A (3:24)

Willie, first, it's great to be with you. Thank you for having me on. You know, I think attribute to CS Lewis. I'm not sure he said it is, is humility is not thinking less of yourself, it's thinking of yourself less. And you know, the great trap of humility is as soon as you think you're getting good at it, by definition you're not. It's. And so I think for me it's. It's really about mission before me. So I think for all of us it's do we in doing something that matters to the world and, and if we're focused on that versus ourselves, I think that keeps the right perspective.

B (3:59)

You came to that a little bit later in life. You ran for president of the student council at unc, seemingly for the role and not for the ability to have an impact.

A (4:15)

Yeah, you have done your homework. So it's really true. And I think sometimes you don't have perspective in the moment. I think when I was running it was because I wanted to do positive things. But I think sometimes when you look back then, I had the perspective that I was probably going more for the brass ring than for really out of a deep sense of wanting to serve. And I was blessed with a couple of amazing role models. And my godmother was actually the first woman president of Smith College, and she helped me get perspective on that. And one of her principles is if you seek power for its own sake, it's going to be inherently corrupting. But if you're pursuing a worthy mission, you'll get the power you need to be able to achieve it. But she did a lot of studying of autobiography, including writing her own best selling one. And her view is you have to wait 10 years before you can objectively look at your own life.

B (5:09)

That's interesting. I have heard you talk about her, as well as your grandmother being incredible role models for you. We'll talk a little bit later, Jonathan, about the need for housing to provide the opportunity for wealth accumulation as well as health outcomes and living healthy lives. But as you and I both know, successful careers also need not just housing and health, but they also need mentors. And you were extremely gifted, I would say, to have two, two exceptional mentors in your grandmother and your godmother. First, what'd you learn from the two of them? And then I think, secondly, do you think what you learn from them, and particularly about leadership, is distinct because they were both pioneering females?

A (5:57)

Yeah, I would say so. Starting with the first part, very different. You know, my Grandmother was not, as I got older, I realized not very well equipped to be a great mom to my mother and to my uncle. But she was an incredible public servant and had took all this sort of. She had a kind of remarkable but difficult life and took all the sort of hurt and anger and poured that into justice issues. And you know, when every time I saw her when I was young, she would do usually two things. She would quote Micah 6, 8, which was her favorite verse from the Bible. He has shown you a man what is good and what does the Lord require of you, but to act justly, to love mercy and to walk humbly with your God. And then she would ask what I was going to do to be useful. And that was her view of the good life as we're supposed to be useful to the world. And it took me a long time to kind of grow into both sides of that. But she was really a ferociously independent congresswoman who entered Congress at the age of 64, having co chaired the civil rights movement in New Jersey for 14 years and come up through the state legislature. And I think for her she was really a political role model. And I thought I was going to go to law school and go into politics and be like her. Jill Conway, my godmother, very different Australian, a feminist historian who kept wanting to solve problems that led her to getting more and more responsibility. So she complained about the treatment of women in University of Toronto and they put her in charge of fixing it. She was then president, Smith College. She was demeaned by the sexist bankers who were running their endowment and she fired them and learned a lot about it. Ended up being the exec, you know, the lead director for Nike, Colgate, Paul Mollev, Merrill lynch and one of the big divisions of IBM. So incredibly accomplished, but always laser focused. And she had a gift that I've always remembered. When you were with her, her whole focus was on you. And regardless of all the sort of noise and chaos and responsibilities in the background. And I always respected that deeply. And if that's something I've tried to emulate from, from her side, I was.

B (8:02)

Surprised that she was the first female president of Smith College. I would have thought that Smith College had had female presidents since its founding. Kind of interesting that they founded an all female college and then put a man to run the college. And it wasn't until your godmother ran it that a female actually had the opportunity to lead it. As you think about your leadership style and having had those two very impactful mentors any Influence as it relates to the two of them being female versus having male mentors.

A (8:36)

You know, I think for their generation, they really were pathbreakers. So there was a, you know, a determination and intensity to come through. You know, I think there were very few women in Congress when my grandmother entered and certainly there were very, almost no women who were running universities. And so they had a comfort in sort of breaking through. And I think, you know, I certainly absorbed learning from that. But they also had a, I would say both an intense determination to kind of improve the conditions around them. And I probably absorbed even more from that than, than from the gender side. But it certainly, but they both had a significant influence on me.

B (9:17)

I'm not sure that there are two jobs that I would less like to have today than being a member of Congress or being the president of a university. But anyway, we'll, we'll leave that, we'll leave that the side for the moment. When you think about giving back and what you have done with your career, you started in a place that most people would say isn't exactly the identity of giving back. Goldman Sachs, if you will. And by the way, I have lots of friends who've worked at Goldman Sachs and there are plenty of very successful people at Goldman Sachs who go on to give back in fabulous and fantastic ways. So I don't mean that as a slight against anyone at Goldman Sachs Sachs, but Goldman Sachs as it relates to a place where you go to start a career that will be one focused on giving back is, is, is unlikely at the top of many people's list. But you sort of got to Goldman accidentally. You said previously that you had thought you'd go to law school and go into politics. You had been asked interview at a, at another Wall street firm. You'd gotten an offer from Morgan Stanley to go work for them. Someone had put the idea in your mind that Goldman Sachs was a talk through the story of how you ended up getting to Goldman Sachs. Because I think it says a lot about your character.

