a lower resource base, less water. Water is now one of the big, big challenges in farming in, say, California, where a huge amount of our specialty crops come from. In the U.S., water is a big challenge. We as citizens of the Northeast United States, believe it or not, ultimately subsidize fresh water availability in on the west western United States. We are in our taxes and in the subsidies that are provided by the federal government to farmers. It allows for fresh water practically from being places like the Columbia River and other places out west to provide water on a massive scale, fresh water to farmers. And that is increasingly becoming expensive. Now there’s issues around the water table and you know, people that are much more expert at that than I am knowing about the depletion of of fresh water in the United States. But fresh water is now increasingly a constraint. So if you can increase yield with data and as a result, target my use of water and even nutrients by and have me use less of those and get higher yields, you not only improve the quantity of food, you reduce the resource cost. And that’s just data, Eve. It’s not, you know, we’re not talking about the labor costs or anything. We’re just talking about the simple use of the data. And that’s really our goal is not only to increase the productivity, the production, absolute production, it’s to reduce the resource base required to produce that.

Eve: [00:28:52] Yeah, interesting. So I’m going to shift gears a bit.

Mark: [00:28:56] Yeah.

Eve: [00:28:57] You know, you ran for mayor in the city of Pittsburgh a few years back, and you, and I know you’ve really been involved in the city, in the startup community. And I want to know what you believe the relationship is between a healthy city and startups.

Mark: [00:29:12] Yeah, that’s a good question. And I’ve thought a lot about that. Eve I don’t think there’s a city in the world that thinks that economic growth is necessarily inherently a bad thing. However, I do believe that a community like Pittsburgh, where there is now, I think, for the first time, I’ve been here 20 years, Eve, and I tell you what’s happening in the last three, three to five years is unlike anything that’s ever existed before. As long as I’ve lived here. It is really exploding. I mean, you have your first big IPO.

Eve: [00:29:47] Yes, Duolingo, right?

Mark: [00:29:49] And you have a few more in the queue. Yeah, that’s insane. So you’re going to see an explosion of millionaires living in the city. You’ve already seen that people who are now have suddenly are flush with wealth. There’s a concern by every city that, hey, is that going to be shared? Is that going to prosperity going to go to just a handful of people or a small elite community in this city? Or is it going to be our other citizens going to enjoy the fruits, the fruits of that?

Eve: [00:30:18] That did not play out well in San Francisco, right?

Mark: [00:30:21] Not at all. And I’ve been there with anyone who’s been there sees the disparity in peculiar San Francisco. You’ve got a beautiful, magnificent city with huge pockets of poverty.

Eve: [00:30:33] Yes.

Mark: [00:30:34] Disappointing. But I think in the case of Pittsburgh, I think it’s thoughtful leadership that doesn’t create a antagonistic kind of, you know, regressive. I don’t believe what’s happened. And I’m not pointing fingers at any politicians here. I think it’s just maybe just a natural outcome, you know, is this tech community grows is increasingly another community or other communities in this city are saying, hey, they’re getting all the attention and we’re still poor.

Eve: [00:31:04] Yes.

Mark: [00:31:04] We still have crappy roads, and our institutions are not working. Our crime is. And so I think that the kind of leadership that that needs to happen is that somebody sort of bridges that that doesn’t create an us versus them mentality, because then when the tech community says, oh, the city doesn’t like us because we’re successful now, they want to make us a scapegoat for their failures as local government. So there’s two sides to that. And that you end up creating, you know, you probably see it for the listeners nationally play out this way is, you know, when it’s really easy to point the finger and say it’s, you know, they’re the source of the problem. And I don’t see it that way. I think it’s a function of quality leadership, Eve, that I sound like giving a speech here.

Eve: [00:31:51] Oh, I completely agree with you.

Mark: [00:31:54] It’s the quality of leadership

Eve: [00:31:55] That, I mean, it’s actually played out that way with the health industry in Pittsburgh, which is really absolutely first class. And there’s been constant friction politically between that community, each other, and the city. And, you know,

Mark: [00:32:14] Needlessly, I think needlessly, I think both care about their community, both want it to succeed. Both have a desire to have everyone as much as possible enjoy the fruits of what’s happening. But I think that is in the details where it gets lost.

Eve: [00:32:30] Yeah, I mean, how did you get here? Like, what’s your background in a nutshell?

Mark: [00:32:35] Yeah, in a nutshell, it’s going to be a big nutshell because it’s crazy, but I’m trying to fit it in a tiny nutshell. OK, I spent the first 14, almost 15 years of my life in Washington, D.C., professional life in Washington, D.C., in and in and out of government, in and out of the federal government. I worked I was fortunate. I worked for initially two then congressmen, one guy named Tom Ridge, which any of your listeners in Pennsylvania would know to me became governor and secretary of homeland security. And fortunately, I worked for him. And then another guy named Mike DeWine, who is actually, now, the governor of Ohio, and that those two experiences were sort of fundamental. I then managed a political campaign in Maine.  A guy we ran for Congress and a fellow named Rollin Ives. That’s a great New England name. And we lost. But I learned a lot about campaigns and came back to D.C. I worked for a Beltway bandit, Booz Allen, that’s the phrase in Washington for anyone listening. So I don’t mean that in a negative way. So big, big consulting firm. Worked for the Justice Department, the US Justice Department, briefly as a policy analyst, and then ultimately got a job working for John Heinz. Senator Heinz, up until tragically he passed away in 91. When the senator passed away, the new senator came in and brought his own staff. So I was again in the market and I was fortunate. Just dumb luck really, got a job in The White House. Got a job working in the Office of Science Technology Policy and under the first Bush administration in the early 90s, so I got a chance to work with an interesting group of people, the science adviser for people who don’t know something called the Office of Science Technology Policy was formed formally became a White House office staff when Eisenhower was President. But but every President since John Quincy Adams actually has had some kind of science adviser. So did that for two years. And President Bush lost. I was a political appointee. So when the President loses, you also lose a job. And so I was out the door and back on the street again. But I am fortunate to have all those wonderful experiences. And I ended up getting a job with Texas Instruments. So, Texas Instruments was looking for a lobbyist, somebody to help run their government affairs in D.C. And at that time, Texas Instruments was a Fortune 60 company in 48 countries and had a lot of business all over the world. So I had to travel, got a chance to travel around the world and had a lot of interesting assignments and it’s a wonderful company. I cannot say enough good things about the generosity of the Texas Instruments. I learned a lot about technology and policy and funny thing when I left, Eve, for your listeners who don’t like corporate lobbyists, they all enjoy this. I had a going away party when I decided to leave that world and moved to Pittsburgh. So I kind of finished that stint when I was about thirty five. I had done all that stuff and I was ready to kind of move on. And they had a party for me at my favorite watering hole in D.C. and they someone gave me a bumper sticker and it said, and these are other corporate lobbyists too, they give me a bumper sticker and it said, “Please don’t tell my mother I’m a corporate lobbyist. She thinks I’m a piano player in a brothel in New Orleans.”

Eve: [00:36:30] That’s great.

Mark: [00:36:31] So anyway, so I got that and then decided I was done. I had done a lot of what I wanted to do there. It was wonderful, but I was done. So I came here right around 2000 and didn’t really have a job. I actually was able to pick up some consulting work locally and then kicked around, got some work done. I was did a little bit of consulting work for Free Markets, back in the day. And I did a little bit of consulting there and that gave me a little taste for entrepreneurship and then really kind of dedicated myself to the starting companies over the next, you know, 15, 16 years here.

Eve: [00:37:15] So, what’s interesting about that is, you know, when people think about startup, they think about some young 20-year-olds starting a company. But you have this amazing wealth of experience that you’re bringing to this company.

Mark: [00:37:33] You know, Eve, I will tell you, the statistics share. I’m also an adjunct professor, at Carnegie Mellon that’s said I want to shout out to CMU. I’ve been teaching here since I moved here and they’ve been wonderful to me. But people if the statistics for those listening or prospective entrepreneurs, statistics are, most startups are started by people in their late 40s, early fifties, believe or not vast majority. It is the, there’s a small fraction of people in starting new businesses that are in their twenties or early thirties. That’s a rarity when it comes to starting businesses. And everyone thinks of the overnight success and…

Eve: [00:38:14] And overnight success is ten years, right?

Mark: [00:38:16] Oh, yeah. I mean, this is it’s a, this isa brutal, I tell people who are contemplating starting a business and, you know, you’ve done it, you’ve done it more than once, and, you know, it’s a brutal taskmaster. It is unforgiving. And it’s…

Eve: [00:38:34] I think I’m about halfway through that ten-year fix, that success on my latest business. And it is completely brutal.

Mark: [00:38:41] Yeah. And it just, but, you know, it’s funny. It’s the kind of thing where as tough as it is. I have a friend, he’s a retired Navy SEAL officer and he’s also an entrepreneur. And he said to me once, you know, he is, you know, being an entrepreneur is sort of like being a Navy SEAL and that you just have to get comfortable being uncomfortable.

Eve: [00:39:04] Yeah. Yeah. OK, I have one more question for you, and that is, what is your big, hairy, audacious goal?

