Podcast Transcript
Speaker 1:
Welcome to Real Wealth Real Health, the show that empowers you with insights, information and inspiration to achieve your version of financial wellness. Learn how to balance living a full life today with planning for the future. This podcast is brought to you by Alpha Investing, a real estate centric private capital network that provides exclusive investment opportunities to its members. And now, here are your hosts, AdaPia d’Errico and Daniel Cocca.
AdaPia d’Errico:
Hello, and welcome back to another episode of Real Wealth Real Health. This is AdaPia d’Errico, and today we are having a conversation with Jillian Murrish. Jillian Murrish has broad experience in institutional investment, as an entrepreneur and specifically in the financial technology industry and real estate crowdfunding. I am honored to call Jillian a close friend, and one of the rising stars in the financial technology industry.
AdaPia d’Errico:
Jillian is a Co-Founder and Chief Executive Officer of Pier Asset Management. Prior to founding Pier, she was the Executive Vice President of Capital Markets at Patch of Land, one of the earliest real estate crowdfunding platforms, where she built one of the first institutional whole loan sales programs in the real estate marketplace lending industry. And before this, she worked with technology clients in the Capital Markets group at a leading middle market investment bank, Houlihan Lokey.
AdaPia d’Errico:
With an eye for trends in the future of finance, she’s paved a path of excellence and integrity throughout her career. Her knowledge and experience and her openness in sharing her story and insights are invaluable for our listeners and to anyone who seeks to understand a little more about the mechanics of finance, and how this relates to their own goals and knowledge and education around building a healthy financial foundation.
AdaPia d’Errico:
Hi, Jillian, welcome to the podcast.
Jillian Murrish:
Hello. Great to be here.
AdaPia d’Errico:
I am so excited to have you on as one of our first guests, not only because I’ve known you for so many years, but truly because of the wealth of experience and inspiration and knowledge and just expertise that you have with everything ranging from investing to real estate to all the alternative assets under the sun.
AdaPia d’Errico:
So it might be a little hard for us to hone it in, but we’re going to try because I want you to tell the world everything that you know. To get started just to level set with everyone who’s listening, tell us about yourself. Tell us especially about your professional background so that people can get to know you as the professional that you are.
Jillian Murrish:
Certainly. Well, thank you for that kind introduction. I will try to live up to your kind words. So looking back at, I guess if we start you said on the professional side, I was a very young entrepreneur. So I started my career building a business around cell phone accessories, so we mainly focused on cell phone cases. I built that business and sold it, and that was really my first job was running my own company.
Jillian Murrish:
I left that and said, what’s next? And what I realized my favorite part about that entrepreneurial venture was actually raising the capital for the business and then selling and negotiating the sale of the business. One of my mentors, for good or for not, recommended that investment banking was just that, raising capital, selling, buying businesses, et cetera.
Jillian Murrish:
And so I joined at its infancy the growth equity practice at Houlihan Lokey, a middle market investment bank. I joined the headquarters here in LA, we built that practice where we were fortunate enough to raise Series A’s, B’s and C’s for later stage technology companies. It was really during my time in the capital markets practice at Houlihan that I really learned how to build businesses in a sustainable way. And then how do you build out headcount? How do you track expenses versus revenue? How does the venture world see these types of businesses? What metrics matter? Which founders built better businesses than others? What did it take to really build that big business?
Jillian Murrish:
I got to see institutionally funded companies versus founder bootstrap funded companies. I think that was where I started to shape my vision of how I thought it was best to build businesses. So after spending time there, I was itching to get back to the operator side. I joined a FinTech company in Los Angeles called Realty Mogul. That firm was actually the first to do real estate equity crowdfunding or I believe they claim to be one of the very early entrants in the space.
Jillian Murrish:
I got connected to them through one of the venture partners who had led their Series A, and it was there that I really started to explore the world of alternative investments, but saw it through an interesting lens of how do we create financial products for the investor? How are we thinking about what people want to invest in and why and what impact does that have on people’s lives? And so, during that time at Realty Mogul, I was very focused on equity investing in real estate.
Jillian Murrish:
I had a vision for a type of business that could be productive on the debt side of real estate crowdfunding. I started doing research on that and came across a firm called Patch of Land which actually that’s where AdaPia and I met. I joined that firm actually, because of you and I think you know that. You were my tipping point. It was an interesting business model where it was similar to the consumer models of the world like Lending Club and Prosper, but it was doing peer to peer online lending in the real estate space.
Jillian Murrish:
So I joined Patch of Land relatively early on and built the capital markets practice, really from the ground up. When I had joined, the firm was focused on peer to peer lending where it was $10,000, $20,000, $50,000 checks at a time that were gathered together to make one loan. And to scale the lending side of the business quicker, I built out the institutional back end.
