The text below is a transcript of the audio from Episode 50 of Onward, "The guy behind the guy, with Scott Plank of Under Armour".
Disclaimer: This transcript has been automatically generated and may not be 100% accurate. While we have worked to ensure the accuracy of the transcript, it is possible that errors or omissions may occur. This transcript is provided for informational purposes only and should not be relied upon as a substitute for the original audio content. Any discrepancies or errors in the transcript should be brought to our attention so that we can make corrections as necessary.
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Ben: Hello and welcome to Onward.
My guest today is Scott Plank. Scott helped build Under Armour from a $100,000 to a multi-billion dollar business. Scott was also the largest angel investor in WeWork, yet no one knows…until now. He was also a seed investor in Fundrise.
Before we get started, I want to remind you that this podcast is not investment advice, it is intended for informational and entertainment purposes only.
Ben: Scott Plank, welcome to Onward.
Scott: Hey Ben, how's it going?
Ben: Excellent. I feel like this conversation has been 10 years in the making.
Scott: Definitely.
Ben: So before we talk about how we know each other, I wanna introduce you to the audience and maybe we'll start with the origin story, but I want to talk about Under Armour. I wanna talk about WeWork. I wanna talk about Fundrise, eVerify, you have lots of experience in real estate and, and venture prolific, if you will.
So how do you introduce yourself to the audience?
Scott: Well, thank you, Ben. I think about my origin story relative to, as you said, I've been 40 plus years doing investment real estate startup venture, and been very successful over the years to have a number of things. Probably best well known of course, is being a partner at Under Armour for more than 20 years or so and driving that company from about $137,000 in revenue to about $1.8 billion when I left in 2012 to the company public.
And as you mentioned, I've got some great stories to tell. About private equity investing or venture investing or however you call it. That's certainly not how I called it when I was making the investments, but I've had some really great successes. I can tell you I've had some failures as well, but fortunately the successes outweigh the failures.
So of course Under Armour, which we'll talk about, and I was a early investor, largest angel in WeWork, early investor, I think largest angel in EverFi. And then of course Fundrise.
Ben: Exactly. So let's start with Under Armour and maybe even before that, let's do a little bit of chronology here. So if this were like a comic book, what's your origin story here, Scott?
Scott: Funny thing about origin stories are that we are taking this back many, many years. My origin story really does start with my family. So, uh, I grew up in Washington DC area and my family really focused a lot on what I would call self-employed. So my grandmother, who was in her late eighties when she passed away 20 years ago or so. She literally outlasted three husbands and she was self employed. She was a realtor for about 50 years in DC. My mom also self-employed as a realtor, and then she became mayor of our town in Kensington for many years. My dad worked for many years. He was a civil engineer and then he began, he was actually an overseas, which also gave me a bite for that.
He was setting up communication towers in Iran and Pakistan of all places, came back to the US and worked diligently as a home builder and eventually started his own company. Ran that. There's five sons in my family, Ben, and I don't know that many of us have ever held much of a job that we didn't either start or whatever.
My two oldest brothers are home builders. Most people certainly know about my brother, Kevin Plank, the founder of Under Armour, and my partner in a number of different things, which Under Armour you're aware of, but there's plenty of other stuff too. So for me and my family, the origin story, if you will, was focused on being self-employed.
Self-employed with extreme diligence, working really hard, recognizing that if you're not making the money for you and your family, then nobody else is. So it's a get up every day, come to work every day. And I think that was a very early part of my life. In fact, the first probably seven or eight years of my life, both during and out of college, was working for myself as a carpenter, building houses.
I traveled quite a bit as a young man. I traveled to Guatemala of all places, learned Spanish, came back with a giant bushel of bracelets, which I then sold on the beach and spring break. And actually Kevin and I sold them at Grateful Dead shows. I spent time in Eastern Europe after the Berlin Wall fell, and literally along the way we bought what are called little Russian Metals, a little red star you see.
And in Caans Poland, we found Cuban cigars for sale. So we threw all of our clothes away, packed up our backpacks with that, went over to Berlin Wall and Western Europe, and started selling that. So just a history of doing a lot of different things. Maybe to find your path or maybe just to enjoy that ride when you can.
There's certain times in your life when you have that level of flexibility, and I think I lived that to the best.
Ben: It's such an extreme from selling bracelets. You bought in Guatemala on a beach to building and investing and owning multi-billion dollar company. So how do you get from there to here? How did that happen?
Scott: The origin story certainly starts with Under Armour and my brother Kevin, he was a football player at University of Maryland and didn't like the way his cotton T-shirt worked, and literally went to Joanne's fabrics, bought a fabric, went to a tailor, brought him hams, BET, and that would've been in 19 95, 1996.
And he's an incredible worker, incredible storyteller. And in 1997 or so, I spent a lot of more time with him. I was working at Freddie M of all places on the real estate side. I was a producer in their multifamily division. Which of course, doing remic and CMOs and pulling packages together, and they paid for my business degree.
So I was able to go get an MBA in finance through Freddie Mac, but started working with Kevin and. I understood debt really well. Didn't understand equity hardly at all. There was nothing called venture capital back then, not that we were aware of. So for me, it was working with my brother and I decided I would put 15,000 bucks, which is literally all the money I had, and put that into Under Armour at 15% of the company and worked together for many, many years from there.
And, uh, great deal of what I was doing in the company. When I was literally working at Freddie Mac, moonlighting at Under Armour, I was putting together our financing packages. So literally starting with building a financing package when you were a hundred thousand dollars in revenue to a bank and going the SBA and getting a loan.
And the loans would take about four or five months to get approved. And I'd go back in and I'd be signing the papers and I'd hand in the next loan. We eventually did four loans with the SBA and the company continued to drive. Kevin, my partners Kip and Ryan continued to drive that company. So we went out and looked for more money when the bank wouldn't give us any more money.
Kevin was adamant not to sell equity, so we found a local DC turned into a sub debt lender who loaned us about 3 million bucks at 24.5% interest rate for about two and a half years. But that investment took us from about 5 million in revenue to north of 25 million in revenue and continued on that path.
Around 2000, I realized that the company is gonna need a lot more, and one of the most important lessons is you certainly know my brother and my other partners. We'd worked together a long time, but prior to making that decision, I had a wife and a kid, brand new kid, a mortgage on the one hand, had a lot, on the other hand, had not much to lose.
So worked it out with Kevin and KIPP and Ryan. And probably the most important thing is that we all came together on the ideas of who's doing what. And I think that's one of the most important lessons I often talk to people about is whether you're making an investment or you're starting a partnership.
Just being really clear about that, there's a famous quote from a guy named Lee acoa, who people on this call may not remember, but he had this quote, it was lead or get outta the way. I've tried to live that in my life too, and I've certainly been working for myself and my own company for 10 plus years now.
But prior to that I was very comfortable like, these guys know what they're doing. They know the process, they know what it means to be a sports marketing and a sports company selling shirts and shoes. And I said, okay, let's do it. I'm gonna leave this other company and go full time.
Ben: Okay. So many follow up questions here. Let me just talk about the debt finance, because these days everything's equity, finance, venture capital. I dunno if you read Shoe Dog, but Nike also. It's a great book.
Scott: Don't tell anybody, but I did.
