Democratizing the Private Markets — ft. Ben Miller

Ben Miller, co-founder and CEO of Fundrise, joins the show to share how his company managed to successfully break into the private markets. He discusses why the private markets are regulated differently, how his company is helping everyday investors get in on typically inaccessible opportunities, and how Fundrise earned the trust of companies like OpenAI to get on their cap tables. Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Are your ad campaigns lighting up the dashboard? But not the pipeline? That's bull spend, and marketers are calling it out in. Dashboard Confessions.

• 0:09Speaker 01

  My boss asked for results, so I opened my dashboard for the only positive sounding metric I had: impressions.

• 0:17Speaker 00

  Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 0:31Speaker 02

  Low energy, unfocused, foggy? You might be dehydrated. Gatorade Zero powders have been scientifically designed to help improve hydration balance in the body. With a clinically proven electrolyte blend and no artificial colors or flavors. Great tasting hydration, no matter where you're going. Shop now online or at retailers nationwide. Gatorade: Hydrates Better Than Water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.

• 0:59Scott Galloway?

  Today's number: $33,000. That's the average cost of a wedding in the US. Ed, true story, at my first wedding, I told my wife, "Listen, I've gotta come clean. I've had a lot of prostitutes." And she looked up and said, "I thought I'd recognize you."

• 1:26Scott Galloway?

  Welcome to Prop G Markets, Ed. Today, we're speaking with Ben Miller, the co-founder and CEO of Fundrise, the largest direct-to-consumer alternative asset manager in the US. This isn't a good segue. We speak with Ben about increasing access to the private markets, the merits of regulation, and gaining the trust of investors. The democratization of these asset classes, I think, is a good thing. I used to be more of a, I don't know, I'm more of a paternal view. Now I'm kind of stopping tantalizing these people. I'm beginning to think that regulation was nothing but an attempt to sequester these assets to institutions such that they wouldn't have access to more capital. Anyways, here is our conversation with the CEO of Fundrise, Ben Miller.

• 2:09Ed Elson?

  Ben, thank you for joining us. Thanks for having me.

• 2:14Ed Elson?

  So I just want to start out talking a little bit about regulation. We talk a lot about venture capital on this podcast. We talk a lot about alternative assets, but unlike the stock market, these aren't the kinds of assets that regular people can invest in. I know that your company is changing that. But before we get to that, could you just give us a brief summary on the landscape in regulation of private markets? Why haven't regular investors gone to access these types of markets historically?

• 2:43Speaker 05

  Well, the essence of the regulatory framework we have in America is that you can either regulate the offering or the investor. So the way that public markets work is the offerings are registered and reviewed and regulated by the SEC. And in the private markets, the investor is regulated. So they have different investor qualifications like accredited or qualified purchaser or QIB. The premise is that if the investor is large, that they are sophisticated.

• 3:14Ed Elson?

  So that bar for sophistication, what actually is that? What does sophisticated mean here? Does it mean just rich or experienced?

• 3:23Speaker 05

  No, it's something a wealth or asset value test.

• 3:25Ed Elson?

  So meaning a net worth? That's how much their net worth is?

• 3:29Speaker 05

  Yeah, I mean, the technical definitions are a million dollars of net worth, excluding your home. For accredited investors and qualified purchasers is a $5 million hurdle. And a QIB is $100 million of assets.

• 3:44Ed Elson?

  And my understanding is that with your launch of Fundrise and the Innovation Fund, that's generally beginning to change that. I mean, it seems like regular investors are somehow able to participate.

• 3:56Speaker 05

  Well, so we did something novel. We created essentially the first public venture fund. So we took a venture fund and qualified it with the SEC. So it's a publicly registered 40 act fund, like a mutual fund. So instead of having to put qualifications or limitations on the investor, we have the offering or the fund itself is regulated. The consequences of that is that it opened up venture capital for the first time to normal investors. How did you come up with this idea? Well, so I co-founded Fundrise back in 2012 to democratize investing in real estate. And so I've been working in this sort of intersection of tech, finance and regulations for the past 12 years.

• 4:38Speaker 05

  And we sort of successfully democratized investing in real estate. We have like 2 million users and I think we have $7 billion of real estate assets. So when we sort of were thinking about the next hill to climb, we, you know, we work in tech. We have 100 software engineers. We have all the technology that a company at our scale would have. And, you know, we felt like it didn't make sense that venture capital should be barred for normal people. That just seemed antiquated. And so we went to the SEC and spent a couple of years working with them to find a framework that they felt would work to sort of open up the industry. And that was also true of real estate?

