The Opportunity Zone Expo Podcast

Avy Stein - Creating Capitalism to Drive Results in Underinvested Communities

August 07, 2019 Avy Stein Season 2 Episode 17
The Opportunity Zone Expo Podcast
Avy Stein - Creating Capitalism to Drive Results in Underinvested Communities
Show Notes Transcript

Avy Stein was already a successful entrepreneur, real estate investor and co-founder of one of the country's most innovative financial management companies. But a battle with cancer prepared him for a different kind of challenge in life. The Opportunity Zone program proved to be the perfect fit for a man who is  commited to creating capitalism to drive results - especially in underinvested communities.

Avy Stein of Cresset Capital is my guest on this episode of The OZExpo Podcast.

Host: Jack Heald
Guest: Avy Stein

Avy Stein:

The answer is it's trying to create capitalism to drive results in underinvested communities. It's really important to figure out what it is that you want to accomplish and what philanthropy means to you.

Jack Heald:

Welcome back everyone. This is the OZExpo Podcast. I'm your host Jack Heald and I am joined today by Abby Stein, who is the co founder and Co-chairman of Crescent Capital. Abby , welcome to the OZExpo Podcast.

Avy:

Thank you jack. It's a pleasure to be here.

Jack:

Now you're in Chicago, is that right?

Avy:

I am. And it's a absolutely beautiful day here in Chicago, sunshine and a reasonable temperature.

Jack:

Uh , and don't rub it in. We've already talked about the fact that I'm boiling here in Phoenix, so , um, as I did my research, I want to learn a little bit about Crescent Capital in particular. So give us kind of the overview of Crescent , how you got started. It seems like that's a bit of an interesting story.

Avy:

Oh, sure. Eric Becker and I are two private equity guys who spent much of our lives as private equity investors and entrepreneurs. Uh, we both had decided that we weren't gonna raise another private equity fund and , uh , began investing our own capital, buying businesses and doing real estate transactions. We liked what we were doing so much in our teams, like working together so much. We decided we want to do something meatier , uh , and something that really created a difference. So we hired a research firm and we looked at it number of different markets where we had expertise, financial services, telecommunications, healthcare . We kept coming back to financial services as we noticed this just incredible shift of people wanting to have their money managed by a people other than people at banks or wirehouses . And the, the shift to independent investment management was something that really caught our eye. At the same time every time we did a deal, we bought a company or did a real estate transaction, we found that there were more people who wanted to co-invest with us than we had room for those co-investments. So we started thinking about how all of those things came together. And , uh, after about a year or so thinking about it, we decided the right thing to do was to form a new firm , uh , that would manage capital. Okay . I would have a deep investment infrastructure but be very focused not just on the public markets , uh , but also on the private markets. And we thought that the best way to describe that was very efficient Beta , uh, very significant services, family office services and other services for our clients and partners and uh , and then having a focus on private alpha investments in real estate, private equity, private equity secondaries, credit and other opportunities in the private markets.

Jack:

Okay. So on your website, it , it , it alludes to what doesn't go into kind of all Musicant shift that occurred for you and your partner. Um, my guess is we'll experience that, that , um, maybe amplified or accelerated your desire to make a crescent, a different kind of place. What, can you share that a little bit with that up ? Let's share a little,

Avy:

Yeah, it's really a combination of two things. I think the backdrop that the website speaks to is that in 2010, life seemed fine to me until I was told I had a stage four lymphoma. So that changed a lot my outlook on, on what I wanted to do. And interestingly, what I learned through that process was that I love to build things and while private equity was fun and I had done that for many years, I was ready for a different challenge, build something of a different nature, something where , uh , it would be a business that I stayed with for the rest of my career. Uh, Eric Becker , my partner went through a similar family challenge and uh, actually retired from his private equity firm and was doing a year of service , uh, in his daughter's name. Unfortunately, his daughter had had passed away and his, his idea was that he wanted to get back , uh , directly investing and he and I truly enjoyed working together and felt like we could build something very different in the financial services business.

