Building a network of mentors, with Cadre’s Ryan Williams

0:00Scaling a business in the US can feel like a maze. Each state has its own payroll, benefits, and compliance rules, pulling your focus away from growth, which is why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert, plus Fortune 500-level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So, if you're scaling, make it simple with Deal. Go to deel.com. slash MOS and get up to three months free. One of the patterns I've seen over and over and speaking with successful founders is this.

0:40They don't wait for HR problems to show up. They build solid systems early on so their company can grow without tripping over itself. JustWorks is one of those systems. JustWorks is the human resources platform that helps you scale without sacrificing your team's needs. It handles automated payroll, benefits, compliance, even international hiring, so you can scale your team without slowing your momentum. JustWorks secures your hiring systems so they don't cost you time, money, or people, which is how you scale with confidence. JustWorks for your people. In the midst of the great financial crisis, I went down to Atlanta with my roommate, visited his neighborhood, and his neighborhood was completely ravaged by foreclosures.

1:36Ryan Williams was still a college student when he saw firsthand the impact of the 2008 housing crash. There was the idea and the opportunity right there. I said, well, what if we could start buying some of these homes? They're neighborhoods we know. They're people and communities that may have been prone to subprime predatory lending. Let's give them a second shot at, you know, the American dream and raised money from some classmates. Bought a few homes. Rented them back out to people in the community. And ended up selling back one of the homes to one of the previous owners. And from there, you know, my passion for real estate really blossomed.

2:17Ryan saw a way to help the community and gain experience as an investor. This week, he shares how he founded a company to take on entrenched competition in the real estate market, what he learned when that business was swept into the spotlight, and why he eventually decided to exit. You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. and then you go back to, this is totally going to be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right.

2:53Oops. Working as a three-bedroom apartment. Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it. Just how you do it.

3:06This is Masters of Scale.

3:12I'm Jeff Berman, your host. Ryan founded Cadre in 2014. It's a tech-powered commercial real estate investment platform. And that may not sound like the most exciting thing you've ever heard about, but he sold the business recently. It's a sweat-driven story of an entrepreneur who started way back when he was a teenager.

3:41Ryan, welcome to Masters of Scale. Thank you for having me. I'm excited to be here. Great to have you here. Like a lot of our guests, you started your entrepreneurial journey early. Can you tell us about your first forays into being an entrepreneur? Yeah, absolutely. My earliest days were in Baton Rouge, Louisiana, which is where I was born. And Baton Rouge is a city that's divided and historically has been divided physically and economically. But despite those divisions, what I saw at least was opportunity and a lot of people who were making the best out of challenging situations. And so when I think about entrepreneurship, that's sort of the lens that I always saw the world through, which is there's always going to be barriers.

4:21There's always going to be challenges ahead of you. But I saw so many examples of people prospering despite that adversity and figuring out creative ways to address some of the challenging circumstances they were in. And so for me, entrepreneurship is really a state of mind. I had so many endeavors that didn't work out. I actually tried to start a local sort of bait and tackle shop up selling worms to people and that didn't work out largely because no one knew who this little kid was trying to sell this kind of product. And so the first real venture was my personalized sports apparel business where I was selling these custom headbands and wristbands.

4:55And again, born out of a pain point, couldn't afford the Nike or the Adidas or the Jordan headbands and wristbands. How old are you when you do this? I was 13. Okay. Yeah. And so So I went to local wholesale garment district. I bought, you know, these terry cloth headbands and wristbands. Initially, they were just for me because I wanted to have some kind of design or logos that looked somewhat like the Nikes of the day. But then teammates said, where'd you get these? And I, you know, obviously didn't let them know what my connection was. But I told them, you know, I could provide same kind of access to them and, you know, maybe charge a little bit of a markup.

5:26And that's what I did and actually made decent money, I mean, hundreds of dollars. But it showed me that there was a market here. and I found a local embroiderer, decided to start customizing these headbands and wristbands. I'd ask, what's your favorite slogan or your team name or your number? Reach out to my embroiderer within 24 hours, have custom embroidered headband or wristband. And I actually started really growing the business throughout the state and throughout the region and caught the eyes of a nonprofit called the National Foundation for Teaching Entrepreneurship or NIFTY, which is based out here in New York.

5:59They said, we heard about this business you have, Would you be interested in applying to our national business plan competition? You can win a grant and come to New York City. And did you like go on Google to figure out how to do a business plan? It must have probably like Alta Vista, whatever the search engine was at the time. But I brought the only suit I had, which was the suit I wore at church and ended up going through the pitch, the presentation, won first place, won a$10 ,000 grant. And most important for me was I got access to mentors who saw more in me than I saw in myself. And it was their urging that led me to apply to Harvard, which was, you know, a huge inflection point.

