June 18, 2024 • 23 mins
Discover the transformative power of investing in each other as we tackle market and social problems head-on. This episode kicks off with Elias Krim, who proposes a radical "third way" in economics through social co-ops emphasizing human-scale economies and community engagement. We’ll also uncover the environmental and social repercussions of PetroPeru's oil and gas activities in the Amazon, driven by financial instability, and explore Connecticut's innovative debt relief program designed to combat healthcare worker shortages and burnout. In a compelling discussion, we’ll also dissect the significance of divestment, particularly in light of student protests against university investments in major weapons manufacturers.
Join us as David Lidz of Streetwell shares his remarkable journey from personal recovery to social enterprise and community revitalization. You'll learn how his struggle with addiction led to the creation of an employee-owned contracting company and an impactful real estate portfolio focused on historically neglected neighborhoods. We then shift gears to reveal how cooperative economics can transform businesses into genuine community assets. With insights from Paul Saginaw of Zingerman, we illustrate the real-world success of prioritizing fair wages, good benefits, and community reinvestment over profit maximization. Prepare to be inspired by stories of enhanced worker compensation, improved worksite conditions, and true community upliftment.
https://streetwell.co/
https://www.wmar2news.com/local/an-employee-owned-cooperative-is-taking-on-baltimores-vacant-housing-crisis
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Arc Integrated
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Joel (00:00):
What if investing in each other could change the world?
I'm Joel Skeen with bizradiousand this is the Mindful
Marketplace, very grateful toget to spend this time here with
you all today, if this is yourfirst time with us on this
program.
We talk to a variety of peopleentrepreneurs, advisors,
(00:22):
industry leaders, investors,economic experts.
All of them are not only justsolving a market problem to make
a profit, but they're alsosolving a social problem to make
an impact, and they arequestioning the assumption that
there's just one bottom line inbusiness and in investments.
Today I'll be talking withDavid Liggs of Streetwell, but
(00:43):
before we get into ourconversation with him and the
good work he's doing in theBaltimore area, we got to hit
the balance sheet the assets,liabilities, debts and
investments All right In theassets column.
There was a really greatinterview in the Main Street
Journal with Elias Krim.
Elias Krim founded a groupcalled Solidarity Hall around
(01:04):
2012 to discuss what he calls athird way in economics, which is
neither capitalist nor statesocialist, but rather the
economy of people, the humanscale economy, including
informal economies.
He describes a third way as theeconomy for people.
Krim is particularlyenthusiastic about the idea of
importing the foreign model ofsocial co-ops into the US, which
(01:26):
are primarily created todeliver different forms of
social care at high quality andlow cost.
Social co-ops, like workerco-ops, are worker-owned and
democratically managed, but theyare multi-stakeholder and can
include things like volunteers,family members, community
members.
And while there are no fullblown social co-op models in the
(01:47):
US currently, there areopportunities for investors to
find co-op opportunities with amodest rate of return for
investors, but also a socialrate of return, especially in
their own communities.
Crim definitely acknowledgedthat there are some challenges
in finding listings ofinvestment ready co-ops, and
many of them are usingcrowdfunding.
(02:08):
But what's cool is that CRIM isabout to begin a social co-op
academy to educate people incollaboration with this group,
the Rocky Mountain EmployeeOwnership Center, covering
topics such as the modeloverview, advantages, financing,
business foundation andexperiences of practitioners in
certain care sectors and publicpolicy implications.
(02:28):
All right next in theliabilities column.
So last week, a delegationtraveled thousands of miles to
tell the leadership of WallStreet's biggest banks to stop
lending money to Petro Peru,which is Peru's state-owned oil
company.
The company's relentlesspursuit of oil and gas, they say
, is threatening the lives andlivelihoods of local communities
(02:50):
and destroying the world'sthird largest forest carbon sink
, which is very important to theAmazon rainforest.
They say it's edging closer toan irreversible tipping point.
Indigenous communities inhabitone of the most intact and
biodiverse areas of the planetin the northern Peruvian Amazon,
(03:12):
which is crucial for the futureof a lot of different
ecosystems on the planet.
The relentless pursuit of oiland gas by Petro Peru is
threatening the lives andlivelihoods of local communities
.
Petroperu is threatening thelives and livelihoods of local
communities.
The delegation traveled to theUS to tell the leadership of
Wall Street's biggest banks tostop lending money to PetroPeru.
Citi and Goldman Sachs were theonly banks that they actually
(03:34):
got to meet with face-to-face tohear the delegation's case,
while JPMorgan Chase had agreedto meet but then canceled just
before it was scheduled to takeplace.
Petroperu is reportedlyconsidering arranging a new $1
billion bond, as it needs anadditional $2.2 billion to
survive creating this pressureto drill for more and more oil.
(03:56):
Petroperu is deeply in debt toother banks and is facing
financial collapse as thoseloans come due, unless it can
maximize its oil production andsecure new financing.
