Finance

Eve Picker: [00:00:11] Hi there. Thanks for joining me on Rethink Real Estate. For Good. 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.

Eve: [00:00:43] Joyous disruption. This is Jonathan Dodson’s goal with each and every real estate project he develops. Jonathan pivoted from an early career as a banker to real estate developer, aptly calling the firm he co-founded, Pivot Projects. He had developed an interest in urban neighborhoods and redevelopment initiatives, and when given an opportunity to co-partner on a project, he grabbed it. Now he leads the Pivot Team, navigating tough conversations and decisions to create the best outcomes for his teammates, partners and tenants. And for Jonathan, the best outcomes are not traditional ones. I enjoyed every moment of this conversation, and so will you.

Eve: [00:01:35] Hi Jonathan. I’m really delighted to have you join me today.

Jonathan Dodson: [00:01:38] Thanks for letting me be on. I’m honored and excited. So…

Eve: [00:01:42] Good. So, on your website it says, ‘We work alongside communities addressing their unique context to create collaborative developments.’ How does a banker become interested in building community like this? Can you tell me about your journey?

Jonathan: [00:01:59] Yeah, there’s several seminal moments for me, but the first one started in 2006, the winter I had just become a loan officer, and I went to an event that was held, it was the inaugural ULI Oklahoma event, and there was a young guy who had kind of started the whole thing and he was actually getting ready to leave to go to MIT and he kicked it off. And his dad was the former mayor of Oklahoma City. And I asked if I could get coffee with him. And he recommended just a bevy of books on urbanism and development and so, as I read those and I got into lending, I was actually drawn towards trying to figure out how can I lend to people who are doing these kind of things. So, when the housing crash happened in ’08 and ’09, what I found as a lender was that all of the stuff within the urban core held up remarkably well within Oklahoma City market. And so that furthered, kind of, an interest of saying there’s stuff going on here that seems to be a little bit more resilient to some of the market constraints that are happening. And so really, I stuck with that and in 2013, I left a bank that I had been at for 7 or 8 years and went to go to another bank that I thought I would be at for a while.

Jonathan: [00:03:21] And long story short, my boss told my assistant if she wanted to keep her job, she needed to have sex with him. And I was in the room where it happened and so, long story short, they gave her, like, four weeks to find a new job. They didn’t fire him, and I put my two week notice in and left. That’s why I left banking was really, you know, kind of this super gross thing that happens that I happened to overhear and reported up and they didn’t respond the right way. And so, I liquidated everything I had. So, 401Ks, pulled that out of the market Roth. 401K, pulled that out of the market and ended up selling my car. And so, I had four kids and rode my bike all over town. Started off sitting at a coffee shop and really just started figuring out what can I do to actually make money. And so, I realized that I knew how to help people find debt, and I knew how to connect people with capital. And so that was kind of…

Eve: [00:04:28] Which is a hugely important skill, right?

Jonathan: [00:04:32] It is. It is. And especially when you’re doing incremental development and finding tenants that aren’t national credit tenants or local tenants. So that’s going against you. You typically don’t have a big pocketbook, so you’re having to be creative on the capital stack and that’s going against you. So being able to find money both from the bank side and equity was helpful. And so really, I started scrambling doing that for other developers and it was on my 34th birthday that my current business partner and one of the co-founders as well, David Wanser, he left my birthday, came back and said, Hey, I got this 30,000-square-foot theater that is completely vacant under contract. Would you be an equal partner with me and go try to redevelop it? And so that was the genesis of Pivot, was really coming out of an act of generosity by him. He could have taken way more ownership in the deal. He could have done a lot of things. But he grounded our company in a sense of generosity and equality. And so that really was what started Pivot in 2014.

Eve: [00:05:35] Wow. So, you know, I had a similar experience to you in 2010 when everyone was saying the sky is falling in. I only had urban properties and I barely felt it. It was really, it was very interesting.

Jonathan: [00:05:48] That’s interesting.

Eve: [00:05:49] Yeah. So, did you fall in love with real estate development then?