Ben: Good one. So raising money based on revenue forecast factoring, which is like financing your receivables. That's such a different way to grow your business. It's how you and Phil Knight did it because that seems really risky. Just seems like any shock in the bank. Could just take the whole company. I actually have, one of my longtime family friends started a Haircuttery and he lost it at 800 locations and he lost the whole thing to m and t Bank. They took it from him during COVID. The guy's like 80 years old.
Scott: First of all, we're not talking about the other guys. Ben, keep them off my call. We never talk about the other guys.
Ben: not Haircuttery, even the other guys.
Scott: I could tell you what we did. I can tell you what I did. And honestly, I think it's important to remember that decades ago in the late nineties, there was not this heroic concept of what is an entrepreneur or what is a venture capital didn't really exist. You know, I, I guess it did, but certainly not in Washington DC area or Maryland where we were in Baltimore.
And then secondly, I came from debt. As I mentioned, I was working for Freddie Mac. I had a really good concept of how debt works, how you get debt, what is the package required, how do you take things through a committee? What are people looking for? So we'd also, as I mentioned, we'd done SBA loans, which was the greatest of venture, if you will, because you didn't have to have a lot of assets to do an SBA loan.
Ben: Small business administration.
Scott: Small business administration. Thank you. So Kevin had to guarantee those loans personally, and that's of course incredibly stressful. And then from there it was, well, we had a couple of people who were interested. Friends and family say would put some money into the company, but frankly, we had no idea what is it worth?
What's it gonna be worth? Who the hell nos. So the idea of taking from prudent capital, Steve Schwartz in DC was about $3 million. Again, 24.5% IRR. But the alternative was selling equity and a lot of control in your company at a place where you're very young, you don't know what's going on, you don't know how to do it.
So frankly, when banks and subject guys stopped giving us money, we were very lucky because we'd attracted the attention. We were going from 50 million to over a hundred million dollars in sales and we'd attracted attention from some of the best consumer products investors. And one of those who we eventually got to know really well and who was a really tremendous mentor to me for many, many years was a guy named Chip Adams with Rosewood Capital.
And it happened that Chip Adams, one of his main investors in Rosewood Capital, was a guy named Don Fisher who had founded the Gap. So for us, we were incredibly lucky that the equity came along when we were ready for it. There was a lot of back and forth between Kevin and Chip about, you can't make us go public, you can't make us do this, can't make us do that.
And Chip was great along the way. The other good thing about it is by using debt. When we did the deal with Rosewood Capital, which I believe is public knowledge, but we only sold less than 10% of the company for $10 million. So you figure the next financing we had was going public in 2005 with 280 plus million dollars in revenue and a $600 million value, which literally the next day or day one became over a billion dollar valuation.
So you got to think and imagine if you're going for it, you're going for it. So what more percentage of the company would have to have given up?
Ben: Yeah. Different structure from folks 'cause that's, you guys were risk on, I definitely know about you. He says periods when you're risk on periods when you risk off and risk on man, that is all the way to the hilt.
Scott: Yes. Yeah, I think that's a great point, Ben. Also, there's times in your life think about folks who are listening, and there's times in your life when you can be really, really risk on. And one of those times is definitely early in your career when you don't have much to lose. Another one of those points in your time, for
me personally, was middle of my career when I had a lot of dough and made a lot of money and thought, well, I can keep pressing my bets, do it in different ways and continue stressing myself and testing myself, engaging with the world in different ways and hoping to both build large scale businesses, but help entrepreneurs and then eventually doing impact investing.
So I think that, as you said, risk on risk off. We have to think about that and it's a very important lesson to learn and frankly, the environment. And we've seen this more than anything in the last three years. Just the incredible level of risk completely on. Go for it in 2022, everything's racing, and then late 22, it's screech to a halt risk off.
You better figure something out. I had to do that as well. So that's been a risk off play for me.
Ben: We'll come back to that, but it's like one of the things, I feel like everybody talks about it, but until you're in the seat, can't appreciate just how much risk just turns into stress. Just shovel it in. Oh man. So I just wanna go back to Under Armour because I know I can't mention the other guys, but the number of iconic sports brands built in America, I think I can count 'em on one hand and very few in the last few decades.
I think Under Armour may be the only one that's just so unusual. How did that happen? And maybe it's such a, am I oversimplifying it? But it just seems wild that you can create that kind of iconic brand to rival the other guy. I'm sure they were not happy.
Scott: Well look, I can talk about it maybe in a different way. A lot of people may have heard the story and Kevin's out there quite a bit. It's a public company, it's doing great. And the number of teams and the number of people that we've impacted in a positive way to feel great about themselves, to win their games that go the distance, that's part of the story that people have heard a lot about.
So I'll tell you more about my part of the story. And as I mentioned earlier, one of the most important things is if you're in a partnership, if you're working in a company, you just need to know what is your lane, if you will, and what are you good at? So for me, my brother is very much certainly, and Kik and Ryan Wood, those guys were coming out of college sports, they really understood what is the product needed and how do you tell that story?
How do you build that great product? And then how do you sell it into different places? So for me, my job literally was. Building out what I would call the platform of a great brand. And that platform when we were building it was able to scale the platform, which of course means the brand can scale through technology that didn't exist before.
So that's one of the things that we hit it in incredibly, right, in so many different ways. But you think about the different use of enterprise resource packages, the internet coming, as I said, when we started the company, Kevin was placing ads in a magazine, and from there we had a catalog, which we would just mail out catalogs to people and they would call in and say, Hey, this is what I'd like to have.
Or they'd fill out their form on the back and send in a check. But in early 2000, of course, e-commerce started moving and equally important, internet started moving. So the ability to communicate changed dramatically. There were a number of computer systems, including S-A-P-S-A-P created a thing called the Apparel Footwear Solution, and that software system was actually created by those other guys and three other other guys.
We were a really small company, but we had the benefit of being able to use that technology and use the different ways of looking at things. And it's one of the things I think I'm pretty good at. I sort of joke, I'm not the best mathematician you'll ever meet, but I'm very good at word problems. I'm very good at applying technology to problems.
So even as simple or difficult as taking a warehouse from 1200 feet warehouse to, I don't know, 20,000 foot warehouse to a 40,000 foot warehouse to a 350,000 foot warehouse, that's virtually impossible to do fast without being very, very good at applying technology and especially those systems that are already in place.
So from my perspective, different than what others might respond to, but one of the most important things about scaling the business was understanding the technology environment we were in and recognizing what we could use and how we would be able to benefit from those things and making those choices along the way.
I can tell you a thousand stories about how we were this close to not making it and the thing didn't start up. And one time we were open in our biggest warehouse we'd ever built, and Sun Microsystems was doing our servers. Myself and a guy named Dave Demsky, who was our CIO. So he and I were together at four in the morning and we're connected to somewhere in Asia because we had a problem, and they just kept moving the problem around the world as each office would close.
But we were just still sitting there and six 30 in the morning, there's literally a giant line of 18 wheelers that had moved from the previous warehouse to the new warehouse. And in our world, we didn't have like extra material. We didn't have extra product. You don't have a chance to say, well, I'll keep shipping here and we'll ship here.
It's like, no, burn the bridges. Shut that warehouse down. So literally being in an office or a server room at that time, and then walking out on the dock and
seeing a giant line of 18 wheelers and a bunch of people sitting around going, Hey, is the system up? And you're going, hell yeah, it's up. I think so.
