Impact

Eve Picker: [00:00:10] Hi there. Thanks for joining me on Re-Think 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. If you haven’t already, check out all of my podcasts at our website RethinkRealEstateForGood.co or you can find them at your favorite podcast station. You’ll find lot’s worth listening to, I’m sure.

Eve: [00:00:56] Today, I’m talking to Michelle Boyd, who runs the Housing Lab at the Terner Center for Housing Innovation. The Terner Center’s mission is to formulate bold strategies to house families from all walks of life in vibrant, sustainable and affordable homes and communities. And in turn, the Housing Lab program was developed to support entrepreneurs trying to solve core problems in the housing market. The result is a business accelerator which hosts a widely varied group of developing businesses. These are early stage ventures with a powerful mission to help solve some segment of the housing crisis. Michelle’s background brought her full circle back to housing after a decade in community and start up finance, organizational design and urban policy research, I’m going to learn a lot from Michelle and so will you. So listen in. 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 patron.com/rethinkrealrstate to learn about special opportunities for my friends and followers and subscribe if you can.

Eve: [00:02:31] Hi, Michelle, I’m really delighted to have this opportunity to talk to you.

Michelle Boyd: [00:02:36] Thank you, Eve. I’m really excited to be here. I’ve enjoyed listening to your podcast and I’m honored to be able to participate.

Eve: [00:02:43] So you’ve been working on perhaps one of the most difficult challenges of our time, affordable and accessible housing for everyone. I wanted to start by just talking about how our real estate industry has failed everyday people. Why is there such a huge gap between housing availability and the need?

Michelle: [00:03:06] Yeah. I mean, it’s a big question, we talk about it in our work at the Terner Center as a myriad of factors that’s contributing to it. There’s no single bullet there. I’d say if we think about the real estate industry as the mortgage industry that is financing home ownership and financing the construction of housing, the construction industry that is building housing and the broader investment markets that influence warehousing is built, as well as the policy elements at the local, state and federal level that regulate real estate. Each of those sectors has contributed to the great inequality that we see in our housing market.

Eve: [00:03:53] Yeah, and zoning is a big part of that. And then

Michelle: [00:03:57] Absolutely,

Eve: [00:03:58] Along with that is NIMBYism, right? Once people get used to having a half acre lot, they don’t want to give up on it. So.

Michelle: [00:04:07] And we have this fundamental assumption in the United States, particularly in California, where we do a large share of our work, that someone has the right to dictate what gets built a few houses a few blocks down from them or even across the city for them. And I think the way that power is allocated in the U.S. really favors homeowners.

Eve: [00:04:31] And I that’s right.

Michelle: [00:04:33] Yeah, and takes, doesn’t allow for power for decisions really to be made at a regional level, for example, as we think about how housing markets are regional because our job markets are regional. There are very few, if any, ways for policy leaders, government leaders to make regionally minded housing decisions. And so instead, they’re left up to small municipalities and neighbor by neighbor. Just saying that we don’t want the housing here. We want it elsewhere.

Eve: [00:05:02] That’s right? That’s probably the most insidious part of this. So, you know, that really struck me. As you can hear, I’m not an American, I’m Australian. Well, I’m a U.S. citizen now, but this is my accent. And that was one of, probably the only culture shock I really had. In Australia, local municipalities really do have much more control. So if you know, if there’s a beautiful tree in your yard, you, you need to get permission to hack a branch off it. Or, you know, if you’re going to build an addition to your house, you have to show some diagrams to make sure that you’re not casting a shadow on your neighbor’s house. I mean, there’s things in place there that just would never fly here.

Michelle: [00:05:50] Yeah, I think we have both a norm that you, as someone who lives in a certain neighborhood, has the right to dictate how and where housing gets built. But however, that power is inequitably distributed.

Eve: [00:06:12] Yes.

Michelle: [00:06:12] It’s most likely, it’s most often allocated to the people who have the time to show up to planning meetings.

Eve: [00:06:19] Yes.

Michelle: [00:06:19] Who have trust in the political system to think that they will be listened to. And that means it to predominantly older white homeowners who really want to keep things the status quo. I mean, I spent, there is this misconception that we can continue to have…

Eve: [00:06:41] Keep things the same.

Michelle: [00:06:41] Yeah, keep things the same and have cities that aren’t dense and still address our housing equity and environmental goals. Like those things are intention to each other and we and requires a compromise.

