Billionaire Investor: How I’d Go from $0 to $1M in a Year | David Adelman

David Adelman 0:00 You can be an entrepreneur in somebody else's business.

Codie Sanchez 0:02 Really?

David Adelman 0:03 There's this weird stigma out there that everyone has to either have a startup or their own venture capital fund. The world doesn't need another fucking venture capital fund. Let's get people who are willing to work hard in business and learn from other business, and then maybe you wanna go out and do your own thing.

Codie Sanchez 0:16 My guest, David Adelman, is the billionaire co-owner of the 76ers and investor in more than 90 companies. You're gonna learn his exact frameworks to spot great opportunities. If you are building wealth from scratch, this episode is for you.

David Adelman 0:28 If you could go in as an entrepreneur into someone's old line business, they're all ripe for succession. Go work at a person who has an HVAC company that only has three trucks. AI is not gonna replace the heater in my house. This is where people need to go to.

Codie Sanchez 0:41 As someone who owns 90 companies, if you were 25 again, what would you do to get your first million dollars?

David Adelman 0:46 I think what you're looking for is...

Codie Sanchez 0:53 Philadelphia 76ers. You are a co-owner of this, and I hear you just signed LeBron James.

David Adelman 0:59 You heard about that?

Codie Sanchez 1:00 Yeah. [laughs] Just a few people.

David Adelman 1:02 Yes.

Codie Sanchez 1:02 And I'm not even involved in basketball, but what does it look like in the room to close a deal like LeBron James or bring a big name to a sports team?

David Adelman 1:12 It was a wild process because, you know, LeBron and his camp kept it quiet, and rightfully so. He wanted to run his process. And, you know, I know h- his agent, Rich Paul, very well. His business partner, Maverick Carter, and I are very close friends. We're in some deals together. But that doesn't mean shit, right? I mean, you know, like, you know, you're, you're just up for grabs along with everyone else. And the real excitement around this was about... We got a text on that Friday morning from Rich Paul to my partners, myself, and the, you know, the guys I just mentioned, saying, "This is it. Sixers it is."

Codie Sanchez 1:46 That's how you knew?

David Adelman 1:47 That's how we found out five minutes before they announced it publicly.

Codie Sanchez 1:50 Whoa.

David Adelman 1:51 Yeah.

Codie Sanchez 1:51 I have a mentor back in the day who kinda taught me how to do some of my first deals. And, um, back then I used to think that it was always the price you paid for something, right? You're like, "Okay, if I go to buy something, I got it for this price, that's a deal," right? And he sort of famously, you know, said to me, "Well, that's sort of how amateurs do it. It's always about terms."

David Adelman 2:09 Yep.

Codie Sanchez 2:10 You know? I could pay you a billion dollars a dollar a day, you're not gonna love that deal, right?

David Adelman 2:13 Right.

Codie Sanchez 2:13 As much as $100 million in a week. So, uh, when you do a deal, you've done-- You know, you invested in 90 companies. I'm sure you've, you've done hundreds and hundreds and hundreds of deals across your lifetime. What is, like, your number one philosophy or secret or tool to doing a great deal?

David Adelman 2:32 For me, the way I think about it is if it's gonna be a great deal for me, it's gotta be a gr- good to great deal for the other person.

Codie Sanchez 2:39 Yeah.

David Adelman 2:39 Very rarely do you get to a place where it's great for one side and poor for the other, and everyone's happy, right? And so for me, I come at it and I'm like, "What do I think I need to do this deal, and will I do the deal under these terms?"

Codie Sanchez 2:51 Okay.

David Adelman 2:51 And what I always do is I kinda make a note. I'm a, kind of a pencil and paper guy. What won't I do the deal at?

Codie Sanchez 2:57 Mm.

David Adelman 2:57 And because what happens is emotion gets you very engaged. You, you know, the heat of the moment, the bidding, stuff like that, that becomes a problem, right? And so for me, I try to think about, what am I willing to pay? And to your point, the terms. Well, what's more important, price or terms, duration if it's a real estate deal? Like, you, you name it. And then more importantly, who's the counterparty? Can I trust them to deliver the deal that they might say they're gonna do? So to me, all of those things come into play. Your mentor is right.

Codie Sanchez 3:24 Can you do a good deal with a bad guy?

David Adelman 3:26 Very hard. I, I've had deals with bad people, and I've been thankful when they're at the end. You can't do a deal with a bad person and keep them in the partnership. That won't change. You can't rehabilitate a bad person, in my view.

Codie Sanchez 3:40 Yeah, I agree. My dad always says also, "Don't fall in love with something that can't love you back."

David Adelman 3:43 Yeah.

Codie Sanchez 3:44 So I love that line that you said about y- you know, you, you have to start sort of with what you don't want-

David Adelman 3:49 Right

Codie Sanchez 3:49 ... in the deal, which is what, like, Charlie Munger's inverse thinking.

David Adelman 3:52 Now, the inverse of that is I've been negotiating deals where someone I thought was a bad person, and I let my emotions get the best of me, and I didn't get the deal done, when at the end of the day... There, there's a deal I did w- w-

David Adelman 4:04 So I have a mentor also in the real estate business, name's Alan Horwitz, who taught me as a kid. And I'm negotiating my first real estate deal. I'm 24 or 25, and it was in between two properties we owned. Actually, like, four pro-- It would have solidified us owning a square block in Philadelphia out by the University of Pennsylvania. And I was like, "I got this." And he had trained me well, so I, I felt good about it. But at the time, like I said, I was maybe 24, and I looked at that guy as some old guy. He was probably my age. Um, but the guy was an asshole.

Codie Sanchez 4:36 Yeah.

David Adelman 4:37 And just demeaning to me, talking down to me, and we kept going back with price. I tried to keep my composure. And he, he kept pushing price and changing terms and all of that. And then, you know, I just went back and said like, "We're just not gonna get this done." Like, I really wanna tell the guy to go F himself, right? Um, but we didn't get the deal done. And so what happened is he sold it to someone else, and I went back to my partner, and I was like, "That guy was a real asshole." And he's like, "Well, you showed him. Now he just sold it to someone else. Like, why did it matter what his personality was? You were gonna buy it. You would've never had to deal with him again." So it was a good lesson for me on the other side, right? There's gonna be a lot of bad people, a lot of assholes out there, and you have to maintain your composure when dealing with them. And what is the mission? My mission was simply to buy that building, right? And I got, I let... You know, it's lessons you learn fr- as you're younger. I haven't made that mistake twice.

Codie Sanchez 5:27 Really?

David Adelman 5:27 Yeah.

Codie Sanchez 5:28 God, I try not to, but I do always get reminded. My dad also says like, "Do you wanna be right or do you wanna win?" And I try to remember to win-

David Adelman 5:35 Yeah

Codie Sanchez 5:35 ... more often. It's a little harder now. I'm hormonal as fuck, so sometimes-

David Adelman 5:38 Yeah. [laughs]

Codie Sanchez 5:38 ... I'm like, "Keep me out of the room."

David Adelman 5:40 Yeah.

Codie Sanchez 5:40 You know, "You don't want me in this deal at this moment. I can't be controlled."

David Adelman 5:41 Well, we do. We want that mama energy to come, you know, change the dynamic.

Codie Sanchez 5:44 For like a second.

David Adelman 5:45 Yeah.

Codie Sanchez 5:45 You know? Then you kick me under the table, and I have to beat it.

David Adelman 5:48 Mm-hmm.

Codie Sanchez 5:48 So, so that's interesting because I think sometimes people think billionaires are just ego. They come in there. They're just, they're just pushing everybody around. But is it actually the opposite in a deal? Do you try to, like, at least not show that you're the big guy or have ego when you're in it?

David Adelman 6:04 You know, the way I describe it is I think there's assholes in all shapes and colors. Okay? And so it doesn't matter if you're worth, you know, $10, a million dollars or a billion dollars. I think there are some people that are programmed to be really difficult, really argumentative, and that's their style. Um, I have a different style. I am not a last nickel guy.

Codie Sanchez 6:22 Hmm.

David Adelman 6:22 I, uh, I said this earlier, you know, when we were talking, like both sides should feel like they won, or both sides should feel like they got the same kinda deal. Like, you both don't feel great about it, but that means, like, it was kind of a fair trade.

Codie Sanchez 6:33 Yeah. So how do you compare with, like, some of the other real estate greats? You know, a Sam Zell,

Codie Sanchez 6:41 who was more of-

David Adelman 6:41 Loves... So he's, like, my icon of, like, the Mount Rushmore of real estate guys.

Codie Sanchez 6:46 Interesting. I always liked that he was a biker.

David Adelman 6:48 I just liked that he was gruff, and you'd be on any interview, you'd sit in the crowd, and he would be like, "Fuck it," right? And then like, "Fuck that guy" [laughs] . And like, I was like, "Can you talk like that if you're re- I, I said, "I guess if you're really rich, you can talk like that."

Codie Sanchez 7:00 Yeah.

David Adelman 7:00 He's amazing.

Codie Sanchez 7:01 So he did more, like, what I thought of as grave dancer deals, or he kinda was famously called the Grave Dancer, would do these, like, crazy complex deals, turn them around. When I think about what I know about you, you basically took an industry, and tell me if I'm misstating this. You took an industry that was kinda like, you know, campus housing, student housing. I think about Animal House style.

David Adelman 7:22 Yeah.

Codie Sanchez 7:22 Like, just the Wild West back then, not an institutional asset class, and you kind of were one of the, the key people in creating a real asset class out of something that people thought was a joke.

David Adelman 7:33 Yeah, I, I think people, like... W- what I did, and by the way, I, I wish I had let that kind of stigma play on in a... If I'd... I would've been even bigger in that space 'cause we, we got too many entrants in it. But what I, what I did is I, I joke, I would go to these real estate conferences, and you'd have, you know, the apartment guy, the retail guy, the office developer, and they wouldn't let me sit at the lunch table 'cause I was just a student housing guy. And 'cause to your point, like, the stigma, that's shitty real estate, they turn over. But you know what? What I had saw early on, and I was like, "What am I missing?" Colleges aren't going anywhere. Mom and Dad are paying the bills. And, you know, it was just always a new tenant showing up. And so I was like, "Maybe I, you know, maybe I'm wrong, or maybe I'm right, and they just don't wanna pay attention. Great for me." And so I was able to take campus apartments from a mom-and-pop local business, and that's how I went national. Because no one was really interested in that. It made, you know, in the beginning, getting lenders comfortable and equity sources comfortable with that took time and education. But I think be- everyone was able to relate to the fact, when we did our first institutional deal in 2006, I raised $300

David Adelman 8:40 million. I'd never raised a nickel before. Zero. I went on a roadshow to raise money, and, you know, back then I was like, "Well, I want 300 million," and our bankers were like, "Why do you need that money?" And I was like, "I'll tell you afterwards." But every investor we pitched, all were sending their kids to college, and all were paying rent to somebody like me. And so, like, they identified with the, with the demand and the need.