Jonathan: [00:05:55] Yeah. You know, I think one of the things that, the thing, there’s several things that I like about real estate development, but one of the things that I’ve said before is real estate developers are really only creating covers to books, and so anyone will pick up a book because of the cover, right? But people read the book because of the story. And so, the idea that as a developer, I got to partner with the city’s best storytellers and actually have them, you know, basically be able to facilitate a space where they could tell the stories of both our past and our future and who we’re becoming as a city to me became such a fun thing to do. And so whether it was trying to transform the city through food and beverage or through music or through thinking through areas that have been forgotten or working alongside communities that have been speaking, but no one’s been listening to them and being able to advocate. Those were things, I didn’t have another role that I could do that would allow me to be able to touch those kind of stories and those kind of things.

Eve: [00:06:53] So it sounds like Oklahoma City is a really important part of this story, too.

Jonathan: [00:07:00] Yeah, there’s this, uh, this old, saint from, like, fourth century. And he said, even if your mother is a whore, you love her. And I think about Oklahoma City because living in Oklahoma City, you see all the flaws. Our city was half of it was in Mexico at one point. We were founded, the city was, the state was formed overnight with the land run. We had minorities who formed it. We had females who were starting towns in the Panhandle, and we’ve forgotten a lot of our history, right? And we’ve become a place that isn’t as welcoming as it should be. So, you see flaws like that, and it’s easy to get mad and upset. But she still is, you know, in a sense, my mother. And so, like, I love her, and I see the opportunity for change, and I see the goodness in people that are here. And so there is a sense of. I love this city and all of its flaws and all of the things. It’s still a city that I want to be a part of and be a part of its story.

Eve: [00:08:02] So you founded Pivot Project after that first project or with the first project.

Jonathan: [00:08:07] Yeah, it was kind of there was one other partner that was involved from day one, and we really just liked working together and our idea was that we were going to chase asset appreciation and cash flow for the 20-year look ahead, right? We weren’t going to go build, fill and flip or be merchant developers. And so really after the Tower Theatre formed, it was, or we built that out, which became basically 3 or 4 restaurants and office space and then a thousand-capacity music venue, um, we realized, man, we all kind of think about the city the same way. Let’s actually do this more often and do it together as a team.

Eve: [00:08:44] What is Pivot Project’s mission and vision? Like, what keeps you focused?

Jonathan: [00:08:49] You know, I think there’s this idea of human flourishing and human flourishing can mean a lot of things, but it’s this idea of allowing all of the different touch points that we have to allow for human flourishing. So, we view, we create one way to say, well, how do you create value? We create value through our financing and the way we put together the deal, right? We create value through our tenanting and the people we partner with. We self-tenant 95% of our space. And then through the property management side, we create value. But what we realized was that in order for us to do those things, we needed to allow for flourishing to occur for not just our tenants, but our investors, the community that sits around the development, the stakeholders at large. And so that forced us, one of our values is joyous disruption. And so, what we mean by that is that typically when someone gets really passionate about something or gets excited about making a change, they use shame and guilt as a methodology to get people to line up right. And we’ve been in, whether work environments or we see city officials do it or whatever, but, you know, you try to shame someone into reacting and that’s not it’s not human to do that, and it’s not healthy to do that. But that’s a tool. The other is paternalism. And so, we see that primarily when groups that have power or access to wealth, they’ll go into communities and say, Hey, you guys are really lucky to have us. Come under our wing and let us take care of you, right? And that paternalism is really not healthy. And we’ve all been in situations where someone has tried to, they think they’re helping you, but your skin’s crawling, right?

Eve: [00:10:38] So from the president down, right?

Jonathan: [00:10:40] Yes. Yeah, absolutely right. And so, what most people are, if someone becomes passionate, it’s like they’re giving one round of shame and guilt or one round of paternalism. And what we’ve said is we have all tried those different things at different times in our lives. We know that none of them work, and we know that we hate them when they’re used on us. And so we said, Hey, we’re going to be joyous in how we try to disrupt systems. And so, we’re going to be really passionate about what we do. And if you’re already leading the way, let us be a part of what you’re doing. If you like what we’re doing and you haven’t been doing it, come join on. And if it’s not for you, that’s cool. We’re not going to try to force you into seeing the world the way that we see it. And so, empathy is one of our values. Thoughtfulness is one of our values. Excellence is one of our values. Resilience and then joyous disruption. But joyous disruption is the one that for me sits at the top because it’s, we want to be passionate and we want to be excited about what we’re doing, but we’re not going to use the typical tools that people use to try to get other people involved.