• 5:20Speaker 05

  Yeah, I started and it took me about two years as well, opening up, maybe, maybe longer back in 2011, 2012. And the whole thing, Mike, people feel like regulators or government is this like, kind of like far off entity. But if you walk in the front door and you talk to them and say, this is what I want to do. This is why I want to do it. Generally, they're pretty open minded. It's slow. It takes, it took us a couple of years. I mean, I've, I've generally found that you can get done what is logical as long as you're, you're trying to do it for, for good reasons.

• 5:54Scott Galloway?

  Ben, nice to meet you. So I love the idea of democratizing investing in certain asset classes that traditionally have been sequestered from, you know, lack of a better term, retail investors. I would imagine that it would be an administrative and logistical nightmare for you though, because some of these assets are illiquid and trying to figure out the entry point. And then when someone wants to redeem, how have you gotten past, is it a use of technology? Is it quite frankly, lockups that are, that are not onerous, but you know, multi-year lockup periods? How have you gotten around not only the regulatory hurdles, but just the administrative and logistical hurdles of having someone place a small dollar amount into a private illiquid investment?

• 6:38Speaker 05

  I'll break your question up into two parts. One is a technology question, one sort of a business practice. So in the technology point, we, you know, we build a platform. We have the same type of technology platform you'd see with a big, you know, investment platform like Schwab. We have, uh, you know, 18 people doing customer service investor relations. We have software that manages like all distributions and dividends and, you know, millions of people. So what we found, because we didn't start with a $10 minimum, we, we started with a higher minimum in thousands years ago. And as it became more and more automated, you know, the marginal cost per dollar of software is zero, right?

• 7:17Speaker 05

  I mean, this is, it's cost nothing to, to make bits. So the technology platform at scale is what drove the, the access down. And then the question about liquidity and redemptions, that's been a really interesting dynamic in the market where, um, I think you see this a lot in, in industries where something new, people don't know what the best practices are, and there's a process of evolution. So we, we learned that, um, you know, you have these two worlds, public markets, which are a hundred percent liquid, private markets, which are nearly 0% liquid. And if you're going to create a, a, a bridge between the two, you have to basically have a mix of liquid and illiquid assets. You can't be one or the other.

• 7:57Speaker 05

  And so our funds are typically approximately 30% liquid. So our tech fund, for example, has lots of private investments and tech companies as well as, uh, we hold liquid bond, typically liquid tech bonds. So we bought tech, busted convertibles and other kinds of bonds. See, it's really about, um, recognizing that if you're going to be at this intersection, have to be a mix of two models, liquid and illiquid. You can't be one or the other.

• 8:23Scott Galloway?

  I also just had a question about private credit and can you first off define private credit? And give it not a pitch, but an overview of the asset class and why investors might be interested in having some exposure to private credit?

• 8:37Speaker 05

  All private credit is, is non-bank lending. So banks are, are highly regulated because they take their money from, uh, depositors. And matching, uh, assets and liabilities is tricky because the deposits are, could be overnight liquidated like we saw in Silicon Valley Bank, but the assets are illiquid. So as a consequence, because of the deposit insurance, the banks have become regulated and over time increasingly more regulated. And the more regulated they become, the more the lending environment needs other solutions. And so those other solutions can be different kinds of debt funds. There are mortgage REITs, there are all sorts of flavors of kinds of private credit. And what they're trying to do, you know, we have a private credit fund is you're trying

• 9:20Speaker 05

  to find places that are not getting funded appropriately. There's inefficiencies and those inefficiencies can be cyclical or they can be structural, depending on what's happening in the world. And so on one hand, I think this is a secular trend that's going to continue to become dominant because as banks can be more and more regulated, and actually I think as banks get out of the lending business, actually there's going to be a need for private credit. The other hand, there are ebbs and flows and sometimes there's too much money in the market and sometimes there's not enough.

• 9:52Ed Elson?

  I just want to go back to democratized access in investing, which I am all for and have talked about on this podcast before. But I think that word democratizing, democratizing access in the investment world, it's kind of getting a bad rap, I think, because it's being used so frequently. I mean, we saw it with Robinhood, we've seen it with other financial products. So I'm just curious to get your view on what democratized access means at Fundrise and why do you think that investors should take it seriously?