Codie Sanchez 9:01 Mm.

David Adelman 9:02 And so we raised $300 million, and in real estate, you know, you can put down 30% equity, 70% debt. So if you have $300 million, that was a billion dollars worth of deals. So, you know, I, I was in my early 30s, I got to say that I created a billion-dollar joint venture, you know, of real estate. So I was pretty psyched about that.

Codie Sanchez 9:19 Interesting. So is one of the keys then when you go to raise money from people, you've never done it before, this is an asset class people don't like. They're probably not taking you super seriously way back in the day-

David Adelman 9:29 Yeah

Codie Sanchez 9:29 ... before you've made a name for yourself. So you don't have, like, a silver spoon. Like, people might say now-

David Adelman 9:33 Right

Codie Sanchez 9:34 ... "Oh, well, it's easy for David. He's a billionaire."

David Adelman 9:35 Right, right.

Codie Sanchez 9:35 But back then you don't have all that. What gets them to say yes? Is it that you already have to find somebody who has a strategic understanding of what you do? Do they have to like you? Like, why does somebody rich give you money?

David Adelman 9:48 I think, one, we had a track record, so they could, we could point to here's a building before, after, cash flow. Here's what we did. Might not have been on the grand scale that we are today, but I could point to, you know, small wins begets big wins. That's the way I always looked at it. Number two, I thought that I could take people and say, like, "We're not gonna lose your money." Like, you know, "This isn't venture capital returns or venture capital risk. Slow and steady returns. Here's what we can deliver." And then three, I think they have to believe in integrity. Like, you, I'm sure we'll talk 'cause you're a big entrepreneur, like, what's the number one asset you have? It's your integrity, right? And so if I could demonstrate that, that I was gonna, you know, work hard, be a good steward of someone else's capital, be respectful of their money, and I could deliver the returns, that kinda opened the doors.

Codie Sanchez 10:33 How much of what you did at, at campus housing was, uh, operational alpha versus leverage?

David Adelman 10:40 The majority is operational. We had to execute. It's a very complicated business, very hands-on, and the hardest part was scaling from Philadelphia to going national, right? How do I take the culture and DNA of a small team in Philadelphia and say, "Now we have to do this nationally"? And have that repetition. You know, we didn't have the computer systems that you have today to be able to replicate those things. This is a people business. And, and most importantly, I am dealing with people's most prized possessions, as you're gonna see soon. Like, your baby, your child, that's it. Like, so number one asset that we had in real estate was filled with people's most important things in their life, their kids.

Codie Sanchez 11:17 Mm.

David Adelman 11:17 And so how do you train and create a culture to make sure they understand that? I, you know, I was just in a meeting earlier, and someone's like, "Well, what's it like with kids paying rent?" I was like, "In the old days, we had to teach them how to balance their checkbook 'cause they were writing checks."

Codie Sanchez 11:28 Oh, I remember that. [laughs]

David Adelman 11:29 You know, now there's an online portal that they're just connected to. It's a lot easier. But you know, this is their first experience living on their own outside of Mom and Dad.

Codie Sanchez 11:36 Yeah.

Codie Sanchez 11:37 I was looking up the numbers earlier, and I think it's that it... You have to make, like, $1,300 a day since the day Jesus died, so, like, 2,000 years, to become a billionaire. It's not easy. And so, um, you know, it's... And it's not that common in real estate.

David Adelman 11:53 I feel like I've been working that long.

Codie Sanchez 11:55 Yeah, [laughs] exactly.

David Adelman 11:55 [laughs]

Codie Sanchez 11:56 You're like, "The hair doesn't lend itself to that."

David Adelman 11:58 Yeah. [laughs]

Codie Sanchez 11:59 But I think people think that becoming a billionaire or g- making a billion dollars in value is really easy, and then when you look at the math, it's actually incredibly-

David Adelman 12:06 Yeah

Codie Sanchez 12:06 ... difficult. What is the key to amassing that kind of wealth? Is it, uh- Can you do that just with financial leverage? Do you have to have operational proficiency? And what do you think most people get wrong in trying to get rich?

David Adelman 12:21 I think you need all of these things. I think you need a plan.

Codie Sanchez 12:26 Mm-hmm.

David Adelman 12:26 You need to execute. You need to have good relationships for capital. And you need to, like, do the right thing so you can r- rinse and repeat-

Codie Sanchez 12:34 Mm

David Adelman 12:34 ... and grow, right? So p- somebody gave you $1,000, now they'll give you 10,000. Then they'll give you a mil- like, you need to be able to prove that trust in all of that. You know, I, I, I think, you know, people are like, "Oh, you're a billionaire." Like, I didn't set out and I was like, "Oh, I'm gonna make a billion dollars." Like, I just said, "I'm gonna set out on this journey. You know, I think it could be successful." But, like, you just keep going, and you're in kind of the rat race. And, like, you know, it's not like, you know, there, there's some counter one day, and it just went off and said, "Okay, here's a billion dollars," right? Like, it, it doesn't work like that, or at least not for me. And, and so for me, like, I'm working harder today than I did when I was 25. B- I- my mentor taught me that if you love what you do, it's not work. And so for me, like, I just love this action.

Codie Sanchez 13:15 Do you ever have, like, dark moments of the soul, like a night where you remember you thought you might have lost it all, and you had no idea how to fix it?

David Adelman 13:23 I've had moments in time where we've had some tough gut punches, and you're like, "Well, what's gonna happen here?" And, you know, my kids will tell you they'll remember a family vacation in 2016 where I had some stuff going on, and, you know. But, like, you know, we got through it, and I had a plan, and I executed on it. But, uh, but I was prepared. I was like, "Well, what happens if this happens? What if we lose this or this deal goes bad? What, what do you do?" But you can't... You know, I've watched a lot of what you s- You can't live in fear.

Codie Sanchez 13:54 Mm.

David Adelman 13:55 Right? You can't be afraid. I, I... My unique thing is I'm not afraid to fail, because if you are, you won't take the chance.

Codie Sanchez 14:03 You talked about the sacrifice in the beginning. I don't think people understand a lot what you have to sacrifice to build anything big in this world.

David Adelman 14:12 Yeah.

Codie Sanchez 14:12 Like, if somebody's watching right now, and they're like, "What does it actually take to make it?" What are the sacrifices you think they need to know about?

David Adelman 14:20 Well, it, it takes a couple things. One, you know, if you're married, it takes a supportive partner.

Codie Sanchez 14:25 Mm.

David Adelman 14:25 Like, I can't emphasize enough how lucky I am to have a wife that was, like, cheering me on-

Codie Sanchez 14:33 Yeah

David Adelman 14:33 ... giving me a heads-up when o- She was like, "Look, I know you're busy, but, like, here are the things going on with the kids you should do." Like, like, if you don't have a great partner, like, it's very hard to succeed, 'cause you don't want that internal pressure from home. There's enough external forces. Number two, I think it's you gotta decide what you're playing for.

Codie Sanchez 14:49 Mm.

David Adelman 14:50 And for me, you know, I know people are like, oh, it was never about money. It was about, like, building businesses and doing great things a- and building great teams. But you put those pieces together, there's generally a good outcome. And so for me, it was focusing on what's my... I'm in a bunch of different businesses, which makes it hard, but it's good for me 'cause I have ADD, so I can kinda, like, bounce back and forth. But I think it's knowing that there's a team in place that I can build in each of these businesses. You know, you always talk about, you know, when I read your stuff about, you know, can the business run without you? I think you always need to be the visionary-

Codie Sanchez 15:23 Yeah

David Adelman 15:24 ... and the North Star for the business. So I always say, like, I'm a great startup person and putting the pieces together. I am not a great long-term operator-

Codie Sanchez 15:32 Mm-mm

David Adelman 15:33 ... because I lose focus. I'm a great cheerleader for the operators-

Codie Sanchez 15:36 Yeah

David Adelman 15:36 ... and a great mentor. But, so I think, like, those are the pieces where you, like, think about how the team gets built, what you need, how you solve problems, when you pivot into a different business or add on a business to that.

Codie Sanchez 15:48 Yeah, it's so good. I gotta... I wanna have you take this thing. We, we surveyed, like, 15,000 entrepreneurs and some high-level executives that didn't run their own business but, you know, worked within other businesses, and basically we're trying to come up with entrepreneurial f- profiles. We call it the Owner Score, so I'll have to send it to you-

David Adelman 16:06 Okay

Codie Sanchez 16:06 ... after this. Because I think what I've found, and, and you tell me if I'm full of it or not, but is that, like, there's a lot of generalized advice for how to run a business or do whatever, um, but man, if I was to h- take Elon Musk's playbook or Mark Zuckerberg's, I would fail.

David Adelman 16:24 Yeah.

Codie Sanchez 16:24 'Cause I'm kinda like you it sounds like. You are more of an, an innovator than I was 'cause you created an entire campus, you know, institutional asset class. But I'm really good at, like, this exists, I'll make it better continuously-

David Adelman 16:34 Yeah

Codie Sanchez 16:34 ... over time, and I'll continue to iterate on it, and I will do it long past s- the point somebody else gets bored. So I know I'm what's called a workhorse. But I realize if, if we have... You know, we only have 30 companies that we own a part of, and really five that we operate real-time, but those operators are not all the same.

David Adelman 16:52 Right.

Codie Sanchez 16:52 So if I gave the same advice to, you know, Steven-

David Adelman 16:55 Sure

Codie Sanchez 16:55 ... as to Bobby, they'd fail-

David Adelman 16:57 Right

Codie Sanchez 16:57 ... 'cause they're different types of humans. So I'm curious for you, as you're looking at all of these companies that you sort of own a part of, invest in, if you could only pick a few things to look at each week to see if your operators or founders are winning or losing, what, what would be, like, the three to five things you'd look at every Monday to be like, "I can tell this thing's on track or not"?

David Adelman 17:17 Well, you know, one is when you pick managers and leaders, one of the things I judge for is will they tell me the bad news.