Eve: [00:11:39] Well, that one’s making me smile. So, give me an example of something you joyously disrupted.

Jonathan: [00:11:47] Yeah. No. Great. So, one way to look at that is our project on the east side. And this is what I think connected us to a lot of great people. We won an ULI international award of excellence. And so, Oklahoma is a state has had three award winners. One is $1 billion tower, another one is a half-billion-dollar park, and then our $10 million development on the east side of Oklahoma City. And so, what we did in that project, very briefly, is we were asked to go redevelop in an area that hadn’t been developed in in 35 years, and it was the historic kind of black community. And so, we said, we’re going to take six things. We’re going to do it, basically, this process will be broken up into six pieces, and we’re going to do the opposite of what we’ve seen done. So, the first was to say that just because people have access to power and money, it doesn’t mean they’re a blessing to the community to go in. So philosophically, we said we are going to leverage access to those things if the community would be willing to take us in, because what we really value is resilience. What we really value is community. What we really value is seeing the world a little bit differently, and they had that in abundance. So, we said, okay, we’ll go leverage this if you’ll let us in. The second thing we did was we said we’re going to flip the script. So power, with developers, power’s like the one thing we don’t want to give up. We don’t mind bringing in partners, but we don’t want to give up power. And so, what we said is we will actually bring in a community member and give them authority over us. So, Sandino Thompson, who is a friend, he actually had authority to veto anything we did. We brought him in as an equity partner, and he received development fees.

Eve: [00:13:30] But why him? Did he live, does he live in the community? or…

Jonathan: [00:13:33] He lived in the community. He’d been at it for 20 years and he had a vision that we felt like was something we wanted to be a part of, right? And so, we had some development skills that he didn’t have. He had been dreaming and eating and sleeping this stuff.

Eve: [00:13:49] He was really a part of the community and understood what thriving yeah, and okay, so you chose someone who was really a representative for the community.

Jonathan: [00:13:59] Absolutely. And so, and then we said we’re going to give you authority over us and then we’re going to pay you like one of us, right? The third thing we did was we said, we are going to pay the community to tenant the buildings. So, what typically happens is a developer calls all of their buddies and says, hey, you want to move over here? And we could have brought some really great white developers to the east side of town. But that’s not what’s needed, right? When we did all of these different charrettes, they said, hey, we want to walk it, we want representative retail, we want to be able to walk into a building and it feels like it’s a part of the community. The ownership is Black, all of those things.

Eve: [00:14:33] And what is the demographic of that community?

Jonathan: [00:14:35] It’s mostly African American and Black. And so it needed to feel like one guy actually was really passionate and he said it needs to feel Black, but we need white people’s money. And, you know, because that area had been so decimated by redlining and all of this, right? And so, what we told the community was, if you bring us a tenant and they sign a lease, we’re going to pay you a consulting fee that’s commensurate to a brokerage fee. And so the idea being that we don’t know what’s best for that community, but they all know if someone was going to open up a bar, who should that be? If someone’s going to open up a restaurant or a pizza joint, who’s that going to be? So that was the next thing we did is we said, we’re going to pay the community to help fill the building. The fourth thing we did was we said we were going to take funds from the city that we get through TIF and we’re actually going to pass those on to our tenants. So instead of protecting our bottom line, we’re going to pass those on to the tenant. So, the tenants got six times the amount of build out dollars that they would get right down the street. And then they got a 35%, or 30% reduction in rent. That was important.

Eve: [00:15:36] I got to butt in because there’s a lot here. Are you allowed to do that with TIF funds?

Jonathan: [00:15:43] Uh, the city actually asked us not to do that, but we felt like it was critical to the project, right? So, the two things that were hard for the city to see was allocation of TIF, how we pass that through. That was going to improve the project, right? But we were trying to make it financially feasible because there had been no development over there in 35 years.

Eve: [00:16:10] So TIF is really meant to improve public places, right?

Jonathan: [00:16:14] Yeah. So, the TIF in Oklahoma City is a little bit different. It’s more project specific.