Jillian Murrish:
So I went and acquired our first warehouse lines, built out a whole loan sale program with a behemoth billion dollar credit fund, purchasing loans in a forward flow manner from the business which really helped accelerate the growth of that firm in multiple magnitudes per year. So it was a blast and there was really where I saw how the credit market were working and what was efficient in the credit market and really what wasn’t.
Jillian Murrish:
It was during my time at Patch of Land that I came up with an idea for a way to invest capital in a way I thought was more efficient than what I was seeing out there at the time. And I saw that there were pockets in this alternative lending space that really lacked liquidity, which meant that if you couldn’t come in and bring capital to those places that lacked liquidity, you could make outpaced returns without having to increase the risk you were taking.
Jillian Murrish:
And so I decided to leave Patch of Land to launch a fund where we would do that and act as a liquidity provider in the alternative lending space, and go in and buy pools of loans in the secondary market, or provide warehouse lines to lenders. And we did just that. So I started my current company, it’s called Pier Asset Management. That’s P-I-E-R Asset Management, two years ago; two and a half years ago, actually – time flies. I’ve been building this business ever since.
Jillian Murrish:
I teamed up with an incredible co-founder, Conor Neu, who was in the fund management space in the alternative lending vertical for five to seven years prior to starting this firm. And he had a really unique skill set in fund management, and I had a unique skill set by actually sitting on the operator side. And we teamed up and started this firm. And so that’s what I’m doing today is taking investor capital and then investing it in the credit sector.
Daniel Cocca:
Super interesting and really cool story. We always love to chat with other entrepreneurs. I think a lot of our investors are entrepreneurs too, so they can kind of associate with all the things that you’re saying. One thing that stuck out to me that I think might be an interesting thing to comment on is this idea that the movement rather to institutional capital kind of what you felt necessitated that.
Daniel Cocca:
If you kind of look back to why crowdfunding exists and kind of being a product of the JOBS Act of 2012. And the idea being that there are a lot of average accredited investors who want to participate in these types of transactions that were previously either off limits to them or hard to find or unavailable for any kind of variety of reasons. It seems like you guys started out peer to peer with these individual investors, but then kind of quickly realized the larger capital that comes with institutions kind of made more sense. And so I’d really just like to get your thoughts on that kind of progression, as you’ve thought about it in that particular moment.
Jillian Murrish:
Sure. So I think at the time, the shift to bringing more institutional capital on board is really attractive from a growth standpoint. So it’s the quickest way to scale revenue because you have to be offloading these loans somewhere. And if you’re selling them to accredited investors, it just takes so many more individuals, and so much more growth and expense to build that investor base than simply bringing on $1 billion credit fund that can fund 100% of your lending activity in a given year.
Jillian Murrish:
And so being within the four walls of that firm, Patch of Land, that was a very attractive route. I think if I go up 30,000 feet and look back down at that type of business model, I see a really interesting opportunity that can arise when you use institutional capital in a way to actually allow individual investors to diversify further than they would have been able to had you not had the institutional firepower behind you and behind that lending engine you have.
Jillian Murrish:
So for example, if you had $100 million worth of peer-to-peer, individual accredited investor demand for your lending product in one year, you could offer them $100 million dollars worth of loans, say that’s 1,000 a month. Well, if you have an institution that can increase that demand two-fold, maybe you’re having the institutions buy up half of individual loans, and then you can put twice as many loans out on your platform.
Jillian Murrish:
So, by the time that I had left Patch of Land, we actually started using that model where we would use institutions to take out parts of loans and then fund the remainder with accredited investors. And it just allowed for much more diversification and more loan offerings that would have been possible without institution. So if I look back at the shift from accredited to institutional capital, and think about how I would do it differently next time, or focus harder in one area, I think it would be marrying the two in a more tandem way than I think I did at the time.
Jillian Murrish:
But there are businesses being built out there today that are doing and trying to focus more on that. Because I do think that the accredited investor really has a lot of stability in our marketplace and can provide longer-term horizon capital, be more flexible, do more of what I call make sense transactions, and they’re not bound by credit facilities that a bank is putting on and big credit funds.
Jillian Murrish:
I think people talk about it as that shift from accredited to institutional. And that certainly happened at many, many lenders. But I think that the platforms that tried to do it more in tandem or have it be a more symbiotic relationship, I think we’re doing it right, in my view.
AdaPia d’Errico:
So I’m going to jump in here, because I was just thinking about, well, because of course we worked together and when I started there it was very much, “let’s go for all the individuals”, like go the peer-to-peer model. Seeing it evolve with you and allowing that to scale, which really works for debt, because it’s such a fast transaction and such a fast turnaround.
AdaPia d’Errico:
Is that what you’re seeing? And this is a little bit of a different question for you because you’re doing different kind of credit transactions now, but I want to dig in a little bit into the credit side because you’ve become so passionate about it that you founded an entire firm on this. Does that work for your business as well? Or is the individual accredited investor doing make-sense transactions? Do you see that only really working in let’s say, real estate crowdfunding or is that also working in your space?