All right in the debts column Iwant to talk about.
Connecticut has launched astudent debt relief program for
healthcare workers, so a newprogram is launching in
(04:17):
Connecticut to tackle studentloan debt and recruit and retain
healthcare providers.
Certain medical professionalscan apply to receive tens of
thousands of dollars of studentdebt relief.
The program targets providersworking in primary care, dental,
mental health care and in otherunderserved areas of the state.
Future nurses and physiciansassistants at Quinnipiac
(04:40):
University are preparing for theworkforce, amid soaring costs
of medical education.
Quinnipiac University arepreparing for the workforce,
amid soaring costs of medicaleducation.
The program aims to combatworker shortages and the burnout
in the wake of the pandemic,providing $13.5 million in
federal funding.
The program requires acommitment to work or already
working in the designated areasof need in Connecticut for two
(05:03):
years, with full-time providersreceiving $50,000 for student
loan repayments and part-timeprofessionals being able to
receive $25,000.
The program can help pay offprivate debt and is seen as a
win-win for students,professionals and patients.
And remember, in order tocombat the debt crisis, the
Mindful Marketplace is actuallyoffering all of our listeners
(05:24):
with a free, customized reporton how you can best eliminate
personal and business debt,based on what you're already
doing and giving you theinformation on the debt you
already have.
Lots of families are able touse this report to eliminate all
their debt, including mortgages, in nine years or less without
spending any additional money.
You can get free from debt bygoing to
mindfulmarketplaceshowcom to getyour free personalized debt
(05:48):
report.
Lastly, in the investmentscolumn.
So there's a lot of talk rightnow about the student protests
and divestment, so I figuredwe'd take just a couple minutes
just to answer the questionreally quick.
What is divestment?
There are lots of articlesabout this.
I felt like this Vox one did apretty good job of giving an
overview.
Div.
There are lots of articlesabout this.
I felt like this Vox one did apretty good job of giving an
overview.
Divestment is essentiallyreversing an investment and the
(06:08):
goal of divestment movementsgenerally is generated social
and political pressure on thecompanies that are the targets
of divestment.
So right now the students areactually, across the country,
are making some specific demandsaround this, seeking to focus
their efforts on divesting frommajor weapons manufacturers that
universities have alreadyinvested in, ensuring that their
(06:31):
universities no longer acceptresearch funding from, you know,
say, the military or weaponsproducers, or ending academic
partnership with theinstitutions they want to divest
from.
Divestment has been a tacticembraced by protesters in
previous student movementsopposing South African apartheid
regime and fossil fuelcompanies contributing to
(06:53):
climate change.
Those calls for divestment havehad varying degrees of success.
To what degree?
On how you define success inthose terms, either financial or
in political impact.
Current calls for divestmentfrom Israel are an outgrowth of
the broader Boycott, divest,sanctions Movement, or BDS
(07:14):
movement, which originated in2005 and was inspired by the
movement to divest from SouthAfrican apartheid.
The BDS movement has called onbanks, local councils, churches,
pensions funds and universitiesto quote withdraw investment
from the state of Israel and allIsrael and international
companies that sustain Israeliapartheid.
(07:34):
All right, that is the balancesheet.
I am really looking forward togetting to dig in deep here with
someone who I'm getting to knowbetter and better and whose
work has really impressed me,david Litz.
David, welcome into theconversation, really glad to
have you today.
David (07:51):
Really great to be here.
Joel, Thanks for having me.
Joel (07:53):
Yeah, so enlighten our listeners a little bit about
yourself.
We talk a lot on this showabout things like social
enterprise around using businessfor good, to do positive
community development, and thosewords all sort of became
popular in the last 10-ish,maybe 15 years or so, but it
sounds like this idea of doinggood with business wasn't
(08:18):
something you read in a book orheard in a TED Talk or heard a
buzzword somewhere.
It was something you've beendoing just for a long time.
David (08:26):
Yeah, thanks, joel.
So yeah, I'll give you thefive-minute bio that explains
how I stumbled into socialenterprise.
And it starts with me having agovernment relations career in
the 90s, both in Annapolis atthe state level and in
Washington DC at the at thestate level and in Washington DC
at the congressional level, andalso having a severe drinking
(08:47):
problem.
So I'm an alcoholic.
I drank my career andeverything else that was dear to
me away and I ended up, youknow, sinking to a pretty low
bottom, so sleeping in the woods, smelling bad, scuffling with
police, that kind of stuff.
In July of 2002, my dad threwme into a rehab where I got it
(09:15):
like.
I got really impassioned aboutthe idea of spiritual recovery
and what I learned in there isthat in order to stay sober, I
have to stay close to mycommunity, in that case the
sobriety community, and also tohelp other alcoholics and
addicts who are trying to riseup from this abyss.
(09:37):
No-transcript.
But I also found out thatnobody wanted to employ me
because of my recent past.
