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2018 | Book

Introduction Read chapter Read first chapter

Leaders of the Crowd

Conversations with Crowdfunding Visionaries and How Real Estate Stole the Show

Author: Dr. Adam Gower

Publisher: Springer International Publishing

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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About this book

Crowdfunding is nothing new. In fact, America was built and financed by crowdfunding. But in 1933 Congress passed the Securities Act, which shut the door on this most democratic means of raising capital and spreading wealth. In 2012, enjoying broad bipartisan support, congress threw the doors open again, passing the JOBS Act (Jumpstart Our Business Startups). Its intent was to stimulate growth of small businesses and startups, but an unexpected consequence of the Act was that the biggest beneficiary has been the real estate industry.

Researching the origins of the JOBS Act, Dr. Adam Gower conducted a series of conversations with the people who lobbied for and wrote the laws that became the Act. What he discovered was that at no time had anyone thought that the real estate industry was a relevant constituency. Perplexed by this disconnect between what had been intended and what had happened, he talked to those who had been the very first real estate people to utilize the JOBS Act. These pioneers, all moving on parallel tracks, seeded the biggest, most transformational change to the real estate industry in history.

This book uncovers these conversations with the people who created the laws and those who connected the dots to real estate. It weaves a thread through the labyrinthine processes of government, chronicling how the Act was conceived, formed, and ultimately signed into law, and it reveals how the visionaries who have revolutionized real estate capital formation embarked on their missions to change their industry forever.

Learn how the JOBS Act, never expected to benefit real estate, has transformed the industry, changing the way capital is raised and syndications are formed forever and how an unintended consequence is helping almost everyone in America invest in real estate like never before.