A (10:42)

Well, I may say about my naivete and probably overconfidence at the time, but it's, you know, I didn't, I think it's great. I didn't know how unreasonable I was being at the time because this was not my world. I was an English poli sci major, as you rightly said. I had been invited to interview with a different firm just because I was in a leadership program and on this scholarship at Carolina. I was so unprepared and I suddenly realized I didn't want to Law school. So I needed to come up with a new plan and quickly was doing my homework. And each time I would go up to interview with one firm, I would kind of daisy chain that into an interview somewhere else. And I would not recommend this to young people from a career advice perspective. But I had had a great morning. I'd gotten an offer at Salomon Brothers, and I had about seven hours before I needed to go back to the airport. And Goldman had not responded. And I'd only heard of this one guy who had been a number of years ahead of me at Carolina. And so I showed up and just asked if he would meet with me and they said no. And I didn't have anything else to do, so I just said, can I wait? And I just was doing my homework in the lobby and three or four hours later he said, okay, five minutes. And I realized I was in totally the wrong part of the firm. But he had just been turned down by somebody from UNC coming out of Harvard Business School, and that irritated him. And so we ended up talking a little bit more and then he sent me to the right place. And actually this was one of those interesting lessons because the person who was running the analyst program, this was the beginning of the Wall street analyst programs, you know, looked at me and said, hey, we're basically done and you know, it's too late and what are you going to do if I don't hire you? And I said, well, I'll probably either go to Morgan Stanley or Salomon Brothers. And it was, you know, it was so interesting because suddenly it was less about me and more about beating them. But, but that led to, you know, 20 interviews later getting an offer. And I, I would say the hubris on my side was telling them finance faster than they could teach people how to communicate. And that was probably not completely right, but it was a great education. And I often tell young people, focus on where you can learn the most as we think about job changes or growth. And even though I probably wasn't a good long term fit, I learned an enormous amount. It was a great two year experience. But I also learned I probably wasn't cut out to be an investment banker. And that really led to that big inflection point in my life where I wasn't leading the kind of life I'd imagined. I was working all the the time. I was kind of acting out and partying and I kind of hadn't paid attention to my faith. And so I really wanted a full change and the, the loose opportunity to go move to Korea. You know, created a complete break and chance to regain perspective.

B (13:30)

Had you already gotten into GSB when you got the loose fellowship to go spend a year in Asia or did you take off from Goldman, go do that and then apply to gsb?

A (13:39)

The latter. So I just, I went with sort of ideas unknown though more interested in business school and after, you know, the, the year in Korea working with the. I went to work on the Olympic Organizing Committee. Goldman got one of the first ever international equity offerings for a Korean company and, and I was able to volunteer to get on that team and go to Korea. They didn't realize I was such a junior slave, but negotiated the job doing marketing for the Olympic Organizing Committee which was preparing for the ADA game. And then to my total shock they said hey, we have another thing for you. And I had lunch with the chairman of the rowing association and they said we only qualify because we're the host country. We just fire rowing coach. We see all this rowing in your background, would you be willing to coach the rowing team? And I told them I was completely unqualified and that that was a bad idea. But to my shock they persisted. So I left Goldman went to the U.S. rowing coaching college in the summer and the U.S. coaches were, were not very scared of the South Koreans. And it ended up, I ended up living in the training camp with all the Korean coaches and athletes for the year doing a split of marketing work and coaching. And it was just life changing in so many ways. Being fully immersed in a different, having to learn so much about communication and leadership. And it also gave me the space and perspective to really think about the next step and what I wanted. And that became a really deep year for my committing as an adult to my faith. And I also started thinking seriously about business school but with the idea of learning the skills to run a nonprofit. And at that point really Stanford and Yale were the only business schools that integrated nonprofit management into their core MBA programs. And so went to Stanford with the idea of going into nonprofit. But then in business school there weren't a lot of career paths for young MBAs at that point I would say we've seen a huge change. If you think about, I'm old now, 35 years ago it was not a mainstream idea that we needed professionally managed non profits. Now there really is a mainstream idea. But my, my new plan coming out of business school was I'll go learn in the private sector and then bring those skills to a non profit job. Because I didn't see a, a clear first step, coming out of Stanford, was.

B (15:47)

There anything that made you jump and stay on this sort of what I would call the corporate path rather than looking at smaller firms like venture capital or private equity? I mean I think about Stanford at that time and coming out of Stanford, you know, the VC industry was in its, you know, beginning to really start to grow. Technology firms have always been perennial recruiters out of Stanford. But you decided to go onto the corporate track and do Disney and then into Circuit City and then into Home Depot. Why was it that you thought that staying on the corporate side was more interesting than doing something on the sort of VC or PE side of things?

A (16:28)

Yeah, you know I, I think, I mean it's interesting. One of my biggest decisions coming out of business school was really totally geographically focused. My now wife, then girlfriend was practicing law in D.C. and we've been long distance and very long distance between Korea and California and her on the east coast. And so I committed to finding a job in Washington D.C. and there were number of corporate opportunities there. Marriott was a growth company. I could relate. One of the things I found when I was in finance was I was really interested in the strategy. I'd work on a merger and my work was figured out do the numbers work? But I was actually much more interested in with the culture work, did it make strategic sense? So I kind of leaned towards strategy. So the chance to work in a growth company on strategic issues was interesting and, and maybe the common denominator is each of those jobs was about working on new businesses within big companies. So more entrepreneurship than entrepreneurship. But I did gravitate towards what was new. So at Marriott, worked on their senior living business, worked on one of the new hotel opportunities, worked on their timeshare business, then got laid off which was a good learning. But I got married so overall it was a win to go to D.C. and then had the chance. It was actually great to learn it was okay to get laid off and that wasn't the end of the world. It was the SNL CRIS of 2000 and I'm sorry of 1991 went to Disney in the same way to start a new strategy group for the real estate based entertainment for Disney. And that was a great experience in the 90s, kind of a boom time for them. And I look back and my career never really made sense. Just things would come along and we'd pray about it and as best we could tell it was kind of the right next step. And maybe the bigger surprise was leaving Disney to go to Circuit City stores which is now gone. But Circuit city was starting CarMax and I thought that was fascinating. It was going to disrupt the whole way cars were sold and create value in used cars. So I was really intrigued with that and had the chance to be head of strategy there. And then Circuit City has the, you know, the, the sad reality of being both in Jim Collins good to great book and in how the Mighty Fall. So it was, it was a, you know, a lot of lessons there. I won't go into all of them. And then right when I was going to run the next thing and then it became clear we shouldn't do a next thing. And as I was kind of contemplating all that and I wanted to move from strategy into an operational role, got recruited to Musicland which was then the leading mall retailer of music and movies. And it was a chance to have an operational role, to be president. And they needed strategic change because digital was coming. And then the unexpected part was Best Buy Bob Music Land, which I was not anticipating and stayed for a year to help ache at work. But then I'd actually thought I'd stayed in the business world longer than I had ever planned and so made the decision to, to walk away and that less sort of started the whole next journey.