• 10:28Speaker 05

  If you think about in a longer timescale, like 100 years, you know, the arc of financial history bends towards democracy and there's been ebbs and fits and starts. And so often when something's getting democratized, again, there's like periods of instability as the industry figures out the norms. And now, you know, everybody invests in mutual funds. That wasn't the case before the eighties. Everyone invests in stocks and trading. So these trends have often gone through sort of booms and busts. And so we went through a boom and a bust with that because it democratized it, then it got overvalued. But so one of the advantages of private markets and of public markets is you can take a longer view.

• 11:11Speaker 05

  Typically, when you're investing in private markets, it's a seven to 10 year horizon, maybe five at the minimum. And so you can see past a lot of the short-term volatility. So right now, we're probably, you know, coming through kind of a bust in that where people took advantage of it, I think.

• 11:29Speaker 05

  And and some of the models really didn't hold up. But I think over time, you know, people are figuring it out. I think we've we figured out how to democratize real estate, venture capital, private credit. And just because of technology and information transparency, the difference between public and private markets is diminishing. I mean, the private markets are becoming more public, more transparent, more efficient. And that's just what happens to markets, thankfully, because of the system we live in. And I think that, you know, 100 years from now, 50 years from now, it probably won't be a difference between the two. And it's just a question of like, who and how you you win that.

• 12:07Ed Elson?

  Yeah, I feel like the the regulators' argument has been that, you know, you need to protect investors from themselves in a way. Like, if if you if you're not, you know, registering with the SEC and you have people selling stock in private companies, then, you know, inexperienced investors won't really know what they're doing and they could get ripped off in some way. I think that's sort of the argument from the regulator side of things, which I get in a way, but it's a very paternalistic view. So I'd love to get your take on, do you see the merits in protecting investors from themselves? Or do you believe that it should be more of a free for all, that anyone can go invest in whatever they want?

• 12:51Ed Elson?

  And if you get burned on the downside, you know, you should have done your diligence?

• 12:55Speaker 05

  My experience as a manager through 2008 was that you certainly can't trust anybody, big companies, big institutions, or small investors. There's the there's a lack of of good judgment when times are hot. And so it's a constant balance, right? Every we've been dealing with this and probably every political discussion, how much you deal with protecting investors or or regulating versus basically a free enterprise, growth-driven entrepreneurism. And it's that you have to have a balanced approach. You have to basically have a nuanced approach. And at times, a pendulum swings too far one way or the other. But I it just it feels like we do make progress and we are making progress. I think venture capital, we

• 13:38Speaker 05

  You know, we're the, we're one of the first to open a venture capital. But I think 10 years from now, it'll be absolutely normal. Every major venture shop will have a seed fund. They'll have a, a series A fund, a growth fund, and they'll have a, a public crossover venture fund like we do. I mean, it's, this is, you know, 10 years ago, there really weren't any growth funds of consequence. And now they're totally normalized. So it's a process and, you know, execution matters, but it's, I think it's inevitable.

• 14:07Ed Elson?

  You mentioned like in 2008 and the lack of trust. I would imagine that that's one of the main things that you have to focus on as a fund manager in this asset class is establishing that trust with consumers. I'd love to get your view on, on how to do that as a fund manager and, and also just how entrepreneurs can do that with their customers.

• 14:28Speaker 05

  My experience with investors actually is that, um, they want to give you trust. They actually really do, but then you have to maintain it and that takes basically time. We have investors been with us for over a decade and that's a, that's a really strong relationship. And we have investors who invested at the top of the market. And now like two years later, they're not as happy with us. What investors want are performance. They just really want outcomes and that's like, uh, that's how you drive trust.

• 14:57Speaker 05

  We'll be right back.

• 15:05Speaker 06

  The new LinkedIn Hiring Pro can't undo your last hire. The human postponer. They were the master of one phrase, I'll circle back on that. But three months later, you were the one doing all their work and wondering how big that circle is. But LinkedIn Hiring Pro can take the hiring load off your plate by automating the hiring busy work from the initial job post to scheduling interviews. Hire right the first time with LinkedIn Hiring Pro. Post a free job today at LinkedIn.com/quality.

• 15:37Speaker 07

  Low energy, unfocused, foggy, you might be dehydrated. Whether it's hot yoga, over 100 degree weather, or too much sun. Gator Light, with a specialized blend of five electrolytes, was scientifically designed to help move fluids into the body faster for rapid rehydration. Shop now at retailers nationwide. Gator Light: Hydrates Faster Than Water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist.