Codie Sanchez 17:24 Yeah.

David Adelman 17:25 Right? So, like, my big saying around all the different companies is, "Bad news doesn't get better with time."

Codie Sanchez 17:30 That one's good.

David Adelman 17:31 And so I appreciate, like, punch me in the face with the bad news. And so the managers that tell me what's... Like, it sounds bad, but I kinda wanna know what's going wrong first, then what's going right.

Codie Sanchez 17:41 Yeah.

David Adelman 17:41 Okay? Like, I expect things to be going right. [laughs] Tell me what's going wrong. And so we, we start there, where you give me your challenges first, because that's like, let me use my thought power to help you solve those. I may not be able to, but let's... or I can help find somebody who can. Then it's like, "Hey, here's the business. Here's how it's doing. How do we make it better?" Okay? So for me, that's like, are they... To answer your original question, are they a good communicator?

Codie Sanchez 18:03 Mm.

David Adelman 18:03 Like, how do they communicate the information, number one. Number two, do we understand how the consumer, if it's a consumer product, or is it a business buy, you know, how do, how are they accepting the product? Are we user-friendly? Are we solving their problem? Are we asking what their problem is? Right? So I think those are the things that are really important. And three, like the blocking and tackling. Like, how do the financials look? Things like that that you would expec- expect in any business.

Codie Sanchez 18:26 Yeah. Such a good point. I read the other day somewhere that Elon said, um, "Leadership is just, uh, understanding a series of compounding lies inside of your business." And it actually made me feel better-

David Adelman 18:37 Yeah

Codie Sanchez 18:37 ... because I feel like that's half the job. I'm like, "Wait, I thought this, but really this." Is that... Does that ever go away? Or as a leader, are you always just looking for the truth?

David Adelman 18:45 I think what you're looking for is, to me, like, what... You could call it the truth. I think I'm just looking for, like, the evolution.

Codie Sanchez 18:54 Mm.

David Adelman 18:54 Because I think what was right for that CEO, what they were doing last quarter, might not be right for this quarter.

Codie Sanchez 18:59 Mm.

David Adelman 19:00 And I think sometimes m- managers just kinda stay on the treadmill, and, like, your job as kind of an entrepreneur is to look much bigger, take a step back, and see if you're missing anything.

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Codie Sanchez 20:16 What do you think is the difference between leading or building a $1 million, $10 million, $100 million, billion-dollar company? How does it change?

David Adelman 20:24 Getting to the first million dollars is really hard, right? Because that determines if your business is gonna win or lose, right? Like, and so, like, to me, that first million and 10 million are much harder than the 100 million to a billion. People won't believe that, but I'm telling you it is way harder, right? Because, like, you're trying to validate a business, you're trying to get people to believe in something that maybe it's a product that doesn't exist or isn't widely known, and so you're creating, you know, kind of a new thought on how this gets sold and all of that. Once you've gotten adoption, it's a different sales cycle and it's a different leader, right? Startup is one thing. You know, growth is another, and then, like, that exponential growth, a diff- all different leaders, right? Because some of them need to be really good managers to put the infrastructure in to make sure that, you know, the wheels don't fall off, that you're meeting your sales targets, or if you're manufacturing, whatever that is.

Codie Sanchez 21:13 Yeah.

Codie Sanchez 21:14 How many people do you think you've hired in your career?

David Adelman 21:17 Directly? Hundreds.

Codie Sanchez 21:21 Yeah. And how many people do you think you employ across the companies that you own?

David Adelman 21:27 Over time, tens of thousands.

Codie Sanchez 21:29 So at any given point, something's going horribly wrong, like even right now.

David Adelman 21:32 Oh, s-

Codie Sanchez 21:32 What are the businesses? [laughs]

David Adelman 21:33 Yeah, I'm sure. Yeah, yeah, yeah. Of course, and I won't know about it till whenever. Um, or hopefully they'll try and fix it before it solves a problem. I mean, I, I, I think if you involve people in a business, you will have a problem, right? HR issues are, like, paramount in every company, whatever they are, right?

Codie Sanchez 21:49 Yeah.

David Adelman 21:50 People aren't showing up to work. People are like, you know... People are being rude to each other. [laughs] Like, what- whatever it is. Like, you gotta get those issues right. Um, and generally, a good manager handles those, right? You know, customer issues, okay? So you're in the apartment business, okay? Like, shit happens. Like, pipes break. It's no one's fault, right? Well, did we respond quickly? Did we do things? Like, the thing that drives me nuts is if I'm walking by one of our offices and I see someone saying, like, "Well, they're not gonna renew their lease." And I'll, I'll pull them. Like, "How come?" "Well, we had these issues, and then..." I'm like, "Did you tell us about it?" They're like, "No." I'm like, "Well, you didn't give us a chance to try and fix it." And so, like, I always wanna know why w- in any business why people stop doing business with us. If it's not renewing the lease, if it's not completing a sales function, a season ticket holder that didn't renew their tickets. What is it?

Codie Sanchez 22:37 Yeah. Do you almost not even care as much about the good news as the bad news as a leader?

David Adelman 22:41 Yeah, it's a problem, though, right? Because, like, I, you know, you feel bad because, like, the team wants to come celebrate all this great stuff, and you're like, "Yeah, well, what about these two things over here?" And it's like this, it's like this, and like, I... But the problem is I also st- tend to do that at home with my family, and it's not good, right? Like, you, uh... So I... But I do think you get better that way. Like, when I tour our properties, I still... You know, I don't do it as often as I'd like. I go in and I tour the fire escapes and the back of the house, right? Because that's where you know, like, where the pride is, right? Your grounds can look great, but are the prides in the back of the house, right? And I can tell a really good property manager and maintenance supervisor by how clean the other areas are. How organized is the maintenance shop which no consumer or customer's going to see, but I'm gonna see it, and they're gonna know, wow, these guys are so organized that the maintenance team could come in and do whatever they need. So, like, for me, that, that's also... So I told you I have, like, ADD. I also have OCD.

Codie Sanchez 23:38 Yeah.

David Adelman 23:38 And so, like, all those little things out of place drive me nuts.

Codie Sanchez 23:42 It's so g- it's so good. You know, it's interesting 'cause we own a lot of these home service franchise companies, and so painting companies, roofing companies,

Codie Sanchez 23:51 uh, window cleaning.

David Adelman 23:51 I love that, the anti-AI play.

Codie Sanchez 23:53 Yeah, exactly. Well, people thought I was really lame and boring five years ago, and now they think it's a lot more interesting.

David Adelman 23:58 I love boring businesses.

Codie Sanchez 23:59 Yeah. Oh, there we go.

David Adelman 24:00 I love it.

Codie Sanchez 24:00 That's why we'll be buddies. But one of the funny things is I could tell the good operators by the status of their cleaning vans.

David Adelman 24:06 Yeah.

Codie Sanchez 24:06 And so you open up the doors-

David Adelman 24:07 How clean is their van? Yep

Codie Sanchez 24:08 ... and if it's a mess, I know that guy's not gonna be on time, they're not gonna hit their quota-

David Adelman 24:12 Correct

Codie Sanchez 24:12 ... and they're definitely never gonna be in management. And then the ones where it's super organized, it's not always a total indicator, but it makes a big difference.

David Adelman 24:19 Correct.

Codie Sanchez 24:19 Interesting. And you call this back of the house. So for somebody listening, it's basically always like you're looking under the rug.

David Adelman 24:24 Yeah.

Codie Sanchez 24:24 Anywhere in business, it's like, where's the part that people are not gonna usually look at?

David Adelman 24:28 Correct.

Codie Sanchez 24:28 'Cause if that's clean, you know the rest of it is probably clean. Interesting. In your world, you're having to hire all these different people. You're having to... I mean, how, how many hundreds of millions of dollars do you think you've allocated over your career or invested?

David Adelman 24:44 Oh, between real estate, the other companies, our asset management firm, you know, we have an asset management business, Future Standard, that manages $95 billion. So we're allocating billions of dollars at, at a time in different cases. But, you know, i- in the real estate business, you know, hundreds and hundreds of millions of dollars in capital improvements, construction, renovation. You know, in the last seven years, we've done a billion dollars in new construction alone. So, I mean, you know, in Philadelphia, I'm gonna build a $2 billion arena, okay? So that's, you know, so, like, it, it's a big number. I think every business... Like, I'm building this new arena, right, in Philadelphia, and I wanna change the live entertainment experience, period.

Codie Sanchez 25:22 Hmm.

David Adelman 25:22 Because, you know, you think about it, people are spending a lot of money on tickets and a night out, babysitters, you know-

Codie Sanchez 25:26 Yeah

David Adelman 25:26 ... all of that. Like, you need to give them a great pre-game, game time, and post-game experience.

Codie Sanchez 25:31 Mm-hmm.

David Adelman 25:31 Right? And so what I'm talking about as we're designing this with the architects and with the people who are gonna run the food services, think of yourself in the hospitality business.

Codie Sanchez 25:40 Yeah.

David Adelman 25:40 And no one does that, right? So again, that's me putting a twist on a age-old offering to say, "Can we do something that just feels different?"

Codie Sanchez 25:48 Yeah. So in order to have the capital really be efficient and come back to you and bring friends, like, you know, you've talked about it, you've gotta invest in the right people 'cause those are the people that are gonna do the outcomes. How can you tell if somebody's gonna be an A player or if somebody is not going to be an A player? How do you tell the difference between the two?

David Adelman 26:04 A couple ways. One, you know, the number one quality to me is I would rather have somebody that's an eight in intelligence and a 10 in work, work ethic than a 10 in intelligence and an eight in work, work ethic. So for me, like, hard work, like, you know, I am, like... Look, I, I went to Ohio State at a time in college where, like, I just needed a pulse to get in there, right? So, like, I, like, I know. Like, I was a low SAT, low GPA guy in high school. Um, but, like, I knew that in business no one was gonna work harder than me. There are a lot of people smarter than me.

Codie Sanchez 26:36 Mm-hmm.

David Adelman 26:36 And, like, most of the people who work for me or work with me are smarter than me.

Codie Sanchez 26:41 Why do you think that most people are not as successful as you then? Do you think they don't take enough risk?

David Adelman 26:46 I think not everyone is meant or programmed or willing to take the risk, which is okay. Like, I, I say to a lot of people, "You can be an entrepreneur in somebody else's business."

Codie Sanchez 26:57 Yeah.