Jillian Murrish:
Oh, yeah, that’s a great question. So in our space, it certainly is working. We span across consumer lending, small business lending and real estate debt within the fund that we mostly operate here. Accredited investors are able to take part in that fund vehicle alongside large institutions like foundations and endowments.
Jillian Murrish:
We have a multi-billion dollar registered investment advisor, a wealth manager to invest in the same vehicle that a dentist from Seattle, Washington invests in. And so we very much adopted that model internally where we can be using institutional capital alongside and with the exact same terms as accredited investors in our fund.
Jillian Murrish:
So, once again I think in building businesses and how I think about building businesses, you want a very diversified base of customers and clients. And so when you’re running a hedge fund or credit funds like myself, our clients are our investors and having one or two really big clients, I don’t think builds a very stable business. I would much rather have 200 clients that are diversified with different liquidity needs and different events happening in their lives, than simply one or two clients that can go away and take your whole business with it. Yeah, that’s my view there in terms of building successful businesses and accredited investors participating.
AdaPia d’Errico:
Right. This is great, because you actually pivoted into the question that I wanted to ask you. We’re always on the same line of thought, which is your biggest lessons and learnings about building businesses in the finance and the investment industry because, as I’ve seen you develop and grow your career and grow this company with Pier, you’ve taken bits and pieces from all the past things that you’ve done.
AdaPia d’Errico:
And you’re a small business like us, like Alpha Investing; we’re small. We’re not a big company running really high overhead or a ton of employees. But we do our volume, and you’re doing a lot of volume with a small team. So I’m curious what you learned along the way that allowed you to do what you’re doing in a small business way, but yet operating on big numbers.
Jillian Murrish:
Yeah, yes. So I think when I heard that question initially I have a few trains of different thoughts. So I think the first one was actually … Or the first train of thought I went down was you have to know what you’re an expert at, and what you’re not. And in the areas that you’re not, you need to partner with folks who are. And so when I started this business, I knew I was an expert at understanding the way in which the alternative lending capital markets ecosystem fits together. And where are their gaps of lack of capital that I can put money in, structure it correctly and get outpaced returns?
Jillian Murrish:
That’s what I know I’m an expert at, but I’ve never run a credit fund. I have not even worked at a hedge fund. Never once. So what did I do wanting to start this business? I went and found a partner where that is all he’s done for the last 18 years like that is it. And so, he’d literally been at hedge fund or running his own credit fund for I think it’s 17 years, maybe 18.
Jillian Murrish:
So, when you look at a bunch of these other businesses in the space, many of these FinTech companies that started off and some did well, some faltered, I think a big problem was that the founding team didn’t understand or wasn’t willing to understand their core competencies versus what that type of business needed. So really having three technologists founding a alternative lending company, in my view, probably is not the most productive way to attack that. You should probably have one credit founder, one technologist, and then maybe one broader capital market type finance person or an expert at that specific asset class, right?
Jillian Murrish:
So I think, building businesses is the team and understanding your core competencies or your gaps and just building from there. There’s a very attractive opportunity in this alternative asset space to build big businesses in terms of revenue, in terms of assets, in terms of volume of product with a smaller, more nimble team. If you can create repeatable processes and make everything efficient with technology, even as a finance shop, you can really cut down the number of back end folks you need to be doing operations and processing.
Jillian Murrish:
And with that, you can actually start out building a business that’s profitable within the first few years, which is quite different than the venture capital backed model where you do need $5 or $10 million to pump into technology in the first year alone, right, a $5 or $10 million spend in one year to build that type of business. You’re constantly running against your time clock of when you run out of capital, when the next capital raise has to happen at the equity level of the operating company.
Jillian Murrish:
In my view, in building a business like that, there are certain spaces that certainly warrant that. So for example, like consumer facing apps where you need a network effect, like a Facebook or an Amazon, you have to have mass adoption for the business itself to actually work. If Facebook didn’t have mass adoption, the business doesn’t work at all.
Jillian Murrish:
The beauty of this business model where you’re managing capital and investing it in credit or for you managing capital, helping people gain access to equity investments in real estate, the great thing is you can do five projects, just as well as you can do 100 projects in one year, and your business works just the same as long as you scale your costs. There’s a flip side to that even actually by keeping things smaller and tight, you may have a greater advantage.
Jillian Murrish:
So I think it’s a different business model. And the space that we both operate in lends itself to being lean and mean, and you can scale in a profitable manner and take that type of business model. Whereas if you’re Facebook or an Amazon the mass adoption really does lend itself to needing to invest heavily in technology year after year, and go into that venture backed model, which in going off on a tangent slightly, some of these peer to peer businesses I think could use a bit more of the profitable growth model that was left in the dust, which typically is what specialty finance companies operate at, right?