You know Capitol Hill wasn'ttaking me back, home Depot
wouldn't even hire me.
(09:57):
So I was kind of like hangingaround the streets of West
Baltimore going to my, inbetween my halfway house and
meetings and I found some catsthat were working on foreclosed
vacant properties.
They were cutting the grass andcleaning them out, tarping
(10:20):
leaking roofs, changing thelocks and I got to talking to
them and they didn't care aboutmy recent past.
I got work, you know, cuttinggrass and changing locks and
trashing out properties and longbefore I'd ever heard the term
social enterprise, what I hadstumbled my way into, quite
literally, is what I now, nowthat I know the lexicon, I call
(10:43):
a low barrier employmentopportunity.
No check the box, no trainingneeded.
I could come in and startcutting the grass and learn my
way up from there.
And what I had stumbled intowas an opportunity.
We were hired as 1099contractors and we could build
our little businesses inwhatever direction and as big as
(11:07):
we wanted to.
So I stuck with it.
It started to grow, the littlecontracting company.
As it grew, I did what I washearing in these recovery rooms,
which is to help others thatare trying to follow the path
(11:27):
that I'm now on.
So I hired people coming backfrom rehab and people coming
back from jail Again, notbecause I had ever heard the
word social enterprise, but thisis what I was doing to stay
sober myself and to staygrounded.
That model kind of just grewover the years.
I got some licenses.
I got my real estate license, Igot my general contracting
license, I started to get myreal estate chops, so to speak.
(11:49):
My real estate chops, so tospeak, started talking to
investors and doing someproperty management, which led
to us opening up some soberhouses, some recovery residences
and still long before I'd heardanything about any of these
terms like employment, socialenterprise or housing first
models we had all that.
We had a model where folkscould come back from rehab or
(12:10):
jail.
We had a model where folkscould come back from rehab or
jail, get a bed in one of oursober houses and get stabilized
and start getting engaged inpeer recovery programming,
recovery programming and oncethey were stabilized and had
(12:41):
some footing they could comeover to the construction company
and stay with us temporarily tokind of get back on their way
or grow, you know, advance theirskills and grow with us.
As we turned in at this point toa full scale renovation company
.
Again, we are a company thatspecializes in managing,
maintaining and renovatingforeclosure stock for pretty
much national lenders orgovernment institutions like
Fannie Mae or FHA or Freddie Mac, and we are finding more and
(13:04):
more that these institutions aresending us into really poor
urban neighborhoods throughoutthe Maryland DC region.
Urban neighborhoods throughoutthe Maryland DC region and,
unlike the rich neighborhoodsthat they send us to, which
would be like Montgomery County,maryland or Potomac Maryland,
when they send us there, theysend us to do a full renovation,
get the property ready to goback on the market so that
(13:28):
community can enjoy some form ofrecovery.
But when they send us toBaltimore or to historically
redlined blocks of Hagerstown,maryland, or to Prince George's
County, which is a majorityblack county in Maryland that
was just decimated by theforeclosure, by the Great
(13:49):
Recession, they're just sendingus there to board up and to
abandon these assets and at thesame time, they don't like, they
don't give a crap about oursocial mission, they don't pay
us well, they don't want to likehelp us with our sobriety
programming.
So we come up with a thesiswhich is hey, man, why don't we
(14:10):
become our own developer?
Why don't we see if we canraise some money and start
buying some of these assets,focus, investment of our own in
what we are now understandinghistorically redlined and
historically oppressed Baltimoreneighborhoods, and if we can do
that, if we can raise someimpact investment I know we are
(14:32):
kind of on the lingo, you knowwith some catalytic terms, some
concessionary terms, someimpactful terms, we could raise
a neighborhood that's been justhistorically abandoned and
trashed for generations by ourfinancial institutions.
We could create better pay andbetter supports for ourselves
(14:55):
institutions, we could createbetter pay and better supports
for ourselves.
Once we finish these severelydistressed homes that we're
renovating, we could rent themout and create a form of
affordable housing.
And we're doing all this in ashared equity or a cooperative
kind of model, which we call animpact real estate portfolio.
We can distribute the equity ofeverything we've built to the
workers that did the work and tothe tenants that moved in, and
(15:15):
then to other neighborhoodstakeholders.
Began pitching this around 2018,17 or so by 2019,.
We get a funder.
That's Seed Commons little bitlater about what that looked
like, but short of it for now isthey funded our conversion from
(15:37):
this construction company thatI had begun called Appalachian
Field Services.
They funded the conversion ofthat from me being the sole
owner into an employee-ownedco-op, and then they advanced
their funding as they got toknow us better, to support this
IREP model and by now they haveissued a $5 million line of
credit for us and we are up to22 properties, 30 workers and we
(16:04):
can get in maybe a little later.
It's probably time for me toshut up here, but about all the
impact that financing and thismodel has driven.