B (19:25)

Yeah. And, and, and going to being a minister before we jump to that. Move to your faith. You know, it's interesting particularly two of the companies, I mean. Well, actually three of them if you think back to Marriott in the day that you were there with Ballenbach, I'm assuming was the CFO when you were there there, there was a, I mean Marriott had a group of senior leaders at that time who went on to do really innovative things at other. And there's an alumni network out of that time period at Marriott that went on to run big, big companies and had this huge, huge impact. And you can then go to Disney and the exact same thing. And some of them did actually move from Marriott to Disney. You can say the same thing about where Home Depot was during that time and Ken Langone and the management team that was growing Home Depot at that. And I mean you really did in your career touch on three corporations that at that time, from a, from a, from a leadership standpoint, from a strategy standpoint, those were arguably three of the very, very best large corporations to be working for at the time that you happen to be there.

A (20:37)

Yeah, you know, I, I think, you know, as my high school math teacher said, better to be lucky than good looking. It's, you know, there was, I was interested, for me, I was interested in products I could relate to. So hotels and theme parks and, and retail actually, though I never intended that direction. Were all products that, you know, I could, I could connect to just to correct. I was a Best Buy at the end. But not Home Depot, though Home Depot has been a great partner of Habitat.

B (21:01)

Best Buy. Got it, Mike. Great.

A (21:03)

Though also at that point was a really innovative company and what I learned there is they nearly died and reinvented themselves. And in retail that's actually really unusual because usually you don't get a second second chance. And, and so that was a. I actually learned a lot there and I look back and actually learned so much at each of those places. And I agree with you on talent. Marriott was a real talent creator and, and recruiter. I was, I wasn't with Bollenbach but John Dasberg who then later ran Northwest Airlines. You had the, you know, the lineage of Gary Wilson. You had a ton of folks at Disney who'd come from Marriott and so. Exactly right. And it was. And good lessons too about, you know, the right strategy for the right time. Marriott was an innovator in syndicating hotel properties to sell them and was way out in front of other companies. But they didn't react well enough to the 86 tax law changing and losing passive loss for investors. And so for your real estate investor world. So when the SNL crisis hit, suddenly Marriott couldn't turn over any of their commercial paper and they were nearly bankrupt. Pepsi actually gave them $500 million. And that's why you won't find Coke in any of the Marriott properties that, that floated them. But it was, it was a rough period in the early 90s for everybody in real estate, I think for when the SNL world blew up.

B (22:22)

It's funny that you mentioned Gary Wilson. I, I'd gone down after business school to Latin America and I started up an airline and, and then did a, a brief stint in private equity and was kind of trying to figure out what my next step was going to be. And I was introduced to Gary and I, I flew out to LA to meet with him in his gorgeous house in Beverly Hills and we're sitting in his office off the back of his house and he says, so what do you want to do? And I said, well, you know, I've been on the finance side of things and I've actually run an operating company and I really want to go and run an operating company. And he said, you actually want to run an operating company? And I said, I really do. I kind of like general Management. I like engaging with people, rolling up my sleeve, working on real hard heart issues. And he literally kind of started to chuckle and he called over to his assistant who was sitting across the office from him. And I can't remember the guy's name. I'm going to call him Joe. He says, joe, I got a Harvard Business School graduate here who actually wants to do something with his life. I can't believe it. And he was, he was both mocking me at the time and then also I think giving me some props that I actually wanted to do something other than just private equity and make money with money. So the shift to your faith and then we're going to get to housing, which is what most people have listened in on this podcast to hear your perspectives on the housing crisis in America and some of the ideas and how Habitat is meeting that crisis. But you did pursue your faith, if you will, not just on a personal basis, but from a professional basis for a number of years. What was it that other than your deep faith and an opportunity that made you say, say I've done enough in the corporate world. I've sort of either checked that box or made enough money or my faith is just. Is compelling me to give up on corporate America and go be a pastor?

A (24:20)

Yeah, I think both opportunity and that long term sort of sense of calling and the opportunity side was if I didn't leave within 12 months of the acquisition of Music Land, I would lose all the benefits of the merger. So there was kind of a ticking clock. And I stayed for I was the only senior leader who stayed to help with the transition. But it was clear they'd put in their own person to run this now what is going to be a division? So it did. We couldn't have two presidents, so that didn't make sense. And there were other potential opportunities to stay. But as we thought and prayed about it and talked about it, it seemed like now maybe was the time to make that jump. And you know, there's a book, Halftime, a friend had recruited that I thought of as people kind of getting to age 60 and then switching. But there was a catchphrase I really liked which moving from success to significance. And I liked that image. And I thought, you know, I don't need to wait another 20 years for that. Maybe it's really time to go. So it seemed clear it was time to leave. And then the interesting thing was it was anything but clear after that. So I actually had a long period of unemployment and a really unusual non compete where I couldn't actually make money for the first 18 months. It was, it was 100% clawback for anything I earned when I walked away. And so it created a great opportunity to, you know, suddenly I could coach every one of my kids teams and I was on every field trip and I wanted a six month sabbatical. Six month went a lot longer. I went with my wife's blessing and I hadn't had time when I was, you know, in business to on a short term mission trip for a couple of weeks to rural India with a group of pastors. And it really, I would say that's where I had a deep kind of recommitment, where just looking at, at that point, these are the bungee, which among the Dalits or outcasts or untouchables in India. And it's supposed to be illegal, but this still happens even today. But back then these were at the absolute bottom of the social order in India and known as the scavengers. Only allowed to hand clean latrines or clean up dead animals, not allowed to live in community in the villages, in rural areas. And about half the kids were dying before their 13th birthday. And I think, you know, all my grandmother's lessons on, you know, justice and came pouring back and I, and then to see what relatively small interventions could do to really change that was powerful. And I came back from that not knowing what I would do, but pretty sure I wasn't going to go back to business and pretty sure I want to do something that was really more directly focused on alleviating poverty. And then I turned down a couple of very good business jobs saying, okay, now I've got a plan. And then almost got a couple of nonprofit jobs. And I got to the final pair twice. And both times they picked someone else who'd already run a nonprofit, which made perfect sense. But I was a little shocked. It was a little tough on my ego. And my deal was like, hey, God, we had a deal. I was going to give up all this and have my perfect next job. And it's a little painful to even articulate this, but if I'm really honest now with the benefit of hindsight, you know, my deal is, God, I'll do anything you want as long as it meets my geographic ego, gratification, financial, family and long list of criteria. And what I kind of heard back was that God was more interested in my character than my job and I should focus on that. And so it was a period of waiting. And now I look back in that time, waiting was great for my family. It was not great. It was good in a good way. For my ego, though it was painful at the time because I think especially, you know, we can so easily let our jobs become our identity. And it forced me to really let go of that more. And my volunteer work had been helping churches grow and my professional work had been helping businesses grow. And to my great surprise, my local church said, would you come and essentially run our very fast growing church so the senior pastor can be the spiritual leader but not try to run all the ministry teams and all the administrative sides of the church. And it was not what I was looking to do. And everyone I trusted for career advice said, don't do this, it's a mistake. Which was not, did not feel good. But we really had a sense that this is what I was supposed to do. And it's so interesting because right when I said yes, I was in a conversation with a search firm about the chance to run a small Internet retailer. That seemed like a great opportunity. And, and I remember telling the headhunter, you know, I've decided I'm going to go work for my local church. And I thought, you know, I will be off the grid, blacklisted. This is it. And you know, two things are fascinating. One, working at the church turned out to be the perfect complement to my corporate career to actually be ready for Habitat. And then two years later was that same headhunter who called completely out of the blue when I wasn't looking to ask me, jonathan, do you know anybody who'd be interested in Habitat for Humanity? And if I could have named, named one job that actually met all my unrest, reasonable list of criteria, it would have been Habitat. And I, of course, like everyone else, thought Jimmy Carter ran it and I didn't know why he was stopping. And you never thought they would choose me. But I remember after that call just the adrenaline going down my back and thinking, okay. And I wrote a two page letter that night saying, I don't know if I'm right for this, but I think this is the kind of thing I've been preparing for my whole life. And then to my great surprise, all that progressed quite quickly in that summer. A few months later, later I was being introduced at Habitat.