Eve: [00:06:53] Yes. Someone else I interviewed said that the most difficult thing for people is understanding and envisioning change. And, even if keeping things the same may not be better for them, you know, changing things may actually work out very well for them. But it’s very hard for people to visualize that, I think.

Michelle: [00:07:14] Right. There was a study I saw recently about how that upzoning in the city of Los Angeles, so allowing for more density, more dense housing, actually raise the property values of the single-family home parcels that didn’t were upzoned because they were seen as more valuable now that they were proximate to higher density housing. That runs in contrast to how people perceive the influence of apartments in the neighborhood. They think that they’ll destroy their home value or destroy their quote unquote.

Eve: [00:07:43] Yeah, interesting. So how do we begin? I mean, how do you think we begin to tackle these issues as so many of them?

Michelle: [00:07:51] Yeah, yeah. Well, I think it you know, it’s in part disentangling where the zoning decisions should lie and where the incentive structure should lie. Like, are there certain types of programs and agencies that can be put in place at a regional level in order to make more regionally focused housing decisions? And then also, I think there are creative solutions about how we can. Right now, it’s really, really difficult to add in what is often called the missing middle housing. So, this is housing, that’s three stories or four stories that can accommodate between two and 20 families. It’s really, it’s economically infeasible to build that type of housing in many areas, and that type of housing would be more amenable to some of the people who don’t want to see their neighborhoods change so fast. And so then we kind of get into this other complex problem, which is the extremely quickly escalate, extreme escalation of housing construction costs and everything that’s contributing to that. And it starts to kind of, you know, you continue to peel layers of the onion to understand where that’s the status quo. I think some of the things that we see as opportunity are both thinking about policy change and then also thinking about how to support more creative proposals and creative thinkers within the housing industry. And this is a large part of my work. There, as we think about the housing industry as a whole, it’s been one of the slowest to innovate in the United States. It’s one of the most inefficient industries compared to other industries and its ability to reduce the cost over time or increase the efficiency of labor, for example. And so I think there and that has to do with a lot of reasons, but one of them is the way the real estate industry is financed and the way it is regulated that make it really hard to support more creative approaches to doing things differently.

Eve: [00:10:05] Absolutely. I think you and I see eye on that. So, you run a non-profit called the Housing Lab, which is a closely affiliated with the Terner Housing Lab, right? And I want to know what is the Housing Lab’s role in changing the game?

Michelle: [00:10:22] Yeah, so just to take a step back and contextualize the Housing Lab that, so we have a close affiliation with the Terner Center for Housing Innovation at UC Berkeley, where our sister organization, we were incubated by the Terner Center and we now live in a sister non-profit that’s called Terner Labs, which is a we’re using as a platform to grow the Housing Lab, the program I run, and then other creative initiatives that use technology and business innovation to address housing inequity and housing affordability. And so the Housing Lab specifically is a program that supports entrepreneurs with creative approaches to reducing housing costs and increasing housing equity in the United States. And so, the way we see it is that entrepreneurs that are trying to, as you mentioned, have creative ideas and housing or face a number of barriers specific to innovating in the real estate environment. So, one of them is the complex regulatory environment that is regulated at the local, at the state, at the federal level. And it’s regulated for really strictly, for good reason. Once you build a house, it’s always there. It’s important that the house is safe. It’s important that house is built to a certain standard. We have, after the global financial crisis, we saw a great need to more highly regulate our mortgage market. So, there’s a reason these regulations exist, but they also stymie innovation. So we support entrepreneurs and figuring out how to best develop their company strategy and their relationships with government in order to effectively navigate that environment. The second main area is thinking about capital. Raising capital and structuring their company. There is not a lot of money to invest in innovative and risky projects in real estate.

Eve: [00:12:07] That’s for sure.

Michelle: [00:12:08] Yeah, that’s right. And for a number of reasons.

Eve: [00:12:12] Yeah, because banks are really made to keep, you know, they want to invest in the same.

Michelle: [00:12:18] They want to invest in the same. The way that real estate is underwritten is evaluated is by looking at a financial model of a prior investment. And if you don’t have a prior investment, an example of what you’ve done, it’s almost impossible to get money from a bank.

Eve: [00:12:31] Yes.