Mark: [00:39:15] Wow. Wow. Oh, my goodness, where do I begin? I just want to make a difference here and in our community and whether that community is Pittsburgh, the region or even the state, I want to make a difference. That’s my goal. I enjoy what I do. I feel great about this company and what it can do. And that’s one of the reasons I love this company, is it’s going to make a difference for farmers, hopefully all over the world. And, but another important goal of mine is to make a difference where I live and try to make as big a difference as possible. And so I think that the great old, grand old, you know, Keystone State that we live in, you know, one of the colonies from way back is seen better days. And I think the communities that are here, you know, we’ve had suffered from population decline in Pittsburgh, in the region and in the state. And I think that there’s a desire to see something better and see change coming. And I think that that’s now possible. You know, it’s not the old, you know, stodgy community state that it once was. I think there’s new vitality, but I think it’s going to take time. And I want to see what I can do to make a difference somehow, some way. That’s what I think is the most energizing thing for me is that it’s why I love startups. It’s a way to kind of cause positive things to happen, keeps me motivated. And that’s what motivates me, is to try to make a difference where you live.

Eve: [00:40:53] That’s a great answer. I feel completely energized now. Mark, thank you very much. Thank you very much for talking to me.

Mark: [00:41:01] Yeah, sure. Happy to be here, Eve. Thanks.

Eve: [00:41:09] That was Mark DeSantis of Bloomfield Technologies. Mark pivoted his life and career from politics into start ups, and he moved from D.C. to Pittsburgh, where he is living his dream, nurturing an ag tech company into a global position in his much loved, adopted city. We’ll be hearing more about Mark and Bloomfield Technologies, I’m sure.

[00:41:46] You can find out more about this episode on the show notes page at EvePicker.com or you can find other episodes you might have missed, or you can show your support at Patreon.com/rethinkrealestate for the price of a cup of coffee. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Mark DeSantis, Bloomfield Robotics

Homage to Sutro Baths.

Anne Nickel Cannady was born and raised in Minnesota but has lived an international life. Over the past 20 years she has worked in brand strategy, culture, innovation and immersive experience design with start-ups and leading brands including Starbucks, Avalon Bay, Choice Hotels, Royal Caribbean, and Honda to name just a few. And she’s lived all over the world in London, Cape Town, Detroit, New York, and now San Francisco.

After leaving college in North Carolina, Ann dove into a marketing and HR career in London working with a variety of organizations. Her skillset expanded into workplace culture. By 2010 she was working in the U.S., first at the consultancy Kantar, then as an independent consultant. She joined the PayPal community for six years, becoming Head of Culture, followed by her most recent job as Head of Employee Experience at Fastly.

Now Anne is challenging herself with a project called Alchemy Springs that brings all her skills to play … and more. The plan is ambitious – a social community bath house. The building is ambitious – the transformation of an historic warehouse into a biophilic wonderland. The location is ambitious – a neighborhood on the cusp of gentrification. And the financing is ambitious – she’s raising funds through an equity crowdfunding raise in order to let anyone over the age of 18 invest.

We can’t wait to see how it turns out. 

Insights and Inspirations

  • Biophilic design incorporates natural lighting, ventilation and landscape features in order to create more productive and healthy spaces.
  • Anne envisions Alchemy Springs as a modern urban oasis. Winding ‘riverbaths’ and lush surroundings will define it. Blazing steam saunas, frigid cold plunges, a starscape moon bath, an outdoor sun bath, greenhouse and gardens will be built for all to enjoy.
  • Anne is based in the Bay Area. But it feels as if she could live anywhere.
Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad. Rich or poor. Beautiful or not. In this show, I’m interviewing the disruptors. Those creative thinkers and doers that are shrugging off the status quo, in order to build better for everyone. When I’m not hosting this show, I’m running my real estate crowdfunding platform, SmallChange.co, where you’ll find impact real estate investment opportunities open to everyone. Or you can learn more about me and catch up on some podcasts at my website, rethinkrealestateforgood.co.

Eve: [00:01:11] Today I’m talking with Anne Nickel Cannady. Anne was born and raised in Minnesota, but she’s lived an international life. Over the past 20 years, she has worked in brand strategy, culture, innovation, and immersive experience design with startups and leading brands, including Starbucks, AvalonBay, Choice Hotels, Royal Caribbean and Honda, to name just a few. She’s lived all over the world – in London, Cape Town, Detroit, New York, and now San Francisco. Anne is challenging herself with a project that brings all her skills to play and more. The plan is ambitious – a social community bathhouse. She plans to transform an historic warehouse into a biophilic wonderland. The location is ambitious – a neighborhood on the cusp of gentrification. And the financing is ambitious – she’s raising funds through crowdfunding on my funding platform, Small Change. You’ll want to hear more.

Eve: [00:02:19] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to patreon.com/rethinkrealestate to support this podcast. For the price of a cup of coffee.

Eve: [00:02:41] Hi, Anne, I’m just really pleased to have you with me today.

Anne Nickel Cannady: [00:02:45] Thanks, Eve. It’s great to be here.

Eve: [00:02:47] You’ve had some really interesting titles like Head of Culture at PayPal and head of Employee Experience at Fastly. But now you’ve moved on to a very different project. And I’d really love you to tell us about Alchemy Springs.

Anne: [00:03:01] Sure. It’s interesting because while I’ve held a lot of different roles, they sort of have all come together for all the skills that I needed to bring this new sort of project to life. But Alchemy Springs came about because in San Francisco, there was a huge community built around some of the hot springs that were, you know, within a couple of hours outside of the city, and one, in particular, burned down in a wildfire several years back. And everyone really missed that community, a community that would gather and be up there. You could, you know, spend the night. There was all these events. And at the same time, we started seeing this rise and this kind of model of these urban bathhouses popping up across the country, so there was one called the Schvitz in Detroit, there’s one, Banya 5, in Seattle. And, all of these really started to bring this community together. You know, for example, I was shocked to learn that, you know, members of the one in Seattle would go four to five days a week. And this whole community was even extended beyond the bathhouse into their local community as a sort of a friendship circle and mentorship circle. So, we looked around at San Francisco, and while we do have a number of spas and sort of bathhouse spas, none of them were quite hitting the mark.

Anne: [00:04:26] There was only one real communal one where you could be social. Most spas, where you really went to kind of check out on your own, not just sort of connect with people. And the one social one that there was, a sort of Russian style banya, it’s a little bit more like a sort of a glorified locker room experience, right? And, you know, maybe wasn’t designed with the guest experience in mind. And so, we really saw this opportunity. And on top of that, San Francisco has this rich history in Sutro Baths. And we met with SF Heritage, who introduced us to the gentleman who wrote one of the famous books on Sutro Baths. And we wanted to learn what the story was behind it, why the mayor at the time wanted to build this grand structure. It was sort of 1894, and it was huge. It was right out over the waters. And at the time, it was quite innovative. He built these almost like little windows, hatches, that would open and close to allow the waters to come in…

Eve: [00:05:37] Oh beautiful, yeah.

Anne: [00:05:37] Yeah. And then he would heat them to different temperatures and all this. And he was inspired by sort of the grand European bathhouses, right? And back then, people were working six days a week and they only had one day off. So, he wanted to find a way that people could socialize with friends or family, but also do something restorative because they only had one day off. And, you know, hydrothermal bathing and all the properties of that, the health properties, he decided to build Sutro Baths. And it really was a place for everybody. So, everyone could have access to this grand experience. And he had gardens, and there was places for, you know, the police and fire department to meet. And it really was a

Eve: [00:06:19] Community gathering place. Yeah.

Anne: [00:06:21] Yeah. A very iconic piece of San Francisco history. So, all of those ingredients together, we thought, this is it. You know, we’ve got to build this in San Francisco. And when the pandemic hit, it only became more important than ever to reconnect the city, which has lost a lot of people, we’ve gotten a lot of new people coming in, but we miss our community. So, it’s kind of perfect timing.

Eve: [00:06:45] Well, what happened to the Sutro Baths?

Anne: [00:06:48] The Sutro Baths actually, there was one point in time it ended up being converted into an ice rink, of all things.

Eve: [00:06:55] Interesting.

Anne: [00:06:57] Yeah. And then it burned down. Gosh, I want to say in the maybe 50s. Yeah, 50s, or early 60s. It burned down. And so now, today, out near Land’s End in San Francisco, there’s these beautiful ruins. I mean, it’s kind of an iconic, you know, tourist destination now right on the cliff side where you can go when you can see a lot of the old cement structures of the different pools.

Eve: [00:07:28] Oh, wow.

Anne: [00:07:28] So it’s, yeah, pretty amazing.

Eve: [00:07:28] You know where I grew up in Australia and they always had rock pools in the ocean, like on the ocean’s edge. Sort of reminds me of the sutro baths but a little bit less grand. They were fabulous places to go and bathe, really fabulous. So, like, where’s your sutro baths? Where’s Alchemy Springs going to be located?

Anne: [00:07:49] Yeah. So, Alchemy Springs is in a neighborhood, kind of the blending of two different neighborhoods. Technically, it’s lower Nob Hill area or sort of upper Tenderloin, right? So they call this neighborhood the Tendernob in San Francisco. And it’s a great up and coming area, right? You know, I think below the Tenderloin has really gone through somewhat of a gentrification. You know, the neighborhood can be a little bit rough, but it’s also been an opportunity for a lot of hospitality, sort of, restaurants and retail to come in. So, a lot of the coolest new bars and restaurants are sort of popping up around there. And then Nob Hill is a great more slightly more higher end neighborhood, tons of residentials, new developments, and then some hotels as well. And it’s about 10- to 15-minute walk west of Union Square, which is obviously sort of the tourist capital for San Francisco with all the hotels

Eve: [00:08:48] And what does the building look like that you’ve chosen?