David Adelman 26:58 Right? And so some people are meant to be that number two or number three guy or gal to run a business and not be the forward-facing and not taking the risk capital. And those people make the business successful. So, like, I, I think there's this weird stigma out there that everyone has to ha- You know, like, I, I digress from your question for a second, but everyone has to either have a startup or their own venture capital fund. You know, like, I would tell your listeners, the world doesn't need another fucking venture capital fund, okay? Like, enough, okay? But, like, let's get people who are willing to work hard in business-

Codie Sanchez 27:29 Yep

David Adelman 27:30 ... and learn from other business, and then maybe you wanna go out and do your own thing.

Codie Sanchez 27:34 Yeah, I think you're right. It's also pretty miserable running the place, you know? Because when payroll isn't there... I mean, how many years in the beginning... You invested in your first deal, I believe, when you were 13.

David Adelman 27:43 Yeah.

Codie Sanchez 27:43 Right? I mean, how many years did you not pay yourself in order to just invest in deals instead?

David Adelman 27:49 M- my mentor taught me a really great thing that I think about all the time. He's like, "Every dollar you spend on yourself is a dollar you have less to invest." And that is in my mind even today, right? And it doesn't mean I haven't bought some really nice things and extravagant things, but I think about that. I'm like, "Oh, if I didn't buy a plane, I could buy that building," right?

Codie Sanchez 28:08 Yeah.

David Adelman 28:08 "If I didn't do this, you could do that." And so capital is, like, really important. I think it's... You know, you always hope... You know, and my uncle used to say, m- he would be like, "Hey, you know, you just hope after all this money comes in and you pay everyone that there's something left for yourself," right? But in the beginning, capital allocation is really important, but it comes back to that risk. I was willing to take risk. I'm willing to fail. Um, I'm willing to fail every day. Like, I... A lot of our startups fail. Like, that's okay, you know? But I'm also willing to, like, try and build new businesses.

Codie Sanchez 28:39 Yeah. Yeah, it's super, super interesting. I think a lot about what holds back people from taking whatever their appropriate level of risk is.

David Adelman 28:45 Yeah.

Codie Sanchez 28:45 But you're, you're totally right. I mean, Sheryl Sandberg, incredibly successful, very rich, never ran a company.

David Adelman 28:50 Yeah.

Codie Sanchez 28:51 You know? And I think she's probably... I read the average entrepreneur makes 46 to $65,000 a year. Like-

David Adelman 28:58 Yeah

Codie Sanchez 28:58 ... that's not really winning-

David Adelman 28:59 No

Codie Sanchez 28:59 ... as much as being one of your executives at any of the nine companies you have.

David Adelman 29:02 But they're playing for the equity.

Codie Sanchez 29:04 Right. Yeah. You must get pitched daily for people to invest in your stuff.

David Adelman 29:09 We do.

Codie Sanchez 29:10 And you got people to give you money early on.

David Adelman 29:13 Yeah.

Codie Sanchez 29:14 You know, somebody listening today is like, "I want somebody to invest in me. I want capital. How do I get it?" What are, what are the things that you look for that maybe people would be surprised by?

David Adelman 29:25 You know, one, what problem are you trying to solve?

Codie Sanchez 29:28 Hmm.

David Adelman 29:28 Like, i- if 10 people are doing what you're doing, like, why are you gonna do it better? Like, just, just tell me, what's the mode around your business? Like, can the next guy start up your thing and do it for the same cost or less? Like, what, what, what's the differentiator? Problem you're trying to solve, track record as an entrepreneur, and how big could this opportunity be?

Codie Sanchez 29:49 Hmm.

David Adelman 29:50 The problem is, a lot of times people are s- creating these startups and i- they're playing small ball. And, like, if we're gonna put risk capital to work, like, we wanna know that there's the potential for a big outcome.

Codie Sanchez 29:59 Yeah. What do you usually bet on, the jockey or the horse? Like, the, you know, guy running the thing or the opportunity?

David Adelman 30:05 Jockey. So the way I... H- here's part of what we go through when we're, my family office, when we're looking at investing. If the deal fails, would we do a second deal with that person?

Codie Sanchez 30:17 Great question. Yeah.

David Adelman 30:19 And I have a handful of people that we've backed a second time or a third time.

Codie Sanchez 30:26 Yeah.

David Adelman 30:26 Because if it didn't, if it failed because, like, the timing wasn't right or... Like, as long as they weren't, like, crooks or bad guys, nefarious, bad attitude, whatever it is, like, not all these things win, but it's not always their fault.

Codie Sanchez 30:36 Yeah.

David Adelman 30:36 It could have been poor timing.

Codie Sanchez 30:38 Yeah, it's a really good point. I think about that a lot today. There's so many people pitching like AI for small business stuff or SaaS companies left and right.

David Adelman 30:46 Yeah.

Codie Sanchez 30:46 But there's no moat.

David Adelman 30:47 Right.

Codie Sanchez 30:48 And the jockey isn't that impressive. You have... You're, you're just like, "Oh, there's this huge opportunity-

David Adelman 30:52 Right

Codie Sanchez 30:52 ... that, that it's easy to build SaaS now." I'm like, "That seems like an anti-sell."

David Adelman 30:56 Yeah, I agree.

Codie Sanchez 30:56 What would you absolutely not invest in today? Like, what comes across your desk, you're like, "Oh my God, I don't ever wanna see another one of these again"?

David Adelman 31:04 God, there's so many. [laughs]

Codie Sanchez 31:05 [laughs]

David Adelman 31:06 You know? I, I, I know restaurants are on your list. Um, w- we don't get as many restaurants anymore, but... A- and I'm in some restaurants right now.

Codie Sanchez 31:12 Do you think I'm wrong on restaurants?

David Adelman 31:13 You know, it depends on the operator. So I have a couple of investments. I, I, I'm, I'm partnered with a guy in Philadelphia, Michael Schulson, and hi- you know, to... I learned very quickly that his operating margins are 20%.

Codie Sanchez 31:25 Yeah.

David Adelman 31:26 Which is some of the highest in the business. And so I'm like, "This guy knows how to run a business."

Codie Sanchez 31:29 And I bet it's a restaurant group, isn't it? Not an individual restaurant.

David Adelman 31:33 He has multiple restaurants, yeah.

Codie Sanchez 31:34 Right.

David Adelman 31:34 And, but, but he was a great chef. Very... It's interesting, a couple things in, in business. Chefs generally make poor businesspeople.

Codie Sanchez 31:41 Mm.

David Adelman 31:42 Doctors are very poor businesspeople, right? And a lot of time lawyers don't translate into being operators. Like, that's just a... something I've noticed. This guy made the transition from chef to CEO.

Codie Sanchez 31:53 Yeah.

David Adelman 31:53 So he has f- understands food costs, things like that. But all in all, I rarely do restaurants. Um, I, I think what I, what I also don't like, software companies are too hard to understand today with AI.

Codie Sanchez 32:03 Yeah.

David Adelman 32:04 I have no idea if you're solving for something that couldn't be solved now by just putting into ChatGPT, right?

Codie Sanchez 32:09 Yeah.

David Adelman 32:10 Like, so... A- and we're not gonna spend the time to differentiate that. So, you know, software is a very tough putt right now, I think.

Codie Sanchez 32:16 Yeah.

David Adelman 32:17 Um, you know, I, I think that anything in the, you know, like you're gonna have lots of bets in AI, hard to know which ones are gonna win. So sometimes, uh, we're kinda like, "All right, we're gonna spread it out a little bit and get educated along the way."

Codie Sanchez 32:29 Yeah.

David Adelman 32:29 Um, you know, I, I think for me it's easier to know... Like, a- a- and the problem also is we're getting all these funds that are coming and looking for stuff, and we're just like, "Stop with the funds." Like, what's your differentiator? You know, you ran a company for, you know, 10 minutes, and now you're gonna go launch a fund. So, like, we say no a lot to those.

Codie Sanchez 32:49 Yeah, it's really good. What about, what about the opposite of that? Like, when I look at how you made your first big pile of money, to me it's like, okay, you had sort of this ugly, super, uh, you know, non-popular asset class.

David Adelman 33:02 Yep.

Codie Sanchez 33:03 Highly fragmented. You know, not a ton of major players-

David Adelman 33:06 Correct

Codie Sanchez 33:06 ... in the space, and an ability for both operational proficiency that just wasn't there at all, plus leverage.

David Adelman 33:13 Yeah.

Codie Sanchez 33:13 Like, really neither of those things existed. Do you see a space today that you're like, "God, I wish I could find amazing jockeys"? Or like, why isn't somebody doing it in this world?

David Adelman 33:22 So the, the thing I talk about often, and y- it seems like you've dabbled in it, I, I think these service businesses are the future. Uh, because if, you know... Like, so I tell everyone, I'm like, "Go work at a person who has an HVAC company that only has three trucks."

Codie Sanchez 33:38 Yeah.

David Adelman 33:38 And they're still doing work orders by pen and paper or maybe some shitty computer system. Like, AI is not gonna replace the heater in my house.

Codie Sanchez 33:47 Mm-mm.

David Adelman 33:48 We're short two million electricians in the country. Two million, okay? Electricians are making almost 200,000 a year right now. And so I look at all these kind of like hands-on skills, all these service businesses, and I'm like, "This is where people need to go to." Now, that also changes education. Maybe you're going right from high school to a vo-tech school to learn these trades, but if you could go in as an entrepreneur into someone's old line business and make that business better, and you work out some deal... And none of those businesses have succession plans, right? You have the entrepreneur who's, you know, pushing 70, his kids aren't in the business, the heating and plumbing or, you know, whatever business, and, like, they're all ripe for succession-

Codie Sanchez 34:28 Yeah

David Adelman 34:28 ... right now.

Codie Sanchez 34:30 Yeah, I totally agree. It's why we buy them. It's also kind of fun because, to your point, it, it... I love competing in industries where you don't have to be that smart.

David Adelman 34:40 Right.

Codie Sanchez 34:40 You know? I, I don't profess to have a crazy IQ like some of these guys, but guess what? I've never had a plumber that had me on a recurring plan that I thought was really useful and a text message follow-up-

David Adelman 34:51 Right

Codie Sanchez 34:51 ... system that was right, that asked for a review, that looked sharp when they showed up at my house-

David Adelman 34:55 Right

Codie Sanchez 34:55 ... that I could remember the name of the place, and the van and branding was good. It's never happened to me in all these, you know, years.