B (29:51)

It's a wonderful story. When you talk about going from success to significance, it makes me think about all the work that my friend Arthur Brooks has done as it relates to mid career and finding meaning in your career and Arthur's both writing and speaking is fantastic. And I see you nodding, which says to me that you've both probably read his book and also spent some time with Arthur. Let's talk, let's dive into housing as I think Jonathan about. I mean, I've, I've interviewed John Gray, who probably has as big a portfolio in real estate, broadly speaking, and the housing and Invitation homes and other things that Blackstone has invested in that have made it so that Jonathan has a huge view of the world. And I've obviously interviewed CEOs of single family developers such as Lennar and Pulte others. But as I thought about it before today, I sat there and said, your view on housing globally is as insightful as anyone on the face of the planet. You all operate in 70 countries. You see the need for housing globally as a lack of close to a billion homes is what your estimate is. In the United States, the estimate is that you have is between 3 and 6 million homes is what our current shortfall is in the United States. Let's focus internationally first and then we'll pull it back to the US because the US problem is a what I think most of our listeners are interested in your thoughts and ideas on, but because of what Habitat does on a global basis. Jonathan, you have a very interesting perspective, I believe, as it relates to not only only how hard it is to build housing, but in many countries, how hard it is to have housing rights and be able to own title to housing. And a lot of the work that Habitat does internationally is much more on sort of a policy standpoint of just making it so that people can actually have property rights to create value in housing more than actually building housing, which is what you do a lot of in the United States. I think the other piece to international versus is domestic is the rehab work that you all do and helping people to invest in their homes and, and make shelter, go from a, you know, a ramshackle dwelling to something that people could actually have as a home, live in safely, and then actually create value in it. And the final piece I'd put forth as it relates to some of the policy things you all have done, I was fascinated to hear about what you all have done in South Africa right after apartheid came down, and some of the communities that you built there, as well as the work that you did in Belfast and the way that Habitat and the communities you have built have brought people together, both from a racial standpoint down in South Africa to a religious standpoint in Northern Ireland. Let me just leave that to you to just talk for a moment about what Habitat's doing around the globe and what is either makes it easier for you to have an impact outside of the United States or harder for you to have an impact outside of the United States, given what you see in other countries.

A (33:10)