Anne: [00:08:52] The building’s beautiful. It took us a while to find a building. We looked at so many different buildings, but this one is a 1919 masonry warehouse. A beautiful brick, gorgeous thick wood timber beams. It’s kind of two and a half stories. So, there’s a ground floor and then sort of the mezzanine above which we’re actually going to be raising the roof to create a sort of proper second floor there. And then there’s this basement level, which right now is sort of being used as a parking garage. But we’ll do some excavation and sort of turn that into the baths floor. But the thing that’s super exciting is that it has a 2500 square foot parking lot out back. So our concept has been able to translate into sort of an indoor outdoor flow in this space and being inspired by nature, which Alchemy Springs is, we can bring a lot of those elements, you know, both indoors and outdoors. So, we’re super excited.

Eve: [00:09:50] I’ve seen some renderings of this. It looks pretty fabulous. But maybe you could describe like what the building will contain or what you’re hoping it’ll contain when you, when it’s complete.

Anne: [00:10:00] Sure. I’ll walk you through the guest experience. It’s probably the best. So, from the street level, on Post Street, you’ll see a small retail boutique and there’ll be an entrance into the bathhouse. It’s going to be quite an inspiring grand entrance in that there’s a sort of giant living wall and double storey ceilings right as you walk in, A beautiful sort of rock carved desk area to sit with your friends or family that you’re waiting to go to the baths with. And you’ll check in. And then in the middle of this building is this gorgeous atrium that runs all three levels, with giant skylights at the top that just bring tons of natural light in. And there’s also tons of natural light from the back of this warehouse building. There’s beautiful, most of the walls are windows in the back, so tons of natural light. You’ll get your towel and your, you know, your robe and your slippers, and you’ll walk on either side of this atrium back to the locker rooms. And in addition to male and female, we also have gender neutral locker room and changing room. That was really important to us.

Anne: [00:11:01] So you’ll change and go downstairs to the bath floor. So, you can overlook the baths through the atrium from that locker room floor. But on the baths floor, we’ve got a series of different thermal pools at different temperatures that sort of wind along a path as if it was a river sort of built into these different platforms for accessibility and A.D.A. But we’ll have, on one end is what we’re calling the moon pool, which is going to be, sort of, you know, body temperature, sort of mild in temperature waters with a higher salt content, so it won’t quite be a flotation tank, but you will feel a little more buoyant in those waters, with a sort of domed ceiling above it that drops down a bit with lights and stars. And then lights in the pool as well with some sound. And then around this, the moon pool, and this is one of my favorite things that Lundberg Design, our Architect, has designed. We have a rain shower curtain. So, it almost creates a cave-like experience around the moon pool.

Eve: [00:12:14] Oh, fabulous!

Anne: [00:12:14] Yeah, I’m excited for that one. And then we have a mineral pool, which will be, kind of, mimicking the natural hot springs healing waters with all the minerals, which, you know, are very good for you. We’ll have then a sun pool, which is our warm pool. It’s not the hottest, but it’s warm. The sun pool, and that will be directly across from the cold plunge, which is kind of on this, you know, bath house circuit. You always want to move between the different contrasts of, you know, warm to cold or hot to cold. And then outside, we have a massage pool, which will be a lot of different water jets, maybe some different textures inside, rocks and things that you can sit on to sort of get that massage and that’ll be outdoors in a greenhouse. So that’s the pool part. We also have thermal rooms. So, we have a Himalayan salt cave. Think of it like a Finnish style dry sauna, but with Himalayan salt bricks and a kind of a salt nebulizer that brings amazing detoxification qualities. And then we have a snow shower. So, when you step outside of the hot salt cave, you can take a shower of snow to cool off before you get back in the bath. And then we also have an herbal infusion steam room, which we’ll do with different herbs that have, you know, different healing properties at different times of the day. So, waking up, relaxing,

Eve: [00:13:45] It sounds fabulous, so I want to move to like the financing. And when do you expect to open the doors?

Anne: [00:13:52] We expect the process from closing the capital to opening doors to take about three years. And so right now, we’re looking at probably September of 2024.

Eve: [00:14:03] And how long has it taken you to get to this point?

Anne: [00:14:07] Oh, gosh, there’s been a lot of stops and starts. It’s taken probably just shy of three years.

Eve: [00:14:17] So this is like a five-year project from inception to opening the doors. It’s a long time.

Anne: [00:14:23] Yeah, I think it’s taken many twists and turns. It started as something small. But as we looked into the business model for bathhouses, it made sense for us to actually do something on a bigger scale. Doing something on a bigger scale allows you to have both, sort of, drop ins for not non-members will say or tourists or anyone that wants to come in, but also have enough capacity to cater for members, because building that membership base in the community was really important to us and the bathhouses that exist today, they can’t really do memberships because their capacity is so small and you wouldn’t want members showing up and not being able to get in.

Eve: [00:15:07] Oh, well, I’m going to come back to that. But I do have to ask, so how much is this going to cost to build?

Anne: [00:15:14] Yeah. So right now, the total project cost is about 20 million. And the last sort of six months has been a pretty heavy and detailed due diligence process. My developer, Michael Jarne, has been an absolute gift to the team. He’s got a lot of experience in this. And there’s always that trade off of, how much do you spend upfront to minimize the risk. And, you know, he’s more on the side of, you know, this is a big project and, you know, somewhat unknown concepts in cities. So, we’ve taken the route of, hey let’s spend more and make sure we’re really clear on what this is going to take financially. And, also, you know, that we can do this concept in this space with the city. So, we’re feeling good about that.

Eve: [00:16:05] And then usual concept equals probably no bank interested? Is that right?

Anne: [00:16:13] I think the banks, you know, typically will want to see operating income, right? So, we’ve reached out to some lenders. We have a fantastic relationship with a bank here in San Francisco, does a lot of real estate stuff, and we’ve tested the waters for them of when in our sort of timeline, we might be able to to leverage that. And now most likely, that would be after we open doors. Right now, it looks like a very sort of good net operating income. And so, we would likely be able to get a loan off of that, you know, within the first few years.

Eve: [00:16:49] So, full disclosure, you’ve listed this project on Small Change as a crowdfunding raise for the first phase of it. So, that’s a pretty bold move in amongst all of this. Lots of bold moves here.

Anne: [00:17:06] Yeah, I mean, it felt right. You know, the essence of the Alchemy brand is positive transformation. And that ties back to this idea of alchemy, right? And, you know, we want our space to be a place where people feel transformed, right? But that’s also important to us as a company for our employees, right? We want this to to have improved people’s lives, right? So, there’s things we have, like we’re paying more than minimum wage and giving health care benefits to people that work, you know, I think it’s 30 hours a week, not 40. But the other side of that is that we want to make sure we’re positively transforming the community that we’re in. And so, for us, part of that was allowing San Francisco, or anyone, to own a piece of Alchemy. If it’s for the community, why should the community not benefit from us being here.

Eve: [00:18:07] I love that idea. So, I’m also going to ask you about, this is sort of an edge neighborhood, right? Between a pretty rough one, slightly rough, I don’t know, changing, and one that’s more established. And I’m just wondering how you’re planning to include that community in this space. And, you know, how that will work. I mean, if you’re really going to emulate that mayor’s desire to have a place for community, how does it look there?

Anne: [00:18:38] Yeah, there’s a few things that we’re exploring. And obviously, you know, it’s early days – we’re three years out. But there’s a couple of things. So, built in, right now, we have some sort of basic community programming of offering up our space before we open. So, our opening hours are 10:00 a.m. to 10 p.m. But there is an opportunity to give our back gardens. You know, we’ve got a sort of a Zen meditation garden and a back dining patio. We could absolutely offer that up to the community to host free events. We have a round-up at purchase, which we want to partner with local community groups and give guests the option to sort of round-up and donate to some groups that align with our sort of mission and vision and values. And then the third thing, which, it’s early days but I’m quite excited to pursue this opportunity, is almost sort of kitty corner to us. At the intersection of Post and Hyde, is at-risk Youth Navigation Center that’s just being developed. It was just rented by the city for 20 years. And when I learned about this, I spoke with one of our advisors, who’s the president of the San Francisco Chamber of Commerce and he said, you know, these centers have more bark than bite. And usually, neighbors are afraid that they’re coming into their neighborhood. But a big light bulb went off for me, that this was, actually, an incredible opportunity for us to partner with a group like that and provide job training, apprenticeships, you know, training these these at-risk youth in service industries. So, I’m incredibly excited to pursue that. And I think we could be a sort of model business citizen for how we embrace and support those centers popping up in our neighborhoods.