David Adelman 35:01 Well, it, it's the same thing kind of, uh, the way I look at student housing. You know, we- we're ha- having people's kids. You're letting somebody in your home. You are trusting them in your house with your family.

Codie Sanchez 35:10 Yeah.

David Adelman 35:10 Like, show up and look respectable. Be considerate. The, like, right... A lot of times you feel like they're doing you a favor by coming out and fixing something in your house, right? Like, create... Attitude changes the outcome here.

Codie Sanchez 35:23 Mm. That's really good. You know, I have to imagine this has happened to you, but one of, uh, the lines from one of my very first investors, he told me, he was like, "All right, if you're gonna do this thing of business"... 'Cause I was in finance back in the day, so he's like, "Finance, you're doing this financial arbitrage thing."

David Adelman 35:38 Right.

Codie Sanchez 35:38 "You're not actually really creating something. You know, you could have some deals go sideways, but it's not gonna feel that personal to you because it, it's not your baby, right? You're just, you're just trying to buy low, sell high," you know, if we wanna, like, hyper simplify it. Um, he goes, "But if you get in business, you're gonna be lied to, you're gonna be stolen from, you're gonna be cheated, uh, and you're probably gonna be sued."

David Adelman 35:56 Yeah.

Codie Sanchez 35:56 "And it's not just gonna be one time, it's gonna be many times on that." So I'm curious, like, in business, does that always happen? Are you going to be lied to, stolen from, cheated? And, uh, how can you tell who is going to do that to you or not?

David Adelman 36:10 You know, hopefully you get the benefit over time to choose who your partners are, right? And choose who you do business with, so you can thin the herd out on those issues. But, like, we get frivolous lawsuits every day from our properties and from our businesses. Every day. We literally just got a, a lawsuit about our website not being compliant for something. I didn't even know, like, what that means, okay? But, like, you know, if there's something we need to do, we should do it. But, like, we're being sued over it. There was no harm, no damage, no foul. Like-

Codie Sanchez 36:42 Yeah

David Adelman 36:42 ... but someone's gonna try and just grab some money. To me, that's, like, un-American. It's just, you know, bullshit.

Codie Sanchez 36:48 Yeah. Yeah, and so you just, at some point, you just go, "This is normal, and this is the game of business, and just deal with it."

David Adelman 36:55 Yeah. And you have to have... You know, back to our point about the, uh, social media and the comments, you just have to have thick skin.

Codie Sanchez 37:00 Yeah.

David Adelman 37:00 Like, the bigger you are, you become a target, period.

Codie Sanchez 37:03 Have you ever had somebody go after you and say you weren't doing enough and you weren't successful that was more successful than you, or does that hate or whatever always really come from below?

David Adelman 37:15 I've never had that happen, and I think it does come from below, and it co- it, it really stems from jealousy, right?

Codie Sanchez 37:21 Yeah. Yeah, I think so, too. And I think it's a lot of energy, too, to hate somebody so much. You don't wanna build, you wanna tear down.

David Adelman 37:28 Right.

Codie Sanchez 37:28 It's really sad, actually. It's like, God, what could you do if you actually wanted to build something instead?

David Adelman 37:32 Yeah.

Codie Sanchez 37:32 I'd love to see that-

David Adelman 37:33 Yeah

Codie Sanchez 37:33 ... 'cause you're spending a lot of time on me. Spend some time on you.

David Adelman 37:36 Yeah.

Codie Sanchez 37:36 Let's see what happens. What is the best investment you've ever made? Like, is there one you're like, "God, we just were so clever on this, and we saw something nobody else did"?

David Adelman 37:47 There's a couple. I mean, one was our, our company Future Standard. It's been 18 years since we started that, and we were trying to solve a problem, which was how do you bring alternative investments to the masses? Instead of just being, you know, wealthy people being able to... You know, you can invest in hedge funds or whatever, but, you know, your... You said your mom was a schoolteacher, right?

Codie Sanchez 38:05 Yeah.

David Adelman 38:05 But she couldn't because she could only get stocks and bonds, right?

Codie Sanchez 38:08 Yeah.

David Adelman 38:08 'Cause she was not accredited or wealthy, right? So we were trying to solve that problem. And so I, I'm proud of the business we built, and today, you know, we're running $95 billion, and that started from an idea I had about how we could do that in a democratized way to, you know, make it accessible to others.

Codie Sanchez 38:23 Interesting. So the best investments you've typically made are the businesses that you build yourself.

David Adelman 38:27 Yeah. Now, listen, we've had... The, the answer's yes, but I'll also say we've certainly had some venture capital bets where we rode a great idea, great operator, you know, checked our bo- boxes of different problems they were solving.

Codie Sanchez 38:40 Yeah.

David Adelman 38:40 Um, and going from there, you know, we just had, uh, a great exit on a, um... You know, I'm in the alcohol business, so I know a little bit about it. Uh, we invested in a great company called Beatbox, okay? And Beatbox thesis was we were gonna be kinda the party drink, and they did it in a box, like a Tetra Pak instead of, like, a bottle or a can. And, you know, the founders, they built it. We were then in there early. We tried to add value. During COVID, they needed capital, so we gave them kind of a working capital line, which I've done to a bunch of our portfolio companies.

Codie Sanchez 39:11 Hmm.

David Adelman 39:11 And, uh, they, they crushed it, and they sold to Anheuser-Busch, and we made, like, a 30X on our money.

Codie Sanchez 39:19 Sucks.

David Adelman 39:19 And-

Codie Sanchez 39:19 It's a terrible deal.

David Adelman 39:20 You're right, terrible deal. And I couldn't be happier for the founders, right? Like, they're gonna make a fortune. They busted their ass. Like, it was great for everybody. So we... You know, every now and then you get a couple of, like, monster hits in some deals that you've done. Some are because you were... You know, like, I, I consider us being part of the answer there because they needed working capital during a time where they couldn't get bank financing. So we stepped in with a couple million dollars of financing, and, um, it worked for them, and it worked for us.

Codie Sanchez 39:46 Yeah. It's so interesting. You know, I always like to do the opposite side of this because I think sometimes people hear wins, and-

David Adelman 39:54 Right, they don't talk about... It's like in the casino.

Codie Sanchez 39:56 [laughs]

David Adelman 39:56 Your buddies only tell you about when they won. They don't tell you about the five losses before. It drives me nuts.

Codie Sanchez 40:01 Me too.

David Adelman 40:01 Right?

Codie Sanchez 40:01 There, there's, like, those guys on the streets that go around and say, "What's the most amount of money you've made?"

David Adelman 40:05 Yeah, right.

Codie Sanchez 40:05 And I've refused to do it because-

David Adelman 40:07 Yeah

Codie Sanchez 40:07 ... I'm like, "Ask me how much I've lost."

David Adelman 40:08 I know. That's it.

Codie Sanchez 40:09 It's a lot.

David Adelman 40:10 Yes.

Codie Sanchez 40:10 You know?

David Adelman 40:10 Yeah.

Codie Sanchez 40:11 So I'm, I'm gonna ask you that question.

David Adelman 40:12 Yes.

Codie Sanchez 40:12 Like, what's the most money you've ever lost on a deal?

David Adelman 40:20 I mean, we've had deals go to zero where, uh, we've lost millions. I mean, so, like, you know, I've, I've had several venture bets that, you know, we've gone into, and they've, you know, they've gone to zero, where I've lost, you know, several million dollars. Um, now, one of them was 'cause the person was a bad person.

Codie Sanchez 40:38 Mm.

David Adelman 40:39 Is ultimately in jail. Um, and we learned a lesson.

Codie Sanchez 40:42 Yeah.

David Adelman 40:42 Right? And so, but, uh, then that's my point. Like, good people, bad people, you know, all, all of that is something important. No one likes to lose. Like, I'm very competitive. I know you are. But, like, if I know that, like, some of these bets are gonna lose, if, if none of my venture bets lost, it means I'm not trying hard enough, okay? Now, if I ever lost money in real estate, which is supposed to be a slow and steady Bizee, I would be nauseous. Like, that would... I, I wouldn't be able to handle that. That would be tough for me because that's not what that business is supposed to do.

Codie Sanchez 41:10 Yeah. That's a, that's a really good point because I think... I th- think about it the same, Far, but our, like, quote-unquote boring businesses, the cash flowing businesses-

David Adelman 41:18 Yeah

Codie Sanchez 41:18 ... I mean, that failure rate should be below 10%.

David Adelman 41:21 For sure.

Codie Sanchez 41:21 It should be really, really low.

David Adelman 41:23 The only thing you should be subject to is maybe a regulatory change, right?

Codie Sanchez 41:26 Yep.

David Adelman 41:26 That, that's beyond your control, and you need some new licensing to wa- I'm making this up, to wash windows, right?

Codie Sanchez 41:31 Yeah.

David Adelman 41:31 And, like, you're not able to get that.

Codie Sanchez 41:33 Yeah.

Codie Sanchez 41:34 And I think people don't realize, like, the... It's really hard to figure out risk when you haven't done this before.

David Adelman 41:39 Yeah.

Codie Sanchez 41:39 So, you know, I know a lot of people will be like, "Well, buying a business is really risky." And you're like, for sure, like, business is risky. But the SBA loan default rate is less than 13% on average.

David Adelman 41:48 Right.

Codie Sanchez 41:48 Average is about 8%. That's actually an incredible risk return.

David Adelman 41:51 It's 'cause those people are working their business every day hands-on.

Codie Sanchez 41:54 Yeah.

David Adelman 41:54 They can't afford to fail.

Codie Sanchez 41:55 Yeah, that's true, and they could never really even get a real loan.

David Adelman 41:58 Right.

Codie Sanchez 41:58 So, like, it makes a lot of sense. So what did you learn? Like, for somebody who, who wants to go out and do a deal, what did you learn from the failures of losing millions? Like, what would you never do again?

David Adelman 42:09 People, right? I really... You know, I didn't diligent... In the case of the one where the person went to jail, they were very good at being warm and affectionate type of, like, you know, very gregarious and all of that, and, uh, we just missed some things in our diligence.

Codie Sanchez 42:24 Yeah.

David Adelman 42:24 And, uh, but, you know, others, you know, I think that we learned, uh, you know, what, we, we made a bet in an industry that was too... had an ability to be replicated too easily.

Codie Sanchez 42:33 Mm.

David Adelman 42:33 That was a miss, right? So, like, always trying to understand what went right. You know, one we lost, uh, there was a regulatory change just put that business out of business. Can't predict that

Codie Sanchez 42:43 No. It's really hard also to determine fraud upfront-

David Adelman 42:46 Correct

Codie Sanchez 42:46 ... in a lot of these businesses, even if you do forensic accounting.