Yeah. Thank you, Will. And I'd love to come back to the bridge building conversation because that's not our prime mission, but it's always been a piece of Habitat's work that when you. And I'll just say this and then move. Move to your question when. My observation is when people serve or volunteer together, they focus on what they have in common. And so in many ways, I think service is the antidote to a lot of the polarization we see when people sit at home on their screens, hear the algorithms, teach them how awful the other is, and keep reinforcing the difference or the separation. And so I'm a huge believer in service as a way to connect and build bridges across all kinds of difference on the international. And I'll set up a frame that may be helpful for our US Conversation. So one of the reasons we started really accelerating growth is we realized there's no way we could build our way out of the problem. Habitat had grown very wide, but not very deep. And one of the reasons you can do more internationally is, you know, I was just in Kenya and Ethiopia a couple weeks ago, and I'll use that as an example in a couple of frames. You know, we can still build a house there for five or six thousand dollars for a very, very low income family. So you think about that compared to just cost. So just the cost. And then you can do an incremental improvement for far less again. And so, so one of the big pivots for Habitat was to change our framing question from how many houses can we build? To what would it take to meaningfully address the housing need everywhere we served? Which is a much scarier question because that really forced us to think about systems and structures. And you identified the starting point, which was a recognition that if you don't have property rights, all the rest of the parts of the value chain don't work. So our first big global advocacy effort called Solid Ground, was working on property rights, particularly for women and marginalized groups to give them the right to stay on their land. Because if you can't stay, it doesn't make sense to invest because you're uncertain. So property rights is such an important first part, because you think about assets, you think about the ability. I'll give you a quick example. In Bolivia, women did not have the right to own their property. And you think about divorce, inheritance, the ability to borrow, abuse all the implications of that. And so we trained over many years a group of very powerful but poorly resourced Bolivian women. And they not only successfully got the right to their own homes, they got the federal law changed. So if a man is married and wants to register his land or his home, it has to be joint titled. So that meant we've enabled in that step 1.8 million Bolivian women to have the right to be homeowners. Now real success is they all actually take advantage of that and pursue those rights. But that's an example of changing the enabling environment. So if you think about then the housing value chain, first step is do you have the right to stay? The second step is access to finance. And this was probably the biggest bet we made internationally, which was could we convince the microfinance industry, which was focused on small business lending, to start doing home improvement lending to your exact point, for very, very low income families, even a $5,000 mortgage is too much, but they could actually afford to pay back, you know, a $700 loan to get a cement floor instead of a dirt floor, get a proper roof to get water, sanitation to get an extra room, meaning the girls could be separated from the boys at night and they could run a small business in that extra room during the day today. And so we started with a group of experiments and then 12 years ago launched Microbuild, a wholesale debt fund. We borrowed $90 million, launched $100 million fund. And I'm so proud of this. Now we're winding that fund down and getting ready to raise a much bigger fund. The fund has loaned out $230 million along with technical assistance to 56 microfinance banks in 36 countries. What's really exciting is the retail payments have been as higher, higher than the small business portfolios. We're on track to pay back the debt and a nominal return to our equity holders. But what's really exciting is those 56 microfinance institutions have put 1.1 billion of their own capital in now. So they're actually seeing the market opportunity and that's directly helped a million people and helped millions more have access. Because now there's a way to get a home improvement loan. So, so that's been a big win. And then the next step for our center in innovation was around building materials and skilled labor. So how do we improve the quality and price and access to good quality building materials? And then the last, which is complicated, is education. So how do you help? Now a family can stay on their land, they can Get a loan. How do they know how to manage that process? Which is not easy for any of us to do if we're not trained. And so we've tried a whole array of ways to do local retail, technical assistance, you know, a new one that's way early to decide if it's working. But in the Philippines, Kenya and Peru, we're actually doing web based home improvement TV and radio to train people on how to think about doing home improvements. And that's reaching millions of people quite cost effectively. So I share that because when we started a lot of that work, the thesis was that the US market and the global north, largely the markets worked. I would actually argue now that the markets don't work in the US and the rest of Western Europe or the rest of the Global north because a third to half of our population can't afford housing on a reasonable percentage of their income. So we've got a fairly significant supply problem. But I think the international work, we're trying to take the principles of that and then think about how can we bring those back. But if I, if I take my visit a couple weeks ago in Addis, had a chance to visit an informal settlement I'd been in nine years ago. And it's so important that we both build and do the systems work because I think they're mutually reinforcing. The being in the communities in a deep way gives us the credibility to be an advocate and a policy driver. And the difference of talking to these families who had been living basically in plastic and scrap trap shacks in an informal settlement with the partnership with local government, we'd given them the right to stay. We'd allocated land and we built. In this case, this was a small group, 10 very small row houses within a shared kitchen and shared latrines for the 10 families, tiny little houses. And as I talked to each family, it's a lot of stuff you would expect. They felt physically safe for the first time. They have a door they can lock, the kids can be in school, they've got access to water without having to pay high prices for it. You know, they're safe from the physical elements. But what was most striking over and over again was just the human dignity. They said, now I'm not ashamed of where I live, I can invite friends over to my home. They felt like now they actually belonged in their community for the first time. And I think that's where you're a housing guy, you understand in some ways it's not the only need and it's certainly not Sufficient. But if you don't have safe, stable and affordable housing, all the other things we want, education, health, livelihoods, those don't work. So I really would argue that housing in many ways is the prerequisite for those other pieces. And meeting with the Africa Union, which is headquartered in Addis, and with the Housing Minister of Ethiopia, we are in the conversation because the formal housing policy has moved. They only want to build mid and high rise apartments for civil servants with their affordable housing money. And I think that's a good thing to do, but clearly insufficient when you've got 70% of the population of Addis living informally. So we were making the case, absolutely do that. But also invest in formalizing and regularizing land because if the government can set the right enabling environment, the families can do the building and upgrading, we can do market systems that can allow that to happen. So we were going for a both and conversation because the government won't build enough of these mid rise buildings to actually, actually come close. And they're addressing an important segment, but that's a segment that still leaves out about half or 60% of the people who need housing in the capital.

B (41:15)

When I first got out of college, I went down to work for Action International in Paraguay and learned the small loan business and then took that and put it into another foundation. And it's interesting that you've now taken the micro finance industry and moved it into the micro mortgage and micro home improvement loans industry. It also makes me think about when other countries, when another country can replicate what we have in Fannie and Freddie in the United States as it relates to a secondary mortgage market. Because that has obviously been one of the great gifts to the American housing industry as it relates to allowing banks to get those loans off of their balance sheets to go put capital back into the communities and allow for Fannie and Freddie to provide capital in the secondary market. Market. A lot of what you just talked about on an international basis and you started by saying, Jonathan, that you look at the US housing market and you look at some of these emerging housing markets and you sort of say maybe we've got it backwards now and maybe we're the ones who need to do some catching up on what we're doing. Housing in America has become wildly unaffordable. It's one of the reasons in our last earnings call, I underscored the affordability issue as it relates to underscoring the strength of multifamily family right now and over the next several years as we have a real single family housing crisis in America as it relates to affordability. I have heard you talk about how we've gotten to where we are with the gfc wiping out most of the independent home builders in America. And I had Ivy Zellman on the Walker webcast a couple weeks ago and Ivy talked about well over 50% of the US home building market is, is now controlled and supplied by the public home manufacturers where when ID began that was less than 10% were in a public format. And so you've gotten this massive consolidation down and then you lead that into the pandemic which messed up the supply chains and, and then after having the supply chains go down, you then had a huge demand increase as it relates to the desire for housing, which just push prices up. And then you also talked about the fact that now we're in a position where we have a lack of skilled labor in the housing market and that it's that combination of the loss of the independence into the messing up of the supply chains and the cost of the raw materials going up, a spike in demand and then a lack of supply and labor to build that supply that has gotten us into the kind of the pickle that we're into today. So with that as the preamble of the question and what's the solution?