• 16:06Speaker 08

  This episode is brought to you by Subaru. You know that place your mind always wanders to? The lake, the mountains, the homes of the people you love most? The completely redesigned 2026 Subaru Outback is built to help you get there. With legendary capabilities, standard symmetrical all wheel drive, and the confidence to go further. The 2026 Subaru Outback. Love never looked so good. Visit Subaru.com/Outback to learn more.

• 16:37Ed Elson?

  We're back with Prof G Markets.

• 16:39Scott Galloway?

  Ben, what's the business model? Is it like a typical 2 and 20? Or is it more like a mutual fund? How do you guys make money?

• 16:45Speaker 05

  So yeah, it's only asset management fee. We don't take a carried interest on our funds. They're registered 40 act funds. In some ways, you could argue the most disruptive thing you could do to the private equity or venture capital industry would be to remove their 20% carried interest.

• 17:00Scott Galloway?

  Yeah, just go straight fees.

• 17:01Speaker 05

  It's this extremely disruptive model of venture capital. And we got rid of it back after 2008 because I always found it as a one way option. So it's a risk incentive. So you get 20% of the profits if things go well, but you don't give back 20% of the downside. And so especially for normal investors, it's much more important to manage risk. And so I think it's better alignment, even though it's extremely different than the normal venture fund.

• 17:30Scott Galloway?

  And how do your fee? I just want to acknowledge there's more logistics and administrative expense when you're managing a million accounts versus going to, you know, Audia or Ottawa Teachers. But how do your fees, generally speaking, if I invest $10,000 in your private credit fund or your real estate fund? What am I looking at in terms of annual fees?

• 17:50Speaker 05

  Yeah, I mean, it's 1% to 2% a year, depending on the fund. And so it's sort of ruthlessly tight fees. I mean, that's very, very low.

• 18:01Speaker 05

  And so we are just getting breakeven this year. I mean, it's much, much lower fees. Considering our assets under management, we should be like 10x more profitable, but the internet doesn't reward high fees. And so we took a long-term view that if we could basically exist and win on tight fees, that as we scaled, it would be a competitive advantage.

• 18:22Scott Galloway?

  Doesn't that imply that you needed to raise a lot of money to get to that point?

• 18:25Speaker 05

  We have to have scale. I mean, scale. So we got to about $3 billion of equity under management and software. I mean, you know, the majority of our team are software engineers and tech people. And so the more we automate, the lower the marginal cost.

• 18:37Scott Galloway?

  And do you track your fund's performance relative to benchmarks? And how have you guys done?

• 18:42Speaker 05

  Depends on the fund. So we, I personally would think about Vanguard REIT Index as the, as the benchmark for real estate. And we've pretty handily outperformed them for the last, you know, 10 years. And that, you know, it's not that hard, honestly. Vanguard REIT Index had Office in it. It had a lot of like, really bad assets. So in a way like our outperformance isn't, doesn't actually like, the thing about investing is that it's actually not that complicated intellectually, but it's really difficult sort of corporately because investors and the world, they want you to go all in when the times are hot and they want to flee to the hills when times are cold. And so it makes it really difficult

• 19:27Speaker 05

  as a, as a fund manager to actually do what you're, what you know is the right thing. Cause you get basically get punished for it.

• 19:34Ed Elson?

  Have you had any problems actually becoming an investor in these private companies? I mean, you mentioned democratizing access to retail investors, but it's also pretty difficult, even if you are a sophisticated accredited investor to get on the cap table. But you've invested in OpenAI, Anthropic, Canva. How are you, how are you getting on these cap tables?

• 19:57Speaker 05

  That is definitely the hard part.

• 19:59Scott Galloway?

  That's interesting. It's been easier to raise money than get the right deal flow?

• 20:03Speaker 05

  Oh, yeah.

• 20:03Scott Galloway?

  That's really interesting.

• 20:04Speaker 05

  Oh, yeah. And we, we actually had like $15 million in cash when we started the fund and we, and we didn't deploy it because it was so difficult. I didn't want to deploy it into the wrong companies. And so we sat on it for, for almost a year, which our investors were not that happy with. But it takes time and fortunately, because like when I go to approach company, like I want to think the companies you name plus other ones. It's funny because like 80% of the companies we invested in Fundrise is a customer of. So we're a customer of Camb or a customer of Databricks or a customer of these, you know, OpenAI and we have a relationship there. Plus like I go into a room, there'll be five people from the IR, you know, the company's IR team and maybe the CFO's office.