David Adelman 42:49 Correct.

Codie Sanchez 42:49 Like, have you learned any ways to figure out if somebody is going to defraud you or steal from you?

David Adelman 42:54 It's really hard to, especially if it's you're a minority investor in someone, in another company, right, and it's all minority investors, and you only have... You don't have, like, report, you know, reporting rights or...

Codie Sanchez 43:03 Yeah.

David Adelman 43:04 So we, we try to determine, based on the size of the investment, how involved we wanna be, right? 'Cause like... That, that's the key. Like, if it's a business we're active in, and then one of your employees is doing something wrong, you need to know that. If it's a, you know, if you're a passive investor in a business that goes bad and all that, wouldn't, you wouldn't have been able to do anything anyway.

Codie Sanchez 43:23 No. Yeah, it's interesting. We were talking about this in the beginning. Like, how do you decide if a business is worth your time and attention or not? Um, because sometimes, yeah, maybe you could make another billion dollars, which sounds amazing, but it's gonna take every single moment with your family, tons of your personal guarantees and capital. Like, what is your... Do you have some sort of framework for saying, like, "This is worth it. This is not"?

David Adelman 43:47 Yeah. And especially now because I have too many businesses, right? Too many things I'm doing-

Codie Sanchez 43:51 Too many

David Adelman 43:51 ... and time is a commodity. I continue to try and get better at saying no. But, like, I love the puzzle of business. And so for me, like, I am m- the, my next frontier that I'm really getting involved in is, like,

David Adelman 44:04 longevity, okay?

Codie Sanchez 44:06 Mm.

David Adelman 44:06 Peptides, stem cells, all of that. Like, I think that is the wave of the future.

Codie Sanchez 44:10 Mm.

David Adelman 44:10 Like, I think that is gonna change the scope of people's lives. And so, like, I'm intellectually interested and about, in it. I'm learning about it and all of that, so then now I'm actively, like, putting capital in to try and really, you know, follow the lead there.

Codie Sanchez 44:23 So if it's, if it's gonna take up a bunch of your time, you better be interested in it.

David Adelman 44:27 Yeah. A- and what I also say is I'm sure you get asked in some of the companies you invest in that aren't your main business, "Will you be an advisor? Will you do this?" And, like, at some point, the juice needs to be worth the squeeze, right?

Codie Sanchez 44:38 Yeah.

David Adelman 44:38 And so, like, I'm only going to allocate personal time versus our team's time if the outcome is really worth it for us. You know, unless, you know, the caveat to that is sometimes I've just taken a liking to a founder, really like them, and I'm like, "I'm gonna help this young person," and really do it that way.

Codie Sanchez 44:55 Yeah. Yeah, it's interesting. I'm sure you get this a lot. Sometimes I get the, "Will you be my mentor?" And I think, uh, that is a big role.

David Adelman 45:03 Yeah.

Codie Sanchez 45:03 Like, I'm like, "I don't know. You shouldn't listen. You should question everything I'm saying."

David Adelman 45:06 Yeah. It, it's very hard, and I get a ton like you, inquiries, you know, "I'm looking for a mentor. Would you be my mentor?" You know, all this stuff. And we just have to say no. Like, "I can't give you what you would need."

Codie Sanchez 45:15 Yeah. What's the way that they could sneak in? Like, for me, I'll share first, like, I always say, "Here's... You know what? I, I don't have time to do that right now. Read this book."

David Adelman 45:24 Yeah.

Codie Sanchez 45:24 "This is a good first start." 99% of them-

David Adelman 45:27 Yeah

Codie Sanchez 45:27 ... 100% of them don't read the book.

David Adelman 45:28 Yeah.

Codie Sanchez 45:28 It's pretty wild. And then I might say, like, "Okay, here's, like, one answer to a question." And, like, they might sneak in if they ask me one really smart question and then go execute on it, 'cause nobody executes on anything ever. Like, what are you like, "You know what? I wanna bet on this young person"? 'Cause I think a lot of young people listening are like, "Ah, you guys have made it. Why won't you help?" It's like, "No, no, we will. The problem is it's real hard to figure out who actually will take action."

David Adelman 45:53 Well, a- and the effort, right? Like, so for example... A- and it might be somebody in your own company that wants to be mentored. A- and this is why, like, this whole work from home bullshit kills me, because you can't meet somebody in your business if you're on a s- uh, behind a screen, right? Like, whether it's at a, your own business, or I remember, like, like, you talked about Sam Zell, okay?

David Adelman 46:15 I used to go to these real estate conferences and just wait in line with the hopes that I could just say hello to him and introduce myself, right? And you need to show up, right? And so, like, people need to show up and reach out and try to make that effort. And so for me, like, my assistant, who's kind of like the gatekeeper, and I have a chief of staff, they'll be like, "Hey, the, this kid, you, you need to talk to this kid. They're like, you know, f- handwritten notes, like, following up, like, real grit, like..." And so, like, sometimes if you trust your team around you to, like, kind of b- be the funnel a little bit, that helps as well.

Codie Sanchez 46:46 Yeah. Yeah, the work from home thing is fascinating, 'cause we'll get ridiculed online. I say the same thing. I think it's a tragedy, actually.

David Adelman 46:53 Horrible.

Codie Sanchez 46:53 Unless you've made it. If you've made it, work from home, maybe.

David Adelman 46:56 Listen, you wanna work from the beach, God bless you. Like, you know, like, it's not for me, 'cause I, I actually need the energy. Like, I'd much rather sit here with you than be, us do this by Zoom, right? Like-

Codie Sanchez 47:05 No, no, no

David Adelman 47:05 Right?

Codie Sanchez 47:05 That's where dreams go to die.

David Adelman 47:06 Yeah.

Codie Sanchez 47:06 Yeah.

David Adelman 47:06 It's terrible. And so for me, I'm like, be around people, create energy. Like, a junior person is not gonna suggest an idea in your company if you walk by the hall, and I'll walk in someone's office like, "What are you working on?" And like, "Well, we have this crazy idea." They're not gonna call my assistant, make an appointment to do a phone call with me to tell me that idea.

Codie Sanchez 47:27 No.

David Adelman 47:27 And what if that's, like, the next billion-dollar idea? Like, so, like, don't be afraid to show up. So my advice to all your followers is, like, show up in person. Make that effort. Get in front of people. I think people, like, appreciate it.

Codie Sanchez 47:41 Yeah. And I'd be curious your take. Like, how hard is it to find really competent people who wanna get after it?

David Adelman 47:49 It's really hard. You know, a- and especially, like... And I hate, like, feeling so old, like, this generation. I'm like, I sound like, feel like a grandfather.

Codie Sanchez 47:57 [laughs]

David Adelman 47:57 Like, drives me nuts, but, like, it's true. There's just this, like... Like, yes, you should have a work-life balance, okay? Like, I think that's important. Enjoy your life and, you know, you're, you're developing and all that. But, like, you know, you gotta pay your dues too. Like, get to fucking work. And so, like, to me, like, if I see somebody who's, like, grinding and doing it, it makes me wanna put more in.

Codie Sanchez 48:17 Yeah. Yeah, it's so wild. I think, uh, like, I remember when I first started at Goldman, everybody there was smarter than me. I was a public school kid. I went to Arizona State, you know? And I d- I was not... I called it Harvard of the West for partying. Like, that was how-

David Adelman 48:30 Yeah

Codie Sanchez 48:30 ... we were not... This, this was not Harvard. And so the only thing I could figure out how to do was be in there earlier than everybody else and stay later than everybody else. That's literally all I had. But damn, if that wasn't enough. And, you know, of course, one of the MDs sort of, you know, saw me there, and then we got a relationship going-

David Adelman 48:46 Yeah

Codie Sanchez 48:46 ... and I got an opportunity b- because of that. And I wasn't even in that much earlier or that much later-

David Adelman 48:51 Right

Codie Sanchez 48:51 ... which is crazy. It was, like, 10%-

David Adelman 48:54 Yeah

Codie Sanchez 48:54 ... more work almost. And I think that still exists today. Um, like, if you had, like, of- I don't know. Of your employers or the people you've seen overall in your career, how many people do you think are, like, giving the extra pers- 10% or 20%? Is, is it so competitive that, you know, anybody could try and they won't be able to do it, or is this still pretty rare?

David Adelman 49:17 I think it's still rare.

Codie Sanchez 49:19 What about your kids? You have how many kids now?

David Adelman 49:21 Two kids. Two daughters.

Codie Sanchez 49:22 And they have a lot of resources, obviously. I think America in general, we have more resources than we've ever had. Is it hard to keep your kids grounded with everything that... Yeah. Or how do you keep them grounded?

David Adelman 49:34 Yeah. Um, I'm gonna come back to having an awesome partner.

Codie Sanchez 49:37 Yeah.

David Adelman 49:37 My wife Haley, the number one. My k-

Codie Sanchez 49:39 Is she tough?

David Adelman 49:40 She... No, she's, she's just kind, right?

Codie Sanchez 49:42 I feel it.

David Adelman 49:42 And she's really... You know, she guards her kids like a mama bear.

Codie Sanchez 49:47 Yeah.

David Adelman 49:47 But we were fortunate that my kids, so our two daughters, 22 and 24. My 24-year-old's a middle school art teacher. My 22-year-old just graduated and just started working. Um, and they just have great values that... I mean, I think it starts, it doesn't matter how much money you have, 'cause people who don't have a lot of money can still have spoiled, entitled kids.

Codie Sanchez 50:06 Yeah.

David Adelman 50:06 Okay?

Codie Sanchez 50:07 True.

David Adelman 50:07 And so I think it's about making sure your kids aren't entitled.

Codie Sanchez 50:10 Yeah.

David Adelman 50:10 Like, teach your kids to be nice people. Teach them to contribute, right? And, like, and then teach them the value of a dollar. And like-

Codie Sanchez 50:17 How do you do that, though?

David Adelman 50:18 Well, because, like, what I'll say to my kids when they were younger, like, well, you know, you know, we live in a m- a big house or whatever. They're like, "Well, we're rich." I'm like, "Uh, you're not rich. Mom and I, we're rich, okay? Like, you haven't done shit."