Eve: [00:16:18] Oh, okay.

Jonathan: [00:16:20] So there is, you can allocate it to the project itself to try, you know, it’s the whole but for. Could the project happen But for TIF and the answer here was obviously no.

Eve: [00:16:32] But essentially you used funds that permitted you to, you know, offer spaces at a rent commensurate to the skills and abilities of the local people, but still let you pay your mortgage and keep the building maintained, etcetera. And that, as I know really well, there’s usually is a very difficult thing to do in a soft market, in a disinvested neighborhood. You need funds like that.

Jonathan: [00:17:01] We probably needed more, and we can talk about lessons learned on this later. But our spaces were, some of our spaces were too big. So regardless of the 30% reduction in rent or 40% reduction in rent, the square footage itself just made the leasing hard, right?

Eve: [00:17:15] Really wrong. Yeah, because someone wants to pay $1,000, not $1500 or $2000. Right.

Jonathan: [00:17:20] Exactly, yeah. So, the next thing we did, which I feel like is one of the most important things, was we said, gentrification can be good and bad. In some areas it can be a good thing, in some areas it’s not a good thing. In underserved communities, it’s almost always a bad thing because it can lead to displacement. And so, in an underserved community and, you know, all this stuff, but in an underserved community, the community ends up taking and filling the resource gap that exists because the city or other services haven’t been funding that or taking care of that, right? So, if that person gets this place, they not only have to move, you know, they’re moving not just down the block, but they’re moving nine miles away to the suburbs. They’ve not only lost their community, but they’ve lost all the community resources that existed there, right? And in our development, I think we’re like at 92% single parent households. So, the need for people to be close to these things is really important.

Eve: [00:18:16] Yeah, it’s a support system, right? When you’re a single parent. Yeah.

Jonathan: [00:18:20] And so what we did was we said we going to allocate 15% of the capital stack for our tenants. And the idea being that if you sign up and you sign a lease with us, and as long as you don’t have a payment default, you become a partner in the real estate from day one. And if there’s capital calls, you don’t get diluted and you don’t have to put in money. But the idea being that the value, there’s two things that that does, if the value that they help create over a period of time is good, they should be compensated for, especially in a project like this. The second thing is, is it ties our hands that if we became greedy or we found out that, hey, we got Starbucks that now wants to come in, we don’t get, like they’re our partners now, right? They’re just not tenants that we can cast aside. And so that was a really important part of us to say is we want to actually have partners and not just tenants in this process. And so we were able to do that. And I think we’re at, I think of the spaces we have, it’s 90% Black-owned businesses, 50% female Black-owned or minority owned businesses in this development. And so, and then the final piece was to say, this was a really hard project for us to do. Phase one was healthcare related. We were told that what the community wanted through our meetings with the community was access to healthcare, access to food and then representative retail. And so, phase one was access to food and health care. And we had our first tenant that came in signed a ten-year lease. They were 100-year-old health care company, their rent alone debt serviced the project. And we went out to 25 banks and couldn’t get a term sheet.

Eve: [00:19:57] Oh, why not? Why not, ’cause of the neighborhood?

Jonathan: [00:19:59] And what we were told, we don’t lend money to that side of town.

Eve: [00:20:03] Oh, God.

Jonathan: [00:20:05] So, and now the honest bank said that, right? Now what I would say is what I’ve seen in this process and just to highlight to how hard it is, we actually had a bank who said, hey, if you bring in someone really wealthy, you give them more ownership than you guys have, they guarantee the debt will then finance the project. And so we got a guy who had more single malt scotch than debt. So that’s how rich he was, was like, you know, he had more single malt scotch in his cellar than we needed in debt. And he said, I’m in. I’ll guarantee the debt. And so, he went back to the bank and the bank came back and said. That guy’s not, like, he’s not rich enough. And so, what hit me at this time was when me, Ben and David did our first project at the Tower Theater, it was 100% vacant, we had no development experience, really. We were able to go in and get a bank to lend us construction money with no plan in place. And we leveraged tax credits so that we didn’t actually put any money in the project. So, I had no money to put in, right? Like I didn’t have a job. So, two miles from this Tower Theater building, five years later, after we’ve developed all this stuff, we have 100-year-old health care tenant who signed a ten-year lease and we have another guarantor on top of it and we can’t get a bank to say yes. And so, what, when you talk about systems, so joyous disruption, there’s something that happens. So, in the 50s, if you were a Black male or female and you came to me and asked me for a loan and I was a banker, I would just say no, because of the color of your skin, I’m not going to give you money. And I would do that in the 60s and I would do that.