Eve: [00:20:32] Yeah, I’m sure you’re going to find lots of other opportunities too as you move along. You’ve barely started, right? What about some of the challenges you’ve been confronted with? You said lots of twists and turns. I think finding a building sounded like a really big challenge,

Anne: [00:20:47] Having been new to this, a few years ago, you know, there’s always this chicken or egg scenario you run into, which is, you can’t raise money without the space and you can’t get the space without the money. So, it’s this dance of timing and, you know, unfortunately, we’ve just missed out on some spaces when some of the, you know, initial capital couldn’t come through. So that was certainly one. And then another one was obviously Covid. There was a lot of initial sort of knee-jerk reaction to anything in hospitality and, you know, bath houses. And, you know, is that safe and clean? And, you know, from that standpoint we’re really lucky in that, you know, all of these spas and bath houses have had to convert a lot of their amenities and their procedures around hygiene to now meet new standards. Well, we can design from the beginning, so in a way, we’re three years out, right? So, you know, knock on wood, hopefully we’ll be out of this by then. So that was another major twist and turn. And then the other one on a on a personal level, which, you know, has deep meaning for me in this project, is a dedication to my mother who passed. And she passed away two years ago now, and she passed from cancer. It was her fourth one. She beat three different stage one cancers prior to that across ten years. But from her first cancer onwards, when she’d find out, she would go to Esalin, this beautiful retreat center in Big Sur, and she really found her acceptance and peace in nature. And that was absolutely a huge inspiration for Alchemy Springs and this sort of element of bringing nature indoors. And so, I promised her that she would have her own little heart shaped rock in our gardens and it would be one of her resting places for her ashes. So there has been nothing insurmountable. I have had the most incredible determination to make this happen in her honor so, from a personal standpoint, that was another setback. But also, what has super-charged me to bring this to life.

Eve: [00:23:07] I’m sure she’d be super proud of you.

Anne: [00:23:09] Yeah.

Eve: [00:23:10] So Alchemy Springs is a big new beginning for you. Right? But what’s your big hairy, audacious goal?

Anne: [00:23:18] Wow, what’s my big, hairy, audacious goal? I mean, I would love for Alchemy Springs to just be the first flagship location of a bunch of Alchemys across the country and to use this brand and these spaces as one of many ways to bring the community together around social bathing. So, there’s, you know, different communities out there for the spa industry and sort of the business end, but there are people across the country that are really into this ritual and little micro communities, you know, in all these cities, but we’re not all coming together as one. And so, another grand vision of ours is to pull this community together, you know, online and kind of connect the global bathing community across the U.S., maybe even internationally, so.

Eve: [00:24:14] That’s a pretty big goal.

Anne: [00:24:16] Yeah.

Eve: [00:24:18] Well, my goal is to come out there in three years and try it. So, that’s my goal.

Anne: [00:24:22] I know, I keep saying, phew, with this ride, I’m going to need it at the end of it. So,

[00:24:28] Yes, that’s right

[00:24:28] …selfish reasons. I’m going to need a spa at the end of this.

Eve: [00:24:33] Well, thanks so much, Anne. It sounds like a fantastic project. I can’t wait to see how it turns out.

Anne: [00:24:40] Thank you. We’re really excited and we’re thrilled to be raising money on Small Change. And I just can’t wait to see how it goes.

Eve: [00:24:48] Me, too. Bye.

Anne: [00:24:50] Bye. Thank you.

Eve: [00:24:56] That was Anne Nickel Cannady. Anne is challenging herself with a project that brings all her skills to play and more. The plan is ambitious – a social community bathhouse. The building is ambitious – the transformation of an historic warehouse into a biophilic wonderland. The location is ambitious – a neighborhood on the cusp of gentrification. And the financing is ambitious – she’s raising funds through crowdfunding on my funding platform, SmallChange.co. I can’t wait to see how it turns out.

Eve: [00:25:40] You can find out more about this episode or others you might have missed on the show notes page at rethinkrealestateforgood.co, or you can support us at patreon.com/rethinkrealestate for the price of a cup of coffee. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Anne Nickel Cannady

One year. 41 more conversations.

41 amazing people. 41 inspiring conversations.

Cynthia Muller. Richard Rothstein. Andre Perry. Charmaine Curtis. Lyneir Richardson. Darryl Scipio. Libby Seifel. Beth Silverman. Patrick Quinton. Daniel Parolek. Charles Durrett. Heather Hood. Diana Lind. Scott Flynn. Atticus LeBlanc. Sam Ruben. Andrew Luong. Stephanie Gripne. Shannon Mudd. Ken Weinstein. Garry Gilliam. Andy Williams. Daniel Dus. Patrice Frey. Bruce Katz. Christopher Leinberger. David Peter Alan. Annie Donovan. Michael Shuman. Dan Miller. Scott Ehlert. Katie Faulkner. A-P Hurd. Max Levine. Brian Dally. Jonny Price. Michael Lee. Kevin Cavenaugh.

These are the rockstars of my show.

Season Three starts soon …

Read the podcast transcript here

Eve Picker: [00:00:14] Hi there. Thanks so much for joining me today for the final episode of Rethink Real Estate. For Good, season 2.

My name is Eve Picker and I’m on a mission to make real estate work for everyone. Real estate can help to solve climate change, can house people affordably, can create beautiful streetscapes, unify neighborhoods and enliven cities. 

You can learn more about me at my website, rethinkrealestateforgood.co, or visit my real estate crowdfunding platform, SmallChange.co. Our projects offer impact, solve housing problems, invest in neighborhoods and give everyone the opportunity to invest and build wealth for as little as $500.

[00:01:12] Today marks the second anniversary of this podcast. Two years ago, I didn’t know that our audience would grow as it has. In fact, two years ago I wasn’t sure we would have an audience at all. Now 10,000 people download episodes every month. That’s 10,000 people who care about thoughtful and impactful real estate solutions.  Wow!  I am humbled that all of you want to listen in.

This second year has been an opportunity to learn from yet another class of extraordinary leaders and innovators in real estate. My guests are working on housing solutions, policy issues, manufacturing, in fintech, on preservation, on developing new technologies and on providing real estate metrics, on mobility issues, as architects, on sustainable development, on community capital, on equity for women and equity for minorities and in many other niches, pushing the boundaries of the built environment to be better for everyone. 

The range of work that is being accomplished is quite awe-inspiring.

[00:02:25] Perhaps the most important theme this year was equity.

Cynthia Muller, director of Mission Driven Investments at the Kellogg Foundation. has been described as a “thought leader of the impact investing ecosystem and a trailblazer in the field.” In No guilt. Just Action. she reminds us that every time there has been an opportunity for black and brown people to build an asset, to build wealth, it’s been taken away from them. Let’s change that. 

Richard Rothstein and Andre Perry have written about these inequities.In The Color of Law Richard argues for a national civil rights movement to ensure that we all get to reap the economic benefits of living in this rich and diverse country. And In Know your price, Andre share findings that homes are underpriced by 23 percent, or $48,000 per home, in majority black neighborhoods. That’s $156 billion in lost equity.

[00:03:31] Charmain Curtis, Lyneir Richardson and Darryl Scipio are a new breed of black developers. Charmain has built a successful career as a developer despite being a black woman. She didn’t realize what she was up against until she was in her 30s. In Spread the Wealth she ponders how wealth could be distributed equitably to everyone.

In Building Generational Wealth, Lyneir describes his plan to buy 100 community shopping centers with 100 community members, all focused in majority black neighborhoods. He provided the first opportunity to 140 investors on Small Change early this year.

[00:04:17] Justice runs deep with Darryl.  In Turning renters into homeowners he describes his latest passion project, Savers Village.  He aims to help every tenant save enough for a down payment on a home.

And Libby Seifel is focused on women.  In Women building collective muscle, she describes the network of women leaders in real estate she has built. After more than 30 years in the industry, she is no longer the only woman in the room, and that some of the biggest new projects in the Bay Area are being driven by women.

[00:04:56] Housing solutions are importantly getting a lot of attention.

Perhaps the boldest of these is Beth Silverman’s Lotus Project. In Radical in its Simplicity she tells us how ,for just $800, her organization can successfully house a homeless family and change the trajectory of their lives forever.

We learn about accessory dwelling units as an affordable housing solution in Yes! In My Backyard! Patrick Quinton has developed a manufactured solution that drops a 32×14 foot ADU into a typical 50-by-100-foot lot in Portland, Oregon without hitting the setbacks and without requiring city design review. And he’s raising money for this project on Smallchange.co

[00:05:48] On the west coast, Daniel Parolek, architect, coined the phrase, The Missing Middle just as the critical absence of affordable housing was becoming a major planning issue for cities nationwide. He explains what the missing middle is, why it is important and how we can build more of it. 

Charles Durrett brought co-housing from Copenhagen to the US many years ago and wrote a book about it. He explains why he’s spent a career in co-housing and how it can make people’s lives better in It takes a Village.

[00:06:27] In Northern California, Heather Hood oversees efforts for the Enterprise Community Partners that ensure low- and moderate-income residents have access to affordable, quality housing. We talk about the enormous size of this problem in The elephant in the region.

And Diana Lind wraps it up for us in Lets be Brave. She’s written a book called Brave New Home in which she argues that the single-family home is at least partly to blame for our current housing woes.

[00:07:01] Technology is rapidly transforming the real estate industry in many different ways as well.

Some of my guests, like Patrick Quinton and Scott Flynn in Manufacturing change, are focused on manufacturing affordable homes in factories. Scott’s company, IndieDwell, manufactures smaller, sustainable and affordable homes at the pace of 10 homes per week and growing.

But others are pursuing new ideas.  Atticus LeBlanc tells us about PadSplit in One Room at a time.. He wants to dramatically change how we address affordable housing by using space that is now under-used in everyday homes.