Michelle: [00:12:32] And in order to do real estate innovation, it’s not like you can take $20,000 and code something in your basement and come up with the next great solution to real estate. You often need to buy an asset or buy land or buy a home and use that as a testing ground for your product, and that costs a lot of money. And it’s really hard to raise that capital. And so, when you work with entrepreneurs about both connecting them to creative and innovative capital providers and helping them think through how they can structure their companies to attract certain types of investors who will help them accomplish both their impact goals and understand the level of risk that they’re taking. And so, and that’s, I think, something that it’s not completely unique to housing, but the environment of innovating in housing requires a different approach. The third, the third main area that we support them with is thinking about all the entrepreneurs we work with have a strong social mission to increase racial equity and or housing affordability and thinking about that intention and how they actually design their business to follow through on that intention in the long term. There is a real risk, particularly with technology and the financial services environment, for example, to unintentionally cause more harm than good. Like placing an innovation that, on top of a really inequitable and messed up system, can sometimes not accomplish those impact goals that the individual entrepreneurs are seeking. And so, we help them think about how to build their business model for long term accountability to keep them towards the impact goals that they have set out.

Eve: [00:14:17] So you host a cohort, you have a program every year, I don’t know how many years have you been doing this?

Michelle: [00:14:24] Yeah, so we’re in our second cohort now. We launched our first cohort in. So we run a cohort program, it’s a six months of intensive advising for a small group of entrepreneurs. We work with four to six organizations each year. We’re in our second cohort now. Our first one was, ran from 2019 to 2020. We graduated our first entrepreneurs on April 7, 2020, which is not the environment we were anticipating graduating to.

Eve: [00:14:52] Yeah, it sounds like you took a break pretty purposefully.

Michelle: [00:14:56] Well, we took a break purposefully to redirect our program. I also had a baby, and it took a bit of time off in between the two cohorts. So we’re now deep into our second cohort.

Eve: [00:15:06] Congratulations! Yes. And how does it work? You know, you select four to six entrepreneurs in one cohort and what is the selection process look like? How many people apply? What do they have to go through?

Michelle: [00:15:21] Yes, we look at about 150 applications each year. We have close to 160 this year and it’s a four-month application and diligence process. So how that works is we have a pretty what we intend to be an accessible application for the entrepreneurs. It’s ten short, intermediate or medium answer questions. And if we’re interested, we do an internal review, a little bit of looking around the website, looking at materials that sent us. And then if we’re interested, we invite them to a second application, or they provide more information on their financials and under upcoming plans for growth. At that point, if we choose to advance them, then we go through multiple rounds of interviews. So, we have we work with a team of graduate students from across the graduate programs at UC Berkeley who help interview the entrepreneurs. We also have an external selection committee that has a range of investors from impact investors, philanthropy, venture capital investors, traditional real estate investors who and experts in construction innovation. And so we work our selection committee to work with the entrepreneurs do these series of interviews. Once we get down to maybe our final 10 to 15, we start working with the companies to look at what type of work we may do together, since our program is, involves a significant investment of one on one advising, and we want to make sure there’s a good match between the needs of the organization and the advising we can provide.

Eve: [00:16:58] Um hmm.

Michelle: [00:16:58] So we spend the last month of our diligence process working with the companies on this. Throughout the whole process we are using a specific set of selection criteria that we’re evaluating the organizations against, that primarily looks at the quality of the idea they’re working on. Like, how creative is it and how likely is it to accomplish the equity and affordability goals that the organization has? We look at the strength of their business model as a product market fit and are they well suited to the capital environment that they’ve targeted themselves towards? Because we look at non-profits for profits, we don’t care we’re agnostic as to what type of company structure it is that we just care that it’s well suited to the capital environment, that it’s in the business structure, that it’s chosen. We can also just kind of look at the standard stuff at any early stage investor would look at around the team skills that they have in the leadership as well. And then the last part is really, well, how they fit with our program.

Eve: [00:18:02] So pretty rigorous. You must also be thinking about the cohort blend, or aren’t you? I mean,

Michelle: [00:18:09] Yeah, absolutely. I’d say we’re looking for entrepreneurs that will be one, like good participants in our program. Like active members of our cohort that will strengthen the community of entrepreneurs, and then we are looking for a certain amount of diversity of the types of problems that they’re working on. So, our 2021 cohort that we’re working with now, each of them is trying to address a pretty different gnarly challenge within the housing market. We think there’s some overlap and we’ve already seen this as opportunities the entrepreneurs need to work with each other. But we are intentionally selecting to pursue types of solutions that are different than one another and can build off one another.