6:35First one in my family to go. From there, you know, things really took off for me. So let's talk about Cadre. If you could explain in simple terms, what is Cadre? Cadre is a technology-driven real estate investment platform. I started the business to democratize access to real estate and ultimately alternative investments. And, you know, it's a platform where people can log in. They can invest in either single real estate properties or in portfolios that our team curates for them. And the idea behind Cadre came to me after spending time sitting at some of the most well-known institutions, Blackstone and Goldman Sachs, seeing how much money and wealth was being created, but for a relatively small part of our global economy and questioning, you know, why is this the way of the world?

7:20Why can only the 1 % of the 1 % benefit? And so I decided to build a business that would be akin to a Blackstone, but with a tech stack behind it for the masses. It's a platform so that if you're an investor who can't afford a$20 million building or$100 million building, whatever, you can actually do fractional ownership, similar to buying into the stock of a company. Exactly. One of the companies that arrived a couple of years before us, but that I spent a lot of time with early on was Robinhood. And so in many ways, Robinhood was able to do in the equities market. We aspired to do in the alternative space as well.

7:55Yeah. And so the origin of the idea, I appreciate the inspiration and being able to see at Blackstone Goldman how much wealth is created for the one one hundredth of one percent. But why real estate? Why this direction? What was the spark of inspiration for you on this? To know why real estate got to go back to that, those college years, financial services, venture capital, private equity. I started doing a ton of research on those spaces. So what I recognized quickly was that there really wasn't a way for undergraduates, especially those who didn't come from the finance world to get smart in these spaces.

8:28And real estate really resonated with me because I never owned real estate. My family didn't growing up, but it was always around me. And so I had a curiosity about it. And so the more time I spent learning about it, the more I realized that it was the most important asset class to own to build long-term wealth. Yet very few people were able to actually own it, especially people such as myself. And so it was a curiosity. I built a curriculum. I recruited some Harvard Business School professors to teach the curriculum, which, again, in hindsight, was crazy. Just to be clear, you are a freshman at Harvard.

8:59This is very much a fish out of water in terms of like, this is all very new for me. I'm not seeing the things that I want to learn. So I'm going to do the research myself, develop a curriculum, and then I'm going to just show up and hang out outside the door of the Harvard Business School professors until I find one who says, I like it. Yes. Yes. That's right. That's right. Fearlessness. And, you know, it's interesting because, again, it goes back to what my grandfather said. What's the worst thing that can happen when people say no? And a lot of people did say no. But, you know, I've been in the entrepreneurial world.

9:30I was used to being rejected. Right. People said no to your worms at the bait and tackle shop. And they said no to almost every other concept that I thought of. And it takes, you know, as an entrepreneur, a really, really strong will. And so I knew all I needed was two to three professors who say, yes, we believe in this concept. And we think others should be able to learn some of these concepts so that they can go off to real estate careers and have the same opportunities that people who come from that network. So this was the kernel of the idea for Cadre? This was the kernel of my passion in real estate.

10:02So this was where I found and I learned how lucrative real estate could be. There's a professor named Arthur Siegel, who's a renowned HBS professor in real estate, who taught the real estate curriculum I developed. And I'd spend time with him after class. And he would always say, Ryan, the best way to get into real estate is to get into real estate. And it's nice to have the theory. It's nice to understand cap rates and all the concepts. You're not really immersed in it until you actually are investing or owning or a part of a real estate firm. and uh and so that just stuck with me you know and you know i was like i'd love to figure out how to get involved the next year was the great financial crisis um and so you know i believe that timing is everything and you know that period of time presented a lot of challenges for so many people but also opportunity yeah and so uh in the midst of the great financial crisis i went down to atlanta with my roommate visited his neighborhood and his neighborhood was completely ravaged by foreclosures and full of subprime subprime I mean you know his own home was up for being uh foreclosed on had gone through the short sale process and so there was the idea and the opportunity right there I said well what if we could start buying some of these homes their neighborhoods we know you know they're people and communities that you know have had a hard go at life in a lot of ways and may have been prone to subprime predatory lending let's give them a second shot at you know the American dream and raised money from some classmates bought a few homes rented them back out to people in the community, and ended up selling back one of the homes to one of the previous owners, made three times our money.

11:36And from there, my passion for real estate really blossomed. We started buying more homes, thousands of units we acquired. Now, this was sort of my night job. My day job was working in finance to pay off my student loans. And I got to a point where I had enough belief and conviction in the understanding of real estate to say, you know what, now it's time to take the next step in my journey. What was that inflection point? Was there a moment where you said, okay, I've got enough confidence. I'm far enough along where I can leave finance and go do this. After my first year at Blackstone and their real estate private equity group, I saw what they were doing, thousands of homes, you know, on a weekly basis.