Jack:

Well, that's a great, that's a great backstory . It's , it's interesting that pain, pain changes, how we approach the world, doesn't it? It really does.

Avy:

Well, like most things, you know, when, when there is a difficult situation that people have to deal with, there's, there's only a few ways to deal with it. Uh , one is to, to , to muscle through it and, and, and use it for strength. And the other is to, you know , go the other direction and , and , and neither of us were of the makeup to want to go the other direction.

Jack:

So on the , on the website it says, "With a vision to reinvent wealth management". What does that mean practically?

Avy:

So I think I mentioned that the, in response to your first question, that there has been an enormous share shift away from banks , and wirehouses , uh, toward independent investing, independent firms that are more aligned with clients' interests. So first and foremost, we want clients to feel a , uh , an intense , uh , alignment of interest with us and us with them. So , uh, secondly , uh, we want our firm to be owned , uh, not just by Eric and me, but by all the people who work here. And by our clients so that there is a, an alignment and a sense of we're all in this together and of course we are building the house that we want to live in. Uh, Eric and I were the first two clients here. That's the backdrop. And then you , uh , look toward what you know, clients really need. And the truth is that there has been an enormous move toward passive investing in the public markets. And I think a substantial recognition that for the most part, you know, there are always exceptions, but for the most part it is very hard to beat the market. And if you look at the performance of endowment funds or the pension funds that are defined benefit pension funds, you see that the allocation to private investment vehicles is very, very high in , you know, if you look at the old Yale model where a David Swenson made this famous, you're talking about 50 to 60% of their invested capital in the Yale endowment was in private markets and less than 50% in the public markets. Uh , if you look at the , uh , most accomplished and , and, and wealthy family offices that have been around for, for centuries, or at least tens of years at a minimum, do you see that many of them have more than 50% of their assets allocated to the private side. And , uh , yet in the United States, if you look at ultra high net worth individuals a , and you look at an average , uh, investment portfolios, it's a much, much smaller percentage. And there's all kinds of data I could share about returns and outperformance , but , but substantially, I think people have come to recognize that private investment vehicles do generally outperform public markets. So that was a , a big part of it. So giving people the ability to have institutional quality, the investment vehicles that they would have access to, they're ones that we create or ones that we curate. Having a focus on creating the best investment vehicles, not for institutional investors, but for individual investors so that they're structured. So the individual investors , uh , can enjoy the ability to invest in them and enjoy the closeness to them that they get from a firm like ours. It's focused on making them a part of, part of that experience.

Jack:

You know, I'll confess that I think an employee owned financial services firm is probably pretty rare. I , I won't, I won't admit, I won't say that I've, I've, I've studied it.

Avy:

It is, it's less, it's less rare in the independent side. Uh, you know, obviously employee ownership employees imply, implies some level of employee ownership. I think we've gone to the farthest level possible where everybody here is an owner. Uh , and not all of them go that far, but, but certainly there is some substantial employee ownership and a lot of independent, the registered investment advisor firms, very different obviously from banks and wirehouses.

Jack:

Tremendously different. I'd, you know, my, my education in the financial world , um, I learned the hard way. I, I traded index futures. Actually, I placed my first trade in October of 2007.

Avy:

Wow.

Jack:

And learned to trade index futures in that, in that incredibly volatile market.

Avy:

Right.

:

And, you know, learned all about the, the mixed motives and the conflicts of interest that exist across that entire investment chain. So obviously this is fascinating to me. So who is the ideal client that you're , that you're looking for? I'm not talking just about, yeah , I'm not just talking about about money, but I'm talking about what they're looking for in terms of an investment approach,

Avy:

Right. So it runs the spectrum. Uh, if you , you, you think about what our clients look like. Uh , they, they look like , uh, you know, individual entrepreneurs , uh , in their thirties and forties who are building their businesses , uh, don't have , uh, you know, a ton of investible assets, but have , uh , the view that they will over time and want to make sure that they have the best possible help , uh , in thinking through how to, how to build their own investment vehicles, even sometimes with their businesses , uh , and want to be part of something that's very different. Uh, all the way up to large family offices that are generation three or generation four that may, in addition to wanting to tap into , uh , our macro strategies. And our investment vehicles, both public and private , uh, wanting to be , uh , involved in family meetings and family governance and family education and more estate planning. Uh, and, and really , uh, like this idea of something we have, which is called launched generation, where we take a 14 to 18 year olds and we take them away for 10 days and we indoctrinate them on not only in basic financial literacy but uh, how, how, how it relates to different types of families. And we do it with a pretty gamified approach. And that's very interesting to some of these families. So there's, there's different levels of clients from the standpoint of some are multigenerational, some are young , uh , but they all share , uh, the spirit of realizing , uh, that they want to do things with the deepest amount of planning, most efficient way to invest in the, in the, in the simple Beta , the public markets and want to have access to private alpha.

Jack:

I'm fascinated with this. What'd you call this? 10 Day indoctrination of the 14 to 18 year olds.

Avy:

Yeah. You can go on the, on the , uh, on the, on the Internet and look up Launch Generation. Our Head of Family Education is a wonderful, a young woman by the name of Whitney Webb and she founded this and uh, you know , we're very fond of it. We , we really think it's great. We just finished , uh , one of our Launch Generation programs in San Diego last week and it was, it was just great.

Jack:

Launch Generation. Okay. We're gonna make sure that one actually ends up , um , printed on the podcast website. That's good stuff. So what makes your management approach your, your financial management approach different at Crescent?

Avy:

Okay . I think it's in a nutshell, it's a focus on macro strategies, goals based investing with efficient Beta, deep planning and services or tax planning. Everything from, you know, the , the most mundane of services like bill payment all the way up to family education, family governance help , uh , and then a significant focus on private alpha. That that is a very differentiated strategy. Uh, and the, you know, the ability to create institutional quality investment opportunities for individuals is , is, is, is our focus. And I think, we think very differentiated.

Jack:

Well, I liked the , I liked the phrase institutional quality investment for instance, for , for individuals. Um, and it certainly sounds like a , an A to Z solution. I would like to take that now and go into the Opportunity Zone in particular. What is your approach and do you have a thesis for OZ Investment?

Avy:

Absolutely. And I want to answer that, but before, but , but something occurred to me, if you don't mind, that I'd like to , uh , say about it . Uh , first, which is what's so interesting is that the QOZ, when we started Crescent, it didn't exist, obviously. And it , and, and so as we were thinking about the private investment vehicles , uh, and strategies, you know, wasn't, wasn't on our radar screen. Uh , about a , um , I want to say last year, this time, maybe a couple months earlier than today , uh, I began hearing about and learning about this little known area that was tucked into the 2017 tax cuts and jobs act called Opportunity Zones. And the more I read, the more I wanted to read to read my wife calls one weekend, the lost weekend where I just basically sat at home and read everything I could get my hands on , uh , that was available about Opportunity Zones and then began calling lawyers and others trying to figure out how we could approach this without knowing what the regulations were going to show. Because our thesis was, our kinds of clients, this is a phenomenal opportunity. And what we wanted to do was to be out ahead of this opportunity. And the reason we wanted to be out ahead of it dovetails in your question, which is, what's the strategy? And what became apparent to me is I read yes all about this is though a lot of the impetus for this was private companies in, in areas that need investment. And I think we will get to that. Initially the opportunity, which was incredible, was to do real estate development , uh , in areas that were closest in to developed areas. But we're in areas that obviously we were in some need of help and that those opportunities would be gone at some period of time. And then , uh, the other opportunities would be closer in because of the, of the building of those first set of opportunities. So I wanted to make sure that what we could do was put together again, institutional quality, real estate investment opportunities first in those top zones. So , uh, our projects in Houston, Denver, Portland, Nashville , uh, silver spring, Maryland , uh, and, and others that we're looking at in California , uh, and, and other places are all in zones that are closest to very well developed areas and are , uh, I want to say lower risks , still creating impacts in those areas, but, but opportunities a to create institutional quality real estate that at the end of the 10 year period when you sell these pieces of real estate, you will have institutional investors who are going to want to buy these properties. Every one of our first several projects meets that standard.