Eve: [00:18:59] Tell me about the 2021 cohort. Actually, I know a couple of have interviewed a couple of the earlier cohort, but I’d love to hear about the new cohort and who they are and what they’re trying to accomplish.

Michelle: [00:19:13] Yeah, I am thrilled to talk about what they are doing and I’m excited. They’re really cool. So, we have two that are in the homeownership space. And so the first one is an organization called Black Star Stability. What they’re doing is to help restructure homes, restructure the financing on homes that right now are encumbered by predatory financing. And so they have built a business structure where they purchase homes that currently have land contracts on them or predatory lease to own agreements. So these are agreements where a family is paying a certain payment each month like a mortgage, but they don’t actually own title to the house, as you would on a traditional mortgage. And they’re often have been paying for 20 years, but have barely paid down any of their ownership stake. There’s really predatory fees and other things that hold them back. And so Black Star purchases these homes, usually in pools of these homes and then restructures them into traditional 30, 10, 15 or 30-year mortgages that end up saving the families. Both give title of the house to the families and save them hundreds, if not more than a thousand dollars a month. And so, the other home finance company that we’re working with is a group called True Footage. They have a new strategy for how to manage the home appraisal process that involves technology and addressing the labor structure of the home appraisal industry.

Eve: [00:20:49] That’s interesting.

Michelle: [00:20:50] Their primary goal is to increase the speed of appraisals and to reduce racial bias.

Eve: [00:20:55] That’s really interesting. We’ll see if it works.

Michelle: [00:21:01] Yeah, we’ll see if it works, I mean, we there’s a lot of things that are contributing to the racial bias we’re currently seeing in the home appraisal industry and a lot of that is baked into the history of racial segregation and ongoing racial bias. But we do see an opportunity for technology to support at least reducing the bias on the margin that is caused by the current appraisal industry, which is incredibly subjective. And I’m going to get these numbers wrong. But I think the current appraisal industry is over 85 percent white men right now…

Eve: [00:21:38] I would say that’s exactly what I imagined. It’s crazy.

Michelle: [00:21:42] And they are over 65 and no shade to throw to the white sixty-five-year-old men, including my father and my father in law, but that is not representative of the sample of the people who are currently seeking home appraisals.

Eve: [00:21:57] Right? Interesting. And then you have a couple more.

Michelle: [00:22:02] Yeah, we’ve got two models that are working with creative like shared housing type solutions. And so, one of those is called the Homecoming Project. It’s a project of an organization called Impact Justice in Oakland, California, and they are placing people coming out of long prison sentences. So, 10 plus years into homes, into renting rooms of homes in the communities that they would like to come back to after they’re released from prison. And it’s a, they’ve worked with 50 individuals so far and have incredible outcomes in helping the people through their program, secure long term housing and get a good start on the ground. So, we’re helping them think through their scaling strategy and seeing if they can access some federal resources into the program. And then the second organization in that category is a group called L.A. Room and Board, and they are using underutilized housing that’s adjacent to college campuses to house community college students that are struggling with homelessness and housing insecurity. And both those models combine the provision of stable housing with also a provision of services and wraparound services to support the individuals while they’re there.

Eve: [00:23:24] So these are these five companies, entrepreneurs, some of them, you know, there’s really only one really high tech one, right? True Footage.

Michelle: [00:23:33] Yeah, True Footage is the only high tech one. And also, there’s one more that I haven’t mentioned, which is a group called Trust Me that is building a new AI financial product and governance structure for community-based organizations to purchase and manage mixed income neighborhood trusts. And so these are trusts of rental property in neighborhoods, and they particularly are trying to serve community based organizations in neighborhoods at risk of gentrification to really purchase a large share of rental property in their neighborhood and maintain stabilized rental prices in that neighborhood. While that neighborhood may see increased rates of rental, increased rents and gentrification. But to your other question about technology? Yeah, True Footage is the only organization working with us this year that is pure tech model that’s seeking traditional venture capital. That’s flexibility has a technology angle to what they’re doing as well around how to communicate to the homeowners that they’re working with and streamline communications and streamline their mortgage processes. And there is everyone in the organizations working with some portion of technology in what they’re doing.