Eve: [00:21:43] If you were a white woman, that would be true, too.

Jonathan: [00:21:45] Yeah, that would be true too. Yeah. But they would do that in the 50s, do it in the 60s, do it in the 70s. But by the time 2000s roll around, a banker is no longer even forced to think that way. What he sees is he says, hey, you have not invested in your community in 40 years. Why would I risk my job to lend money in an area that, obviously this community doesn’t even care about itself, right? The system has so well baked-in the decisions that it’s hard for people to say, oh, there’s a system in place that’s prevented these people from being able to redevelop in their own community and you’re part of the problem, right? And so, my first reaction to that was to be super pissed and to get really angry at all of the banks and, you know, want to take them all down, right? Shame and guilt were very much the methodology that I wanted to use there. But what we realized is that that was not going to win anyone’s heart and so white culture in general is anemic, I think. It’s a deceptive, anemic, because we think we have everything we need. We have access to power. We have access to money. We have access to what we think is culture. You know, when an anemic person gets exposed to iron for the first time it’s like the grinch’s heart gets bigger. It’s like, oh my gosh, you know, I have more energy. And when we get exposed to cultures that are different, our hearts become bigger, too, right? And so trying to say, okay, if you didn’t lend me money. Now what’s cool is they come to Kindred, which is a really awesome bar on the east side, or Scrambled, which is an awesome breakfast spot or East Side Pizza and they’re seeing people that don’t look like them. They’re experiencing great food and they’re calling me going like, Holy crap, this is like really cool.

Eve: [00:23:30] And they realized they missed out, you know?

Jonathan: [00:23:32] Yeah, yeah. And my job isn’t to tell them that they missed out, but if they start to see the world a little differently, then how cool is it that I got to be a part of that? You know? And my role is very limited. Really my role was to fight long enough to find a bank, to say yes and then find storytellers through the community’s help to go put them in buildings so that they can tell their own stories, right? So, I have a very limited scope of influence, but we’re committed to use that scope of influence we have to be a part of these kind of stories.

Eve: [00:24:03] Oh, I think your influence is enormous if you’re providing a way for the community to generate wealth and have ownership as well, that’s a pretty big influence, I think.

Jonathan: [00:24:14] Well, we’re having fun. And it’s again, it’s having friends that, what we’ve realized is, a story that I’ve told before, but we talk about if you were going to come to Oklahoma City and open up, build an office building and you’re new to town, I’d be like, Eve, okay, I got to connect you with some of the other office brokers in town. I got to connect you with these people, so, you know, right. And I would play the relationship game, right? So that you came in and you’d be accepted. And no one’s going to try to, like, stop you from doing what you’re doing, right? Financially or, you know, making phone calls or whatever. So, I get a call from a friend of mine who’s a part of the project as a tenant and a partner, because he’s a tenant, and he calls me and says, I need you to come meet me at 2:00 today. And so, I drive over there and to the East Point project and he’s like, we need to go for a walk. And so, we go for a walk, and we go to this nondescript door that just says Barber. And he says, we need to go inside. And so, I’m like, Dude, what’s going on? He’s like, just go inside. So, we walk inside and there’s three dudes playing NBA 2K smoking weed, there’s a dude getting a haircut, and then there’s this guy that’s probably like six foot four has no body fat and he’s got one picture on the wall and the picture of the wall is of my buddy. And he and the buddy start talking and then, Mailman this this barber starts asking me questions. He asks me, what am I doing next door? He asked me, why am I doing it? He asked me what kind of food am I going to try to bring in? He asked me what my intentions are. And so, we go through like a 20-minute, and I know I’m being interrogated.

Eve: [00:25:50] You’re being interrogated?