Jack:

So the exit strategy is already in place. Um, and the, I'm just trying to rephrase what I hear. The thesis, the thesis is , uh, institutional quality buildings that are available in , uh , in , uh , an area that the trajectory says is going to be desirable 10 years from now. We're going to get to that now so that we can get out of it with, with the a a target audience of an institutional investor. Okay .

Avy:

Yeah, get out of it if it , if we want to at that time. So , um, you know, I'm not absolutely sure that, you know, when the 10 year horn goes off that everyone's going to think it's a great thing to get out to some of these properties. Some of these properties may be throwing off some significant cashflow. Uh , and it will be a question of what the market is at that time with the fancy market is what the multiples are, where the cap rates are. Uh, and at that point in time, you're gonna want to assess whether you want to hold or sell, but to have the opportunity , uh , to sell because the institutional market is much broader , uh , uh, than, than other markets for selling real estate. You see , one of the thing about strategy, if you remember the old hippocratic oath that people talk about in medicine, which is first, do no harm. This is a, ours is a first, do no harm strategy. These projects are levered 50 to 60%, not 70 to 80%. They are , uh , in areas where we are very confident that we can hold, hold in , withstand a 2008 kind of event. Uh , still not lose the property because they're not over levered . And the financing is set up to be longterm financing, not short term financing in the main , so that we don't run into a situation where rates move and we have an uneconomic project. So we're, we are very cognizant of the fact that you're taking people's capital gains dollars and you want to have , add an element of conservatism in these investments that might not exist across all real estate type .

Jack:

Sure. Well, I'm impressed that what I'm hearing is an illustration of what you said when I asked you about Crescent in general, what makes you different? It sounds like you started with the question, how do we exit from this after 10 years? What's the, what's the most likely type of exit? And then work your way backward . That's how it sounds like to be. Maybe that wasn't your process, but yeah .

Avy:

Oh , it is in part the process it, no, no. It's very much a part of the process. And the other, the other part of the process was to think through what, what is the advantage of this particular piece of legislation? What is it trying to do? And you know, where will the opportunities be a for outperformance? And the answer is it's trying to create capitalism to drive results in underinvested communities. And in doing that, I think a lot of people's minds go to , uh, you know , like the far south side of Chicago where you know, there's, there's a lot of gang issues. Um, those aren't the first things in our view that you do. The first things that you do are you do , uh, places that are closer to development , uh , on the fringes. Like maybe the medical district in Illinois just to keep using the Illinois example , uh, or our Houston project where downtown Houston is already starting to really develop the theories around it aren't. And then once we put up this building that we're doing, the areas around it will be more more interesting. Um, and then you can go to that area, the areas around it, and then you can step further and further into areas that are under invested in. So we felt like the way to maximize the returns for investors and still have impact was to have that balance of , of going in those places where we could create institutional quality investments. And then over time as those areas developed , the ones next to them will also create those types of opportunities for us.

Jack:

Makes Sense. I've got a question about the other side of OZ Development , which is the, the , um, operating business side. With a background in , in private equity, I would guess you're fairly uniquely qualified to assess those types of opportunities. Are you looking for those kind of opportunities? Um , operating businesses? Yeah . In the, in the OZ,

Avy:

yes. The answer is yes. Uh, you know, the , the thing that people often don't think about is that , uh, we think about OZ is urban. Uh , but 40% of the ocs are rural, only 38% are actually urban and the rest are something in between. And as you think about the rural areas in particular , uh, yeah , a lot of business ideas come to mind , uh , including data centers, hydroponics, telecommunications, infrastructure, alternative energy development, all of those things make a lot of sense. And , and , and I think, you know, we are looking at all those kinds of opportunities. However, until recently there was the 50% rule, which was still defined . It wasn't defined at all. There are announced then that rule means that 50% of the quote income had the come from the Opportunity Zone. It was very hard to understand what that meant. The last set of regulations did give us some safe harbors there and it's better , uh , but still not perfect. So it's still a little bit harder , uh, on the, on the, on the operating company side. But we are absolutely looking and we absolutely believe there will be Opportunities on the operating company side. The other thing to keep in mind is that from a real estate perspective , uh, I think the better opportunities , uh, will be, you know, gone away in some period of time. Whereas there's a much broader set of opportunities from a business perspective, it's , it's less limited in terms of where you might go. So I think we are focused first on the real estate side. Our first fund, which is going to be $500 million fund , uh , half of which has been raised and we have projects that would take the whole fund already. Uh, insight . Many of them already committed to will will really be the focus in the first fund. I think as we go out into 2020 and 2021 , uh, we will be more focused on the private equity side. Our Fund does have the ability to do both. I just think that the, we have been , uh , really, really heartened by the quality of the real estate opportunities we're finding.

Jack:

Good to know. Real quick question about the fund itself. I was going to ask if you had running project specific funds or, or um, I think you answered that question already, but,

Avy:

Well actually I didn't, I didn't full answer it. But, we did something really unique here.

Jack:

I was going to ask if you are unique with your fund. That's what I was going to ask.

Avy:

Yeah. We created a fund and that is a multi-asset fund , uh, that , uh , people can invest in and we think that's usually the preferred way. The reason is you get diversification of the, of the deals and today people can see , uh , in large part what's going to be in the fund. So it's not even a blind pool anymore. Uh , I do find though that there are some people who have been in 1031 exchanges , uh, who are used to making their own real estate decisions , uh , people who have sold a business , uh , that they may have run and have a large capital gain and they're used to doing things on, on a deal by deal basis. And larger family offices tend to want to look at things on a deal by deal basis. So though we have a fund, every opportunity that we find, we reserve a portion of that opportunity depending on its size for deal by deal investment. It's on the same terms. Uh , there's no, no, no difference. Uh, but it allows people to have that ability if they really just want to do Houston or they just wanna do Nashville or they just wanted to Denver or whatever they can do, they can do those things because we wanted to appeal to a broader base of folks because it's all about for crescent building our ecosystem of, of investors both on the private side and of, of assets that we manage on public sites .

Jack:

That is the, that is different. That is interesting. Okay, well I'm glad I asked that question. I'm glad you, I'm glad you anticipated it . Um, I want to,

Avy:

The other thing , one other thing I should mention just about the fund itself, is that consistent with the way we think about things. Well, we have a very significant real estate group here at Crescent, that's internal. We wanted to partner with the best developer , uh, that we could find , uh, who happened to be part of our ecosystem. A gentleman named Larry Levy and a group called Diversified Real Estate, who is , Larry has been a real estate developer for over 40 years. Uh, and he brought with him the Heinz relationship. Heinz is a partner of ours in , uh, three , uh , deals already and hopefully , uh, additional ones going forward. Heinz is one of the largest developers in the world and they had many projects already underway in Qualified Opportunity Zones , uh , where we could be their partners, which we're very excited about. And that is the way we do things. We always, if it's an area of expertise where we feel like we need a little bit of help, we're going to go out and get the best partners we can , uh, and build the best projects we can in this case. Or, you know, when the private equity side, if it's a , you know , in a certain market where we feel like somebody can help us , uh , we're going to go ahead and create those partnerships.

Jack:

Very good. I want to find out a little bit more about your life pre-Crescent, just because this is really interesting to me. Yeah. Um , I , I, I grew up in Oklahoma, in Texas, and so oil and gas was part of, of the, the culture that I was part of. Um, in fact, the town I grew up in was the headquarters of Phillips Petroleum Company. So you either worked for Philips or you worked for somebody who worked for Phillips. So that's, you know, it's kind of.

Avy:

Right.

Jack:

You were the president of a company called Cook Energy Corporation . So what's the story there? Okay .