Jillian Murrish:
You grow profitably with a focus core competency and what you’re the best at, where they think many of those tried to build as if they were a technology company only. And that led to some problems and some falling out of earlier platforms. But I think we’re seeing staying power of those platforms that built on the right foundation. For example, your business – you built slower with your exact core focus of what your expertise is, and here you are rocking it and other firms aren’t right? We’ve seen shakeout and fall out of other firms I think because of that mismatch of the growth model.
AdaPia d’Errico:
Yes, and you know from our time together, because I was employee number one at Patch of Land, I’m that crazy cat that just says okay, let’s go for it. Real estate is such a different business. It’s not, in my opinion, a technology business. The beauty, though of let’s say crowdfunding from the tech perspective, because it has the legal perspective with the JOBS Act, and then it has the tech perspective of bringing things online.
AdaPia d’Errico:
It really brought to the attention of the industry, the need for streamlining and efficiencies and transparency because of both the consumer model and the technology that forced people, incumbents as well because a lot of incumbent real estate firms as well you’ve seen them like up their game with their marketing.
Jillian Murrish:
Yes.
AdaPia d’Errico:
With their websites, they have investor portals, but it’s in service to the core business of real estate as opposed to this idea that I mean, I drank that Kool-Aid in the beginning too where I thought whoa, yeah, let’s do it. Technology is going up-end the real estate industry. And it’s not.
Jillian Murrish:
I like the phrase tech enabled, like we’re enabling the real estate industry to perform better by frankly, bringing it up to the 21st century. Like you said, ancillary businesses like servicing businesses who service real estate loans, many of them were run off of paper files until five years ago. I mean, that is wild, right? I think a lot of it is climbing and bringing the real estate industry into our century.
Jillian Murrish:
And then enabling and helping make the businesses more efficient. I do think that one of the areas that we’re never going to replace humans is the investing in the equity of commercial real estate properties. That is a bespoke skill set where you’re analyzing very particular individual things and teaming up with humans and people who’ve been around and know that exact block corner of the city and know in the last five restaurants is cycled through that piece of real estate, and partnering with those experts I think is crucial and can’t be replaced.
Jillian Murrish:
And so I think that leads to another topic of building businesses and how I view this finance investment firm space is that we really have to be particular about those that we partner with. And it goes down to understanding your expertise. And for me and myself and the way that we invest out of our funds, we go invest in lenders who have lent for 30 years in the real estate space, and that is the expert we go to, right?
Jillian Murrish:
I think synonymous on your end, you are going and working with sponsors who have put hundred million dollars to work in one specific corner of a city and they know exactly who’s been in every building, who’s coming in and doing the build out, et cetera. I don’t think that can be replaced with technology fully.
AdaPia d’Errico:
Right. Right.
Jillian Murrish:
It can be enabled and made sharper.
AdaPia d’Errico:
Yes, exactly. They know the ins and the outs. What I’ve noticed too, with the sponsors, is that they buy properties off-market. And a lot of times they fall into properties, let’s say, because maybe they were the third bidder and the first one fell out. And there’s all of these, I don’t know if you want to call them politics, but its relationships. It’s being there. And it is, like you said, it’s like one corner of one city is very different than another corner of another city. And so with that kind of expertise, you can’t replace it with technology, though you and I have both seen the data side.
Jillian Murrish:
Oh, we tried.
AdaPia d’Errico:
Yeah, we tried. But I think where the tech actually really helps everyone has been on the data side, just the amount and the transparency of data that’s coming available. I mean, it costs a lot to have access to it, but it is there. And as cities take better data, and I’m talking about real estate now and for your business, it’s all data driven on the consumer and this lending side. I mean, without those numbers, it’s like you’re flying blind.
Jillian Murrish:
Yeah, and, for example, in consumer lending when we’re pricing out a portfolio here, our chief investment officer will take 400 to 1,000 data points into account when analyzing and pricing up a loan. That’s consumer lending. The amount of data available is incredible. And yet it’s a human brain creating the pricing model, looking at the portfolio overall, factoring in qualitative factors on top of quantitative factors and then pricing out the correct price to purchase portfolio.
Jillian Murrish:
So that availability of data allows the human underwriting to be that much more sophisticated. I think you’re right, and it’s been incredible. There’s HouseCanary and I’m sure, there are other platforms that you use for your real estate data, but I know there’s a plethora.
AdaPia d’Errico:
Yeah, there’s a lot even like the basic ones like COSTAR and then I really like to follow John Burns – they focus more on the single family rental space, but that single family asset, because it is the substrate of American living, that data is really important because we might be looking, let’s say at migration data for jobs, like people moving to different areas, and where are people going? There’s this migration patterns, and like they’re following the jobs, and the companies are following cheaper real estate to some degree.