Didn't say, I think so, but I'm like, yes, it's up. Let's go. Let's go. But those kinds of things, certainly people see that today, but man, you just never forget. It's really, really difficult and challenging and takes a special personality to have that ridiculous confidence in yourself.
Ben: One of the things you said I thought was really interesting, he said, you think someone could not start under Armour now? The world's changed so much, it just wouldn't be possible to do what you did then in the current day. Could you expand on that for everybody?
Scott: When I say that, I mean a consumer products company. Now, people could certainly argue, well, you know, you can get quick ships from China. There's TikTok. There's so many different things and ways that you can produce product, but producing product at scale is really difficult. And the other thing I think about is Kevin started the company by literally going and saying, I've got a pair of compression shorts.
They're fantastic. It's a stretchy fabric. I'd like to build something like that for a shirt instead of using cotton. And he goes over to Joanne's fabrics, he picks up a bolt of fabric, goes to a local tailor with a Hanes beefy tee. He says, Hey, how many of these can you make? And after that he goes up to New York City, seventh Avenue, and he says, gotta make some shirts.
How many can I make? So those kinds of things. And then when we moved our first larger scale warehouse, and we made our own product for a long time too, for many years, and that was done in Baltimore in an old tie factory. And there was 20 or 30, I think it was as many as 40 people who knew how to cut and sew.
So I think it'd be very difficult to do it how we've done it. So maybe there's another way to do it. I wouldn't know. I sure as hell wouldn't do it again, that's for sure. But I think it would just be difficult and, and to that exact thing, hate to say it like this, but RIP, Joanne's fabrics, 'cause I believe they've just gone outta business.
So I think it's more like that. Every generation will have their own way of doing things and their own way of building a business. So doing it the way we did it, it would be impossible to do. There would not be the fabric. We were buying fabric that was made in the Carolinas. We were manufacturing here in Baltimore.
So I think that would be incredibly difficult. There'd certainly be a way to do something like that. It wouldn't discourage anybody, but don't do exactly what we did.
Ben: So just try to put a finer point on it. What you're saying is that the skills you took over this TY factory, people who made neck ties, I don't even know if those exist anymore, and they knew how to cut and sew. You got your fabric from North Carolina. All the manufacturing and skill sets were here so you could go and figure it out.
I know people in China and people don't appreciate how important the ecosystem is. It's not just the capabilities, like the fact that across the street, your buddy, this is how software works in San Francisco, there's an ecosystem and people with talent in one thing can come over to your organization and help you.
And the San Francisco ecosystem, no one's been able to reproduce. Manufacturing is similar.
Scott: Yeah, and I think we're certainly hearing that today with the administration is working diligently to bring manufacturing into the country for a number of reasons. Your point is well taken. The ecosystem of manufacturing, depending on what it is you're trying to build, and people say that all the time, getting the right skilled labor or you gotta go out and you gotta make the skilled labor.
You have to train people to do things differently than maybe I'm going to school and I'm gonna earn a liberal arts degree. So that ecosystem is challenging. I spend a lot of time in San Francisco. I have a portfolio in San Francisco growing Under Armour. I spent a lot of time out there working with technology people, and you're absolutely right, that ecosystem does still exist.
It's other places too, in the United States and other places, but that ecosystem is tremendously helpful that the randomness of walking into somebody at a cafe and going, Hey, what are you up to? And hey, wow, that's really interesting. I think I could do that as well. That's something that I'd like to say I've benefited greatly from is just being that person who's willing to go out and just bump into things.
Ben: I can't wait to get to that, but let me just stay with Under Armour for a couple more beats here. So Under Armour's, gone through some tough time. Obviously I know about 2008, could you tell at least one or a couple of the times when things really came down to the wire and how you worked your way through it?
Scott: So I mentioned opening a warehouse with a giant group of 18 wheelers. I'm probably only gonna tell you the stories that worked out okay for me. So hopefully that'll be all right with you. We mentioned these things that are going on now. One of the biggest challenges, of course, is, and many of us see that you saw it in the last couple of years where the world changed and the real estate business.
Well now I'm not a real estate operator anymore. I'm somehow an interest rate analyst, so I'm somehow an economist. I'm not a guy who just likes to build stuff or run real estate. So where the sand shift beneath your feet, and I think one of the important lessons is recognizing that and was it Muhammad Ali?
I can't remember who said it, but everybody's got a plan ticket punched in the face. I would say that's 100% true in the world of entrepreneurship or the world of growing things. Best example I can give is, before there was a crisis of 2008, there was a huge boom. Things were moving really well. I had been, as I mentioned, doing a lot of different things to Under Armour, and by then I was focused very clearly, very directly on building out our direct business.
So direct business would be our e-commerce business and our stores. Stores being primarily outlet stores, which people are familiar with, where you are selling excess. And in today's world, it's not just an excess channel. It's very much a make for and very profitable direct business companies. Doing really well.
2006, 2007 company going public in 2005. The brand was on fire, we're killing it. And Kevin is thinking about ways that we can continue drive the brand. And one of those ways people think about is you build brand stores and you put your brand in places that people are not used to seeing it. So in Under Armour you'd be used to seeing it on the football field, lacrosse field, tennis court, but you may not be used to seeing it in a high-end shopping center.
Other places you weren't used to seeing it. So with the retail group, I probably had 50 or 60 stores by then, probably 2000 people working for me, just doing retail throughout the country. And we thought, well, we've got the platform, we've got the skillset, we're gonna start building brand stores. And brand stores is a very different business, completely different business.
It's very expensive. The build out is expensive. The rent's really expensive, getting the brand right's really expensive. The turns are faster. In outlet world, you can have product that's a season older in brand stores. It's the product that's the season forward. So very challenging to do, and I certainly remember that it took me a year of talking to a number of landlords and trying to convince them that we were excellent at retail, that we'd done a great job with our outlet stores like the Simons and some of these people who very much were great partners of ours.
And I started doing term sheets for stores. I distinctly remember I had a number of term sheets lined up. And at the time also I'd started opening up stores in China, in our China business, which was a direct business. So I was literally at a hotel in Shanghai, 12 hours ahead or backwards, I don't even remember.
But all I know is it was three 30 in the morning and I'd talked to what was going on in the states and you could start to see where the world was really blowing up. And more importantly was financing was locking up. Stocks were down tremendously. Are you gonna find enough cash to do what you need to do?
So we had to make a very difficult decision to shut down the brand stores. We'd already signed two of them, so we went forward with those. But we had to shut down the brand stores. And as you said, I had to make those phone calls myself and be like, man, I'm really sorry. We just gotta do, we gotta shut this down 'cause we don't know what's gonna happen in the future.
The sand shifted beneath our feet. Fortunately, like all things, you move through it, you move out of it. We continue to build outlet stores and then Under Armour today has many, many brand stores. But I think the lesson there is to make sure that you gotta pay attention to how you're doing, but you really have to pay attention to what's going on in the world.
Your idea was an idea created and might've been a fantastic idea when the world was like this. And when the world blows up, you have to re-look at everything around you, everything around you. You have to look at everything and say, well, this was my assumption, and then these three things change. Does that mean I'm still gonna have success?