Avy:

Yeah . So , uh, it's kind of a fun story, I guess. Uh, I was 20, I want to say 28 years old. Uh, I was a lawyer with Kirkland and Ellis , uh, first in Chicago and then in Denver. And I had a client , uh , that was a small American Stock Exchange, quote, conglomerate. They owned Terminix pest control , uh , an oil and gas exploration and production company, a real estate development firm or grain trading business, insurance company. Uh, the CEO and largest shareholder was a gentleman named Ned Cook, who was a very flamboyant, wonderful , uh , mentor and an individual. Um , he had gotten , uh, into , uh, some issues with his oil and gas exploration and production business. Uh, and I was recommended to him as a lawyer , uh, and I helped him , uh, through a number of , of situations , uh, as his lawyer. And finally, one day he called me and said , uh, you're wasting your time being a lawyer. Come work for me. Um, I want to make you an offer you can't refuse. And I said, well, of course I'll , I'll listen. And he did. And he did. So , uh, he made me an offer I couldn't refuse and I ran the oil and gas exploration and production business, which was , uh, in the Powder River Basin , uh , Denver Julsberg Basin, and then a number of gas wells , uh, and throughout Pennsylvania. [inaudible] in Pennsylvania. And , uh, I also , uh, said it was an advisor to a pest control business. Uh , when they did acquisitions, they were very inquisitive and I was involved in the real estate side as well. So it was a wonderful opportunity for me at a very young age. And , uh , it taught me a lot. And , uh , as I said, I Ned Cook was a terrific mentor.

Jack:

Okay. Now I know a little bit about this business. It says oil and gas exploration and production, that is the single most risky side and the least risky side of the, of the oil business. How in the world did , how in the world did you manage both of both sides of that exploration and production?

Avy:

So a lot of our exploration was step out drilling a not wildcatting. And I know you'll know the difference between those terms. Uh, we did have one geologic group that did some , uh, some fairly wild stuff. Uh, but , uh, I would say 80% of what we did was step out drilling and a , you know, that was managing pretty much by the numbers. Uh, by the way, step out drilling is often in the analogy I use in our QOZ investing versus wildcatting.

Jack:

I think here , I hear an echo there. Go ahead. For, for, for, that extraordinarily small subset of our listening audience who isn't familiar with the oil and gas expert . Yeah .

Avy:

So step out. So step out drilling was, was where you had a well a or a group of wells that , that were making oil or gas and there was an adjacent area that your geology suggested and your experience suggested would also make oil or gas. Uh , so the odds were , uh , far more in your favor. Uh, Eh , sometimes you're even going back into an existing well , uh, with a different , uh , production technology where the odds were even more in your favor. And all of that was referred to as stepping out or step out drilling versus , uh, when you had , uh , some scientists , uh , geologists, geologic engineers telling you that there was , uh, a field , uh , somewhere , uh, where it appeared that based on all the geology, that if we were to drill a well, we had a , a likelihood of, of making oil. The odds on that were, you know, various various numbers but never very high , uh, just by its nature. And so , uh, we did a lot more step out drilling than we did , uh , wildcatting.

Jack:

Okay.

Avy:

And by the way, I see the same thing with QC and I see the same thing with QIC . So if you're , so if you're in downtown Houston where the surrounding areas may not be great, but downtown Houston is starting to boom. Uh , to me that is analogous to the step out drilling where if I take my first do no harm , uh, view of the world and I take my view that I can build an institutional quality, you know, $180 million , uh , apartment building there that is going to be, you know , uh , of among the top buildings in Houston. Uh , that is a different way of doing a QOZ type thing than if I'm going into, as I said before, the south side of Chicago , uh, where I'm really going to try to create a brand new community , uh, with the QOZ mentality and perhaps some subsidies from the government.

Jack:

Sure. Wildcatting versus step out in . Yeah. Makes Sense. I like it. I see. I see how that's worked for you. Now I do have to ask this, this other question though, so

Avy:

Sure.

Jack:

What you were, you were basically in corporate law. What was the, what was your, your specialty, your focus there as a corporate lawyer? Was it just anything that had to do with, with the legal side of, of your clients or were you focused on something?