Eve: [00:24:56] That’s a requirement these days, right? It’s not the core of what they’re doing, which is really interesting because I think most people think of entrepreneurs and incubators as places that are all about high tech solutions. So that’s not what you’re doing here.

Michelle: [00:25:16] I will say it’s something that we we knew that going into this, we wouldn’t work exclusively with technology entrepreneurs. Because, as we often say, on our team, you don’t live in a virtual house. Like there’s a real physical nature to housing and to this year’s cohort, in particular, has less of a technology bent. But that really came from our focus this year on trying to find entrepreneurs who are solving racial equity concerns coming out of COVID 19. Like the areas of inequity that were exacerbated by the COVID 19 pandemic. And just the organizations we’ve ultimately chosen are working on really gnarly problems. We think the innovation that they’re working on is scalable despite not having a pure software platform, and it has a significant opportunity to impact individuals on a deep level. I think as we’ve seen, a lot of the technology and innovations tend to be more on the surface and the impacts that they’re able to have.

Eve: [00:26:22] It’s really interesting. So, tell me about like some success stories from the first cohort.

Michelle: [00:26:30] Yeah, happily. So, a couple of the organizations we’ve worked with, so and one of them that had a more pure technology angle and where I think technology is really suited to the problem they were trying to solve as an organization called Esusu. And so, they provide data and analytics to tenants and property owners that improve tenant credit and financial well-being. And their hallmark platform product is a rent reporting platform that has overall allows tenants to record past and current rental payments to the credit bureaus, in order to positively influence their credit scores. And overall, across all of the individuals on their platform they have increased credit scores on an average of 50 points over the past year, with many of the individuals on their platform having credit score increases that far exceed that. And they have grown exceptionally over the past couple of years, and they now have at least 30 percent of the largest landlords that are on the National Multifamily Housing Council list. 30 percent of those landlords are now using Esusu’s rent reporting platform. And so, they’ve been able to scale pretty quickly and actually just raised a large round of financing that’s going to help them grow to the next phase.

Eve: [00:27:54] Wow.

Michelle: [00:27:56] So we’re, yeah, they’ve been really successful and we think it’s an all star team that’s working on that. And we looked at a lot of rent reporting platforms and when we were doing diligence for our last cohort and found that Esusu had, for us, the perfect combination of scalability and strong impact focus in what they were trying to do. And strong racial equity angle to the work.

Eve: [00:28:18] So who’s who’s on your team and how do they help move these ideas? Or, you know, early start ups to a functional business model like this that might scale?

Michelle: [00:28:31] Yeah. So we, I, we do work with organizations that already have a core business model in place because the advising that we help them with is really an accelerant. Like we’ll help them with their business model around the edges. And then with their policy strategy, their capital fundraising, what supports it and that and their long-term accountability, and then also open up our network to them. And so in order to really open up our network to them, they have to be at a stage where they’re ready for those conversations and partnerships. And so, our internal program team is small. It’s really me and Carol Galante, the faculty advisor at the Terner Center and the founder of the Turner Center. And then we have a wide network of coaches who some of them we pay, some of them have donated their time pro-bono, who are leaders in the real estate innovation industry, and they spend time with their companies as much as two hours a week, helping them identify and sort through their priorities during the program and really help them get in front of key people in government that can help them secure certain partnerships. Get them in front of industry experts that other industry experts that can just take them to the next stage in their organizations analysis about how they fit into the regulatory environment. For example, how to structure a partnership with a large bank. So, it’s really through this kind of intensive work where we sit down with the entrepreneur and get a full list of all their biggest challenges and what they want to do. We pick out like three or four of them and really help them with and we get on the phone weekly and talk through them with that mix of like advising, structure that helps with their decision making if they want that and really, really network connections. And so, an example of a couple of our coaches. One of them is, they kind of range in experience. So, we have a woman named Molly Turner, who helps start the policy team at Airbnb and now works on faculty at the Haas School of Business and advises start-ups, both on scale strategy and how to work with city governments. We also have a coach, Brad Blackwell, who used to run homeownership growth and policy at Wells Fargo and is now retired, and he supports our companies that are working in the mortgage environment. And so that’s just two examples of some of our other coaches work professionally as real estate investors and for a mix of non-profit, affordable housing and traditional real estate and are helping organizations on that type of work. And then we have in addition to those coaches that get on the phone for a couple of hours a week. We also have a wide network of other advisors that we can connect our companies to for specific projects or goals. And those often have a strong real estate expertise, but not always. Some of them bring their expertise and non-profit scaling strategies specifically, which is important to some of the organizations, and they just know how to apply that to specific companies.