Joel (16:12):
Well, and it sounds like, because there's a bunch of stuff
I'd love to follow up with youon and we'll follow up here, but
also this is going to be atwo-part conversation where
we're going to get to dig alittle deeper.
You mentioned, you know, I usedto be in in homeless case
management and so there's a lotof stuff I'd love to talk to you
about housing first and allthat.
But to to kind of stay on ontopic, you know I was thinking
(16:35):
about what you said when youwere talking about the
difference between the way thatyou, the companies, have you,
approach the one neighborhoodfrom the other.
The redlined neighborhood thathasn't had the same access to
resources has actually beendivested in.
We were talking aboutdivestment earlier.
That's actually been divested infrom Wall Street and private
(16:57):
equity versus these otherneighborhoods that are being
invested into.
And it seems like there's justa fundamental mindset difference
between the way you and yourgroup are thinking about doing
real estate investment or doingbusiness development investment
and the way that some of thoseother groups might be doing that
(17:20):
, and I think that that mightkind of get a little bit to the
more holistic approach that youand I have talked about, that
you take in your business where,yes, profit is important,
profit is a thing that must behad in order for a business to
stay in business, but thatthere's more to it than that.
In the long run, a lot ofpeople, when it comes to
business, would just say, well,just maximize profit and that's
(17:43):
kind of the only thing thatreally, at the end of the day,
you know when the rubber meetsthe road, that really is going
to matter.
I guess you know how has thatmindset, how has that mindset
set up the work that you'redoing now?
David (17:59):
Oh, it's so, it's so exciting.
So for years this was justtheoretical, but now we're like,
really in it and so I can giveyou some, um, I can give you
some great examples.
So, uh, yes, we're all forprofit.
We are a for-profit cooperative.
So, um, we don't get anythingin the way of grants, really a
couple little nickels and dimeshere and there.
But, um, we use a loan to goout and purchase and renovate
(18:24):
these properties alone that wethen have to pay back Again.
The rates are very good thatwe've got I hope we talk about
that later.
But, to your point, a littlewacky at the beginning because
we emerged into this idea askind of a startup.
So we're like, figuring out ourway and then COVID happens.
But now we're at the point inthe last 18 months or so where
(18:45):
we are emerging intoprofitability and into, you know
, beyond break-even, and intoprofitability and towards a
positive balance sheet.
And so some of the things thatwe're experiencing in this
community equity model, which iswhat it is, is we are highly
focused on providing good wagesand good benefits for our
(19:06):
workers, which was a thing wecould not do when we worked for
these corporations and for thelike, contracting with the
federal government, with thesesupposedly white-hat agencies,
you know, like FHA and FreddieMay, we could not pay our.
So our wage range prior to 2019, when we converted to co-op,
was $11 an hour to $17 an hourand at the time we've only
(19:30):
stayed like $2 ahead of minimumwage.
I think minimum wage wassomewhere around nine or 10.
Anyway, 11 to 17.
And then, since we've convertedand really gotten our proof of
concept to prove out, our wageshave not.
We have taken this thing thatyou might otherwise call profit
and we've invested in our ownworkers.
We've, you know, let our ownworkers own the fruits of their
(19:53):
labor and our wage range hasshifted from 17 to $48 an hour,
I think, in like three yearstime.
And again we're about to, whichis just, by the way, it's
amazing and we have somebenefits now and we're able to
train much better and run saferand cleaner work sites and we're
(20:17):
able to invest in thesurroundings.
So outside of our property anyproperty we might own there
might be abandoned vacant lotsthat are full of trash and rats
and lead and all that, and wecan spend a little money on
investing and just cleaning upour more.
You know, a community.
Look at how we own an assetRight, we are now looking at
(20:39):
popping into a positive balancesheet, probably in 2025, maybe
2026.
And now we'll have this realconversation where, at the end
of the year, we'll say, hey, wehave these profits, do we want
to distribute dividends to ourworkers and tenants and we have
a growing value in our balancesheet?
(21:00):
How do we want to talk aboutand distribute that equity to
our cooperative members in theform of, like, long-term wealth
building, pulling everything youcan out you know to I don't
(21:27):
know become uber rich and youknow, when you're not solely
focused on profit but insteadyou think of reinvestment and
thinking of lifting up yourpeers and yourself.
I just think it's a way morecreative and way more powerful
way to run an economy, and Ithink we have a great like
little Petri dish showing thatthere's truth to this man.
Joel (21:48):
Yeah, and that's why I wanted to have you on was to
show those examples.
Paul Saginaw, who startedZingerman's up in Michigan
they're now one of the biggestfood distribution and restaurant
kind of worker-owned co-ops upthere told me once that it's
amazing what you can accomplishin business when your main goal
isn't to make money, you'll makemoney, but like when your main
(22:09):
goal is to do something else.