Avy:

Yeah, so I started out actually believe it or not , uh, doing , uh , sophisticated , uh, litigation that involved securities laws, antitrust laws, things of that nature. And then I migrated , uh, into doing , uh , transactional work around mergers and acquisitions , uh, real estate development , uh, and other projects that were, you know , more , uh, more around , uh, the transactional work , uh, and the company work.

Jack:

Okay. And so Mr. Cook was one of your customers then?

Avy:

He was , he was one of my clients.

Jack:

This sounds like an interesting cat. I think I need to know more about him.

Avy:

Oh, he was, he was, he was, I mean, he was a, he was a grain trader extraordinare um ,

Jack:

Oh my lord.

Avy:

His, I think, grandfather was the General Everett Art Cook . Uh , so if you go in Memphis, you'll see the Everett, our Cook Auditorium. There were a huge Memphis family. Um, he was , uh, you know, he was willing to take risks , uh, on a lot of things. He was, he was a real interesting fellow.

Jack:

A grain trader. Wow. Yeah . And I had yet , when I was, when I was , um, one of my good buddies , uh , was , uh , was a cotton broker and I got,

Avy:

that's when I got Ned was in cotton too . Your young buddy will remember the name Ned Cook for sure.

Jack:

Wow . Wow. Fascinating. Well , well that's, that's a good, that's an outstanding education for getting you to , okay. So I want to , I want to ask you a couple of questions that probably have nothing directly to do with Opportunity Zone investing, but I suspect , um , there , your experience with them probably makes you a good leader for this, for this , uh, this industry. What is the Development Council for B.U.I.L.D, The Broader Urban Involvement and Leadership Development? What is that?

Avy:

So my wife and I, over the last 20 years, have had a, an affinity for trying to help youth at risk youth in inner cities. And , uh, that is B.U.I.L.D's mission. Uh, it does everything as an organization from , uh, education , uh, to try to prevent , uh, gangs and kids going into gangs. Uh, through a intervention when unfortunately , uh, some, some young people do get pulled in that direction , uh, to creating college scholarships , uh , education , uh, internships and, and guidance and general guidance. And

Jack:

Where all, or your programs,

Avy:

these are all in Chicago. These are in several neighborhoods in Chicago , uh , affects about , uh , 6,000 young people a year , uh , and growing. And it's, it's really trying to create an opportunity for them.

Jack:

Okay . What is the Council for Adult and Experiential Learning?

Avy:

Yeah, so , um, the, the idea there was somewhat connected to B.U.I.L.D in the sense that, wow , I'm a big believer in vocational education and , uh, that counsel was trying very hard to get vocational education to be more accepted , uh, and deliver a better product for young people.

Jack:

Wow. There's a huge need for that. Bigger, bigger, I think, than probably at any time in the last 70 years. Vocational Education. I mean,

Avy:

What's, what's so interesting about it, unfortunately, and I , uh , as an investor learned this lesson the hard way that , uh, there is a tremendous amount of animosity toward , uh , any education that is not , uh , government controled. So , uh , anything that's called for-profit education , uh, which really is where all the vocational education grew up. And for that matter where online education grew up , uh, is, is seen generally as, as a bad thing. Uh, though , uh, the elements of that were or continue to be a very helpful to a lot of young people. So it's been a , a very difficult to , uh , path to navigate and , uh , the council tries to help make all that work.

Jack:

Very good. Now I see, just for fun here that you're also on the, you also part of the Western Golf Association. I'm assuming, I'm assuming that that's not that, that, that doesn't refer to golfing in cowboy boots, but is probably right .

Avy:

Uh , no, the Western Golf Association is the parent entity for the Evans Scholars Foundation. Uh, the Evans Scholars Foundation is , uh , a foundation that takes young people who caddy , uh , at various clubs and courses around , uh , around the country and based upon , uh, their educational achievement. Their work as a caddy , uh, and their community involvement gives them full scholarships to college.

Jack:

Oh, wow. That's fun.

Avy:

So that the , so the, the BMW championship, which is on the PGA tour is run by the Western Golf Association.

Jack:

I knew I had seen that some where.