A (44:04)

Yeah, you know, the, the sad news is there's no magic bullet. I, I wish there were. I think it's, but fundamentally it's supply that we can't really address it. And it's not necessarily supply everywhere. There's been a lot of sophisticated data that shows it's, it's sub parts of each market that are wildly under undersupplied. But you hit one of the big ones which was starter homes. Entry level homes is where we've got the biggest gap. And I would say still most new apartments that are coming online, you know, are coming online for families who can afford a $2,000 a month rent. That leaves out a lot of people. Or as the Harvard data would show, you've got a huge number of people paying 50% or more of their income on, on, on housing, which may, which forces really unacceptable choices about what else they can, they can afford for their families. So I think it is, you know what, as I talk to mayors, to me it starts with can we make it faster and easier to build? I mean it is interesting over time, time. And I think you need a local solution, a state solution, a federal solution, and then less relevant for the US but global in terms of, I think the groups like the EU and Africa Development bank and other groups can matter in terms of financing, which is a big piece of the puzzle. But if we think about making the housing value chain work without getting into politics, we need to create more construction trucks, trade and sort of bring honor back to the construction trades because our construction workforce is aging out. And in the current immigration environment, we're also pushing out some of the people who are critical to actually doing the building. I think you could argue.

B (45:46)

Jonathan, let me just one thing I do want to jump in on there, which is just that I have spoken to many of our developer clients about the access to labor. And to this point I have yet to have one of them say to me that getting labor is a problem today due to what's happening from an immigration standpoint. It may be an emerging issue. But I just. As you put that out there, I do think that there's a narrative right now in the market that says that because of what's happening from an immigration standpoint that is bringing down the supply of labor in the housing market and at least in the multifamily developers that I have, which may be, be that are clients of ours that may be distinct from the single family world. To this point, I'm not having anyone say we can't find labor and we can't find labor at an attractive price point.

A (46:33)

I, I think that's right. But I would say the attractive price point for those developers is a higher price, is, is a more expensive price point. So if you play it down through, I'll give an example. Post disaster, and we just had the 20th anniversary with Katrina, which happened right when I started, what we generally see is the wealthier markets and companies pull the skilled labor and then it sucks it out. So what happens is Florida has a storm. Florida pays better. Texas, the rural skilled labor goes into the urban areas because they pay better and then they go to Florida and there's not enough skilled labor in those rural areas to do the reconstruction and the rebuilding. So it's a little more nuanced, but I think it's more about a cost issue than a supply. Right now.

B (47:20)

You're spot on in the sense that the developers that talking to are not building the type of housing that you say we so desperately need. They are building the housing that we finance, which is that, to use your example, the $2,000 a month plus Class A apartment building and, and not necessarily the affordable housing that, that you are pointing out is so desperately needing the United States.

A (47:41)

So, so I wouldn't start there. I would start with Land and financing and then. But labor becomes one more input that, that all, all the inputs went up at the same time, which kind of exacerbated the, the supply challenge. Because ultimately, you know, there's a, there's a will issue and then there's a math issue. And we've got to, you know, if you look for all the reasons you shared, we didn't build enough. And then, you know, I remember one of ten years ago and being in these panels where we were going to be in the sharing economy and young people weren't going to want to own homes, I never really believed it. What did happen is they delayed homeownership because they had college debt and they were delaying getting married. And it's usually when you get married and start thinking about starting a family family that the life stage is suddenly, then you want more space and, and you want to own a home. But the attitudes towards home ownership had not really varied much at all across generations. And then when Covid came, everybody suddenly wanted more space. So I do think the big, the big impediment is land. And because rates were low for so long, land, you know, land. I think investors poured in and went after land. You know, we've had debates. I won't start that debate with you. So I think it can be overstated that the private equity owner buying up housing had a huge impact.

B (48:59)

I heard you mention that, that housing going from being a place you live to being an investable asset has been another contributing factor to it. But if you look at the large private equity firms and their ownership of the housing stock in America, it's less than 2%. And so while I listen to Elizabeth Warren in the Senate Banking Committee go haywire on private equity ownership of housing in America, it's less than 2. And so I'm hard pressed to think that Blackstone owning single family rental companies is what's distorting the market.

A (49:31)

I tend to think it's not a driver in specific suburbs of specific growth markets. It's probably exacerbated the issue, but that's pretty narrowly cast to places like Charlotte and Atlanta and a few others. But I agree with you. I don't think that's the main driver. I think the main problem is the population has grown in those markets, markets faster than the supply, and therefore you've got an imbalance. And this goes to both of the will and the math. I think if you're a developer, you're going to build until it's saturated at the higher end because there's More margin there. And so the question is ultimately, how do you make the math work for a. We're the warmest hearted developer you can find and we can't make the math work anymore. That house in Atlanta that appraised not that long ago for 150,000 is now appraising at 300,000. Fantastic. Fantastic for the families who already have a home. Not great for all the families who aspire because incomes have gone up just a little bit. So I think there are some interesting solutions. So one at the federal level, which I know your cohorts would strongly appeal, even though we don't do rental, we strongly support the low income housing tax credit because that's been a great vehicle for creating supply. Now you could debate about whether there should be a longer tail on lasting affordability because we're losing more units than we're creating right now, which is a challenge. On the home ownership side, there are a couple different things we would love to see at the federal level. The Neighborhood Homes Investment act is something we have bipartisan support for. We think this could be a great vehicle for historically more distressed cities and or that part of town that hasn't kept up in the growth. So you could pick a buffalo, you could pick parts of many cities that have not grown at the same level. What this would be would be a federal tax credit for the situation. Detroit and New Orleans would be an extreme example where you could buy a house relatively affordably, but by the time you fix it up, it won't appraise for what you had to buy, put into it and to do the repairs. This would be a tax credit that would cover that gap. We actually believe that could help hundreds of thousands of units be preserved and be on the market and create home ownership opportunities and then sold to income qualified buyers. We think that could be one of the faster ways to get a lot of units units moving. I think the next. And you've got some mayors doing some of this. Our Atlanta mayor, they just said, hey, if you bring a mixed income or affordable project, we're going to fast track your entitlements and put you at the front of the line. So that's something that actually doesn't cost the city very much, but actually is worth real money to a developer in terms of making it faster and easier to build. If you look at, I think actually Tokyo is a fascinating example. If you think in 70 years Tokyo went from wooden shacks to one of the largest cities in the world with all gleaming skyscrapers, but they always made it easy to build. And so the transitions were never that hard. And they also kept those neighborhood feel even as they did that constant, constant upgrading. And I think we've made it very difficult to build in the US in some markets and we've certainly also become economically segregated. And that's all in the another conversation. So what's happened is we have forced all the affordable housing into, into sub markets and locked them out of the a lot of communities of opportunity and long term that's bad for everybody.