[00:07:46] Or Sam Ruben in 3D-printing, robotics and automation, oh my! His company is printing buildings and hopes to create affordable and sustainable homes with their new technology.

And finally, Andrew Luoung who has deconstructed the often lengthy and confusing process of small scale real estate investment, making it accessible to everyone.  In Andrew loves real estate he describes the online turnkey service that he has developed into Doorvest.

[00:08:20] Some guests are focused on fertilizing tranches of future impact investors and leaders.

None is more passionate than Dr. Stephanie Gripne. In The impact accelerator, she tells us about founding the Impact Finance Center with a mission to identify, train and activate philanthropists and investors to become impact investors. Her big, hairy audacious goal is to move a trillion dollars into impact investing.

Dr. Shannon Mudd is right behind her, teaching students how to invest $50,000 of real money for maximum social impact. His Young Angels are carrying this knowledge into their professional careers.

[00:09:09] Others want to pay it forward.

Like Ken Weinstein, a highly successful Philly developer whose career was inspired by his landlady in Germantown. He’s created a boot-camp for aspiring developers called Jumpstart Germantown and describes the program in Jumpstarting a community.

[00:09:32] Garry Gilliam may be best known for playing in the NFL. Today he has a second career as an impact real estate developer. He tells about his first project in The Bridge. It came about as a joint effort with Garry’s friends from the Hershey School, a philanthropic school for low-income children. That school gave them all a leg up and now they want to give back to their community. 

Or Andy Williams, a former Marine who was determined to secure his future through real estate. He’s built a substantial portfolio of homes, a real estate development business focused on larger projects, and now, a program that seeks to turn veterans into entrepreneurs just like himself.  

[00:10:23] Some guests, like Daniel Dus and Patrice Frey, are focused on building on what’s already there. Learn how Daniel is planning to redevelop the dramatically underutilized historic luxury estates of the Berkshires for the shared economy in Everything old is new again.  And in Saving Places, Patrice explains the role of the National Main Street Center in servicing the revitalization of commercial main streets in big cities and small towns alike.

Bruce Katz moves the focus back to metro areas in Cities are networks. As a foremost policy expert, Bruce argues that cities must knit together solutions. It’s an imperative. And he calls this the new localism.

Christopher Leinberger is thinking along the same lines in Back to the Future. As a renowned urban strategist, teacher, developer, researcher and author Chris thinks “Back to the Future” got it right.

[00:11:30] While David Peter Alan enchanted me in I’ve been working on the railroad with his singular passion for the country’s railway system. He has ridden the entire Amtrak system and about 300 transit providers in the U.S. and in Canada.

Annie Donovan and Michael Shuman are focused on alternative finance. Michael thinks we have it Totally backwards. Local owned businesses make up 60 to 80 percent of the private marketplace in the average U.S. community. But economic developers and subsidies almost always overlook them. And Annie believes that disruptive capital is critical for solving thorny problems. She describes her pursuit of fairness in economics and finance in The world beyond banks.

[00:12:27] A handful of guests are diversely focussed on sustainability in the built environment.  Perhaps the most interesting is Dan Miller, who has launched a platform that connects everyday investors with farmers who need loans. He’s Stewarding the Future of Farming with investments as low as $100.

Scott Ehlert and Katie Faulkner are mass timber experts.  Katie as an architect with an eye on sustainability in From here to there.  In Mass timber for the masses, Scott tells us about the installation and cost benefits of a proprietary hollow core mass timber system he is designing that uses 50% less wood fiber. And, as if that is not enough, Scott is also designing a robotic fabrication facility to anchor a new wood product innovation campus, in California.

While A-P Hurd remains focused on building Livable and delightful communities.

[00:13:28] This class of guests would not be complete without my colleagues in the crowdfunding industry.

Some like Max Levine and Brian Dally are focused on real estate.

In Hello, Neighbor we learn about Max’s Neighborhood Investment Company, which has a mission “to localize wealth creation and broaden access to neighborhood equity.”  While in Get in on the ground floor,  Brian describes the platform that he has built into the go-to funding platform if you want to fix’n flip property.

Jonny Price, previously with Kiva and now with Wefunder, is focused on Filling the “crazy” gap. There’s a common theme for Johnny – financially excluded and socially impactful businesses.And Michael Lee is Building Virtual Communities using blockchain. Instead of using blockchain for crypto, he’s using it as an organizing tool to democratize the power of data.

[00:14:31] Finally, what better way to end than with Kevin Cavenaugh a developer in a class of his own. In I do a bunch of weird stuff, you can tap into this unique developer. Left brain, right brain, head and heart all come to bear on his wildly creative buildings. “I’m tired of mocha-colored, vinyl-windowed boring. I can’t change the fact that the streets are gray, and the sky is gray. But the buildings?” says Kevin.

Phew. That’s a lot of podcasts.  I’ve enjoyed every interview with every person.  I’m in awe of them all.   But it’s time to take some time off to recharge and get ready for Season Three. We’ll be back refreshed in September with many more amazing people for you to listen to and for me to learn from.

Thank you so much for joining me.  Now go forth, invest a little in your community and make some change!

Stewarding the future of farming.

After a decade of building a career in real estate finance, from a pre-college stint as an analyst for an established D.C. development firm all the way to co-founding (with his brother, Ben) the first real estate crowdfunding platform, Fundrise, Dan Miller changed lanes.

Sort of.

In 2016, he founded Steward, a private commercial lender which enables people to help fund the growth of sustainable farms. In a way, it wasn’t such a shift from Fundrise, which used an online funding platform to connect developers and investors. Think farmers instead of real estate developers.

When Dan’s real estate work led him to cross paths with a local D.C. chef, and as he learned of the financial difficulties facing independent farmers that supplied his restaurant, Dan connected the dots. “This generation of regenerative farmers has more opportunities than they’ve ever had. The demand is exploding. They really have a chance to grow sales and revenue but they can’t get funding.” So he set out to solve that problem.

Steward is a B Corp, which allows individual lenders to pick specific farm-based agricultural projects to back. The loans vary in interest, often 5 – 8%, a reasonable rate for business owners who cannot find financing anywhere else. “I always saw finance as a way to open up access to new groups of people,” says Dan, and true to his word, one can join in for as little as $100.

Read the podcast transcript here

Eve Picker: [00:00:08] Hi there, thanks for joining me on Rethink Real Estate. I’m on a mission to make real estate work for everyone. Real estate can help to solve climate change, can house people affordably, can create beautiful streetscapes, unify neighborhoods and enliven cities. So I’m on a journey to find the most creative thinkers and doers out there. I’m not the only one who wants to rethink real estate. You can learn more about me at rethinkrealestateforgood.co or you can find me at smallchange.co, a real estate crowdfunding platform with impact real estate investment opportunities open for investment right now. And if you want to support this podcast, please join me at Patreon.com/rethinkrealestate where there are special opportunities for my friends and followers.

Eve: [00:01:08] Today, I’m talking with Dan Miller, who co-founded Fundrise, the first real estate crowdfunding platform to emerge in the U.S. and which has now raised over 500 million dollars. Those early years Fundrise were a slog, but that hasn’t stopped Dan from starting over. He’s changed lanes. Sort of. In 2016, he founded Steward, an online platform which raises loan funds for sustainable farms from the crowd. In a way, it wasn’t such a shift from Fundrise, which used an online funding platform to connect developers to investors. Think farmers instead of real estate developers and loans instead of equity. How did this happen? When Dan’s real estate work led him to cross paths with a local Washington, D.C. chef, and as he learned of the financial difficulties facing independent farmers that supplied his restaurant, Dan connected the dots. This generation of regenerative farmers has more opportunities than they’ve ever had, says Dan. The demand is exploding. They really have a chance to grow sales and revenue, but they can’t get funding. So he set out to solve that problem. You’ll want to listen in to learn more.

Eve: [00:02:33] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to Patreon.com/rethinkrealestate to learn about special opportunities for my friends and followers and subscribe if you can.

Eve: [00:02:56] Hello, Dan, I’m so happy to talk to you today.

Dan Miller: [00:02:58] Happy to be here, thanks Eve

Eve: [00:03:01] So I have followed you since the early Fundrise days and now you have GoSteward, a very different type of enterprise. So I wanted to start by just understanding what is GoSteward?

Dan: [00:03:16] Steward is a funding platform for regenerative agriculture, and I began meeting regenerative farmers in my real estate days in the past through chefs I knew, and these types of farmers, diversified, direct sale, smaller scale, generally have very little access to capital. So it’s meant to be a platform that lets farmers raise money and lets individuals provide capital to them that they can’t fund otherwise.

Eve: [00:03:43] So, but why did you start it?

Dan: [00:03:45] I started in 2016. There was a well-known chef in the D.C. area that I had been working with from real estate projects there. And through him, I started to meet all these farmers growing amazing products with great stories, selling them at well-known restaurants and farmer’s markets. And then in those conversations, it was clear that that none of them had access to capital, which was surprising because they’re selling products that everyone wants, you think they’d be able to get access to funds. And this was in the early days of when I was working on Fundrise, so 2010. When Fundrise was launched was when I started to meet some of these farmers. So I shoved the idea for a bunch of years and then it kind of kept coming back to me and then I eventually read the Wendell Berry ‘The Unsettling of America’, one of the kind of iconic foundational texts around agriculture and the challenges and issues of modern agriculture. And that just put me on, I would say, the path and obsession of this type of agriculture and then the positive impacts that it has through land use and ecology and health and wellness. And you, kind of, once you get into it, I find that people, they tend to not be able to stop.