Eve: [00:31:57] Ok, so, you know, it’s not always smooth going when you build something like this, you must have also had some failures. What have you learned that you might do better?

Michelle: [00:32:08] Oh so much, Eve. We’re constantly innovating ourselves. I mean, we’re you know, well, we’re a program that was established at an established university. We tend to view ourselves as a little start-up ourselves in constantly getting information and feedback from our companies and from our advisors and innovating as we go. I think some of the biggest changes we’ve had over the past were just in our first two years. Our first year, we had a heavy in-person component. And before COVID hit, we had already realized that we needed to reduce the in-person requirements and in-person time for our companies. Our founders are all over the country. They are already working.

Eve: [00:32:54] Yeah, that’s really hard.

Michelle: [00:32:54] Some of them are parents. And so, we were already transitioning our model to be more virtual, especially for the advising and kind of like monthly cadence check ins and then just kind of more targeted in-person community building. More retreat type space for our founders when that was needed. So that’s one big thing that we learned over the past year. Another was that we switched that part that I mentioned that the last month of our diligence process is about figuring out how we work together. That’s in addition to our diligence processes this year. We found that allows both to make sure that our partnership with the company, that we’re coming in with really clear expectations on how we’re going to work with each other. And it also lends itself to our intensive one on one advising model. We’ve invested more resources in that one on one advising this year. So, it’s just really important to us that the coaches we’re working with are getting to know the companies and really feel like there’s a mutual match there. And so, as we’ve transitioned from these kind of bigger in-person events to more of this kind of an intensive one, that’s the biggest change. We also have revised our selection process and criteria as we continue to learn about the information that we need. I think we’ve, we’re really happy with the selection process this year and imagine keeping that mostly intact in the next couple of years.

Eve: [00:34:25] And then, I have to ask this question. You’re a non-profit, someone has to pay for this. So who funds you and why?

Michelle: [00:34:35] Yeah, so our largest funders to date are foundation funded. So, our major founding partner was the Chan Zuckerberg Initiative. And we’ve also brought in money from the we also partner with the James Irvine Foundation here in California and a couple other West Coast foundations that we have a tech angle to their work or come from families like family offices that have that do real estate work. And the main reason that most of our funders have at some point worked or received pitches from some of these start-up innovative housing ideas, and they see the same need we see to one, provide specific type of coaching to these entities to navigate the regulatory and finance environment. They see the same challenges we see that these companies face, and so they see the need for advising and two is they honestly want help and understanding which organizations they should support and work with. They see value in the diligence process that we do in order to select the companies that we work with.

Eve: [00:35:47] Interesting. Yes.

Michelle: [00:35:47] The kind of the housing expertise that we bring to that diligence process is of value to them.

Eve: [00:35:54] It sounds like you have good partners.

Michelle: [00:35:57] We do have good partners and they’ve also been great partners in helping us improve both our program and our selection process as we’ve grown.

Eve: [00:36:05] And then I just want to switch to you. How did you find your way to this role? What’s your background and how did you land here?

Michelle: [00:36:14] Well, I’ll say it. It’ll maybe sound like it makes sense perfectly, but you think everybody knows it? That’s not always, always how it feels. So I’m originally from the Detroit region, I grew up in the suburbs of Detroit, and both sides of my family have been from Detroit for almost a hundred years. And I really, I grew up, my father worked in real estate, and I grew up understanding the physical nature of the divide in Detroit, primarily racial divide. My suburb was overwhelmingly white upper middle class. And you would drive six miles down and cross that Detroit line. And the change in the quality of housing stock was incredible across that boundary, from a well strewn sidewalk to one that was completely broken. And so I started my career educational path studying urban policy to try and understand the forces that shaped the inequity that I saw that was so clear to me when I was growing up. And my first few jobs were in economic development. So I worked in the non-profit sector for Workforce Development Organization for an organization that invested in small businesses that were operating in low income communities. I then had the opportunity to spend several years with the Bridgespan Group, which is a non-profit philanthropy advisory firm. And while I was there, I really got to take a step back and think about the myriad of factors affecting urban development in the U.S. and somehow just kept finding my way back to housing. I had the opportunity to work with a couple of housing focused clients and just kept finding that housing was this nexus of social equity around issues of race and financial markets and in place that just became more and more interesting to me. And I frankly became frustrated at the limited tools available to philanthropy and even non-profits that wanted to make a real change in housing. I was working in San Francisco, and at that point it was almost already about half a million dollars to build one new apartment subsidized apartment in San Francisco, and that number is continuing to rise. And I had a full philanthropic client who are trying to advise to work in housing and say that they felt like investing in housing was a big black hole that was going to suck up all of their money. And part of them wasn’t wrong.