And that's what I see you doingand I'm really looking forward
to digging in and part two withyou here on, more specifically,
on how you let those valuesevolve from um, where you're
starting a business with amission, to where you're
actually making it a communityasset, to where you're actually
making that business an assetfor the community, not just an
(22:32):
asset for your own portfolio.
So really excited to dig inwith you on that.
Remember, you can listen to usnow on all of the Spotify,
itunes, iheart Stitcher all ofthe places you get your podcasts
.
Obviously, listen to us livehere on Biz Radio US on Tuesdays
and check us out on YouTube.
(22:52):
Now we are up on video onYouTube, so subscribe there as
well and until next time, tunein next week to listen to the
rest of the conversation withDavid Lids and until then,
remember we are each other.
What if investing in each other could change the world?
I'm Joel Skeen with bizradiousand this is the Mindful
Marketplace, very grateful toget to spend this time here with
you all today, if this is yourfirst time with us on this
program.
We talk to a variety of peopleentrepreneurs, advisors,
(00:22):
industry leaders, investors,economic experts.
All of them are not only justsolving a market problem to make
a profit, but they're alsosolving a social problem to make
an impact, and they arequestioning the assumption that
there's just one bottom line inbusiness and in investments.
Today I'll be talking withDavid Liggs of Streetwell, but
(00:43):
before we get into ourconversation with him and the
good work he's doing in theBaltimore area, we got to hit
the balance sheet the assets,liabilities, debts and
investments All right In theassets column.
There was a really greatinterview in the Main Street
Journal with Elias Krim.
Elias Krim founded a groupcalled Solidarity Hall around
(01:04):
2012 to discuss what he calls athird way in economics, which is
neither capitalist nor statesocialist, but rather the
economy of people, the humanscale economy, including
informal economies.
He describes a third way as theeconomy for people.
Krim is particularlyenthusiastic about the idea of
importing the foreign model ofsocial co-ops into the US, which
(01:26):
are primarily created todeliver different forms of
social care at high quality andlow cost.
Social co-ops, like workerco-ops, are worker-owned and
democratically managed, but theyare multi-stakeholder and can
include things like volunteers,family members, community
members.
And while there are no fullblown social co-op models in the
(01:47):
US currently, there areopportunities for investors to
find co-op opportunities with amodest rate of return for
investors, but also a socialrate of return, especially in
their own communities.
Crim definitely acknowledgedthat there are some challenges
in finding listings ofinvestment ready co-ops, and
many of them are usingcrowdfunding.
(02:08):
But what's cool is that CRIM isabout to begin a social co-op
academy to educate people incollaboration with this group,
the Rocky Mountain EmployeeOwnership Center, covering
topics such as the modeloverview, advantages, financing,
business foundation andexperiences of practitioners in
certain care sectors and publicpolicy implications.
(02:28):
All right next in theliabilities column.
So last week, a delegationtraveled thousands of miles to
tell the leadership of WallStreet's biggest banks to stop
lending money to Petro Peru,which is Peru's state-owned oil
company.
The company's relentlesspursuit of oil and gas, they say
, is threatening the lives andlivelihoods of local communities
(02:50):
and destroying the world'sthird largest forest carbon sink
, which is very important to theAmazon rainforest.
They say it's edging closer toan irreversible tipping point.
Indigenous communities inhabitone of the most intact and
biodiverse areas of the planetin the northern Peruvian Amazon,
(03:12):
which is crucial for the futureof a lot of different
ecosystems on the planet.
The relentless pursuit of oiland gas by Petro Peru is
threatening the lives andlivelihoods of local communities
.
Petroperu is threatening thelives and livelihoods of local
communities.
The delegation traveled to theUS to tell the leadership of
Wall Street's biggest banks tostop lending money to PetroPeru.
Citi and Goldman Sachs were theonly banks that they actually
(03:34):
got to meet with face-to-face tohear the delegation's case,
while JPMorgan Chase had agreedto meet but then canceled just
before it was scheduled to takeplace.
Petroperu is reportedlyconsidering arranging a new $1
billion bond, as it needs anadditional $2.2 billion to
survive creating this pressureto drill for more and more oil.
(03:56):
Petroperu is deeply in debt toother banks and is facing
financial collapse as thoseloans come due, unless it can
maximize its oil production andsecure new financing.
All right in the debts column Iwant to talk about.
Connecticut has launched astudent debt relief program for
healthcare workers, so a newprogram is launching in
(04:17):
Connecticut to tackle studentloan debt and recruit and retain
healthcare providers.
Certain medical professionalscan apply to receive tens of
thousands of dollars of studentdebt relief.
The program targets providersworking in primary care, dental,
mental health care and in otherunderserved areas of the state.
Future nurses and physiciansassistants at Quinnipiac
(04:40):
University are preparing for theworkforce, amid soaring costs
of medical education.
Quinnipiac University arepreparing for the workforce,
amid soaring costs of medicaleducation.