:

Several, yeah . Several other amateur , uh, tournaments. Uh, and the directors are people who , uh , have a golf background, have a little bit of golf background , uh, and uh, you know, want to give back to young people who are continuing to participate in the game that as young players, but as, as caddies. And many of the candies are also players, but , uh, it's really , uh, that these young people , uh , uh, many of them inner city, again, same theme , uh, it's giving them an opportunity they wouldn't otherwise have. And it is a, it's really a great program as a complete free ride. They live in a house that is a and Evan Scholars House . And the only real stipulation is that they have to work a job , uh , in the house. So , uh , you know, way as a waiter or, or , or something else where they work a job elsewhere, but they do have to work a drop. Oh , while in college.

Jack:

Okay. I'm, I'm having, I'm having all kinds of sparks go off in my head here because I'm seeing this a theme run through all of these , um, uh , nonprofit things that you're involved in that's common also to Crescent Capital with this , uh , true, truly employee owned and aligning our interests. Why do you think you've got that happening? What is it that is in your life that's in your background? Why, why is that a common theme? Not Everybody's got that. Does that question to you?

Avy:

Sure. So I think first of all, I think , um, the first question you always have to ask is, you know, why was I , uh , lucky enough to be given the skills that I have and what should I be doing with those skills? And , uh, you know, obviously the first thing is growing your business and raising your family and doing all those things, but then , uh, it's, you know, shouldn't I be giving back? And then the question always is, how do you give back? And I was fortunate enough to have a wife who is very oriented towards giving back. And she and I are both , uh , very oriented to, you know, giving back to children who don't have the same opportunities that maybe other kids have. And really that's just been a theme. Um , you know , we tell people in Philip Philanthropy Counseling, going back to our base business, part of what we do is, you know, counsel people on , on their philanthropy and that it's really important to figure out what it is that you want to accomplish and what philanthropy means to you. And for us it always meant helping the younger people have the same opportunities that others would have , uh , when they may be born into a situation where they don't have those opportunities and doing everything that we can to try to try to help as much as we can.

Jack:

Good answer. Well , um , Abby, if folks want to get ahold of Crescent Capital , uh , or you, what's the best way for them to do that?

Avy:

Probably best thing is to go to the website, just the , uh , and there's a lot of, a ability to contact us off of the website. Uh , or certainly a , I'm happy to talk to anybody who would like to give me a call and I'm happy to give you my phone number. Uh, it's probably email's easier. Uh , astein @crescentcapital.com . Uh , or if it's a burning desire , uh, I will quickly give them my phone number.

Jack:

Very good. Well, any last words before I let you go for the day I've had, I've had fun with this conversation.

Avy:

Ah me too, me too. Look, I think that the, the, the last word I would leave is the first time in my professional career , uh, that I have seen a public policy initiative line up with the reality of the situation , uh , where something can really work to be helpful is qualified Opportunity Zones. Uh, you know, it's the, the, the, the legislation is not bogged down with a lot of red tape , uh, that makes it hard to execute. It is executable. Uh, and the tax benefit is significant enough , uh , to drive conscious capitalism in the communities that can use a boost. And I think it's a really wonderful that this was bipartisan . And I think anyone who has a capital gain, a either from stock appreciation, selling a business, selling a piece of real estate trades, whatever ought to considered a this, it's a , it is going to create some impact that is going to help some communities and the same time the, the risk adjusted rates of return if you pick the right funds are really quite good. So I'm a big believer in it and I'm very glad , uh , that we were able to get out ahead of this. Uh , as I think we did a and create some terrific opportunities for our investors and for others.

Jack:

I agree. Terrific opportunities. I don't think I could have said it any better, but frankly you've got a lot more credibility if you judged that way than I do.

Avy:

I don't know about that, but thank you very much for the interview. I enjoyed it.

Jack:

Hey, I have two well for Abby Stein of Crescent Capital, I am Jack Heald for the OZExpo Podcast. Thanks for joining us. Just a reminder that all this contact information will be available on the podcast website. Go ahead and click on that subscribe button so you're always updated when a new podcast is released. That happens multiple times a week, and we will talk to you next time.