Eve: [00:04:54] So how does it actually work? How does the platform work?

Dan: [00:04:58] So farmers come to our platform through insurance, through referrals, through direct relationships. They apply for funding through the traditional application process, telling their background and their experience, what products they’re growing, so we can learn more about their farm. We do due diligence, we vet them. We have a farmer on our team who does the agricultural diligence, understanding their operation, their bottlenecks or challenges, their farming practices too to make sure they align with the principles of regenerative agriculture. Then we do the credit underwriting the classic financial stuff that’s not as sexy, but it is critical for any viability of any platform. And then the loans are put on the platform so that people are buying loan participations, and they’re buying slice of the loans that were making, and then they earn the interest and return on that loan. So it’s essentially a way to connect farmers who need capital, they need credit with individuals, whether high worth family offices or small retail funders, and give them the chance to lend money to these farmers.

Eve: [00:06:04] There’s always an issue with finding loans for anything that is really standard, right? And I feel like that’s partly why we’re in the predicament we’re in. Like, banks are really focused on lending to, sort of, tried and true things that they know will guarantee a return for them.

Dan: [00:06:25] And that’s, I think, the broader theme of the work I’ve done through Fundrise or now Steward, that most funding is looking for safe and traditional and corporate and reliable. And so, when you see that, what businesses are able to access capital, it’s the larger ones that have a lot of assets and are more predictable. But money needs to go to small businesses and entrepreneurs across the spectrum, whether that’s in agriculture or real estate or small business. And the way that the funding system is set up is, it’s just not built for that. So, creating these decentralized models where smaller dollar contributors can participate and entrepreneurs can tell their story and raise funding, I think is fundamental to really unlocking more capital, which gives more opportunity to people. So I see parallels in the, kind of, the different sectors, but in the need to bring different types of funding to the end result.

Eve: [00:07:20] Well, you know, I wholeheartedly agree so, you know, in real estate, it’s exactly the same problem as in business. So it’s always the same old, same old that gets funded and that’s, that doesn’t really encourage innovation and moving forward, does it? It just staying where you are?

Dan: [00:07:40] Not at all. And I think I found a lot of similarities in agriculture to real estate. The focus on credit tenants, the focus on the users of the space being well-capitalized corporate users, forces a certain type of development with chain stores and large corporations. And similarly, in agriculture, they’re focusing on large commodity producers, huge operators with just tried and true grain, corn, soy, whereas anyone that’s doing anything a little different is just not worth the effort. They’re just left out, completely left out. Part by design, I think, but part just because it takes more time, which is basically harder to assess.

Eve: [00:08:20] It takes more time. Yeah, but damn, it’s so much more exciting!

Dan: [00:08:26] I can’t, I can’t do it because I just have no motivation. So there’s no option for me.

Eve: [00:08:33] No, I’m not wired that way either. Like, you know, I’m just not. So where did you start your operations? What were the first farms?

Dan: [00:08:41] Yeah, I began in 2016-17 working on Steward. The first farms that we funded were two urban farms in Detroit. You know, I had left Fundrise, I had started speaking to farmers through many different connections and actually found a lot of real estate people I had met around the country. I asked them if they knew agriculture and was connected to a lot of local farmers. So, there were two urban farms in Detroit. One is called Fisheye Farms, one is called Acre Detroit. They were farming on small lots, a tenth of an acre lot and they were hoping to buy land from the city. The city owns ten thousand acres of vacant land but was hesitant to sell them to farmers because, I don’t know what they’re waiting for. So we stepped in, provided funding for these farmers to buy two acres of land each. The original loans I personally provided as I was building the platform and figuring out the regulatory infrastructure. And just as an example of the kind of growth and opportunity of these overlooked farms, Fisheye farms went from ten thousand of revenue to one-hundred-twenty-thousand revenue in the three years since they were able to buy that land, so…

Eve: [00:09:49] So how much was the loan? Like, how much was it?

Dan: [00:09:54] That was a hundred-thousand-dollar loan, so, I mean, relatively small,

Eve: [00:09:56] Relatively small.

Dan: [00:09:59] And it shows the demand for those products. You know, people really want to buy wholesome food and they want to connect with where their food’s coming from. And so, in a city like Detroit, they’re in a food desert, they have fresh food that they can sell locally, and people are thrilled to do so. So, I think there’s a lot of misnomers around the viability of these types of farms. The reality is they are viable, but they’ve been under-capitalized. It’s hard to get to viability when they can’t access funding but when they are able to access funding, we see the same story of really rapid revenue growth. So, we started with urban farms in Detroit. I thought we would be a niche business. I thought most regenerative farms were funded well and maybe urban farms and other niche farms struggled. And I soon realized that it’s a global problem. Any non-traditional farm struggles with capital and so that kind of broadened from urban farms to really all types of farms now.

Eve: [00:10:54] How many farms if you help to date with loans?

Dan: [00:10:58] Over 70 now. That’s about one or two new farms a week so it’s really picked up. Just some recent farms as an example, we’ve a livestock branch in Western Oregon, right near Astoria, Oregon. We have a urban farm in Detroit with a Black farmer who’s about to raise funding. And we had an Amish dairy farmer in Pennsylvania raise funding to do value added processing for fluid milk. We had a fisheries project with just line-caught tuna and line-caught local fisheries that are then processed and sold direct. So, I think the narrative that’s similar is farmers are people that are obsessed with the quality of the product. They’re obsessed with the traceability of it. They’re obsessed with taking care of the natural resource, whether that’s land or the watershed. And they have customers that are along for the journey that want to support them. And they need money for equipment, infrastructure, land, you know, operating capital. So it’s a fairly simple business plan. They have demand and they need more production to meet the demand. But because they’re non-traditional, they’re just ignored.

Eve: [00:12:05] So you say they have customers who want to support them. Do those customers also invest?

Dan: [00:12:09] Yes, those customers do fund the loans. We actually have the first 20 percent of every loan gets funded through the network of that farmer. So, they share it at the farm stand they share it through social media. And that gives a chance for their community to be engaged and connected to the farm. And it also provides social validation of, if those people are engaged in supporting the farm, then I think it provides us confidence, too, that there’s really a community to support them. If you have customers that love your product, you’re in good shape as a farm and those are the types of farms we support. They’ve established their markets, have established their products. They know what they can produce. They know where they can sell it, and now they need to grow. And whether they’re a small farm or a larger farm, they have that same kind of demand, they’re unfulfilled.

Eve: [00:12:55] So, I think you’ve said this is not a crowdfunding platform, but this sure sounds like crowdfunding. So what’s the regulatory structure that you’re using?

Dan: [00:13:04] Yes. So, you know, crowdfunding and the general term of raising money online from many people, but ever since regulation crowdfunding came out, then that’s kind of narrowly defined crowdfunding.

Eve: [00:13:15] Really? I don’t think of it that way.

Dan: [00:13:16] In terms of fundraising, introspective. So, yeah. So, I think in broad brushstrokes it meets the premise of crowdfunding, of raising it online in smaller, larger amounts and people telling their story. We’re providing loans so we work under a framework of syndicated or participated loans. So, Steward is a private commercial lender. We provide the loan for the lender record and then we sell the participations to qualified basically members of our platform. There was a recent legal ruling over the summer, last summer, in 2020 around commercial syndicated loans not being considered securities. So there’s always been a discussion around the determination of when is a loan a security or not a security?

Eve: [00:14:02] Oh interesting.

Dan: [00:14:03] And so under that premise, we’ve kind of designed our business. So basically, we’re just providing credit, providing loans and giving the people the chance to participate in those loans.

Eve: [00:14:13] That’s really fascinating. What’s the typical loan size and what’s the rate?

Dan: [00:14:19] So most of the loans, I would say, as small as ten thousand. Average loan, probably fifty to one hundred thousand. The largest we’ve done is seven hundred thousand. Larger loans tend to be for mortgage, for property purchase. The midsize tends to be for equipment and isome nfrastructure. And then smaller ones are often quick bursts of operating capital.

Eve: [00:14:41] I mean, it’s really sad that a farm can’t get a ten-thousand-dollar loan from a bank, like…

Dan: [00:14:46] Well, the sad thing is it’s easier to get a ten-million-dollar loan as a big soy farm than a fifty- or ten-thousand-dollar loan from a bank. So, it’s kind of this strange circumstance you probably see in real estate that the bigger, formulaic deals can raise money and smaller deals that can’t get it.

Eve: [00:15:01] Exactly what we see on Small Change, and yet, I mean, I really think that if you’re really going to support that change in real estate and growing experience with people who’ve never had the opportunity before, that’s exactly what has to happen. Smaller loan sizes, smaller equity needs. Like, smaller.

Dan: [00:15:18] Yeah, you need a pathway to viability. Right now, the system’s set up that only if you’re inheriting large amounts of farmland can you get credit because you need big assets and big dollars. But a lot of the farmers we support didn’t grow up farming. I mean, it’s, I think the real sea change that’s happening in this type of regenerative agriculture. People of non-farm background, often college educated, going into farming, which certainly never happened in the past, at least not consistently. How are they going to get on the ladder? How are they going to be vetted and able to support? So a ten, twenty-five fifty K loan helps them get started. And then eventually they buy land and grow as a business. In terms of rates, most of the loans are between five to eight percent. So, I think very fair rates.