Jonathan: [00:25:53] Yeah, yeah. I know something is happening. I am not smart enough to figure out what’s going on. And so, we, he’s like, he finally says, Man, you’re cool. Like, you’re good to go. Uh, and so I say thank you. And I walk back out and I tell JB, I’m like, what the hell just happened? And he said, I needed you to meet the Mailman. And he’s, uh, he’s an OG. And I was like, all right, I know from like, 90s rap what an OG is, but like, what does that mean? He’s like, well, he’s made. And I said, well what does it mean to be made? And he said he’s untouchable. All of the gangs respect what he does and who he is, and I needed you to come in. And actually, I leveraged my reputation so you could have a meeting with him because now your project is safe. Like, it won’t get tagged. People aren’t going to do anything to it. And I needed you to have that kind of protection for your building, since this is the first building over here in 35 years. And it was a super humbling moment for me because as a, just a white dude who’s trying to figure things out for my friend to leverage his whole reputation to give me access to a meeting, to make sure that this development would be successful, you leave and you feel like how little I’ve done for other people and how much he’s done for me and like, just again, your heart gets bigger, right? And you start realizing how important these things are. And so those are the kind of stories when you say like, what’s joyous disruption look like? It looks like all of those things. And when we get to be a part of that, I really do think we become better humans.

Eve: [00:27:25] Yes. How large is your portfolio now and what’s the end goal?

Jonathan: [00:27:30] Yeah, great question. So, we, over the last seven years, we’ve developed about $100 million worth of real estate, all within kind of the Oklahoma City urban core. Over the next 3 to 4 years, we’re growing and we’re doing some bigger projects. So, we’ve probably got about 350 million over the next 3 to 4 years that will be taking on. And it’s Oklahoma City and Tulsa, which are, you know, if you’re not familiar with Oklahoma, they’re about an hour and a half drive from each other. And so, they’re the two largest cities within Oklahoma. And so really what we’ve said is we want to continue to grow what we do. We have added a brokerage wing to our team. And so, for me, one of the things that I realized was that another way to form joyous disruption and to like do things differently, is just to do different. And so, brokerage is one of the industries where if you’re a really hard worker, you pick up the phone, you call, and then you’re willing to not take shortcuts. I mean, brokerage by default is transactional, right? Because it’s like you’re trying to close. And so, if we could maintain a level of our values and how we do things and incorporate and integrate a brokerage firm into that, we could hire differently. And so, our brokerage community in Oklahoma looks like a lot of brokerage communities where it’s 90% white male, and there’s some females scattered and some minorities. But our intention was what if we actually hire differently and we hired primarily females or minorities? And that’s really all we hired.

Jonathan: [00:29:02] We got a gentleman who’s really trained almost every broker in the city who’s 70 years old, and he was at the most preeminent firm in town. And he said, I will come start your brokerage company and I will try to replace myself as quickly as possible, but I will commit myself to do that. And so, the brokerage company is another way just by hiring differently, right? You’re able to disrupt systems. And so, we started a brokerage company. We have a property management company, and then it’s trying to expand our development scope not because bigger is better, but really as we’re trying to use the company, I believe, Pivot when it uses itself to create wealth for its employees and for the community and for all the people who touch it, if we can do some larger projects, that gives us larger runways to actually put capital into smaller projects where we don’t have to go try to raise capital, you know, $500,000 or $750,000 to do that. We can do that ourselves. And so really, we’ve got a, you know, a ten-year plan. I’m currently the CEO at Pivot, and I talk to my team all the time but at some point, I won’t be the best CEO for Pivot. And so, when that happens, I’ll step down. But until then, I’m passionate about building this company and what’s a little weird about Oklahoma City is we really don’t have development companies in Oklahoma City. We have developers, we have development companies. And so, we’re really kind of forging our own path in terms of what we’re doing and how we see it. And we don’t have a lot of groups that we can say like, hey, we’re going to do it just like them. We have people we respect, but they’re not really building development companies.

Eve: [00:30:30] I was going to ask you that. Has anyone influenced your work?

Jonathan: [00:30:34] Yeah. And I would say I think one of the most influential groups for us has been the group that Jim Hyde has put together through the Small Developers Conference. Having Lorenzo and having Hector and so many of these people, Michael Lander, that I get to talk to and see how they’ve done stuff and how they’ve put a project together. And what we do can be really lonely, right? Because you’re going against the grain at every single avenue. Nothing is easy, right? We always laugh like there is. We’re the most inefficient development company because we haven’t just done just one thing, right? We have this portfolio of all sorts of stuff. And so…

Eve: [00:31:13] But damn, it’s so much fun.