The program aims to combatworker shortages and the burnout
in the wake of the pandemic,providing $13.5 million in
federal funding.
The program requires acommitment to work or already
working in the designated areasof need in Connecticut for two
(05:03):
years, with full-time providersreceiving $50,000 for student
loan repayments and part-timeprofessionals being able to
receive $25,000.
The program can help pay offprivate debt and is seen as a
win-win for students,professionals and patients.
And remember, in order tocombat the debt crisis, the
Mindful Marketplace is actuallyoffering all of our listeners
(05:24):
with a free, customized reporton how you can best eliminate
personal and business debt,based on what you're already
doing and giving you theinformation on the debt you
already have.
Lots of families are able touse this report to eliminate all
their debt, including mortgages, in nine years or less without
spending any additional money.
You can get free from debt bygoing to
mindfulmarketplaceshowcom to getyour free personalized debt
(05:48):
report.
Lastly, in the investmentscolumn.
So there's a lot of talk rightnow about the student protests
and divestment, so I figuredwe'd take just a couple minutes
just to answer the questionreally quick.
What is divestment?
There are lots of articlesabout this.
I felt like this Vox one did apretty good job of giving an
overview.
Div.
There are lots of articlesabout this.
I felt like this Vox one did apretty good job of giving an
overview.
Divestment is essentiallyreversing an investment and the
(06:08):
goal of divestment movementsgenerally is generated social
and political pressure on thecompanies that are the targets
of divestment.
So right now the students areactually, across the country,
are making some specific demandsaround this, seeking to focus
their efforts on divesting frommajor weapons manufacturers that
universities have alreadyinvested in, ensuring that their
(06:31):
universities no longer acceptresearch funding from, you know,
say, the military or weaponsproducers, or ending academic
partnership with theinstitutions they want to divest
from.
Divestment has been a tacticembraced by protesters in
previous student movementsopposing South African apartheid
regime and fossil fuelcompanies contributing to
(06:53):
climate change.
Those calls for divestment havehad varying degrees of success.
To what degree?
On how you define success inthose terms, either financial or
in political impact.
Current calls for divestmentfrom Israel are an outgrowth of
the broader Boycott, divest,sanctions Movement, or BDS
(07:14):
movement, which originated in2005 and was inspired by the
movement to divest from SouthAfrican apartheid.
The BDS movement has called onbanks, local councils, churches,
pensions funds and universitiesto quote withdraw investment
from the state of Israel and allIsrael and international
companies that sustain Israeliapartheid.
(07:34):
All right, that is the balancesheet.
I am really looking forward togetting to dig in deep here with
someone who I'm getting to knowbetter and better and whose
work has really impressed me,david Litz.
David, welcome into theconversation, really glad to
have you today.
David (07:51):
Really great to be here.
Joel, Thanks for having me.
Joel (07:53):
Yeah, so enlighten our listeners a little bit about
yourself.
We talk a lot on this showabout things like social
enterprise around using businessfor good, to do positive
community development, and thosewords all sort of became
popular in the last 10-ish,maybe 15 years or so, but it
sounds like this idea of doinggood with business wasn't
(08:18):
something you read in a book orheard in a TED Talk or heard a
buzzword somewhere.
It was something you've beendoing just for a long time.
David (08:26):
Yeah, thanks, joel.
So yeah, I'll give you thefive-minute bio that explains
how I stumbled into socialenterprise.
And it starts with me having agovernment relations career in
the 90s, both in Annapolis atthe state level and in
Washington DC at the at thestate level and in Washington DC
at the congressional level, andalso having a severe drinking
(08:47):
problem.
So I'm an alcoholic.
I drank my career andeverything else that was dear to
me away and I ended up, youknow, sinking to a pretty low
bottom, so sleeping in the woods, smelling bad, scuffling with
police, that kind of stuff.
In July of 2002, my dad threwme into a rehab where I got it
(09:15):
like.
I got really impassioned aboutthe idea of spiritual recovery
and what I learned in there isthat in order to stay sober, I
have to stay close to mycommunity, in that case the
sobriety community, and also tohelp other alcoholics and
addicts who are trying to riseup from this abyss.
(09:37):
No-transcript.
But I also found out thatnobody wanted to employ me
because of my recent past.
You know Capitol Hill wasn'ttaking me back, home Depot
wouldn't even hire me.
(09:57):
So I was kind of like hangingaround the streets of West
Baltimore going to my, inbetween my halfway house and
meetings and I found some catsthat were working on foreclosed
vacant properties.
They were cutting the grass andcleaning them out, tarping
(10:20):
leaking roofs, changing thelocks and I got to talking to
them and they didn't care aboutmy recent past.
I got work, you know, cuttinggrass and changing locks and
trashing out properties and longbefore I'd ever heard the term
social enterprise, what I hadstumbled my way into, quite
literally, is what I now, nowthat I know the lexicon, I call
(10:43):
a low barrier employmentopportunity.