Codie Sanchez 50:30 [laughs]

David Adelman 50:30 Okay? And, like, and so, like, I, I would say that, and t- my wife would think [laughs] I was a little too harsh-

Codie Sanchez 50:35 [laughs]

David Adelman 50:35 ... but I'm like, I'm like, "You've gotta earn it, right? Like, yeah, I'm doing you no favors." Like, "Now listen, you graduate, you wanna start a business, like, pitch me on your plan. I will line up to be your first investor if it's a good idea."

Codie Sanchez 50:47 Yeah. How do you teach them money? Like, is there an... Like, did you make them have allowances?

David Adelman 50:53 I'm, I'm gonna give you a great story. So my younger one, from the time she was a kid, her, her name's Sage, she loved apples, okay? Still does. And she, I would cut up the apple into four pieces, and I would only give her three, and I would eat one in front of her. And she'd say, "Why are you eating one?" I'm like, "That's called taxes."

Codie Sanchez 51:13 [laughs]

David Adelman 51:14 Okay? And I literally would do this her whole career, okay? So like her whole career. I mean her whole childhood. And she's like, "Does everyone have to pay taxes?" [laughs] I'm like, "Yep, get used to it, okay?"

Codie Sanchez 51:26 [laughs]

David Adelman 51:27 And then, like, my proudest moment, she's, like, 10 years old and we're walking. She's like, "Can you explain what a mortgage is to me?"

Codie Sanchez 51:33 [laughs]

David Adelman 51:33 I, like, I thought I was dying, right? Like, so very inquisitive-

Codie Sanchez 51:37 [laughs]

David Adelman 51:37 ... a- and all of that. And my older one, so, like, when we invest in a venture company, first thing I do is I send it to my girls. I'm like, "What do you guys think about this?"

Codie Sanchez 51:45 That's amazing.

David Adelman 51:45 Like, they know cool way more than me. They know stuff, like, way better, and so, like, they've been really valuable on, like, uh, I, I'll tell you, like... There's a company called Coconut Cult.

Codie Sanchez 51:56 Mm-hmm.

David Adelman 51:56 Okay? It's this new yogurt type of blend that they're making, and they pitched us on it, and I sent it to my girls. And my daughter was in college at the time. She literally opened up her refrigerator and said, "Dad, I have this here."

Codie Sanchez 52:08 Is it glass? Is it in glass?

David Adelman 52:09 It's a glass jar.

Codie Sanchez 52:10 I think I eat-

David Adelman 52:10 Yeah

Codie Sanchez 52:11 ... it's s- so overpriced, but delicious.

David Adelman 52:12 Delicious, right?

Codie Sanchez 52:13 Okay. Yeah.

David Adelman 52:13 They're crushing it.

Codie Sanchez 52:15 They are. I knew it-

David Adelman 52:15 Crushing it

Codie Sanchez 52:16 ... 'cause they're kids, me.

David Adelman 52:17 And so-

Codie Sanchez 52:17 And their margins have to be huge. Maybe you probably can't say. Do you know? Is it?

David Adelman 52:19 I, you know, I don't know. I, I can't speak to their margins-

Codie Sanchez 52:20 Okay

David Adelman 52:21 ... 'cause it's a, it's, you know, it's a fresh product that's made, right?

Codie Sanchez 52:23 Yeah.

David Adelman 52:23 So, um, but I was like, all right, my kids know this. All their friends are eating it. I'm like, "I'm good," right?

Codie Sanchez 52:29 Yeah.

David Adelman 52:29 So we made the investment. It wasn't a huge amount of money, so but, like, that was a good demo for me to prove that this thing was real. And so I really

David Adelman 52:35 do try to, you know, understand that, and my older daughter's very challenging. She'll be like, "You know, I, well, I looked up that company. Their social media's horrible." And I'm like, "So does..." And she's like, "Maybe it's a good product, but you better make sure because their social media sucks."

Codie Sanchez 52:47 I love that.

David Adelman 52:48 Right? And so I'm trying to get my girls engaged to think about how you invest and what you do.

Codie Sanchez 52:53 So is, is that the key to having kids that understand money and business, is you just bring them along?

David Adelman 52:58 I think you talk about it.

Codie Sanchez 52:59 Yeah.

David Adelman 52:59 Okay? I think you share it with them. Um, you know, you talked about allowance, so my wife had this thing. And when they were little, like, we had this checklist for them when they were little. Like, to earn your allowance, okay, here's your checklist. Look good, feel good. It meant, like, brush your hair, brush your teeth, and look good f- each day, right? Make your bed, okay? Things like that. Uh, and we had this list, and then we were like, okay, how much of your allowance has to go into savings and how much is for charity, right? And so we would, like, have those discussions on that.

Codie Sanchez 53:28 Yeah.

David Adelman 53:29 And so, like, it was a small thing and it was, you know, a very small amount of money, but we wanted them to think about it, that all of these things are earned and you have to work towards it.

Codie Sanchez 53:36 No, it's so good. I mean, uh, when I was growing up, I'm Latina, and I didn't come from very much money, and you didn't talk about money.

David Adelman 53:43 Right.

Codie Sanchez 53:43 You didn't, you didn't talk about it. We pretended it didn't exist. You didn't ask for things. Uh, I had no idea what a credit card was-

David Adelman 53:49 Right

Codie Sanchez 53:49 ... until I was well in college. You know, so I didn't have credit. And I thought that, uh, to talk about it was kinda gross. I was like, "Oh, that's, that's not a good thing-"

David Adelman 53:57 We don't do that. Yeah

Codie Sanchez 53:57 ... "for us to talk about. We don't talk about that." And in retrospect, what you realize is rich people talk about it all the time-

David Adelman 54:02 All the time

Codie Sanchez 54:02 ... 'cause it's just a tool.

David Adelman 54:03 Yes.

Codie Sanchez 54:03 And so, you know, I think that's r- that's really nice to hear for people who maybe didn't grow up with it.

David Adelman 54:09 Yeah.

Codie Sanchez 54:09 Because if you don't talk about it, how can you ever get more of it?

David Adelman 54:12 So that trigger, that triggered something to me that I think is the number-one thing we didn't talk

David Adelman 54:16 about. Asking questions.

Codie Sanchez 54:18 Mm.

David Adelman 54:18 So one of the things that drives me nuts about people is, let's just say I was just pontificating about something and you didn't understand something I said, and then you didn't ask me about it.

Codie Sanchez 54:28 Mm.

David Adelman 54:29 And so 'cause I'll say, like, so, like, I'm proud of the fact that if we're talking about something and I don't, I'm gonna say, "Well, can you explain that to me?"

Codie Sanchez 54:35 Mm.

David Adelman 54:35 Most people are embarrassed to say, "I don't understand" or, "I don't know."

Codie Sanchez 54:38 Mm.

David Adelman 54:38 Huge mistake. Like, I respect when I'm talking to our interns or whatever it is, they're like, "Can you explain it to me?" I'm like, "Thank you, because none of you understood that, and you were brave enough to ask."

Codie Sanchez 54:49 [laughs] Yeah.

David Adelman 54:50 Right?

Codie Sanchez 54:50 Yeah.

David Adelman 54:51 And sometimes I'll say things in a group, and I'll stop and say, "Did you all understand what I said?" And, and... Like, why didn't you ask? And so whether it's learning about money to ask, or learning about business or learning about anything, people need to not be shy and not into this groupthink, and not afraid to ask questions for fear of looking dumb or anything else. You- b- uh, so many people are self-conscious.

Codie Sanchez 55:12 Yeah, it's a great point. I also think it's so important with AI today. Like, I w- I had one of my employees the other day, we're doing a, a big book launch on September 18th, and we wanna sell a million copies. That's, like, kind of a ridiculous goal.

David Adelman 55:24 Right.

Codie Sanchez 55:24 It... So, so people don't buy books to the same degree. It's sort of hard. Anyway, um, and one of my employees came to me and was like, "Well, this other person," I won't say who, not a big name, not a well-known book, "she sold 100 million copies." And I said, "Hold on. Just think about how many copies that would have to be."

David Adelman 55:42 Wow.

Codie Sanchez 55:42 Is it JK Rowling or Jesus?

David Adelman 55:45 Right. Yeah, that's a good-

Codie Sanchez 55:45 Because unless it's one of the two, that doesn't make sense. She's like, "No, I got the result from AI. You can see it here." I'm like, "But you gotta ask the next question, which is like, 'Is this reasonable?'"

David Adelman 55:54 Right.

Codie Sanchez 55:54 And so for whatever reason I do... I remember when I was younger, oh, like, yeah, I totally get that, because it is scary to look stupid.

David Adelman 56:01 Right. And I, I, I-

Codie Sanchez 56:02 But that's where you lose all your money

David Adelman 56:03 ... I think it's brave.

Codie Sanchez 56:04 Yeah. Interesting. Yeah, it's a good point. Because you probably say often, "Explain that to me like a six-year-old. I don't understand what you're talking about."

David Adelman 56:10 More and more now, 'cause I... Like, especially when it comes to AI and certain, so I'm like, "I don't understand what you're saying."

Codie Sanchez 56:15 Yeah. And because you don't think that has any bearing on your intelligence. You're saying, "I don't understand this one thing-"

David Adelman 56:20 Right

Codie Sanchez 56:20 ... which is no reflection on me."

David Adelman 56:21 How do you learn if you don't ask questions? Like, I, I wanna learn every day. I wanna learn about business.

Codie Sanchez 56:26 Yeah, interesting. What about, you've talked a lot about your wife.

David Adelman 56:29 Yeah.

Codie Sanchez 56:29 And I wasn't thinking about asking about this, but I work with my husband. He's, uh, brilliant and amazing, and I think you said in the beginning you really can't be successful if you don't have a successful partner. How did you... How do you find a partner that is going to back you?

David Adelman 56:45 You know, I, I, I think I was pretty open and transparent with my wife when I met her that, like, I love work and I love business and, you know, this is a very important part of what I do. And so like, I, I, I felt like I l- she might disagree, but I was like, I laid out the disclaimer, right? Like, that this is really important to me, and I love this. I can love you too, okay? But, like, this is my energy, right? A- a- and it does, it feeds me. It like... And I think I'm a better husband and a better dad and a better friend to people when I'm, like, in action, and it's also 'cause my mind won't settle down.

Codie Sanchez 57:18 Oh.

David Adelman 57:18 So, like, I, I just need that energy.

Codie Sanchez 57:21 And so the key is kind of, one, you gotta be honest-

David Adelman 57:23 100%

Codie Sanchez 57:23 ... and say, "This is what it's gonna be."