B (52:50)

Does does Habitat. I, I, I heard a couple examples as you talked about what Habitat's done in for a, for a mixed use and mixed income community in Minneapolis for instance. And some of the work that you've done on a policy standpoint in Minneapolis to, to increase density where you were getting, you got it the, the laws changed from single family to units that dwellings that would allow for up to three units in it. And then some of the work that you all did in Portland, Oregon where you got legislation passed to allow for ADUs to be put onto properties, which is all great. But when I heard you talk about Minneapolis and Portland, I can think of almost. There are few other major cities in the United States and when I say major, you know, scaled cities, not, not tertiary cities that have more restrictive housing policy from rent control and other development restrictions. And I'm just curious, does Habitat sort of focus on those cities that are hard to, you know, hard nuts to crack, if you will, like Minneapolis and Portland, or are you rewarding those places where it's easier to develop and you're putting your dollars and your philanthropy and your volunteer time time behind those where you can actually get things done easier? And I know that's probably a difficult question because I think you're probably going to say we do it in both and we don't actually, if you will segment between those two. But I was just interested when I heard those two examples of Minneapolis and Portland because if you talk to Walker and Dunlop developer clients and I said give me two cities that you sort of said I am not going there. Given what local legislation has done from a housing policy standpoint, Minneapolis and Portland would be at the top of the the list.

A (54:31)

Yeah, so you're absolutely right. The way Habitat operates, your, your listeners may not know is all the work is done in the US through our local chapter. So we have about a thousand local Habitat affiliates who do the building work in their local communities. So we are red, blue, purple, urban, rural. We're really everywhere. And so it is an issue in a way we're local everywhere and we do work in all these countries communities. I would say the sweet spot for us was actually the places largely we work everywhere. But the, you know, when you think about the big Habitat affiliates, though, Twin Cities would be one. It's places like Dallas, Houston, Austin, you know, Tampa and Jacksonville and Orlando, it's Nashville and Birmingham, it's Atlanta and Charlotte and Raleigh. Places where historically we could build a lot of single family relatively affordably. The crisis for us in a way is those markets. Not that New York is impossible or California is impossible possible. It's that those markets have all doubled in the last five years because so many. And, and that's in a way the, that's really where the affordability crisis suddenly is showing up. And so I think it's interesting in the Twin Cities and you actually could differentiate St. Paul from Minneapolis.

B (55:42)

It's too early control in Minneapolis and you don't in St. Paul.

A (55:46)

The other way around. St. Paul tried to put in rent control and it failed. And then they pulled back because when they put it in, all the development, nonprofit and for profit stopped and went across the river. And then the city council said, well, we didn't mean that. And then they undid it. A year later, Berlin did exactly the same thing and with the same result. So in general, my bias would be towards things that don't constrain supply because we actually need more. If your problem is supply, I would say the way it's been implemented, I'm actually in favor, very much in favor of soft density, whether it's accessory dwelling units or being able to build multiple units on a single family lot. Because you've probably seen the maps of every major city in the US Most of the city is designated single family only. And there's no question that is constraining and rather the images. We're going to build high rises in every residential community. That's not going to happen. But we need density near transit. And then I think if you can fit. I think adus is not a magic bullet either, but it does create more housing opportunities in areas. You know, Habitat in Seattle has an example where they, they've got permitting to put in four tiny units on one lot and those become starter homes. They're not perfect, right? These are little tiny condos. But it gets a family in the game for the first time. Now they can build a little equity and then they're on a path to be able to buy a larger home over time. And so, and it means they get into a community of opportunity because if, if you look at the Raj Chetty data data, it's really overwhelming, you know, that low income kids in mixed income communities still kind of experience the American dream. Their social mobility is pretty positive. But low income children in areas of concentrated poverty really have no mobility. And my hometown of Atlanta was 49 out of 50 for social mobility, even though it was pretty good on affordability because in fact what we have done is concentrated these low income families. And so that is why we are really focused on how do we create, create ultimately mixed income communities, which I think is better for everyone, the data would say, but I would say are, you know, it's understandable when, when someone's primary asset is their home, they suddenly get much less friendly about letting anything happen that they perceive rightly or wrongly that could hurt their property values.

B (58:08)

Yeah, I, you know, and that gets back to your comment as it relates to private equity firms and housing going from being a place to live to an asset. But I, I guess there are two other things that I want to touch on before we run out of time and I know I'm going to run out of time with you and I could keep talking for another hour. The first one is I've heard you talk about land and that many cities in America have a lot of land that, that can be turned into land for housing. And I was very hopeful at the outset of the Trump administration that Interior Secretary Burgum, who talked extensively about, if you will, energizing the asset side of the US Balance sheet, I thought that his idea to take public land was going to allow for things like military bases and a federal office building that's no longer being used and allow them to take that land and turn it into housing and be able to create density inside of American cities. And as you know very, very well just Jonathan, that his ideas basically hit a very solid brick wall in the, in the, in the big beautiful bill and, and had no, no political support in it and as a result of it died pretty quickly. I think mostly on the environmental concerns as it relates to taking national forests and turning them into development sites rather than trying to use some of this land that's in urban settings owned by the federal government that could actually really make an impact on the housing supply issue. But your comment on cities owning land and converting that land is an interesting one. And there I would assume that governors and mayors have the ability to entitle that land and either sell it or do leasing of that land to allow for more density. And then the other one that I'd love you to touch on before we run out of time is just manufactured housing and modular because the manufactured housing, I mean you can get, you can basically get entitled to build a nuclear power facility in the United States easier than you can get entitlement to build manufactured housing or turn it, turn, turn something into a, into a manufactured housing community. And that, that would seem to be the easiest place for us to start to build modular housing or to build mobile home parks that would allow for huge supply at a relatively low cost and yet we can't get the entitlement there. I thought that what Bergen was going to do was going to allow us to get some real inroads there. And then the, on that is. Why do you think it is that none of this manufactured housing or modular housing has been able to actually create a business case that works? I mean Katera is a fantastic example of billions of dollars going to no end. There's still some startups that are out there, but when I've spoken to CEOs of large single family home manufacturers, not a one of them says that there's a technological innovation coming down the lane that is going to really bend the cost curse curve and make it so we can create housing at a cheaper cost. So could you touch on land and, and, and, and, and manufactured housing or modular for a moment before we, we have to end?