No check the box, no trainingneeded.
I could come in and startcutting the grass and learn my
way up from there.
And what I had stumbled intowas an opportunity.
We were hired as 1099contractors and we could build
our little businesses inwhatever direction and as big as
(11:07):
we wanted to.
So I stuck with it.
It started to grow, the littlecontracting company.
As it grew, I did what I washearing in these recovery rooms,
which is to help others thatare trying to follow the path
(11:27):
that I'm now on.
So I hired people coming backfrom rehab and people coming
back from jail Again, notbecause I had ever heard the
word social enterprise, but thisis what I was doing to stay
sober myself and to staygrounded.
That model kind of just grewover the years.
I got some licenses.
I got my real estate license, Igot my general contracting
license, I started to get myreal estate chops, so to speak.
(11:49):
My real estate chops, so tospeak, started talking to
investors and doing someproperty management, which led
to us opening up some soberhouses, some recovery residences
and still long before I'd heardanything about any of these
terms like employment, socialenterprise or housing first
models we had all that.
We had a model where folkscould come back from rehab or
(12:10):
jail.
We had a model where folkscould come back from rehab or
jail, get a bed in one of oursober houses and get stabilized
and start getting engaged inpeer recovery programming,
recovery programming and oncethey were stabilized and had
(12:41):
some footing they could comeover to the construction company
and stay with us temporarily tokind of get back on their way
or grow, you know, advance theirskills and grow with us.
As we turned in at this point toa full scale renovation company
.
Again, we are a company thatspecializes in managing,
maintaining and renovatingforeclosure stock for pretty
much national lenders orgovernment institutions like
Fannie Mae or FHA or Freddie Mac, and we are finding more and
(13:04):
more that these institutions aresending us into really poor
urban neighborhoods throughoutthe Maryland DC region.
Urban neighborhoods throughoutthe Maryland DC region and,
unlike the rich neighborhoodsthat they send us to, which
would be like Montgomery County,maryland or Potomac Maryland,
when they send us there, theysend us to do a full renovation,
get the property ready to goback on the market so that
(13:28):
community can enjoy some form ofrecovery.
But when they send us toBaltimore or to historically
redlined blocks of Hagerstown,maryland, or to Prince George's
County, which is a majorityblack county in Maryland that
was just decimated by theforeclosure, by the Great
(13:49):
Recession, they're just sendingus there to board up and to
abandon these assets and at thesame time, they don't like, they
don't give a crap about oursocial mission, they don't pay
us well, they don't want to likehelp us with our sobriety
programming.
So we come up with a thesiswhich is hey, man, why don't we
(14:10):
become our own developer?
Why don't we see if we canraise some money and start
buying some of these assets,focus, investment of our own in
what we are now understandinghistorically redlined and
historically oppressed Baltimoreneighborhoods, and if we can do
that, if we can raise someimpact investment I know we are
(14:32):
kind of on the lingo, you knowwith some catalytic terms, some
concessionary terms, someimpactful terms, we could raise
a neighborhood that's been justhistorically abandoned and
trashed for generations by ourfinancial institutions.
We could create better pay andbetter supports for ourselves
(14:55):
institutions, we could createbetter pay and better supports
for ourselves.
Once we finish these severelydistressed homes that we're
renovating, we could rent themout and create a form of
affordable housing.
And we're doing all this in ashared equity or a cooperative
kind of model, which we call animpact real estate portfolio.
We can distribute the equity ofeverything we've built to the
workers that did the work and tothe tenants that moved in, and
(15:15):
then to other neighborhoodstakeholders.
Began pitching this around 2018,17 or so by 2019,.
We get a funder.
That's Seed Commons little bitlater about what that looked
like, but short of it for now isthey funded our conversion from
(15:37):
this construction company thatI had begun called Appalachian
Field Services.
They funded the conversion ofthat from me being the sole
owner into an employee-ownedco-op, and then they advanced
their funding as they got toknow us better, to support this
IREP model and by now they haveissued a $5 million line of
credit for us and we are up to22 properties, 30 workers and we
(16:04):
can get in maybe a little later.
It's probably time for me toshut up here, but about all the
impact that financing and thismodel has driven.
Joel (16:12):
Well, and it sounds like, because there's a bunch of stuff
I'd love to follow up with youon and we'll follow up here, but
also this is going to be atwo-part conversation where
we're going to get to dig alittle deeper.
You mentioned, you know, I usedto be in in homeless case
management and so there's a lotof stuff I'd love to talk to you
about housing first and allthat.
But to to kind of stay on ontopic, you know I was thinking
(16:35):
about what you said when youwere talking about the
difference between the way thatyou, the companies, have you,
approach the one neighborhoodfrom the other.
The redlined neighborhood thathasn't had the same access to
resources has actually beendivested in.
We were talking aboutdivestment earlier.