Eve: [00:15:59] That’s really reasonable.

Dan: [00:16:01] Very reasonable rates. We found that the funders are comfortable with those. Five is secured mortgage, solid cash flow. Eight is equipment with an earlier stage business. The highest we’ve done is 10, which is kind of a scrappy year one, year two farm where they’re early in their days and they just need funding to help grow. And so that’s what we’re really trying to do, create a capital market for regenerative agriculture. At what rates are people willing to lend the money? At what rates can farmers afford to borrow the money? And connect the two. Which is surprisingly uncommon in agriculture because the entirety market, most of the market is government funding. And so, there’s very little private capital market in agriculture, pretty much all USDA and government loans. And so what we’re trying to do is create an alternative of private capital that’s a different option for these farms.

Eve: [00:16:55] What about vertical farms? Have you helped any vertical farms ’cause that’s all the rage, right?

Dan: [00:16:59] It’s all the rage. I’m sceptical of vertical farms. We’ve helped urban farms, we’ve done greenhouses, hoop houses. The thing I struggle with, with vertical farms as the concept is, they are only needed in certain places. Generally, land is not that expensive in most places that you would need to produce vertically. And I struggle with the capital costs. A million dollars into some infrastructure to grow greens, you know, when you can go not too far outside the city and buy a piece of land for ten thousand dollars and grow greens there. And so, the economics of overhead of a million, or overhead of twenty-five-thousand,

Eve: [00:17:35] It doesn’t make sense to you. That’s really interesting.

Dan: [00:17:36] I just, I struggle with that as a credit provider. That you basically have, you know, the thing I’ve learned in agriculture is you want to keep your overhead low. You want it to have as little debt to service as possible. And so loading huge infrastructure costs for the vertical ag just kind of breaks that mold. Farmers, I think, do find it frustrating that a startup in Silicon Valley that’s doing vertical farming can raise one-hundred-million dollars, but they’re doing livestock in Missouri, and they can’t raise 50 K. And it’s just like, why do we keep throwing money into the non-sensical billion-dollar thing when there’s just good people out there who are doing farming the right way and just need a little bit of money to get to take the next step.

Eve: [00:18:19] Dan, you really like to support the underdog,

Dan: [00:18:22] Always, always. I don’t know how that…

Eve: [00:18:26] You’re a man after my own heart.

Dan: [00:18:29] And with these farmers, I mean, they’re persevering. They’re sacrificing, they’re doing whatever they can, most of them have off-farm jobs. One of the farms we funded in Detroit was washing dishes at the restaurant he was selling to, I mean, whatever it takes. And so, the ability to get them more resources and help them grow, it does, it is meaningful. I find it more meaningful than my work in real estate. But not all real estate developers, I would say, have the best ethic. But these farmers are really values-oriented people.

Eve: [00:19:01] Interesting. So, but you have to keep the doors open. How to Go Steward make money?

Dan: [00:19:06] Yes, you do have to. And that’s part of our proposition, that it’s a commercial platform. You’re paying rates of return that are reasonable but fair to lenders. We charge a loan origination fee. So, we charge roughly between two to three percent of the loan amount. And that’s a success paid at closing of the loan. So, when they go through the lending process that fee is added to the loan balance. And we’re also working on some other revenue streams. We’re providing services, support to some farmers, such as bookkeeping or helping with branding a website. So, I think over time a lot of the kind of business functions of these farms we could help and streamline. And then we’re also providing our technology infrastructure. And one of the farms now is using our software to raise a round of equity capital for their business in a private syndication. So they’re using our software to do that, and we have other firms. So, I think over time, this kind of value of this system we’re building, the kind of decentralized financial platform and then its application is to agriculture. And I think over time there’s ways to monetize both of those. But we’re in our early days and I mean we’re, we obviously have a long way to go. There’s a lot of growth and demand and interest from both sides of the market. So I definitely see the viability. I’ve seen it before from before with Fundraise from the beginning. How will this business ever work? But if the right market forces and trends are behind you, you can surprisingly get to scale. And I see the same thing here where just the interest in regenerative agriculture is exploding. The kind of viability and demand for these products is exploding and the need for alternative capital credit is becoming more aware. So, those kind of all weave together, that there’s more farmers that need funding, more people that want to fund them, and that the winds of ESG and climate and kind of the policy support is going is going in the right direction.

Eve: [00:20:59] Right, right.. Interesting. So how do you hope to scale?

Dan: [00:21:05] For us, it’s just more farms, I mean, we started making loans originally smaller, 50 K, 100 K. Recently we funded a project that was seven-hundred-thousand. So we’re now starting to work with more mid-sized farms that our hundreds of thousands revenue, really solid operations starting to grow. So, by being able to provide more capital, we can support operations that have more capacity to grow. So, I think, just expanding both sides of the market. The more farms we have, the more capital, the stronger the platform. The more capital on a platform, the more interest there is from farms. So we’re seeing that symbiotic kind of viral effect of each side of the market strengthening the overall platform, which is what you always hear about, but it’s nice to see it in action, that, kind of, the more the business grows, the more it can offer.

Eve: [00:21:56] Yeah. Yeah. So, you know, you said you started in Detroit. Where are you lending now?

Dan: [00:22:02] We’re lending all around the country. Right now, we’re US focused. We’ve had a lot of interest from non-US farms, that’s definitely on the horizon. But in terms of the US, Oregon has been our biggest market. Our HQ is in Portland, though our team’s remote. So just amazing farmers and farmland in Oregon, really knowledgable and thoughtful consumers, a lot of them hoping to also put their money to work in local food systems. And we just made a loan to a farmer in Hudson Valley. We funded a bunch of farms in Louisiana. So, I think we’re now at probably around 30 of the 50 states in the US. So it’s by no means limited to big coastal cities. We’ve got farmers in all parts of the country. And the business model depends, you know, you’re closer to a city you often have produce, if you have livestock that tend to be farther from a city because you need more space. And it all varies. But we’ll support any type of farmer anywhere in the country and hopefully soon the world, as long as they’re following the right practices and can have the knowledge and experience they need.

Eve: [00:23:06] So do you have investors who invest across all farms?

Dan: [00:23:11] That’s what we found. That’s one of the most promising aspects. We have over half of the people that have funded a farm fund, fund another farm, and I think we found that there we’re building a category of, well, I’ve funded this one farm and now here is another farm. It’s a similar story and a similar profile, maybe in a different location and a different product. But I, I see their challenges. I believe in them, and their kind of values focus. So, I think we’re finding that people who want to support regenerative farms have very few options. And if they’ve come to support one farm, maybe they’re a CSA member of a farm and they heard about the opportunity to help fund it and they have. Now they see another farm, and they fund it. We have people who funded 10 or 15 farms, even. Some are putting ten, twenty-five thousand dollars into every farm. So, I think that kind of stickiness of the customer on the funding side has been very positive because that’s not always the case with platforms. Sometimes people come in and do one deal and that’s the end of it and if you can cultivate a community, it goes a long way.

Eve: [00:24:09] Yeah, we’re actually finding the same thing. We definitely have a community of investors who come back again and again and again for particular themes. I think those people are truly impact investors. They really, they really care about an issue like a farm. It’s great. It’s really great to see. So just shifting gears a little bit, the common theme in your life has been crowdfunding, at least for the last 10 years, right? You launched Fundrise, which looks more like a mutual fund now than a crowdfunding platform. And now back to sort of a very organic crowdfunding platform, helping farms. What else do you think crowdfunding might be applied to that could be really successful besides real estate and farms?

Dan: [00:24:55] Yeah, I’ve always felt there’s so many broader applications and I think people haven’t been creative enough, you know by developing Fundrise, I just again saw so many people go into real estate and it like, there are other verticals to be done.

Eve: [00:25:08] There are other things, right?

Dan: [00:25:09] And so I, I felt it was a lot of like, kind of, me too. Well, what’s the narrative? Why does it matter? And I think in reality, that type of passion shows the purpose behind the platform, not just sector, but the purpose behind it. So I think real estate still presents opportunities. I think a lot of, you know, you talk about green building and other aspects, I think there’s still a ways to go to push the envelope in real estate in terms of how the built environment is done. You know, agriculture obviously, now is my big focus. Parallel to agriculture where I think there’s an opportunity is also in forestry. And I think that’s a great way to build as a good asset, but also as a natural resource to be preserved. I’m seeing more interest in alternative energy. It’s something that we’ve even worked with farms who are planning to do solar on their farm. So I think ultimately more decentralized local funding for alternative energy can go a long way. In small business, I feel like there’s still a lot of gaps for small businesses that are looking for funding. I look at so many funding platforms and it feels like there’s a lot that are real estate, there’s a lot that are tech startups, you know, and that’s pretty much it. And the reality is there’s so many other enterprises that need the support.