David Adelman 57:24 Yes.

Codie Sanchez 57:25 And then what response are you looking back from your partner? How do you know if they're just paying you lip service and going like, "Yeah, yeah, sure, buy me the Bentley, but be on vacation"?

David Adelman 57:32 Yeah, I mean, I, I think, one, um, she had her own great values the way she was raised. Two, she was a really hard worker. She was a teacher, then became a college professor, and then got her PhD, and then, you know, now she does documentaries and writes children's books, so she has her own business. Um, but I think, you know, for, for that was... A- and I'm not an expert here, okay? I've been married 20, let's get this right, 26 years, um-

Codie Sanchez 57:59 We'll edit it out if it's off. [laughs]

David Adelman 58:00 Yeah, let's hope I'm right. Okay. Um, and I'm still, like, a student of this, right? Like, where, you know, my wife will be like, "Hey," like, you know, "the pendulum's a little too far," like, this, that. Like, and we'll talk about it.

Codie Sanchez 58:12 Yeah. Yeah, I know. I always, I chuckle every time I give some piece of advice about relationships-

David Adelman 58:17 Right

Codie Sanchez 58:17 ... on the podcast.

David Adelman 58:18 Yeah.

Codie Sanchez 58:18 I'll immediately fight with my husband.

David Adelman 58:19 Right.

Codie Sanchez 58:19 I'm like, "I gotta not do that anymore."

David Adelman 58:21 Yeah. [laughs]

Codie Sanchez 58:21 Because I can't pretend like we actually know what we're talking about. But I think it's really important because, I don't know what happened, but at some point we stopped thinking it was reasonable to do business with family-

David Adelman 58:31 Yeah

Codie Sanchez 58:32 ... or to bring family into business.

David Adelman 58:33 Yeah.

Codie Sanchez 58:33 And I can see why. It's really hard to set expectations. Things could go very sideways. Um, but Lord, I mean, how many hours a week do you think you worked in the beginning and even now?

David Adelman 58:43 Oh, 70, 80, 90, you know, 100, you know.

Codie Sanchez 58:47 So, like, what if, what if you couldn't talk to your significant other about any of that?

David Adelman 58:51 Yeah.

Codie Sanchez 58:51 Wouldn't that be hard?

David Adelman 58:52 It is. That would be really hard. And so my wife has done a good job of being interested. Not all partners are interested, right?

Codie Sanchez 58:58 Yeah, interesting.

David Adelman 58:58 And so I find that, you know, my friends who are in business, not all of their partners are interested. Mine is. Um, I'm trying to get my kids interested as well. Um, but you know, to your point about family and business, so I, I have a hard and fast rule that if you're family, you can't work

David Adelman 59:13 with me unless you work someplace else for three to four years.

Codie Sanchez 59:16 Yep.

David Adelman 59:16 You gotta pick up those habits somewhere else, be trained by other people and, you know, that's kind of the way I've thought about it for my kids, my nieces and nephews, you name it.

Codie Sanchez 59:24 Yeah, because probably a lot of them just wanna come and work for one of your many companies.

David Adelman 59:29 Right.

Codie Sanchez 59:29 I mean, the 76ers would be pretty sexy to, like, step right into.

David Adelman 59:32 Yeah.

Codie Sanchez 59:33 Interesting. And so you go, no, you have to... Is it just three to four years somewhere else, or do you have to have a-

David Adelman 59:37 Yeah, I, I... A- and again, like, that's directly from me. If it's, like, a portfolio company that I'm not running and all that, and they're getting their, cutting their chops there, that's great.

Codie Sanchez 59:45 Yeah.

David Adelman 59:45 Like, I, I'm okay with that, and if there's great management there and great mentors there, I'm fine. But, like, you know, if... Certainly for me in the real estate office and some of the other, the family office, you have to work someplace else first.

Codie Sanchez 59:54 I think that's, that's smart. I remember I got to chat really briefly with Charles Koch, and, um, he was the same way-

David Adelman 1:00:01 Yeah

Codie Sanchez 1:00:01 ... about his kids. And I remember Junior was telling me about one time he had to... His father made him go to one of the ranches that they owned, and he had to, he had to do some things with a cow and a glove-

David Adelman 1:00:15 Yeah, yeah

Codie Sanchez 1:00:15 ... that, that really-

David Adelman 1:00:16 Ouch

Codie Sanchez 1:00:16 ... I don't think anybody would ever wanna do.

David Adelman 1:00:18 Yeah, yep.

Codie Sanchez 1:00:18 And I thought, that's probably the right way to bring somebody into the mix.

David Adelman 1:00:23 I think you need the appreciation. So literally, w- when... in the real estate business, when it snowed, I showed up there and was shoveling the s- the walkways along with the maintenance crews.

Codie Sanchez 1:00:31 Interesting.

David Adelman 1:00:31 Right? And I, I think you have to have that appreciation of hard work. You know, I've painted apartments. I've done all of these things. I can't tell you I'm a master painter, but, um, I, I think if you don't have an appreciation for the work your people are doing, it's hard to relate to them.

Codie Sanchez 1:00:46 Yeah.

David Adelman 1:00:46 And so I think that's really important.

Codie Sanchez 1:00:48 This is kind of a weird question, but one of the reasons I really liked your background is you are an operator, and have, like... You know, when I looked at your businesses, I was like, "Yes, there's financial arbitrage here, and leverage, and all of that." But man, you know, campus housing, that, I, I... That's 24/7 service-

David Adelman 1:01:05 Yeah

Codie Sanchez 1:01:05 ... which is like, you wanna do... That's worse than any of my businesses.

David Adelman 1:01:08 Yeah.

Codie Sanchez 1:01:08 You know, you, you don't... I guess some of the plumbing companies you call in the middle of the night, but my painters aren't having-

David Adelman 1:01:12 Right

Codie Sanchez 1:01:12 ... to go fix something-

David Adelman 1:01:13 No

Codie Sanchez 1:01:13 ... at 2:00 in the morning, right? So that's really intense. But I was curious, like it feels like a lot of real estate is so competitive and could be even gnarly because maybe the margins are tight, and it's just so much financial leverage.

David Adelman 1:01:27 Yeah.

Codie Sanchez 1:01:27 Why does so much of the real estate industry seem to be so competitive, whereas a lot of these other industries are more collaborative?

David Adelman 1:01:33 You know, I don't view really competitive... You, you might be competitive with someone else in a diff- in a market, your apartment complex against theirs.

Codie Sanchez 1:01:40 Yeah.

David Adelman 1:01:40 But, you know, in our industry, in the student industry, I would say a bunch of the owners, uh, like our chief operating officers all get together twice a year, and they share best practices.

Codie Sanchez 1:01:48 Interesting.

David Adelman 1:01:48 And we've tried to bring people together to do that. So I think, like, you know, you can be like friendly competitors, too, and you know, want what's best. It's like, you know, I'm friends with a lot of lawyers. They compete, but they're all kind of collaborative and friendly and, you know, do that. So I, I think it depends on the personality.

Codie Sanchez 1:02:03 Yeah. So do you think you always have to compete to win or annihilate somebody else? Or can you collaborate with your competitors?

David Adelman 1:02:09 I don't believe that I, I, I don't try to win at the expense of somebody losing. Okay? Um, I kind of pride myself on that.

Codie Sanchez 1:02:18 Mm.

David Adelman 1:02:18 And so, but there are people that do, and it's winner take all and all of that. Not my, not my thing, and maybe I would make more money if I did that. Um, but like I, I also wanna like set a good example for the people I work with and my kids and all of that. And so for me, it's like, it's exciting to win the right way.

Codie Sanchez 1:02:37 Mm-hmm.

David Adelman 1:02:38 Share the wins with your team. But don't get me wrong, I'm really competitive.

Codie Sanchez 1:02:41 Right.

David Adelman 1:02:41 I still wanna win.

Codie Sanchez 1:02:42 Yeah, yeah.

David Adelman 1:02:42 Right? I just think it's how you play the game.

Codie Sanchez 1:02:44 Yeah. Well, that's what I heard about you from a few people that know you. That was kind of their saying-

David Adelman 1:02:47 Yeah

Codie Sanchez 1:02:48 ... is that they would do deals with you.

David Adelman 1:02:49 Yeah.

Codie Sanchez 1:02:49 Which I think is one thing people don't ponder as much-

David Adelman 1:02:51 Yeah

Codie Sanchez 1:02:52 ... is if you're always trying to beat somebody else up, then they're never gonna bring you opportunity.

David Adelman 1:02:56 Yeah.

Codie Sanchez 1:02:56 That's for sure. And so I think it's, it's cool. And it's also important 'cause these days people are crazy about rich people. They think we don't... We... I mean, how many... A different way, I guess you could say, is like how many billions of dollars in value and, like, assets do you think you've created in order to have to become a quote, unquote billionaire?

David Adelman 1:03:15 Wow. A huge multiple, 20X, 50X, of 100X. It's a huge multiple more of, you know... Again, it's kind of like build these businesses [laughs] and hope something's left for you.

Codie Sanchez 1:03:29 Yeah.

David Adelman 1:03:30 Right? And that's kind of what's happened over the years, and that piece fortunately has gotten bigger over time.

Codie Sanchez 1:03:34 Let's say you had to go back. You're-

David Adelman 1:03:37 Yeah

Codie Sanchez 1:03:37 ... somewhere between 13, 'cause you're a crazy person, and 25, with no money, no network-

David Adelman 1:03:42 Yeah

Codie Sanchez 1:03:42 ... no reputation. Where would you go looking for your first million? What would you do?

David Adelman 1:03:48 In my mind, it's not looking for the first million, it's looking for what education can I get that'll lead me on a path, okay? So I would, I, I would show up... And, and we had talked about this. If I, if, knowing what I know today, I'd go back to somebody's operating business and say, "Can I be an entrepreneur in your business, learn your business, and then ultimately become like so valuable that you wanna give me equity or tie me up or do something that I either can make a huge part while I'm there?" I mean, you know, you worked at Goldman, right? A lot of people become hugely wealthy working there and getting a piece of the action. So could I become so invaluable to this organization after learning that you can't live without me? Or did I learn enough to go out on my own and do it with a few people and, you know, hopefully you can gather some money to start small and get big.

Codie Sanchez 1:04:31 All right, David, you're the man.

David Adelman 1:04:32 Awesome.

Codie Sanchez 1:04:32 Thank you for being here.

David Adelman 1:04:32 Appreciate you. Thank you. [upbeat music]