Jonathan: [00:31:16] Yeah. No, it is. It absolutely is. But at times you’re like, Man, am I crazy? You know? And so, to be able to call or to be able to have a conversation with somebody and then go see what they’re doing, I mean, the affirmation that they give us when they come to town and are able to encourage us, and then what we’re able to see when we go to their towns, it’s so much fun and it really is. So, I really think what he’s done has been super important for us. And then we just have individuals here in town that we see them doing really great work and excellence is one of our values. And so, we’re, when we decided to grow, we said we have some very large gaps within our company that we can’t be excellent. One was, we were doing property management in-house, and we weren’t good at it. And we didn’t have anyone who had like a skill set in it. So, we hired someone who had property management experience, right? We didn’t really have a high level, what I would call financial mind. All of us have finance degrees and we could put together but there’s a huge difference between having a finance degree and then actually knowing what you’re doing. And so, we brought in a lady named Megan Bruner, who had been at Grant Thornton for 15 years, and she came in to help us with that. And then we didn’t have anyone in the construction world. And so, as a developer, we felt like we kind of getting taken advantage of, whether it was intentional or not. But once we got the process going between the architect and the GC, there’s was a game being played that we just didn’t know well enough how to play it right. And it’s like…

Eve: [00:32:42] Absolutely.

Jonathan: [00:32:43] You could see it happening, but we couldn’t stop it, right? And so, we were able to hire another female who had been at one of our largest general contracting companies for 15 years, and she came on board to help us. And so, it’s like we’re starting to fill these gaps that we have, which has been really fun.

Eve: [00:33:01] Little gaps of knowledge, yep.

Jonathan: [00:33:03] Yeah, and it allows us to, I mean, empathy is one of our core values, but excellence as well. So, we don’t want to just be a nice company, we want to be a nice company that does it really, really well. And so, we’re hopefully headed in that direction.

Eve: [00:33:18] So who gives you pushback and why?

Jonathan: [00:33:22] What kind of pushback?

Eve: [00:33:24] Whatever you want to talk about.

Jonathan: [00:33:28] So, what I will say one is that David Wanser, who was a co-founder with me, he is a voice of reason for me in regard to, there’s been a lot of times we talk through things, and he’ll say we’re moving too fast. We need to rethink this. Do we really know what we’re doing here? So, I would say he’s been a great voice. He’s a friend and he’s been a great voice of wisdom for me. All that we’re doing, we get pushback. I mean, I can’t think of a single thing that we’ve done where someone says, you know, this makes perfect sense.

Eve: [00:34:07] This is a great idea. Go, right?

Jonathan: [00:34:10] Yeah, yeah. Everything is like a fight, you know? And so we’ve got we’ve got some really big projects that we’re working on. And some people are saying this is the worst time in modern history to develop. You shouldn’t develop. Don’t do it now. And we’re saying because you say that we actually think it is the best time, you know. So, but it’s obviously, development is hard right now because you’ve got inflation.

Eve: [00:34:33] The price differentials are ridiculous. It’s very insane.

Jonathan: [00:34:36] And your cost to borrow is increased. And then banks…

Eve: [00:34:39] But if you can get through that, you have some asset at the end of it. Yeah. I’m trying to finish a project in Australia and that’s exactly what I’m confronting. It’s just every moment is another problem. But you know, no is an interesting word because the impact that Nno has on me means, oh, I’m just going to try harder.

Jonathan: [00:35:00] So, I have this great example of, there’s this, someone that I really respect, and I was really lucky to meet, a guy named Sam Hinkie, and he was the GM for the 76ers and he worked at Bain & Company as like a 20 year old. And now he teaches at Stanford. And I got two hours in the car with him, and he said, go show me your projects. So, I drove him around and told him the stories of all of our projects, right? And he all he did was ask questions the entire time. And so, at the very end, he said, well, do you want to know what I think of you guys? And I was like, no, I don’t want to know what you think of us.