AdaPia d’Errico:
It really is these interesting like mini cycles, more like spirals that the data tells a really interesting kind of story. But I personally find the single family data set really interesting because it also ties into what behavioral economics and what is the consumer doing, and how are they living? Even suburbs are completely being reimagined now. They’re not what they used to be back in the ’50s.
AdaPia d’Errico:
There’s a lot of, oh, I don’t know, like shade if that’s the right word. But suburbs don’t really have the best connotation but now suburbs are being developed out as mini, all-encompassing community so that people don’t have to leave because so many people can work from home now. And it’s totally shifting the way that people are living in a city, who’s living in a city, and the way the demographics are moving. Anyway, I think it’s really fascinating.
Jillian Murrish:
We fully agree. We have dashboards up in our office of many charts and data sets that feed into them. And we are constantly using that type of information to make our investing decisions.
AdaPia d’Errico:
Well, yeah, because you’re investing in loans that are basically people’s credit cards and business loans. That’s driving so much of the economy. So you have really early indicators on sentiment.
Jillian Murrish:
Oh, yeah, and it’s critical that we stay on top of that. Something interesting in the way that I view the credit space today and I’d be curious to hear your thoughts on this. But the way that we’ve been analyzing the credit market is that we’re certainly in a later inning. I don’t believe anyone would debate me on that.
Jillian Murrish:
Because of that, the investing opportunity, some could say, oh, it’s holding cash. If you held in cash the last five or six years, you would have missed out on some of the best returns in the S&P 500. And you can’t predict that, and people were saying even five years ago, we were getting toward the tail end.
AdaPia d’Errico:
Yeah.
Jillian Murrish:
My view is it’s incredibly difficult to time the bottom or the top. And so what do you do in these times? I say opportunity doesn’t go away. I say it changes. And so the way that we’ve changed our investing activity at Pier is we look at shorter duration opportunities. And that’s how we decided to approach this timing in the market, or the time we are in the market cycle.
Jillian Murrish:
And by doing that we can be able to move to cash quickly, to take advantage of illiquid asset when the downturn does occur. So that means for us, instead of investing in 10 year type of credit, we’re investing in 12 months or six months. I think once again it lends itself well to certain types of projects.
Jillian Murrish:
In the equity real estate space, I would be curious to know what things you’re seeing that are interesting, and where you’re focusing versus not because during this time, like we said, the opportunity to invest does not go away. There are certainly ways to capture the market cycle and invest smart in equity real estate today, no doubt. And I’d be curious, are you guys focused on a certain sector lately or is there something that is a theme you’re capturing?
AdaPia d’Errico:
We’re really focused on multifamily. It still drives a lot of business and it’s still very much in-demand and a lot of that has to do with essentially the decreasing ability for people to buy the home that we were talking about, the single family home. That phenomenon hasn’t changed.
AdaPia d’Errico:
So even though in the last five years banks have loosened up on the down payment amounts, for a while there, like it had to be 20% or you could not get a mortgage. Even though that’s loosened up a little bit, there still is the issue of rising living costs. Essentially, if your costs are so high, there are student loans involved, there’s all this credit that you know so well about, it’s really hard for people to save money for a down payment, even if a down payment is 5%.
Jillian Murrish:
Yeah.
AdaPia d’Errico:
Because the price of everything is going up. So, 5% of 200K 5 years ago, but now that property is going to go (sell) for $500K, $600K. So you’re getting further and further behind, and actually that’s one of the reasons that people are actually driving into smaller, even tertiary markets to buy a home, because it’s the only place that they can afford to buy home if they want one. So multifamily remains really strong.
AdaPia d’Errico:
We are looking mostly at Class B, some Class C. I’m actually going to let Daniel jump in here with some of this stuff, because he’s the one that works mostly with the sponsors. And the second category that we’re super focused in is the senior living and assisted living care category.
Daniel Cocca:
Yeah, so just come on top of what you just said, AdaPia. I think there are larger macro trends that we find to hold true, and as the market changes, we’re always opportunistically looking at different asset classes and different deal types and markets and what have you. But we circle back really to common themes. One is that people are renting more than they’re buying, they need places to live.
Daniel Cocca:
Particularly coming into what many folks believe will be a recessionary environment, workforce housing in particular is expected to remain strong during any type of recession like environment, right. And then on the senior housing side, the population’s aging, people are living longer. And we’re still six, seven, maybe eight years out from baby boomers like formerly entering assisted living facilities.
Daniel Cocca:
Despite the fact that there’s been a lot of development work going on in that asset class, we’re still under supplied, and particularly in the senior housing space, the types of projects that we like are the ones that are currently owned by the non institutional investor, the mom and pop, right? It’s a group that maybe has a 50 to 100 unit assisted living or memory care facility, and maybe they’ve owned it for 20, 30 years or so and they really haven’t put into place the institutional kind of management that some of these larger groups are able to do.