Or do I have to do something different? And I could tell you that's the same process I went through in the last three years. When the sand shifted underneath our feet, interest rates rose. A whole bunch of things changed. I had strategies that I was working forward. Some of 'em I had to shut 'em down. Some of 'em I was able to pursue.
But it's really important that you understand that it's not just you, it's the world around you Also.
Ben: I've been through 2008 and I went through 2001 and went of 2020 and now 2023. It's mostly the world outside you that is the problem.
Scott: No, it's your fault.
Ben: It just shocks.
Scott: Don't kid yourself. It's my fault. It's your fault. You should have seen it.
Ben: Your job's to be prepared for these crazy things, but it's the crazy things that get you. It's not the things you spend all your time on. It's the things you don't spend your time on that end up sneaking up on you. Okay, so 2012, you decided to leave Under Armour. Did you know what you were gonna do next? Or you were just like, I'm ready to move on.
Scott: So, good question. I think a decision to leave like that, there's a whole lot of things wrapped up into it, but one of the things I thought about was what are the things that I enjoy doing at Under Armour and what are the things I just don't wanna do anymore? And there was plenty of stuff I didn't want to do anymore.
There was a lot of things that I thought I'd accomplish what I could accomplish there. So let's think about other areas. The three areas that I really enjoyed, of course, I love building out campuses and stores and real estate, even warehousing systems like that. I love doing that. I did that as a young man and my undergrads in city planning and architecture.
So I really enjoy doing that work. I really enjoy building companies. I think it's one of the most interesting creative pursuits you can have. It's incredibly challenging. It's hard work. You get to work with a lot of cool people. And then just frankly, spending time family. My kids were younger then and going off to their worlds of high school and things like that.
So there's a whole lot of different reasons wrapped up in that. But for me, on the professional side, it was very much making a list of those things that I enjoy doing. How I'm engaging with the world is how I'll often describe it. And I'll think to myself, well, I'm gonna change the way I engage in the world, but there's still things that I want to do.
So when I left, I set up the real estate company, and when I was an Under Armor also, I did basically nothing else. I think I fixed up a house, but that was literally it. Because I thought it was just so important that you're only doing what you're doing when you're doing it. So I didn't have any venture stuff, nothing like that.
Towards the end of the time at Under Armour, I had made two investments that were introduced to me in areas that I thought I had a lot of both expertise and knowledge about. And one of them was EverFi, which you mentioned, which is a fantastic company. Also founded in dc, a guy named Tommy Davidson and some partners, and they were focused on financial literacy coming outta the crisis of 2008.
Loved what they were doing. Thought I had something to add there. And then the other one, of course is WeWork, so people know a lot about that and happy to tell that tale. But for WeWork, I had a very unique introduction to them. And then a very unique perspective and background on why it was interesting to me.
Ben: Let's do WeWork first 'cause it's so fun. 'cause I said the intersection here of real estate and tech. And what's funny about it is that even. Though you were super early, earlier than almost anybody, you've been able to stay out of the movie. So this is, uh, first an exclusive here. Okay. So you get introduced to WeWork.
You wanna tell the story of how early was it, what was happening, how'd you make that decision? Because it's a crazy story.
Scott: Well look man, I love quoting movies. The movie Swingers Man. I'm the guy behind the guy behind the guy. So I don't do a ton of podcasts. I thought we would do it together 'cause I wanted to work with you on this. So the funny thing about it was I was actually introduced to Adam Newman and Miguel McKelvy through my good friend Larry Max, who we still do things together now.
And Larry knew Adam's father-in-law who was in the movie and his father-in law introduced us. And Larry and I went up to New York City. We toured, what
was WeWork second building at one Little West 12, and I looked at what he was doing. Of course, Adam is the same person as he is on television, as he is in person, as he is on podcasts, et cetera.
I got to know him well. But what I found most interesting, honestly, for me was I thought it was something that I had a unique understanding and interpretation of that others didn't. And you're right, a lot of people passed it up. For me, I had been building remote offices for Under Armour and our own headquarters.
I built our headquarters in Baltimore. I built offices in Denver, Colorado. I built in Toronto, Amsterdam. I built an office in Shanghai. We built a different office in Hong Kong and then of building stores. So I had a pretty unique idea and appreciation for how difficult it is to do an office. Our first office in Baltimore was 1200 feet, I think, and the back room was the warehouse and the front room was the quote office.
I was working at Freddie Moonlighting at Under Armour, and I had to go to the store and buy a book called Networking for Dummies, which is that big yellow book that probably nobody knows anything about anymore. And then I had to go down to the, I think it was a local electronic store, and buy a big spool of Cat Five and Crimpers and Little Ends and wire up my own office.
And then I had to go down the street because Dell Computers was the only guy selling what was something like a white box. I had to go down the street, but this was back in the day when there were a lot of people building and selling their own computers from a small little strip center. So I bought eight computers.
I put the thing together, wired it all up, and we had a network. Getting phones turned on is incredibly difficult back in the day. So you take those things. And then the other piece that I really, really understood is not just the operational side of opening an office, but the brand side and the community building side.
So one of the things I always tell people is that your brand starts in your own company. It starts with your own people. So trying to tell your brand story, you better make sure everybody internally understands it. And telling that brand story can also be told in your four walls in your office, it's told in your stores, it's even told in your warehouse.
Every place there's a space like that. And of course, under Armour is a on field brand being products, shirts, and shoes on field. So being on field where you are
in 3D world is very important to us. So seeing what Adam and Miguel were creating, Miguel especially creating this brand idea of how cool the space was, that I felt that that was actually a revolutionary thing.
And some people who had experience looked at it and said, ah, whatever, he is just got a different paint color, something. I was like, no, you don't understand. And the other piece I thought was just incredibly important was the way they were able to bring people who was a startup or a single operator. And so you had one or two people in your quote company.
So working from home, people have romanticized that after COVID. I personally find it, although I'm sitting at home right now, I find it boring. I don't find it that exciting. I prefer to be in an office or engaged with people. So one of the other things that WeWork did, which I always found to be incredible was Under Armor, you've got three or four people there.
So I built an office in Denver, Colorado, and I had to think about which people or services are gonna come in that office. And so just having the sales team and the sports marketing team, those guys get along really well. But if you have other types of users in there of types of services in there, nobody hangs out.
So one of the coolest things about WeWork was you might be a startup guy and I might be doing shirts and shoes, and you might be doing a real estate refi startup, or another person might be an accountant. But once you go to lunch together, which is really important, everybody has the same problems. Like my customers a pain in the ass, I don't have enough money, somebody didn't pay me.
All those things were very consistent. So when those guys are building out WeWork, I felt that it had created this really incredible, it made it a lot easier. The locations were fantastic. I also was a big fan of what you'd call move back to the city, which was going on at that time too. People forget now, but there was a time when cities were dead and that was about that time.
So the real estate wave was excellent because when they were picking real estate, there was a ton of empty office buildings. And then when you add to that, that they created a brand environment that just looked really cool. See, when you go to that office, you don't feel like you're in your mom's basement or something.
And then on top of that, there's a lot of people to engage with in ways that you're not really sure of. But at the very least, to be able to commiserate and
ditch about things. So what I saw in WeWork was something that I thought was really cool. I saw in Adam and Miguel was something that I've since been able to replicate, just how important it is to have the right people running something.