Jonathan: [00:35:36] And he said, You guys don’t give up. He said, every single asset that we’ve gone through there has been, you know, our first project, our music operating company, defaulted on their lease within three months of signing a ten year lease. And we had to form an, overnight a music operating company with no experience and go raise $1 million, which meant we borrowed $1 million to go build out the space. And we learned how to run a music operating company, right? Those are things that he said on the West Coast you just walk away from, right? You just, that just didn’t work out like we thought, we’re going to leave. He said, I know that if I give you money or someone does, you’ll never treat that lightly and you will work to make that project happen. And so to your point, no is not no, no is like we got to be more creative. We got to work harder. We got to figure out another way around it, right? And so, I think that’s in the DNA of anyone who’s doing what we’re doing.

Eve: [00:36:38] Yes. Wow. So just any big disappointments?

Jonathan: [00:36:45] Yeah, I journal a lot. And so it’s funny to go back and look at the things that are disappointing, right? That you look back and you go, at the time, it feels like it’s soul crushing. We had a tenant that we wanted so bad it would have been the first location, it was our first project at Tower Theater, we knew they were going to say yes. The CEO said he was going to say yes, and then he changed his mind on the day of the vote to bring this tenant to Oklahoma City. And for us, it was like we were so, one, we were naive, but two, we were so excited. We felt like, you know, we just hit a home run. And so, you look at whether it’s tenants saying no, it’s bankers saying no, it’s working your butt off on a project and then losing it because it doesn’t make financial sense anymore and you have to walk away from it. Those are all things that I think you take. I look at how much we’ve had to grow as a company. And when you take other people’s capital and you bring it in, they’re entrusting you to not just get their money back, but to make a return on that, right? And, you know, Covid was so difficult, right, to try to figure out how do you. We were…

Eve: [00:37:53] Crushing.

Jonathan: [00:37:55] 40% of our portfolio was food and beverage at that time. And so, trying to figure out how do you handle that? And so, those are things where I think we’ve said if we are forthright, honest and we’re communicative and we problem solve, even in the midst of disappointments, we’ll be able to find a way out. And whenever you have a plan to not flip, but your goal is to hold, it gives you some runway, right? To be able to weather things that otherwise would’ve been, if you were trying to sell during this time, you would have been totally screwed.

Eve: [00:38:29] Yes, I agree.

Jonathan: [00:38:30] I posted this the other day on LinkedIn because I’ve been thinking about this a lot and some of this is from Jim Hyde’s stuff that he did, but that an entrepreneur is, by definition, optimistic about the future. Right?

Eve: [00:38:41] Yes.

Jonathan: [00:38:42] We can make a difference. We’re going to figure this out. But I find for myself in most that we’re also like the hardest on ourselves and our companies. And we like, you live within disappointment because you’re like, I thought we would be past this by now, or why are we dealing with this issue again? Or, you know, like what’s going on? And because entrepreneurs have to be future looking, we very rarely measure how far we’ve come. And so, one of the things I’ve been trying to do is, look, I did a five-year, three year and six month look back to say like, what has Pivot done during that time period? And I think that’s where you can start to find, oh, we’re actually like, we’re growing. Sometimes it’s more painful and slow than you want but look at how much farther we were now than we were five years ago. And so there is stuff that is like, okay, I need to be more kind to how far we’ve come and not be so disappointed that we’re not where I wish we were right now.

Eve: [00:39:36] Well, this has been completely delightful. And I’m going to wait for an invitation to come and see all your projects in Oklahoma City. I have to figure out how to get there.

Jonathan: [00:39:45] We’re great hosts. As long as you like to eat and drink. Yeah, no, just come. Just come.

Eve: [00:39:49] Yeah, yeah. Okay. This has been great, Jonathan. And I hope I see you at the next Small Scale Developer Forum. And I hope everyone who’s listening checks it out because it’s really a pretty amazing group of people. It’s wonderful.

Jonathan: [00:40:04] I’m already booked, so you’ll see me for sure. So, I can’t wait to see you.

Eve: [00:40:08] Yes. And thanks very much for joining me.

Jonathan: [00:40:11] Thank you, Eve. Really appreciate it.

Eve: [00:40:16] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big 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.