Table of Contents

Frontmatter
1. Introduction
Abstract
Crowdfunding is nothing new; it was prohibited in 1933 as an antidote to the Great Depression and revived in 2012 as a cure for the Great Recession. Indeed, post-civil war America was built on crowdfunding during an era when the entire financial system rested on a foundation of investment from ordinary Americans who could freely invest, without limitation, in anything they wanted to by buying stocks and bonds through syndications—the crowdfunding of the day.
Adam Gower
2. Inception: David Weild IV
Abstract
David Weild IV is a scientist by training. He started his career as an academic biologist who really didn’t like biology but who liked genetics, fulfilling most of his undergraduate requirements with graduate course work in molecular genetics. He left graduate programs, ultimately finding himself on Wall Street, and was fascinated when watching Genentech go public (1980): seeing the stock open at $35 per share and cresting within an hour at more than $88.
Adam Gower
3. The Letter: Jenny Kassan
Abstract
Jenny Kassan has always been an activist who wanted to make the world a better place. She decided to study law and graduated from Yale Law School because, although she was not quite sure what she was going to do with a law degree, she thought being a lawyer would help her achieve her goal. Between college and law school, she looked around for something to do that would be interesting and took a position in Washington DC at the Institute for Policy Studies where she was paired with a fellow called Michael Shuman.
Adam Gower
4. Advocate: Sherwood Neiss
Abstract
Sherwood “Woodie” Neiss got his MBA in international finance from Thunderbird in Arizona, and from there he went to Wall Street, where he got a feel for how public companies raise capital in the public markets and how bureaucratically laden and costly the process is. He migrated to the retail side of things, which he didn’t really care for very much, but there he came to realize he enjoyed finance technology software.
Adam Gower
5. Senate Lead Staffer: Dina Ellis Rochkind
Abstract
Dina Ellis Rochkind has always had a passion for politics. Both of her parents were those swing voters in Pennsylvania—you know the ones. Her mother was a Republican and her father a Democrat who was a bank examiner for 36 years in the state. “Our dinners,” she says, “were heated both literally and figuratively.” They talked about politics a lot and, in pursuit of the passion she acquired at home, she went to school to become a lawyer. She decided that she was going to work on Capitol Hill.
Adam Gower
6. Investor Protections: Andy Green
Abstract
Andy Green is a securities lawyer by training but was also someone who had a background and an interest in living and working in China. After law school he went to work as a securities lawyer in the Hong Kong offices of a prominent New York law firm involved in corporate securities deals. The work was very interesting and he felt he was on the cutting edge of global finance in the mid-2000s.
Adam Gower
7. The White House: Doug Rand
Abstract
Doug Rand’s story at the White House began in September 2010. Despite being very much a political neophyte, he found himself in the extraordinarily fortuitous circumstance of showing up for his first day of work at the President Barack Obama’s White House. For Doug, it was a dream come true. His path to getting there had been very serendipitous. He had never had a policy job before and had come to it as a public interest fellow newly graduated from law and business school. He had been a relatively older (30) law and business student, having spent most of his 20s building up a company in New York with his brother.
Adam Gower
8. Rich Uncles: Harold Hofer
Abstract
Harold Hofer is Canadian born and a subject of the Queen, like the author. He moved to California when he was a kid and grew up in the Los Angeles area, eventually attending the University of California Los Angeles, where he received both undergraduate and master’s degrees in economics and then went on to get a law degree. After working in a law firm for a couple of years, Harold’s former college roommate, who was then working for a real estate firm in Orange County, suggested they go into business together assembling syndications for the projects his firm was building and selling.
Adam Gower
9. Fundrise: Ben Miller
Abstract
Ben Miller filed a patent in February 2011 for an idea to market real estate on the Internet, fully a year before the JOBS Act was passed and before anyone in Congress had even begun thinking about such an idea. The idea came to Ben during a period when the United States and the world economy were in shambles. He thinks it’s incredible the contrast in sentiment ten years later, where people are feeling sanguine compared to how they were feeling during the Great Recession of 2008. Within those ten years, unemployment had dropped from above 10 percent to a very low 4 percent—4 percent, being close to full employment. Ben equates the contrast to a comparison of the 1950s and the 1970s: two completely different eras.
Adam Gower
10. RealtyShares: Nav Athwal
Abstract
Nav Athwal started his career as an engineer, so his early work experience was in technology rather than real estate. He worked as an electrical engineer for a company in Oakland right out of college and was living in the Bay Area, exploring that side of the world. He’d always had an interest in exploring the real estate market since his father was a broker and investor, so while he was still an engineer, he got his real estate broker’s license and began selling single-family homes and small commercial buildings and helping folk get refinances at a time when the market was still good but the economy was about to enter the recession.
Adam Gower
11. Investor: Ian Ippolito
Abstract
Ian’s first taste of real estate investing was with rental properties in the late 1990s, and with it came the realization that it could make him money. He took an online real estate course to learn how to run rental properties and continued investing, but became distracted as he was an entrepreneur and was able to make lot higher returns building companies and startups.
Adam Gower
12. RealtyMogul: Jilliene Helman
Abstract
In the period before the JOBS Act was passed in 2012, Jilliene Helman worked for Union Bank and Bank of Tokyo-Mitsubishi, where she had spent most of her career on the wealth management side. She worked with private banking clients who had capital they wanted to invest, whether in stocks or bonds. In working on the wealth management side of the banking industry, she found that most of the wealthiest clients were real estate investors. They either made their money in real estate or had numerous real estate holdings. The bank obviously had a large lending arm, so these investors were very visible to Jilliene.
Adam Gower
13. Patch of Land: Jason Fritton
Abstract
The impetus for Jason Fritton’s story wasn’t a happy one. He’d been an entrepreneur for a very long time and had built up a company that was very successful. He owned 100 percent of it and was primarily working with the public sector—mostly with the federal government—and his company had grown to nearly $30 million a year in business. Not a bad thing for a sole owner. He was a pretty happy fellow. Jason was a very young guy; this was back in 2004 all the way through to 2008.
Adam Gower
14. Small Change: Eve Picker
Abstract
Eve Picker has not had a straightforward career, having taken a very circuitous route to being one of the leaders in the real estate crowdfunding world. An architect by training, she received her architecture degree in Australia, where she became fascinated by the structure of cities. She was accepted at Columbia University in New York, where she studied for a master’s in urban design, which is a little bit different than urban planning.
Adam Gower
15. Conclusion
Abstract
Though it was never intended for real estate, the JOBS Act continues to change the way investment and capital formation occurs in the industry. Within the first four years or so since the laws were promulgated, platforms like those described in this book have attracted more than a hundred thousand registered investors, who have capitalized deals with hundreds of millions of dollars of equity. The real estate industry has been the single largest beneficiary of individual sections of the JOBS Act, equaling alone the use of parts of the Act by all other industries combined.
Adam Gower
Backmatter
Metadata
Title
Leaders of the Crowd
Author
Dr. Adam Gower
Copyright Year
2018
Electronic ISBN
978-3-030-00383-8
Print ISBN
978-3-030-00382-1
DOI
https://doi.org/10.1007/978-3-030-00383-8