But reel it back to my decision making tree was entrepreneurs are far better at risk than risk management. So I got to know Adam, my partner, Larry and I, we put up the money for the tenant improvements in that building. I got to know them, continued to know them for several months, and then Adam was raising money and I said I'd be interested in that.
I spent time with him learning the business, et cetera. And interestingly enough, you get to know someone when you're negotiating with 'em too. And what I got to know was I started out, I was gonna invest about 2 million bucks or something in the company by the end of it. When we closed, I invested two and a half million dollars.
I invested two and a half million at a $50 million value. So I had 5% of the company, which I think made me the biggest angel in WeWork. The next financing they had was Benchmark Capital, put in 17 million at a hundred million dollars value, and I thought I'd hit the jackpot. At that point, I was like, oh my God, I hit a double.
This is incredible. The rest is history, as they say. 'cause WeWork went up to 47 billion selling stock to SoftBank. And little known fact, I will say on this because we're friends, but I was very fortunate to have effectively founder share. So I was selling along the way with the founding team. So a really exciting company and very proud to have been part of it.
Ben: It's incredible. 50 million to 50 billion story and then back down.
Scott: To be fair, this SPAC was $9 billion in value. So it's funny, again, gets back to this weird culture of entrepreneurship and what is success? These guys built a company that even at the spac, was worth $9 billion and that's pretty amazing.
Ben: I'm here to try to pull out some of the lesser known parts of the story. 'cause everybody knows, and I think everybody's view is tainted in retrospect, but I think it's like WeWork at the time, they just transformed how people thought about real estate and place. And it was part of an era of, you said this, but the rejuvenation of cities, the rise of the millennial and the rise of tech.
Tech became, and this just everybody takes the present for granted, but like tech didn't become a booming sector till after 2008. It took a long time for everybody to realize that tech was gonna be the prime driver of growth in the us. So all this happened at once during that decade, and WeWork is at the epicenter of that.
One of the things that you said I thought was really interesting was that the company people conflate the capitalization and the challenges it had on the cap table, if you will, with the business itself, which actually was always a good business. Could you expand on that or maybe explain what you meant?
Scott: So I was involved very early for the first couple of years, but then not so much after that for reasons that probably you could just intuit why. But to your earlier point, what I think is important, and I'll just think about it from my perspective, take the financing out of it. The company created places and spaces for people to really pursue their dreams and so many companies and people came out of WeWorks all around the world.
So again, I'm very proud to have been a very small, early part of that and very proud of what Adam Miguel were able to create because the timing was incredible. It was really important. People need to remember at that time there was not a ton of jobs either. In 2008, the world had completely blown up.
Offices were closing and people were getting laid off, and people had to figure out something else to do with their time. And on top of that, as a person who, as I mentioned, I studied, my passion is city planning and growing places. The other thing about what WeWork has done and did over time was created places and put investments in places that others were not willing to do.
I invested in one WeWork building with them was in San Francisco. And again. Say what you want about San Francisco with COVID. That's been a tragedy and difficulty, but prior to that it was, and it is again, thank you. A city on the move with tremendous amount of interest. And Adam and Miguel and WeWork were taking empty buildings and they were turning them into places people wanted to come.
And something I often think about is one of the hardest things you can possibly do is bring people to places they're not used to going. They haven't gone there before. So one of the things I've focused on in my world is sometimes you have to do something to get them to move there. This actually reminds me of, uh, very early Fundrise in one of my attractions and interests.
There was, I've always been a fan of, if you wanna live in that neighborhood, you have to get it activated. So sometimes you can activate it with a WeWork, sometimes it can be a cafe or a restaurant or another apartment building or something like that. So I think what they did at that time, they really, I don't wanna say saved cities, make it that crazy, but there were so many cities that had poles in their fabric.
Those holes were filled by WeWork buildings.
Ben: I would talk about Fundrise because actually our original tagline was Build Your City. 'cause we really wanted to activate people to be able to invest and own and build the way the city ought to be built rather than outside money. But before I get there, there was an unusual clause in your deal with WeWork and I just feel like that says it all about you.
Scott: Well, as I said, I'll revisit. Entrepreneurs are not very good risk analysts. So I was at Under Armour when I made the investment. And of course, being a scheduled employee in a public company is a big deal. And to me there was nothing more important certainly than Under Armour, and no personal investment that I'm making outside of that company would be allowed to change people's viewpoint there or viewpoint about me.
So. Not so much with WeWork, but in general I was like, if I'm gonna make this level of investment, one thing I need to make sure of is that this isn't gonna come back and bite me. I didn't join the board or anything like that, so I put in my investment documents that I could put the stock back to the company at any time and lose all my money.
I wasn't gonna get my money back, but I wasn't gonna keep the stock. So that was very important to me, particularly as a very early angel investor or PE guy, whatever you wanna call it. So to me, I was like, I can't mess with the mothership in any way, even though I think this is really cool. And it obviously worked out tremendously well, but that was important to me.
Ben: Let me just recapitulate that. So here you are. You're making a $2.5 million. You think the thing is great, but also wild, and you say, let me just make sure I have this clause that I can walk away from this investment for nothing, just in case.
Scott: So it's probably important to note too, it was by a long shot, the biggest investment, quote unquote, I'd ever made in my life. It was far more money than my house was worth. We were still a public company, which means you can only sell what you can sell. So it was no joke. It was a lot of money to me, a lot of money.
Nobody in the world thought it was a good idea. Nobody. So it worked out. Take it for what it's worth, it could have gone the other way and not something I would've talked about again. But I'd say more importantly though, and as people think about investing, for me, one of the most important things is that I'm very proud of people that I'm invested with, that the company, I'm proud of what they do.
There's a lot of places that I've had opportunities to invest that I don't and have never, and they've killed it. They've rocketed to it, but it's areas that either I didn't know a ton about it, didn't wanna learn about it, wasn't interested in it, or felt maybe it was a little sketchy. And you guys can interpret from that the different things going on in the world as you please.
But unlike Fundrise, which I thought was killing it, and amazing, so Ben, we're talking about WeWork and again, one of the crazy things about that, and maybe my life is. There was a period, which people probably saw it on the TV show, but WeWork sold stock at $47 billion to SoftBank. They came in and then a whole lot of things happened where I was sitting in the cheap seats like
everybody else, trying to figure out what the heck's going on.
And at some point there's a big fight and SoftBank is supposed to invest more money, but there's a giant fight. And then on top of the giant fight, WeWork has a failed IPO attempt. So I have to tell you, I was sitting there sitting back and looking at that going, I had no insight other than, wow, this really stinks.
I think I've just gone to zero. So I spent probably eight months, I don't know how long it was when I just figured, well, whatever I sold, I sold the rest of the stock I own is zero. And then Adam pulls a rabbit outta the hat and he gets SoftBank to invest a billion dollars, I think it was at $19 billion in value.
And we were able to sell into that. And then the next phase was the spac, which we were able to not sell into the SPAC, but to sell eventually. So again, no one to hold up. When to fold up. But those gambling days, I don't say they're over for me, but it's the movie with Mel Gibson. He just keeps going, I'm too old for this shit. So, man, I've had a lot of ups and downs.