Daniel Cocca:
The trade off is that there’s still a lot of inefficiencies at that level. And so if we can come in, acquire something at a favorable basis with some upside that comes from better management, that maybe comes from the result of some interior renovations and upgrades, that comes from repositioning of the property in the marketplace, we think there are opportunities to kind of achieve that at Alpha that we’re looking for.
Jillian Murrish:
Yeah, yeah. Great.
AdaPia d’Errico:
So I want to spend the last few minutes on something that’s near and dear to my heart, which is, well, financial empowerment, probably why I started working in banking when I was 18. I had it pretty set in my mind that it was important. Yes, it’s crazy. I just gave a new keynote and I was telling the story about I started when I was 18 and then when I was 38 I kind of hit what I felt like was like the pinnacle of this financial career before really jumping into this smaller business side.
AdaPia d’Errico:
We’re doing this with Alpha Investing and it was kind of weird to think that that’s already been 20 years. But anyway, my personal values, I know them. I have very strong personal values, not just around financial empowerment, but also the people that I work with. Hence Alpha Investing, hence like you and I are still in touch. What are some of your personal values and goals and how have they evolved throughout your career?
Jillian Murrish:
Oh, I love this question. So when Conor and I set out to start Pier Asset Management, we sat down and started having what I called were co-founder deep dive. And so we would talk through this. That was what I decided was the most important factor in a co-founder outside of just technical knowhow, and so he fit the bill from a technical standpoint. But did we have those same principles and values to grow a business in a way that was harmonious to our work day that flowed well into our home lives.
Jillian Murrish:
And so when we set out to start this business, we put together a founding principles book that we wanted to live by and wanted our employees to live by. Really, they’re very simple, and they developed over the course of my career and I’m so grateful I had the opportunity to put them all in one cohesive kind of list, and really try and stay true to that in this business venture and fix them up along the way.
Jillian Murrish:
I can list them off quickly. Number one is be good. And that’s operate with social and environmental awareness. The other one is work with a quality talent. And this one we’ve touched on a bit during our talk, but the way that I like to define a quality talent, and what we look for here at Pier is to work with a team of what we call smart creatives. It’s a term that we took out of the book ‘How Google Works’. Have either of you read that?
AdaPia d’Errico:
No, no, but it’s on your list.
Jillian Murrish:
Yes, I must send you a copy.
AdaPia d’Errico:
Yes, please.
Jillian Murrish:
It’s a fantastic book. A smart creative is really defined as … It has a longer definition. But essentially, it’s someone who’s not limited in their access to the company’s information and computing power. They take risks, they’re not punished or held back in any way when those risky initiatives fail. They speak up if they disagree with something. They get bored easily, they are multi dimensional, combines tech depth with business knowledge and add a creative flair to it.
Jillian Murrish:
They’re not the knowledge workers that we see often, at least in the traditional sense, they’re this smart creative that goes out into the world and sees things a bit as an entrepreneur, but with a foundational technical knowhow that creates a really powerful employee contribution. So, I see Conor as my business partner as in a smart creative and that’s the team that we’ve built here.
Jillian Murrish:
So be good, a quality talent, health is our third one. And that drills down to personal health. Automate, automate, automate is our fourth one. We use technology to automate all repeatable processes within our business. We are the most tech forward fund that I know of, period. Our head of operation codes in SQL, like whose head of operations at a hedge fund codes?
AdaPia d’Errico:
Right.
Jillian Murrish:
Once again in hiring and filling that role, that was a key tenet is automate, automate, automate. Transparency is our fifth. Profitability is sixth, and that’s the last one. So, building a business where transparency is critical amongst our team, but also to our clients. Being in this business, you and I, that was one of the reasons we set out to build Patch of Land was to create transparency to the accredited investor that they could actually see and choose and pick what they were investing in.
Jillian Murrish:
Instead of going into this big financial engineered product that took down our financial system in 2008. And that was something that has stayed true in my heart to this day and building here is building a business where we are fully transparent to our investors. And then to our employees, we keep the doors open when we have meetings at our office. We don’t have a kind of a bureaucratic or stratified type of work environment. Our most senior employee can speak casually and freely with me as CEO, and we really try to foster that and push that.
Jillian Murrish:
And then profitability was the last one I mentioned. And there is such strength in being profitable. That is the strongest seat you can be in as a business, in my view. There’s so much strength in that and building responsibly from there, and that gives you staying power. In our business, we need to be around for a really long time for our clients. When they give us money, we need to invest it, care for it, grow it.