A (61:09)

Absolutely. So land first because it's all about, I mean ultimately to make the math work, it's going to be land or financing or both. And so, you know, tax credits is one side of financing. And cities do own a lot of land. And what we've seen is when we do inventories, it's usually broken into three or four or five different groups. But often the school system owns a boatload of land, the housing authority owns a bunch of land, the city has random bits of land and then you've got multiple other groups. Sometimes there's a land bank, sometimes there's. And, and the fastest way to get going is to use that land because that's a way. And then, you know, one of the compromises we've done is we've talked more about lasting affordability. So our, our niche has been affordable home ownership because we believe not only do the family benefit, but community benefits from a percentage of homeowners in the community. And there's a lot of data behind, behind that. But not everyone should be a homeowner. But what we do see is that, that there's a tension between, is the goal to build the wealth for the family versus to build more supply. And my answer is both. We want, we ideally want both. The compromise if a city's willing to provide land is they don't want that land to flip to market in five years. So what we're now seeing, seeing widely it started for us in the high cost markets is long term deed restrictions or shared equity models or land trust models. There's multiple vehicles that means the family owns the house, but they can only then sell back either into habitat or to another income qualified family. So you're ensuring lasting affordability, but with that then should come like a conservation easement, a reduction in property taxes. So you're actually also then helping the family on affordability which allows them to create some savings. So for us there's a middle ground.

B (62:53)

Which is what you did in Frederick, Maryland, right?

A (62:56)

Yeah, we've done it in many places. Yeah, yeah.

B (62:58)

Right, yeah. And so then on, on modular, why do you think it is that modular hasn't been able to create a sustainable business model?

A (63:05)

Yeah, you know, I've been talking to a lot of smart people, you know the, the big guys that you, you referenced. I've been told they spent a fortune on technology and it was, it was, you know, you know, they had a ton of cheap money and went way too big. We've seen good small scale examples and I think there's, it's also context. So I'm not sure modular will be the answer necessary for building urban traditional apartments. But for us, like a rural affiliate that doesn't have that much capacity, we can create a triangle with the USDA assuming they'll keep funding it with their rural housing program, rural low cost financing. The affiliate does the family selection support and support, but then they outsource and bring in a modular builder to build the units. They can then build a whole neighborhood instead of building one or two houses. And that could accelerate much faster because we have a rural housing problem as well. So I'm actually very enthusiastic about that. But I think it's going to be context specific. I do, I think manufacturing housing has a bad reputation that's out of date. You know, modular, you've seen you can build $10 million modular homes. You can build very simple modular homes. So it's not the fact that it's built in a factory, it's what you decide to build. And that's going to be spec to the desires of the community. But it should be more efficient if skilled labor is tight to build and build in a factory and assemble on site if the transportation is reasonable. So it's not a. I don't think it's a. Again, no magic bullet, but I do think it's going to be a growing opportunity. I met one very smart guy who's a leader in 3D printed auto parts and his thesis, though this is early days, is you should 3D print the panels in the factory and then assemble on site. That that's going to be the sweet spot over time to minimize materials cost and actually start bending the curve to be determined. But I do think there can be manufactured housing would claim they can get about 25% cheaper building in the factory. But you've got to. But it is very context specific and when you get in cities, it's a little tougher. It's easier to do that in a new suburban neighborhood than it is to, to navigate, you know, power lines and traffic lights and everything else to bring that stuff into, into a downtown environment. So. But I'm still, I think we need all of it. My view is the more the better.

B (65:21)

I would say that there are two things from yours and my, you know, 1980s, 1990s life. We lived in of two industries that got really bad reputations during that period of time. Time that our nation must get over if we're going to meet our energy needs and our housing needs and that is nuclear energy. We have got to get over Three Mile island and what happened there. And we've got to get ourselves investing in nuclear energy. And the other is mobile home parks have got to be branded as manufactured housing. We've got to forget about what mobile home parks are to most people yours and my age. And we've got to think about manufactured housing allowing for the entitlement of land to put manufactured housing communities on them to be able to build supply where supply is needed and get out of that old thing that I don't want a mobile home park in my backyard. If we could get those two things taken care of, Jonathan, I think we could make great progress on our energy needs as well as our housing needs.

A (66:13)

Well, and we, you know, we started the conversation about Charlottesville and I'll maybe close with, with a nice example of that. Charlottesville, a lot of mobile home parks are getting redeveloped and they're just evicting everybody. In Charlottesville, Habitat worked with local communities and instead of evicting everybody, they got agreement to dramatically increase the density. So they did a smaller one first. Now they're doing a much bigger1 with 360 units. They're getting 100% retention of anyone who wants to stay and they're doing a mixed income project with homeownership rental and apartments. So they're. I think it's a nice example of, you know, of a win win that's creating more, you know, in a no longer affordable market market to create a lot more housing units, but not just kicking everybody out. And I think we need more of that kind of multi sector creativity to come up with better solutions.

B (67:01)

No doubt. You have been very generous with your time and I have run over dramatically. I usually stop right at the bottom of the hour. But you and I were too into an incredibly important piece of this whole thing. So I'm gonna have to have you come back for part two of this discussion and talk about some other things in more detail. But Jonathan, thank you so much for joining me. Thank you. It's been a real pleasure. Greatly appreciate your ideas and your more, more, more specifically and more importantly, your leadership of Habitat and all that Habitat for Humanity does, both in the United States and around the globe.

A (67:32)

Oh, Willie, great to be with you. I enjoyed the conversation. Thanks so much.

B (67:36)

Great. Thanks everyone for joining us. Have a great day and we'll see you again next week. Thanks, Jonathan. Thank you, Sam.