Ben: When you were at the top and your WeWork shares were probably worth. Close to $800 million. Did it affect your psychology? Did you go to more expensive dinners?
Scott: Honestly not, I don't know how this is gonna sound to people, arrogant or whatever, smug. But I've done well with a lot of different things. I've done well with WeWork. I'm also really good with risk. Generally, I'm really good with, sometimes it works, sometimes it doesn't. I wouldn't say I'm really good with risk analysis or mitigating risk, but I'm good with risk.
And I just say the second part of it is certainly look, with WeWork, I think it exceeded anybody's concept of expectation of how much return you would get on an investment in a company like that. So when you add up all those things together, I looked at it like, well that sucks. So nothing I could do about it.
And I had other stuff going on, other fish to fry, as they say,
Ben: You see, you look at some flyers that have just been,
Scott: not a lot. Honestly.
Ben: not a lot, just a few. Yes, that's true. Just a few flyers.
Scott: I think that's a very important point. I'm not the investor who set up an office and have a couple analysts and just say, you know, sending your business plan. I've never been interested in that, to be honest with you. I make a quote from Warren Buffet's quote, which is, invest in what you know. If you like McDonald's, invest in McDonald's.
So for me it was, I tried very hard and have continued to do that, to invest in things that I know or that I have something to offer, something to add to it. And then of course it also, and I think about this of any partnership we must have shared values and shared in aligned values is one of the most important things that I use to invest as a way of looking at.
As I said earlier, there's a lot of things that have been just killing it that I've had opportunities for, but just didn't feel like I had a shared value for what folks are doing or didn't understand it or whatever. But what I found interesting, first of all, I think you may remember I met you through your father, so your dad and I had a connection because he'd actually built a ton of outlets and I had opened stores in Mills outlets.
So had a pretty good connection there. And then the other thing was interesting is your dad had put up a small retail strip in my neighborhood in Baltimore City under contract. And as I said, I just left Under Armour and I was thinking about what are the things I want to do? And one of 'em was, I love retailing.
I love being a retailer. And I thought, well, it'd be pretty cool if I was on the landlord side of that. Who would I pick? How would I merchandise a retail center? So I became interested in that. I talked to your dad about it and I said, Hey, I'd really like to do that. And he was a complete gentleman and he said, look, I get it.
I understand. So he let me move forward with buying the what became a place called Belvedere Square here in Baltimore, and it was a great purchase. I got to know him. And then through that I got to know you and your brother Dan, and with shared values. Again, what I thought was very important was towards my interest in your interest in building out neighborhoods and recognizing that capital doesn't come without quote scale or if it doesn't know anything about it.
So one of the things I just thought was really cool about Fundrise in the very early days, which I think it has continued with those shared values over time, is. What if you're in a neighborhood, you've got 10 or 15 friends in that neighborhood, and you think to yourself, wouldn't it be great to get a cafe or a coffee shop or a restaurant, or, we love this smoothie joint, would they move in, but maybe they don't have the capital to do it, or the buildings available, but they didn't do it.
So early Fundrise was, let me work with local people who have a local interest in a local neighborhood, and let's figure out how they could all become, in that case, limited partners from that early principle. And I think you started thinking about it as, well, wait a minute, there's a much bigger opportunity here, and there's an opportunity to democratize not just the idea of getting 10 or 20 people into a neighborhood they love, but to be able to get tens of thousands or hundreds of thousands of people to be able to invest into areas that they're otherwise prevented to invest through.
They're, they're not accredited investors, they don't know, et cetera. So I became interested in Fundrise because of that core principle. I also have two real estate companies. One is called Warhorse Cities and can get into that. We do a number of different things. And then I have a thing called Warhorse City, CDC, which is a community development court, which is a not-for-profit, and I've continued with that idea that some things don't pencil, but they're really important to do for a neighborhood.
So sometimes for me, I use a not-for-profit. Sometimes you use the for-profit, but the principle and the idea is always the same, which I think is the same case with Fundrise Over time, the core value of you guys and the core value of the company continues and it's just expanded and scaled.
Ben: So much of what was happening at that time was that cities were still recovering from the riots from 1968, and they were just, some of the properties we bought or renovated or funded were abandoned, had been abandoned. First deal we ever did The first Fundrise deal in Washington DC on H Street, like it had been an abandoned building since the 1968 riots, and when we renovated it in 2011, 12, it had been a long time since anything good had happened, and that era of rebuilding cities was the birth of Fundrise.
We eventually grew from there to the Sunbelt because look what's happened to cities. We were lucky to move to the next strategy 'cause COVID just destroyed, came back and Rees destroyed so many of these cities again. But the fact that you sit at this intersection of real estate and all these other things, I'd love to talk about a couple of your real estate deals.
Let's just do the WeWork one first. 'cause it kind of represents the rise and fall of real estate in cities. 'cause we work. You go into San Francisco, you rebirth it, you buy this building, you tell that as a quick arc 'cause it's remarkable to me how much people have taken for granted now. Things have just in the period, how much it went from nothing to worth of fortune back to nothing.
Just incredible.
Scott: It's a great lesson that certainly we spent this call talking about. All the phenomenal successes. Trust me, I've had some stinkers too, and what I think is important to understand, and I can point it early days at Underarm, and frankly going back to the retail story I told about that stands under your feet shift.
You have to be really quick and figure out what's going on, and sometimes you have to shut things down. You might have spent a lot of time on, it might have been a great idea at the time, but the world changed around you. So for me, it tied into what I was doing with WeWork, getting to know Adam and those guys.
There was a building at the corner of Sixth and Market in San Francisco, which is also known as the Tenderloin. And it's easy to see on Fox News, the Tenderloin and all the terribleness, et cetera. But for me it was an opportunity and I'd long left Under Armor by then. But it was an opportunity for me to one, build a WeWork together, which was really cool.
But it was also a building, as you mentioned, that had been vacant for a very long time. And a vacant building in a distressed neighborhood is adding insult to injury. So being able to create and put in that distressed neighborhood, a WeWork where you have several hundred people, men and women and others who are saying, we're gonna make this our place we're gonna build here.
A number of other places, a number of other companies had moved in very familiar with Twitter, was in the neighborhood around the corner, uh, Dolby, a number of other companies there was in that neighborhood. So I bought three buildings on that corner. And again, it seemed to me that the world was moving in the right direction.
People were moving back to cities and frankly, it was doing extremely well. I own next the WeWork, building a rent control apartment building 77 units across the street. I bought a, what was an old pool hall? We put a, a food market in it for a couple of years to again, bring people to places they haven't often been.
Then that became, we worked with a very large institutional investor, built that into 180 plus apartments, which it is today. But knowing where to hold up, when to fold up COVID hits, WeWork is in distress. What should they do? What should they hang onto? They hung onto this building for quite some time, 'cause it was fully leased to WeWork.
And then they made the decision that they were gonna move outta the building. So I'll spare you the trials and tribulations of that decision, but that also fed to me, well, what am I gonna do? And the city of San Francisco, like so many of our cities, went into deep distress for a whole host of reasons.
And that was a building that, although I loved it, we literally built it from scratch. It's gorgeous inside. It's a beautiful building. It's called the Golden Gate Theater Building. It has beautiful prominence on sixth and market, really important building right next to Golden Gate Theater. So I hung on to it for about a year, trying to figure out what can we do, what can we do, what can we do?