Eve: [00:38:47] Yeah.

Michelle: [00:38:47] And so I took that point and I went back and got an MBA at UC Berkeley and really wanted to understand the real estate financial markets. Like what was governing the investment markets within housing and what were some creative solutions that could help push us forward in this egregious policy. And I was at UC Berkeley while the Terner Center was thinking about expanding. I had just had this initial partnership with Chan Zuckerberg Initiative and thinking about expanding its innovation work. And so I got to help build out the housing program and then step in to lead it when I graduated. So, at this point, I feel like I get to draw on both my experience and philanthropy investing in non-profit advising, but also draw on my strong interest in working on solutions that are interacting with the traditional capital markets in ways that can influence at a more significant scale.

Eve: [00:39:44] It sounds like a perfect landing place for you. So tell me one more question, and that is how do you plan to grow the Housing Lab? You have small cohorts. This is the second one. What do you think it’s going to look like in five or 10 years?

Michelle: [00:40:00] Yeah, well, we’ve clearly seen through our application process the past few years that there are way more highly qualified companies that want the services that we offer, then we have the capacity to serve. And so we are thinking over the next few years about both how we can grow our program to serve a larger cohort and then also how we can think about serving the broader ecosystem of innovators out there. Like, what type of network can we build light or touch advising to serve a broader group? So, I can imagine us growing to have kind of a second tier to the work that we do that can serve a broader number of innovators. And I, we also are in conversations with several partner organizations to explore establishing more financial vehicles that can fund innovation. Specifically, there is a gap for many of the organizations that we see, and I’m sure you’ve seen this too. Through the innovative financing that you do is that sometimes companies can find that money for that first pilot, but then they may need five or 10 million dollars for the next version of their pilot. They can’t get that from the traditional bank.

Eve: [00:41:20] Yeah, yeah.

Michelle: [00:41:21] But then they can’t go back to their philanthropic investors because that’s too much money concentrated in one project. And so, yeah, we’re working with several of our partners to explore what our different creative ways we can have to fund some of these more innovative models. And so, whether that’s something that we build into our Housing Lab growth or something we do in partnership that’s housed at one of our partner organizations, but I definitely see that something that we want to make progress on in the next couple years.

Eve: [00:41:47] Well, I can’t wait to see where this takes you. I think the ten companies so far are pretty fabulous. So, I’m really excited to see what happens the year after and the year after and count me in if you build something bigger. I think that networks around creativity in the housing market don’t seem to exist and they’re critical.

Michelle: [00:42:13] Yeah, I mean, you’re coming back to one of the main reasons we started this program is we were just hearing from entrepreneurs that they didn’t feel like they had peers. And so, building a peer support network where people can bounce ideas off each other and get feedback and input and share each other’s networks are really important.

Eve: [00:42:32] Yes, it’s pretty fabulous. Thanks so much. Thanks so much, Michelle. I really enjoyed talking to you. Can’t wait to see what happens next.

Michelle: [00:42:40] Thank you, Eve. Thank you for your time.

Eve: [00:42:47] That was Michelle Boyd, who runs the Housing Lab at the Terner Center for Housing Innovation. Just like the businesses she serves, Michelle is growing a business too. The Housing Lab is a mere start-up, having hosted two cohorts, a total of 11 companies to date. To make a significant difference, Michelle knows that she must expand the Lab’s offerings. I can’t wait to see where that takes her. You can find out more about this episode, or others you might have missed, on the show notes page at our website RethinkRealEstateForGood.co. There’s lots to listen to there. 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.