Dan: [00:26:26] But where I tend to think the interest and ,demand is, is if you can back it with some sort of fixed asset, I think it always helps the viability of the business and the ability to take capital where you can be more confident that people can earn a return. And I think having a forward-facing business where they’re engaged with their customers goes a long way. So, I think if you have an audience of people that want to support you, I think it’s good to bring them in. So, yeah, I’ve always been interested in crowdfunding from the perspective of a different type of capital that thinks differently and is more aligned with the end project that Fundrise was originally developed around. Me and my brother doing real estate development projects that were non-traditional and finding that traditional funding didn’t fit it. So, I’ve been on the entrepreneur side. I began on the entrepreneur side of, the frustrations of trying to find funding that meets, that is really aligned with you and so all these platforms have been, had that as the theme of how do you have more of an alignment among the entrepreneur and the capital?

Eve: [00:27:30] Yeah. So, what is your background before Fundrise?

Dan: [00:27:35] So, I started a real estate development business with my brother right out of university and my father was in real estate development in Washington, DC, so that’s where I learned real estate. Just being around it. I have tons of experience in it, but actually for years not  necessarily, just you just grow up and then see around it. So commercial real estate, I would say, applies across everything. It applies to Fundrise, with the ability to build that. It applies with Steward because at the end of the day we’re funding a lot of commercial real estate and use of land that is commercial real estate. For some reason, agriculture is not thought of as commercial real estate, but it certainly is, I would say, commercial real estate. And then my kind of interest and experience in raising money through alternative channels was built around that, of being a real estate entrepreneur, trying to figure out different types of funding and then just creating a platform to do it. Just, well, if there’s nothing out there that can serve what I need, let me help build the platform that does it. So I’ve, my whole career has almost been in being an entrepreneur and finding alternative funding and building it up. And a lot of my work with these farmers is just helping them think through funding options. Not always just saying, you know, use our funding or just, well, what’s out there that we can weave together? We now even help some of the farmers apply for grants. We help them figure out what’s out there, and what can we weave together. And I think, I think that’s what a lot of entrepreneurs struggle with. An advocate for them, helping them think about what’s there from a kind of agnostic perspective. And then obviously finding that I think I can help them through our platform but understanding that there are options out there that they just may not be familiar with.

Eve: [00:29:25] Interesting. So, I mean it’s a nascent industry, crowdfunding, if you think about crowdfunding – all of it, not just regulation crowdfunding. How could it be made easier and more acceptable? It’s definitely not mainstream.

Dan: [00:29:41] It’s, yeah, it’s still early. And that’s why I think people have a short-term perspective. I mean, most of the regulations that define the world of securities and investment were written in 1933, 1934, and that quieted down requirements for fundraising and for basically eighty years provided very few options. So, we’re really only in the first decade of loosening of those types of rules, broadening opportunities and access to capital. And a lot of the rules and regulations are still challenging and problematic to utilize and maybe probably generally over the garden some. So, I think as these rules are streamlined and improved, it will become easier for platforms and entrepreneurs to use them, which will then expand the size of the market. I also find, I think the way to really drive growth in crowdfunding and drive adoption is through narrative storytelling. And so, I find a lot of crowdfunding is pitching return and that’s fine. But I think if you’re just pitching return, there’s a lot of places that are pitching return and it doesn’t stand out. And so, I find if you’re bringing people in on an emotional narrative level, you know, that takes someone who’s not classifying themselves as someone who funds things to now funding a project. And I think to bring people mainstream, it has to go beyond the investment world. And I find that few platforms to speak people beyond return.

Eve: [00:31:06] Interesting. So, what’s the biggest challenge you’ve had in building this Go Steward?

Dan: [00:31:12] I mean, the biggest challenge was really developing the market. I mean, I started in 2016 / 17. The idea of regenerative agriculture was very kind of unknown. I didn’t grow up farming. My mother’s family has been farming since the late 1800s so I was one generation away from that, but it wasn’t my personal background. And so, understanding who are these farmer customers? Where are they? How do I find them? What can they afford to pay? How can I structure a deal? Are they viable enterprises? And just validating that there is a customer who actually is a real business that can afford and raise capital, that took a few years. And then was just very pleasantly surprised at not only by the viability of these businesses, but the growth in this sector of just all types of people entering this world and wanting to become farmers and really focused on ecology and taking care of the land. And then the second challenge was, well, who are the people who want to fund these farms? I mean, I personally funded the first portfolio because you don’t want to try to build two sides of the market at once. It’s easier just to focus on one side. And then we took these farms to market over the past year as we launched the platform publicly. And I’ve been amazed by the breadth of people who are interested in funding these types of funds.

[00:32:26] I mean, most people have never funded a farm. I mean, I’ve almost never spoken to anyone who’s funded a farm that wasn’t their own family’s farm. And so you’re having to educate them about farm, farming as an asset class, regenerative agriculture as a subset of that of a different type of agriculture, and then, you know, the stories of these farms. And so, I think people, when I was saying the kind of narrative emotional level, they connect with these people. They’ve all bought food, they’ve all have that experience of being at a farmers-market of hearing a farmer and understanding their passion and their interest. So, if you can connect with who that person is and their challenges and their struggles and the importance of the funding, the other aspects of collateral security sector, I think, they can get comfort on the fact that that’s what we’re focused on and that’s our goal to make that simple and easy. So now we have both sides of the market working. Farms raising funding, funding happening very quickly. And now it’s growing the business. That part’s easier to me. It’s still a challenge but you at least know that there’s viability on both sides, whereas the first few years was kind of a lot of questions around who even is the market going to be?

Eve: [00:33:38] And are these real collateralized loans? I mean, what happens if someone defaults?

Dan: [00:33:43] Yes, so they’re all secured loans. Some are secured by real properties, some by mortgages or deed of trust, some real estate and some are secured by personal property which basically means equipment, infrastructure. So, they’re all secured. Some farms have better collateral than others. So that the interest rate depends on that. The five percent loans are the more secure lower risk loans, the higher rates are businesses with less assets or collateral. But that’s our sole business of vetting farms, helping farmers figure out what type of funding is needed and what amounts, helping them drive growth their business through other means. And then we service all the loans ourselves. So if there is a challenge, we’ll work with the farmer. Most of time if there’s a challenge, it’s a timing challenge. That there is an issue with the market or a customer or a job. So it’s not a fundamental problem. It’s OK, I just need a little more time or this customer drops so I’m now launching this, or I’m waiting on an inspection for my grade A milk, which happened when Covid hit and now it’s six months later, you know, just the reality. So rescheduling the payments is the most important. But if a farmer really can’t do it anymore, they just need to give up and move on, then we would step in. And our first scenario would be to bring in another farmer because we have a huge network of farmers who would love nothing more than to take over a operation that exists and is properly capitalized. And it’s ready to go.

Eve: [00:35:06] Interesting.

Dan: [00:35:07] So that’s our view. It’s not a type of business where you can just passively just auction off the assets and expect to get recovery. You have to be engaged in it. All we do is fund small-and mid-sized generative farmers all day, every day. And so that expertise gives us confidence that if situations do arise where there are challenges, that we can step in and resolve them. And I mention that team member who’s a farmer himself. I mean, he can literally show up at the farm if he has to and help them figure out the bottlenecks and the challenges that they’re facing.

Eve: [00:35:37] Oh wow! So then, what’s your big, hairy, audacious goal?

Dan: [00:35:41] I’ve, you know, I came into this with the view that there is a need for a fundamental transformation in our agricultural system. The reason why I support regenerative agriculture is because of the importance of taking care of the land and people and helping them all. All of those positive benefits are needed in part of our agricultural system. Instead, the system we have now has huge negative externalities with run-off, with low wages, with low quality food, with difficult access to food. So I think what we’re trying to prove is there’s a viable alternative of how you can do agriculture that is in alignment with ecosystems that provides health and wellness and opportunity for people. And I think if that can be shown to be viable and it doesn’t need to be subsidized and it can operate on its own, you can show that there is a different way and a different path forward. So many, I think, of the current modern challenges we face around societal economic, health challenges, find a root in agriculture, at least are impacted by agriculture in terms of climate or obesity or exploitation, labor exploitation. And so, it is one of those sectors that touches upon everything and each story, each farm has their own impact, which is direct and tangible, which then becomes part of a broader movement. So I think we’re in a historical kind of sea change of doing one hundred years of industrial agriculture with really negative results, misguided maybe by design or not, but the end result is not serving the interests of most people. And so, our goal is to really lead the transition to an agricultural system that is for the benefit of many and does provide opportunity for people.

Eve: [00:37:29] Well, Dan, it’s really interesting and I’m so glad you could talk to me and I wish you all the best success. It sounds like you’re well on the way.

Dan: [00:37:38] Well, thank you. Really nice to chat. And I appreciate all the work that you’ve done, also in building impact and focusing on storytelling and engaging people around funding things that are different. And I think more of that is always needed.

Eve: [00:37:52] Thank you. That was Dan Miller, founder of Steward, an online investment platform raising funds for sustainable farmers. Everything about Steward and Dan checks a box for me. With Steward Dan is serving an under-represented group of people, farmers who can’t get loans elsewhere. He’s non-discriminating in accepting investors. You can invest for as little as one hundred dollars. And he’s keenly focused on making a difference in everything that he does. I’m looking forward to seeing how Steward grows.

Eve: [00:38:45] You can find out more about this episode on the show notes page at rethinkrealestateforgood.co or you can find other episodes you might have missed. Or you can show your support at patreon.com/rethinkrealestate where you can learn about special opportunities for my friends and followers. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Images courtesy of Dan Miller, Steward