And then at some point I had to make that decision that all of us do. Which is, it's not gonna work out. It's not when the timeframe that I have, I've got these other buildings that I have to focus on. I have other areas of my portfolio I have to focus on. So with that building, we made that decision and we made that decision relatively early in the process to give that back to the bank and not something you do lightly.
Something, I have immense level of guilt about it, but also recognizing that that's how it has to happen and that's what's happening around this city. The building is still not foreclosed on by the bank because that area and the city had become so distressed. But the other side of that story is that I own a number of other buildings in San Francisco and three things had to happen getting back to that.
So the sand shifted out from under us. So what were the three things that have to happen in San Francisco to gain confidence again? First one was there had to have been a federal court order, which allowed you to, instead of saying that people who are homeless, they live on the street. And that's the humane way of doing it, which I've never felt that way.
You created a different environment where people could move to shelters. The second thing that had to happen is that the political, the people in charge of San Francisco had to change and swap out. So we had that happen. We have a guy named Daniel Lori, who's been elected mayor, who is just such a tremendous inspiration for that city.
You have other folks, some of the supervisors, the supervisor of the Tenderloin swapped out. I met him a couple months ago, met Daniel Lori a couple months ago, gained that confidence that these guys, that the city, that the community of San Francisco is going to invest in itself, and that's what they've been doing.
So I'm always reminded by myself of a song by a guy named Kenny Rogers, which is called The Gambler. I promise I won't sing it for you, but it's, you gotta know when to hold up. You gotta know when to hold up. You gotta know when to walk away. You gotta know when to run. You never count your money till you're sitting at the table.
There'll be time enough for counting when the dealing's done. And I can tell you if you use that song and listen to this podcast, you'll see me in my head that song over and over again. And in that case it was, that building does not have an opportunity, but everything around it does. So husband, your resources continue to make investments.
Continue to invest in philanthropy and tenderloin, which I do still today, and it will potentially work itself out, which is where we are today with San Francisco.
Ben: Can you put some numbers from the beginning to the top, back down to the bottom on that building? 'cause it adds some concrete scale to it.
Scott: Well, 60,000 foot building rented to a single occupant, which was at that time a very big, fast growing public company. Extremely well financed, was worth an awful lot of money. 60,000 feet today, it's worth probably 4 million bucks. And probably 20 plus million invested in the building 'cause it was an empty shell.
So certainly gives you perspective. Somebody, the next guy is gonna make a tremendous killing in San Francisco. I'm gonna do what somebody taught me one time, which is at every turn you make what's called a rebuy decision, especially in the real estate portfolio. So I had to look across my portfolio and figure out what I would keep, or I would effectively rebuy at the price it is today.
So that's the decision I had to make, Ben. It's like as we're looking at things we're doing and we have to say to ourselves, it's not working out. He reminds me of Mr. Wonderful on Shark Tank and sometimes a guy will come in there with the greatest hopes and aspirations in the world and pitch Mr. Wonderful, this incredible idea. And he just looks at it and he says, this is a terrible idea. I'm gonna save you a lot of time. I'm gonna save you a lot of personal money and energy. Go find something else to do. Take this idea out behind the shed and put a bullet in it. So I've had to do that more than a few times.
Ben: This is something like late 2022. Interest rates are going up, the stock market collapses and going to 23. Interest rates go from 0.25 to 5.5. You have a real estate portfolio, and then you also had some tech company investments. You once said to me, 2023 was the hardest business environment we've ever been through.
Did I have that right?
Scott: We forget the early things that were painful that worked out. So I can't say that it was the worst I've ever had, but I can tell you it was pretty terrible. And I think it's also, again, not being the best risk analyst, but being a pretty
good entrepreneur means that I may not have always taken in what you might call black swan risk or other types of risks.
So I was like a lot of people looking at the post COVID boom and excitement around that and did not take into account like a lot of people that what is this gonna be? Flush the country in the world globally, flush with a lot of cash. What's that gonna mean for interest rates? So what I had done is had started a selling process in my real estate portfolio.
Not because I was smart or anything like that, but just because I felt that things were really valued. I was personally thinking about cutting down on the things that were not core and key to mine. And I feel like where I am today in my real estate portfolio, again, same thing. I don't use outside investors.
My portfolio and my work is all for my own account. So it's very much focused around what is the world gonna happen that I think, and at the time I'd been starting companies that were focused around advanced logistics using new technology, which was primarily IOT and started three companies that I invested in.
One was called MedDi Go, which was an IOT platform for of all things quickly tracking and creating machine learning for how quickly you could move human organs. And the reason for that is because the United States doesn't have that system at all. Everything's done by Notebook and there's nothing more valuable or time urgent, in fact invaluable.
You can't value a kidney that's lifesaving for somebody and if it doesn't get there, it can be wasted. So myself and Dr. Joe Scalia and some other folks, we built this company up and we were cruising along, doing really well with it. 2022, mid '22, you're starting to go out and look for term sheets from other investors.
We've got a couple of the very big multi-billion dollar multinationals saying this is great. We had half of the market, close to half the organs moving in the country or moving across the Medi Go platform. And then all of a sudden the world blows up and it's late '22, and the term sheets are, we're not doing that.
And then you call 'em up. You say, what do you mean you're not doing that? Say we don't invest in companies anymore. I'm like, what the hell happened six months ago? You guys had a huge venture arm. Yeah, we don't do that anymore.
Then the next thing you know that CO gets fired, new CFO comes in, then the CEO gets fired.
So it was a tremendously difficult time to figure out what's gonna happen, what's going on. Of course, in the real estate side, you had to do the same thing. You had to make decisions around, well, if the interest rate goes up and I'm at interest rate risk, am I willing to buy down the mortgage to keep the property?
Or am I not willing to do that? So with the company Medi Go, the other thing that shifted was early 23 was the early days of ai, which of course I should have seen that coming too. 'cause we were involved in machine learning, creating very sophisticated algorithms to create a time of delivery across a very complex supply chain.
But with AI coming, we started getting calls from some of the very big tech companies that were doing medical, and I was like, oh, this is great. This is gonna be awesome. Then I started talking to them, they're like, yeah, you don't have this, you don't have that. You don't have the data, you don't have this, you don't have that.
And I was like, oh my gosh, what are we gonna do? So we made the decision in that case was, well, the company is very important. The mission still stands. We're still literally saving lives every day. So we went out on a path to sell the company far earlier than I wanted to. Not at the return that I wanted to have, but we're very happy in that case that we were able to sell the company to a company called Care dx, which is a big public company in that space.
So Medi continues today and serves its customer and saves lives every day. So another company I did though, we had to shut it down, we did the same process. We had term sheets sitting there in late 23. I had a term sheet that was, we're gonna invest, and then it was with an option to buy and literally. A week or two before that, the CEO gets canned.
The CFO becomes the CEO. The CFO says we don't make investments, so we had to shut that company down. We had to make some really tough choices. So I think that there's a lot of ways to interpret that and approach that. But I would say one of the most important lessons that we all need to know is at some point you just gotta shut it down and it's really ego bruising.
It hurts the wallet. You might have other investors that you have to go and tell a terrible story to. You have employees you've gotta talk to, and it just, it's terrible. But sometimes it's what you gotta do.