• 20:48Speaker 05

  And I'll say, okay, is anybody here in this room a Fundrise investor? Usually half the room is a personally invested in Fundrise somehow. And so the credibility and connections we have has allowed us to have like an opportunity to get into these companies. And then lastly, we were lucky, right? This market is much more normalized. There's a lot less capital than it was two years ago. And so we came into the market at a good time and, and when we could get access to these companies.

• 21:14Ed Elson?

  And just a final question, you are a successful founder. You started this company in 2012. It's now the largest direct to consumer alternative asset manager in the US. I think we have a lot of entrepreneurs who listen to this show. Do you have any advice to them? Any advice to any entrepreneurs who might be listening? What do you think it takes to build a successful company?

• 21:32Speaker 05

  Oh, man, it takes incredible grit. I mean, just brutality.

• 21:37Scott Galloway?

  I gotta interrupt you, man. I can't, I can just see it in your face and I'm when I think of, I know enough about alternative investments. I worked with hedge funds. I think what you're doing is a fucking nightmare. I can't even imagine what it's like to take money from someone, take their 400 bucks and then start pinging customer service, demanding that you get better returns for them. Or I would think that this would be literally like you are a masochist. I just imagine there's 2% of your customer base is, what's the term? A fucking nightmare. And that they're like emailing you personally and

• 22:15Speaker 05

  And tweeting at me. Yeah, yeah.

• 22:18Scott Galloway?

  Anyways, I would think this would be just a 12 years of like hand to hand combat.

• 22:22Speaker 05

  But I feel like to be an entrepreneur is to be a masochist. You can't be successful and not be a masochist. You just have to love the pain. The pain has to be something that you somehow get gratification out of. Because otherwise, there's no way anybody could do this type of work.

• 22:38Ed Elson?

  So what would the advice be then? Embrace the suck?

• 22:41Speaker 05

  I mean, it's hard because the real advice is that like, it's going to be harder than you possibly imagine. Masochism, but like, because you don't really appreciate it, you're going to do it anyways. I did it anyways. And like, there's some sort of moment when you, when you kind of like, accept the pain. Like there's, you know, you have health crisis, you have all these things go wrong. And you started to start to see them as normal, like that sort of crazy drama that happens. It just makes no sense. And, and you're just dealing with like, you know, like when Silicon Valley Bank exploded, or you know, literally COVID, the country shutting down. And, and you just, if you get to a place where you see those as like, regular business, like, you know, normal, normal,

• 23:22Speaker 05

  making payroll and things like that. If you get to a place where you actually, you no longer are phased by it. That's the, that's the emotional evolution. And so like, trying to turn the pain into, into like, you know, spin it into gold, is the, is really the psychological, emotional journey. And, you know, that journey is like, I recommend that like, people have empathy for themselves. How about that?

• 23:49Ed Elson?

  Ben Miller is the co-founder and CEO of Fundrise, which is the largest direct to consumer alternative asset manager in the US. Ben, thank you for joining us.

• 23:56Speaker 05

  Yeah, thanks for having me.

• 23:57Scott Galloway?

  Thanks, Ben.

• 23:59Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our executive producer is Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof you Markets from the Vox Media Podcast Network. We'll be back with a fresh take on markets on Thursday.

• 24:57Speaker 09

  When you shop pickup at Kroger, you can expect the savings you love and fresh groceries selected just for you. Our associates are committed to getting every detail right, carefully handpicking your items, checking for quality and freshness, and packing your order with care. Because bringing you fresh, quality groceries is what we do best. And right now, enjoy $20 off your first online order of $75 or more. Restrictions apply. See site for details. Kroger. Fresh for everyone.

• 25:27Speaker 10

  Close your eyes, exhale, feel your body relax, and let go of whatever you're carrying today. Well, I'm letting go of the worry that I wouldn't get my new contacts in time for this class. I got them delivered free from 1-800-CONTACTS. Oh my gosh, they're so fast. And breathe. Oh, sorry. I almost couldn't breathe when I saw the discount they gave me on my first order. Oh, sorry. Namaste. Visit 1-800-CONTACTS.com today to save on your first order. 1-800-CONTACTS.