That's actually been divested infrom Wall Street and private
(16:57):
equity versus these otherneighborhoods that are being
invested into.
And it seems like there's justa fundamental mindset difference
between the way you and yourgroup are thinking about doing
real estate investment or doingbusiness development investment
and the way that some of thoseother groups might be doing that
(17:20):
, and I think that that mightkind of get a little bit to the
more holistic approach that youand I have talked about, that
you take in your business where,yes, profit is important,
profit is a thing that must behad in order for a business to
stay in business, but thatthere's more to it than that.
In the long run, a lot ofpeople, when it comes to
business, would just say, well,just maximize profit and that's
(17:43):
kind of the only thing thatreally, at the end of the day,
you know when the rubber meetsthe road, that really is going
to matter.
I guess you know how has thatmindset, how has that mindset
set up the work that you'redoing now?
David (17:59):
Oh, it's so, it's so exciting.
So for years this was justtheoretical, but now we're like,
really in it and so I can giveyou some, um, I can give you
some great examples.
So, uh, yes, we're all forprofit.
We are a for-profit cooperative.
So, um, we don't get anythingin the way of grants, really a
couple little nickels and dimeshere and there.
But, um, we use a loan to goout and purchase and renovate
(18:24):
these properties alone that wethen have to pay back Again.
The rates are very good thatwe've got I hope we talk about
that later.
But, to your point, a littlewacky at the beginning because
we emerged into this idea askind of a startup.
So we're like, figuring out ourway and then COVID happens.
But now we're at the point inthe last 18 months or so where
(18:45):
we are emerging intoprofitability and into, you know
, beyond break-even, and intoprofitability and towards a
positive balance sheet.
And so some of the things thatwe're experiencing in this
community equity model, which iswhat it is, is we are highly
focused on providing good wagesand good benefits for our
(19:06):
workers, which was a thing wecould not do when we worked for
these corporations and for thelike, contracting with the
federal government, with thesesupposedly white-hat agencies,
you know, like FHA and FreddieMay, we could not pay our.
So our wage range prior to 2019, when we converted to co-op,
was $11 an hour to $17 an hourand at the time we've only
(19:30):
stayed like $2 ahead of minimumwage.
I think minimum wage wassomewhere around nine or 10.
Anyway, 11 to 17.
And then, since we've convertedand really gotten our proof of
concept to prove out, our wageshave not.
We have taken this thing thatyou might otherwise call profit
and we've invested in our ownworkers.
We've, you know, let our ownworkers own the fruits of their
(19:53):
labor and our wage range hasshifted from 17 to $48 an hour,
I think, in like three yearstime.
And again we're about to, whichis just, by the way, it's
amazing and we have somebenefits now and we're able to
train much better and run saferand cleaner work sites and we're
(20:17):
able to invest in thesurroundings.
So outside of our property anyproperty we might own there
might be abandoned vacant lotsthat are full of trash and rats
and lead and all that, and wecan spend a little money on
investing and just cleaning upour more.
You know, a community.
Look at how we own an assetRight, we are now looking at
(20:39):
popping into a positive balancesheet, probably in 2025, maybe
2026.
And now we'll have this realconversation where, at the end
of the year, we'll say, hey, wehave these profits, do we want
to distribute dividends to ourworkers and tenants and we have
a growing value in our balancesheet?
(21:00):
How do we want to talk aboutand distribute that equity to
our cooperative members in theform of, like, long-term wealth
building, pulling everything youcan out you know to I don't
(21:27):
know become uber rich and youknow, when you're not solely
focused on profit but insteadyou think of reinvestment and
thinking of lifting up yourpeers and yourself.
I just think it's a way morecreative and way more powerful
way to run an economy, and Ithink we have a great like
little Petri dish showing thatthere's truth to this man.
Joel (21:48):
Yeah, and that's why I wanted to have you on was to
show those examples.
Paul Saginaw, who startedZingerman's up in Michigan
they're now one of the biggestfood distribution and restaurant
kind of worker-owned co-ops upthere told me once that it's
amazing what you can accomplishin business when your main goal
isn't to make money, you'll makemoney, but like when your main
(22:09):
goal is to do something else.
And that's what I see you doingand I'm really looking forward
to digging in and part two withyou here on, more specifically,
on how you let those valuesevolve from um, where you're
starting a business with amission, to where you're
actually making it a communityasset, to where you're actually
making that business an assetfor the community, not just an
(22:32):
asset for your own portfolio.
So really excited to dig inwith you on that.
Remember, you can listen to usnow on all of the Spotify,
itunes, iheart Stitcher all ofthe places you get your podcasts
.
Obviously, listen to us livehere on Biz Radio US on Tuesdays
and check us out on YouTube.
(22:52):
Now we are up on video onYouTube, so subscribe there as
well and until next time, tunein next week to listen to the
rest of the conversation withDavid Lids and until then,
remember we are each other.
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