12:14I was buying one or two, maybe on a quarterly basis. And so I was like, I didn't necessarily have the same level of belief that the investing that we were doing was going to accrue to the benefit of the community. The same way that if I were to have invested in a community, I'd know I care about both doing well and doing good. For a lot of people in this situation who made it to Harvard, have made it to Blackstone, I mean, we're doing pretty well right here. And you've got this drive and you've got this idea. They might say, I'm gonna be an entrepreneur. I'm gonna do this at Blackstone. I've got the security of Blackstone behind me.

12:47What gave you the confidence and the impetus to say, I'm out. Like, I'm going to go do this on my own and not do this here. I decided that, you know, I'd done well enough financially. I wasn't going to optimize just for the next dollar. And instead I want to have an impact. And also I thought a lot about, you know, if I didn't go out and build this kind of business, you know, I'd regret it down the line, number one. But number two, someone who may not have the same goals and mission, you know, in terms of promoting self-determination amongst the underserved, which is kind of like my my founding principle.

13:19And, and I always said like, you know, in order to get unconventional outcomes, you have to do unconventional things. So you're at Blackstone, you see this opportunity and what are the steps you have to take to actually jump? You know, the next step for me was to figure out, you know, how do I build an MVP? How do I build a product where it's easy for people to log in and invest in real estate projects? So my second year at Blackstone, by night, you know, I was building out my business plan and building out the first version of the product and an MVP. And so did you have a technical co-founder?

13:47Are you coding? I don't want to hype up, you know, how dynamic it was, but they were very immersive dynamic wireframes. But yeah, the first version of the product and the platform I built, the first actual asset was an asset that I was able to secure vis-a-vis a relationship with Jared Kushner, who was one of my earliest partners as well. And then the investor base, those who were buying fractional stakes from my network and then from friends and family who I'd gotten to know as well over a year. So we kind of built proof of concept. And, you know, at the time, too, this idea of technology, which is hard to believe because this was 2014, but the idea of technology changing real estate was still crazy to a lot of people.

14:26Prop tech, fintech, these were still, you know, slogans and phrases that people sort of laughed at, you know. And so in a lot of ways, we were very early, which is probably one of the reasons why the folks at Blackstone were supportive, that I was not going to a competitor instead. you know, was taking this moonshot. But I think in a lot of ways, it was eating at some of the core principles of the business at the time. More with Ryan Williams on his decision to exit Cadre in just a minute.

15:07Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more. Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25.

16:06aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So if you're scaling, make it simple with Deal. Go to deel.com slash MOS and get up to three months free. Welcome back to Masters of Scale.

16:53You can find this conversation and more on our YouTube channel. I wanted to hear more about how Ryan built Cadre's client base. he had a much more complex offering to market than, say, a consumer product. The B2B, which is really what I think we are more of in the B2B2C business as well, you know, it's a very different playbook, especially when the underlying industry is one that is used to everything being analog, offline, relationship-based. And so my approach to scaling the business was a little counterintuitive, which was start at the top of, you know, the customer pyramid, if you will, like with the most sophisticated, discerning, analog, offline potential partners, but also the ones that have the most gravitas and the most trust.

17:43What's an example? Goldman Sachs. Good example. Right. And so, you know, you think of Goldman, you think of this behemoth and you think of this institution that is relatively slow moving in the scheme of technology companies. You think of a lot of domain understanding and expertise and investing. And what I wanted to do is build a moat around some of these highly sophisticated partners from a distribution standpoint, get them to buy into the concept, get them to distribute our product to their clients. And from there, I thought you could then go down the kind of customer pyramid, if you will, to a wider range of investors that maybe didn't have all the quote unquote sophistication, all the infrastructure that someone like Goldman had, but would look at Goldman as a social proof point.

18:27So that meant the sales cycles for getting some of these partners to bring their clients onto our platform to invest were much, much longer. So as an investor, VC, you've got to be willing to understand that this is more of a marathon, a fast marathon. It's not a sprint. And the rewards from a lot of that investment early on and building an infrastructure that is trusted, credible, that has all the safeguards you would want in place, that's a well-curated platform, will pay dividends down the line. And so after a lot of conversations with folks like Goldman and JP Morgan and Ford Foundation, some of these bigger institutional clients, we ended up winning a few contracts and we were able to strike some partnerships, you know, less than two years since I started the business with some of the biggest names in the financial services world.

19:15And once we've got those investors to say, you know what, this is a really unique way to give our clients access to real estate at smaller fractional bite sizes with liquidity, then being able to go to independent advisors and direct individuals became infinitely easier. But the muscle that you've, at least we had to be able to build was, you know, we needed to have a really clear playbook for these longer sales cycle meetings and engagements where we knew what meeting one is going to need to look like to hook these investors on the concept of what we were looking to do, the value proposition.