Jillian Murrish:
Most people want to have a very long term relationship with those that they’re doing business with. Our clients want to be working with us in 20 years, and I want to be working with them in 20 years. And so profitability is our founding principle, and the key tenet of what we strive to maintain. I think those are the major values. I think overarching that, and I don’t have this in our founding principles, but it’s something that I know you also believe in is being highly selective with the external people we work with, right? We have just nurtured and then very slow to hire internally.
Jillian Murrish:
We’ve built this team that feels more like family than employees. And that has just been a stunning success, but you must be as equally protective as who you work with externally. I think in my younger years in my career, I was much more focused on fast growth and I would think to almost do a deal with anyone if the numbers made sense and they checked out with references. If they weren’t even that nice of a person, ah it was a great deal. Let’s get it done. It’s going to create wealth and prosperity, and it did. But it also created a really not fun work environment for a lot of people in doing those deals.
Jillian Murrish:
It wasn’t fun for me to work with that counter party, it created a drag on the rest of my day and I wouldn’t be as present in the office with my employees, or I wouldn’t be as sharp later in the day because it drained me having to have those calls with that external person who wasn’t a, a great human. And so that’s something it took me a long time to learn in my career.
Jillian Murrish:
I think you had learned it by the time we started working together, and I think that was something that you helped teach me in our time working together was, we could be more selective. I’m grateful that I get to sit in the seat I sit in today owning my own business, owning the equity of this company, and not answering to other people with growth goals, and having to sacrifice on that principle of working with wonderful people externally as well just for the sake of hitting internal numbers. We just don’t.
AdaPia d’Errico:
Right. I love that. You can hear it in your voice, like you can hear people’s voices and then how they live. And we were talking about this before about how in a way it’s a lifestyle business, but not maybe in like the Instagram way but in the true sense of the word, like a lot of our investors are working professionals like doctors and dentists and lawyers and their work is not separate from themselves.
AdaPia d’Errico:
And so this idea of the relationships being so important because they form the foundation of your day like transaction aside, it’s who you work with that that energy has a huge impact on your life, how you feel, how you are when you go home. It’s a huge principle. I see a lot more people shifting this way, and it makes me really happy because I’ve always been a big believer in like, yes, be a good person and work with good people, and be aligned to your values. And when you align to your values, you will find other people who have aligned values.
Jillian Murrish:
I was just going to say that, AdaPia. For me, it’s been incredible over the last few years running this business what comes to us now, like the people that come to us and have sought after our business is incredible, compared to in previous iterations of my life where I had been, what flowed to me versus what flows to me now. Just by waving the flag as the nice guys, we are the nice guys and the nice guys want to work with the nice guys and they come to us.
Jillian Murrish:
We’ve built a really amazing ecosystem where we invest in deals with other counter parties where I’m proud to work with them and grateful. Caring about family, caring about these businesses as you said, I don’t like the idea of work-life balance. I like life. I choose to do this because I love it. I love coming to my office every morning. I like investing in these deals. I’m intellectually challenged. I absolutely adore our clients.
Jillian Murrish:
We have incredible investors in our fund, and I love having those calls throughout the day. And so I really like to dispel the idea of work-life balance, and how do you manage it, Jillian? You run this business and then you have your home life and it must be really hard. How do you exercise it? No, how we choose to spend our day and our time is our life.
Jillian Murrish:
That’s your life. The whole, every part of it is not work and not life. It’s just all life. And how do you want to build that and what do you want that to look like? It’s incredible when you meet other aligned people who have a similar view, and then your work becomes your life and your life is your life, and it’s all happy and good.
Daniel Cocca:
Isn’t it crazy to how quickly that dynamic has kind of changed, right? I go back to 2010 when I’m coming out of law school and I just think about the environment that I was in at this New York City law firm and just how I felt about interacting with the partners I worked for, the clients and just kind of what the demands were, right? In a matter of really 10 years, and obviously, we’re a little bit of a self selecting group here, right, but there really has been this massive shift in terms of who people want to work with.
Daniel Cocca:
When I think about putting our team together, it’s always this idea of like, we’re hiring people to do a job, but we’re a small team and we need that person to fill in other gaps and really just explore and be creative and find other ways to kind of help this business grow. Our thought has always been, this only makes sense in a world where everyone who’s part of the team feels comfortable kind of spreading their wings, for lack of a better way of saying it.
Jillian Murrish:
Oh, yes. Over talked about by just as equally important topic of, it’s okay to make mistakes. I remember in my investment banking days probably very synonymous to your big law days, or law firm days was the idea that making mistake was the end of your career. Oh, my goodness. So why would you try hard, try new things or take on bigger parts of the deal that you didn’t know how to do really well? It didn’t foster that type of spirit.