Ben: We've gotten almost to the present here. What is next for you, Scott?
Scott: Actually looped up in advice I give to my kids right now, one of them a senior in college, one of them's out for a year. One of them's out for about four years, five years. And I think to myself, well. What is the world gonna come to next? Because what we have in front of us is a potential revolution of ai.
And I don't wanna get too crazy about it. We still need apartments and we have apartment buildings and we have 250 unit apartment building on the waterfront that we're teeing up to build. Uh, I own a golf course in Reston, Virginia that we're doing townhouses on, and we're still running it as a golf course.
So there's a zillion things that you can do. But the challenge of ai, I think, is to me, one of the things where certainly has a potential to be incredible, but it also has the opportunity to be, frankly, a bubble. And I've seen enough of those to know that it may work out great, it may not, but I've seen enough of 'em to know that for me, my world and my cycle is, I don't think I have it in me to do another cycle.
So what we're working on and what we're working on, especially related to AI, is fortunately several years ago we started seeking out and developing, getting titling approved for data centers. So was able to get one done, 17, 18, I think it was very early on. And then in the last couple years we started looking at it and it's its own world.
And I listened diligently to your podcast previous to this one, or a recent podcast, which was on data centers. And for me, there's a lot of ways to look at it. One of which is I don't pretend to be a technologist who understands either what exactly AI is gonna require, the chips that go into it, et cetera.
But what I do see today is it's almost like a wildcatting world. It's almost like it's Texas in 1918 and the movie, there will be blood, you gotta go out, you know that this is an area where there's probably oil. You gotta give it a shot. In this case, there's a ton of different land and a lot of owners have jumped in too.
But you gotta have these couple things. You need water, you need access to power at some time between now and the next couple of years, you need enough space and you need a community that says, we really want this. Because the tax advantages to pay for schools and pay for other things that they want. So we're working on a number of things, and I have a number of venture investments that are still playing themselves out, but data centers is very much attuned to my investment style, which is, it's an io, you spend some money, you tie it up, you drive it hard, you're gonna make a whole bunch of money, or you're gonna lose hundreds of thousands of dollars in your diligence process.
Ben: I thought you were gonna say something like, I did my risk on period and I'm now I'm gonna move to my risk off. And then you,
Scott: Oh, I'm risk off in a lot of places for sure.
Ben: and then you talk about wildcatting.
Scott: Well, I'm risk on in that area, and I think there's a bit of time left in that, but risk off in many other areas.
Ben: It's both a boom, but still I think there's opportunity.
Scott: And, you know, uh, other thing I learned over the years is I thought about this world. All I just wanna be is self-employed. I just, I know I'm not always gonna have a boss. My customer's always gonna be a boss, but I was like, I wanna be a self-employed guy. And I did that for many years. And then we started Under Armour and started driving the companies and realizing, well, what's the difference between a self-employed and an entrepreneur?
And people have lots of ways of looking at that, and a lot of 'em are highfalutin, which is, I saw a sea in the market, or I saw a startup opportunity, white space, no one else saw. That's certainly always true. But I'll tell you, one of the things I've learned the positive way, I think is an entrepreneur's job.
And I say this to young entrepreneurs all the time, your job is to make money for everybody around you. Your job is to make money for your teammates, for your employees, for your investment banker, for your lender, for your venture capital arm. And eventually, if you're incredibly successful at it, you do a great job for the public markets.
So I would say one of the things I'm most proud about, and I think it's Bezos said that he wishes that people would also grade him on not just his net worth, but grade him on the amount of value he's created trillions and trillions of dollars of value he's created for other people. Yes. To me, that is the job of an entrepreneur.
If you're really good at it, you make a lot of people a lot of money, and that's how you make money.
Ben: It's been amazing, Scott, really appreciate you coming on the show. Do you have any closing advice for the young entrepreneurs who are gonna be the next top plank?
Scott: Yeah, I think so. Again, I'll give the same advice I give others and listen to Warren Buffett for a minute, who said, invest in what you know. So I think that in an environment, especially in an environment, it's hard to know what your job is gonna become in the future. I advise people, and I've lived this way, investing this way too, is it may seem like it's easy for people to say, oh, you invested this random way.
I'm like, no, actually I was very, very pointed on things that I knew a lot about, areas that I had great confidence in and where my values were consistent, like building cities, like moving people back to cities, different ways of doing that. So I think what's important is that people are looking at the industry rather than their job and even looking at the industry rather than a specific investment.
Because if you're very new to the business world, your number one resource is yourself. It's your time, it's your human resources. And I can tell you that early in my career, it's all I had was human resources. I didn't have any money. I had grit, but I didn't have any money. So I think in today's world, even if you had money.
I think that what's more important is understanding to the best of your ability where the world is going by industry. So I mentioned earlier that something like data centers. So data centers, maybe that's something to become involved in. Maybe not if you're not interested, don't. But one of the other areas of incredible interest to me is, and none of these are things that I'm the genius just coming up with this, but technology and development coupled with climate change requires a different way of looking at energy.
And a society's growth is often driven, fueled through having energy, whether it's your personal energy to run really hard or it's electricity coming across the wires. So. I think that there's areas to look at, which are more like industry than they are about a specific job. And we can point to that. I wanna be a lawyer.
Well, I don't know. I can tell you five different startups who've approached me on, we have ai, we're gonna get rid of lawyers. I wanna be an architect. Well, I'm talking to guys now, they're doing a really kickass job. Looking at a building of ours using, I wanna say ai exactly, but using a very different way of looking at the shell and deciding, here's a bazillion things you could do and here's a bazillion different ways you could use this building, which previously would've been really hard to do. 'cause you'd have to redraw the thing or lay it out. Areas that I know about. So I think what is important though, is certainly we're gonna need to build more houses. We're gonna build more places. People still live in a 3D world. We might think about our world digitally, but we live in a 3D world. And frankly, that's always been where I've made my money in the 3D world, whether it's WeWork, which is 3D World or Under Armour on the field, or of course Fundrise, and the things that you guys do and the three ways you look at the world.
So I think that's the best advice I can give. And then the other thing is don't be afraid to say, I thought it was gonna be a good idea. I pushed it for a while. But I have very clear metrics and ideas about what are the things that have to happen for me to continue pursuing this thing, whether it's a business or a real estate deal, or my personal career.
And don't be afraid to say, you know what? It was a good idea. I love doing that. It's not working out. I gotta make a change. And I can tell you, hopefully you've heard from this podcast, I've made more changes than probably most people in the world. At Under Armour, I got fired from more jobs than anybody because at some point you realize you're not actually that good of a CIO and you bring in a real CIO.
You're not that good of A CFO. You're not that good of a head of real estate and you bring in real person. So I think that's really important to understand.
Ben: Well, Scott, thank you again. Onward.
Scott: Thank you, Ben.
Ben: You have been listening to Onward, featuring Scott Plank, entrepreneur, investor, and philanthropist. My name is Ben Miller, CEO of Fundrise. We invite you again to please send your comments and questions to onward@fundrise.com.
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Finally, for more information on Fundrise sponsored investment products, including relevant legal disclaimers, check out our show notes. Thanks so much for listening, and we'll see you next episode.
Thanks so much for joining me.