19:49We knew that we were going to need to meet them in person because it was very much relationship business. We had one shot at technology demos and giving them a view into what this would entail because there was already skepticism. And then there's an ongoing client relations management side of this as well, where we had to bring on domain experts who could cultivate those relationships. And so we spent the first few years building a highly concentrated base of significant whales, if you will. I like to use a fish and whales analogy. And we were able to get those investors to say, yes, we believe in this business.

20:22We believe in the product. And it really differentiated the brand. Were the Goldmans committing minimum dollars to be invested as part of these deals? And then they were passing on the opportunity to their clients and they just knew that they could fill up to that number. So what we did with Goldman, which as far as I know, hasn't been replicated. We secured a$250 million commitment from Goldman, you know, the institution. And then they had about a thousand sub-advisors and clients beneath that commitment. And those were the individuals that ultimately owned fractional stakes in the properties or the portfolios that we built for them.

20:57And so I would say, you know, it was really building that critical mass of high impact, you know, large enterprise-like clients that gave us the ability to then open up access to a wider range of folks from a position of trust. One of the most unexpected challenges Kadri faced was around media attention it received during the first Trump term, because one of its earliest investors was Jared Kushner, who suddenly had a role in the White House, which might have created conflicts of interest. We got a lot of attention. It wasn't necessarily for what I thought the reason would be. And I guess taking a step back, Josh and I were in school together a couple of years ahead of me, and Jared had been really supportive in one of my real estate businesses and also on a personal level.

21:40And so I got to know them in a very different context in the world as seemingly gotten to know them. They were still relatively early in their careers. And so when I was thinking about partners and thinking about the kind of people I wanted to work with, those two off the bat checked every box. And so my experience with them has been incredible. I never anticipated the geopolitical focus on the business. And I always made it clear to Jared and to Josh that, you know, I had certain principles and values. And, you know, those values are, for me, values I would never forsake and I would never concede on in any way, shape or form.

22:17Respect, integrity, transparency, empathy. These are all things, you know, that I was raised with. And in all my experiences and times with them, there was a genuine respect for those values. We didn't always agree on everything. and I don't even think, you know, Jared and Josh agree on everything, but what we did agree on was we wanted to do what was best for Cadre and to move the business forward because it was a company we all had a deep passion for. And so, you know, that led to, you know, everyone in a lot of different ways, making selfless decisions, you know, Jared extracting himself from the business when he went down to DC, when he had, you know, brought so many of his relationships under the tent, Josh encouraging me, you know, to find my voice and speak truth to power when there were things that I saw that I didn't agree with, especially in light of George Floyd's murder in 2020.

23:05And I would say overall, like our company and our team grew from that experience and from having so many connected, politically connected partners, because it wasn't just Jared and Josh. We also had the Soros family, who was one of our biggest backstop partners and Mark Cuban, who I communicated with on a weekly basis. So we had the whole full political spectrum, but Jared and Josh were there from the early days. And for me, my relationship with them preceded, you know, all the media focus. How did you deal with some of the negative attention that this has brought to you? So the first thing I would say is I was very naive about the media world.

23:40You know, I probably in hindsight could have gotten ahead of some things earlier, but you know, you can spend all your time managing media and then, you know, the business suffers. And so I had some incredible mentors who I went to whenever there was a story on the horizon. Who are some of those mentors? People like Vinod Khosla, who I would talk to. And Vinod was great in that he gave me this advice that still resonates with me today, which is the most important attribute in his mind of an entrepreneur is who do you listen to for what advice? And that's a muscle as well, right? It takes time because early on, it's sort of a trial and error.

24:19You listen to one person who gave you certain advice on one concept or theme and you realize it was not the right person to listen to. And so what I did was I built, you know, I guess a little cadre, if you will, of advisors around me who I knew would be great, you know, for certain challenges. And Vinod was super helpful as it related to managing the team and keeping everyone focused in-house while, you know, there were media stories surrounding the business. I spoke and spent a lot of time with Michael Ovitz as well. And seen his share of controversies he's had to deal with. Right. And Michael was great as well with making sure I kept my head on straight, you know, and I focused on the main thing, which was making sure our business continued to scale and achieve product market fit.

25:03And then I actually talked with Josh Kushner a lot as well, too. And Josh, you know, had a very unique perspective, obviously being in his seat, but was incredibly supportive throughout. And so, again, I consider myself really fortunate that, you know, despite all of the craziness that came with being a CEO and a founder, plus at that time, I had this network of people around who cared about me. One of the things I learned from that experience is you can never over communicate to your key stakeholders. And so I had to get in front of it. I had to stand in front of the company and say, hey, you know, tomorrow this is going to be something that's out.