Jillian Murrish:
Whereas I’m proud that inside our firm and it sounds like instead of yours, employees ask to try new parts of our business and our operations. A woman here, Sarah, who is what I call this incredible utility player, she can learn anything. If I’m bandwidth constrained in a part of the business, she shadows and learns and then takes it on and may make a mistake or two, but actually Sarah really doesn’t. She’s not human. She’s superhuman. But I know that she feels comfortable making a mistake, and that we’re just thrilled that she’s learning and trying a different area of the business. It’s important.
Daniel Cocca:
Yeah, a lot of what we’re doing is new and sometimes I forget that, right?
Jillian Murrish:
Yes, yes.
Daniel Cocca:
People have been investing in real estate for forever. But there is no playbook for accredited investors for getting into these types of institutional real estate deals, in the same way there’s no playbook for the types of kind of credit deals that you’re working on. We’re writing it today. So for us, it’s always totally like hey, you maybe want to consider working in a different part of the company.
Daniel Cocca:
If you want to be a part of this team, that’s a prerequisite, right? We want you to dip your toes into anything that you feel comfortable with. The reality is things you don’t feel comfortable with are areas for you to grow into, and the things that come out of that are kind of amazing, right? And like I said, there’s not this playbook. And so if you can come up with something that makes sense, that adds value, not that we can’t standardize with technology over the course of time, that’s a huge win for us.
AdaPia d’Errico:
All right. Well, I want to be super respectful of your time, Jillian, because you know and I know that we could talk forever. So this is such a pleasure to have you on the podcast, and over the past few years to sort of have these parallel paths in our careers and to see you grow and thrive. It’s just really beautiful to see. I’m really happy for the growth of your business, because again, it’s like these parallel paths.
AdaPia d’Errico:
I just want to ask one last question. If you have any tips or insights for investors who are not professionals in the space like you or like us, is there anything like parting words of wisdom about how they should be looking at or evaluating from a top line perspective, making new investments in a space like real estate or alternatives that is so different, so far removed from the common ETFs that they may be investing in?
Jillian Murrish:
Sure. Yeah, the age old wisdom that I actually remember my grandfather giving me when I was a girl was try to make money while you’re sleeping. I think, fortunately for the accredited investor and folks in a similar seat, who have spare capital to invest, trying to find ways to make money has become easier than ever with opportunities like Alpha Investing or like Pier Asset Management. They can go and access alternative investments that aren’t simply like a Goldman package credit product where there’s 10 layers of fees, and they don’t know what’s in it.
Jillian Murrish:
And so I think it’s critical to be getting into those types of investments that you can understand. I guess that’s my best piece of advice is invest in things you can understand, and you can learn to understand, and do it with trusted professionals, who you align with, their values resonate with you, and really vet those counter parties. I say don’t invest in something if you don’t understand it. Take the time to learn it. Listen to the webinars, read material on it, do follow up calls with people on Alpha Investing team, for example, or with people on Investor Relations team at Pier Asset Management.
Jillian Murrish:
I just critically focus on that because I think that’s how we got into some of the issues we did in the financial crisis was when we all invested in things we didn’t understand. And then, diversify, diversify, diversify is another pop out answer to this. But I truly believe that, invest in a variety of different projects and don’t put all eggs in one basket, and work with different management teams, right?
Jillian Murrish:
So you can do all of your real estate investing in the equity portion through Alpha Investing. And then it’s great that Alpha Investing doesn’t pretend to understand stock investing. So go find a great stock manager and go put that portion of your portfolio with a different management team. That’s another way to diversify.
AdaPia d’Errico:
Yeah.
Jillian Murrish:
So yeah, diversify, diversify and make money while you sleep.
AdaPia d’Errico:
Yeah, yeah, it’s always back to the basics, isn’t it?
Jillian Murrish:
Right? Keep it simple. I think I forgot that we were doing the podcast for a while. When you started your wrap up moment here a few moments ago, I laughed when you said thank you for being on the podcast. I thought we were catching up. You must be you are very good at running a podcast because I forgot.
AdaPia d’Errico:
Thank you. Well, we have to catch up personally, aside from this anyway. But for now, Jillian, thank you so much for being on the podcast, for sharing your wisdom and your knowledge, your insights and really your heart and your soul. It just comes through. So thank you so, so much again for being on the podcast.
Jillian Murrish:
Well, thank you for having me.
AdaPia d’Errico:
Thanks for tuning in to Real Wealth Real Health. We hope that you’ve enjoyed today’s episode and found it both informative and insightful. We welcome all your questions and your feedback about today’s episode and especially, we welcome your questions about specific topics that you would like us to cover. So shoot us an email at [email protected].
AdaPia d’Errico:
And if you have a moment, we really appreciate ratings and reviews as it helps us grow our online community and our interactions with you. And we’ll also be linking to a number of relevant articles on topics that we might have touched on during our conversations. Some of them are broad. Some of them are technical, but we’re always aiming to provide information that helps you better understand the mechanics of building this healthy financial foundation, especially if you’re looking to do this with real estate.
