Fundrise CEO Ben Miller: VCX, Roaring Kitty's revenge, and AI killing the office

Ben Miller is the co-founder and CEO of Fundrise, an alternative asset management platform that gives individual investors access to private real estate, private credit, and venture capital. In March 2026, he listed the Fundrise Innovation Fund on the NYSE under the ticker VCX, one of the first publicly traded venture capital funds. VCX gives retail investors direct exposure to private companies like Anthropic, OpenAI, Databricks, and SpaceX. The fund manages over $650 million and has over 10...

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

• 0:00Auren Hoffman?

  Hello fellow data nerds. My guest today is Ben Miller. Ben is the co-founder and CEO of Fundrise, an alternative asset management platform that gives individual investors access to private real estate, private credit, and venture capital. In March of this year, he listed the Fundrise Innovation Fund on the New York Stock Exchange. The ticker is VCX, and it's one of the first publicly traded venture capital funds, giving basically anybody, retail investors, direct exposure to private companies like Anthropic, OpenAI, Databricks, and SpaceX. VCX manages over $650 million of investments and has over 100,000 individual investors. Ben, welcome to Summation.

• 0:42Speaker 01

  Thanks for having me, Orin.

• 0:43Auren Hoffman?

  Now, you are a second-time guest. I think you are only the second second-time guest of this podcast, so it's a huge honor. Yeah, yeah. So we only have like the only if they perform super well on the first one, do they have them come on the second time.

• 0:57Speaker 01

  Okay.

• 0:58Auren Hoffman?

  Now, the VCX, it surged about 700% on day one of trading and traded like at roughly like 10x NAV at the time. What did that tell you about like retail demand that maybe institutions miss?

• 1:12Speaker 01

  The most common question I get from people is why did it trade up so much? I was really lucky because Robinhood Ventures went public two weeks before ours did and traded down, right? So it traded down, like not a lot, a little. I mean, it traded the way-

• 1:29Auren Hoffman?

  Below NAV?

• 1:30Speaker 01

  Below NAV, yeah.

• 1:31Auren Hoffman?

  Oh, wow.

• 1:32Speaker 01

  Yeah, it went public at like $25 a share and fell to $23 a share. And now it's at $32 a share, so or something, I don't know. So but temporarily it traded below NAV, and then since then, I think, started to trade-

• 1:45Auren Hoffman?

  And what was the reason that they traded below NAV? At least, what's the street belief?

• 1:49Speaker 01

  Yeah, well, I don't know about the street, but I think I have a strong opinion about why we traded up. And also, Bill Ackman took his fund public this week, and it traded down also, I think about 10%, 10% or 20%. And so there's no sort of like, why did some funds trade way up, our fund, and some trades funds trade down? And it's actually, I think that this is what my theory is, is that institutions undermine the success of retail investment.

• 2:22Speaker 01

  So Robinhood and Blackman were pro retail, pro institution. They raised a lot of institutional money and they raised a lot of retail money and it traded down.

• 2:32Auren Hoffman?

  Oh, it's like the institutions left and the retailer stayed or some of the retailers did?

• 2:36Speaker 01

  I think these institutions, their instinct is to dump on retail. And so as you bring institutions in and retail, you institutions undermine your retail success.

• 2:47Auren Hoffman?

  So you kind of have to pick one or the other. And if you're institution, then no sense going public because you're like a traditional fund. And if you're retail, like lean into the retail.

• 2:56Speaker 01

  Yeah, I've been, you know, raising money from the public for 15 years. And I experienced the opposite, which is that retail investors undermine institutions. Institutions hate investing with retail. It feels like they got a bad deal. They're supposed to be like special, exclusive. And so for the last 15 years, I've been dealing with the other side of the coin, which is that institutions hate retail. They hate it. The only thing they want from retail is to be able to basically sell to them at a big premium.

• 3:25Auren Hoffman?

  Yep.

• 3:26Speaker 01

  And I think for the first time.

• 3:27Auren Hoffman?

  Or trade with them because they think they're not smart or something or whatever. Right. This is a classic like Citadel trading with Robinhood or something.

• 3:34Speaker 01

  Right. And over the last 15 years, since I started Fundrise, retail has become more and more important, especially in public markets. And institutions are trying to figure out what to do with that. I think, I think it's like a third of all markets is retail and the rest of it's basically Citadel.

• 3:52Speaker 01

  So I think that the combination of the two is why we were pure retail. We leaned into it. We didn't, institutions were interested in investing. They wanted to invest. They wanted to basically, but what I learned, so I went and interviewed investment banks before we took VCX public. And I learned that institutions were excited about buying, investing so they could dump it on retail.

• 4:16Speaker 01

  And that was exactly the opposite of our mission. And so I said, no, no institutions, which my investment banks were just like, what are you talking about?

• 4:25Auren Hoffman?

  Yeah, that's kind of what they get paid to do, right?

• 4:28Speaker 01

  And I mean, institutions are the, are where the brand is like in financial markets. Institutions are the most sought after, biggest brands, you know, most, this is how you build your resume. And to be anti institutional is like anathema to success.

• 4:44Auren Hoffman?

  So it's like the revenge of roaring kitty or something like that.

• 4:47Speaker 01

  Revenge of the nerds.

• 4:48Auren Hoffman?

  Revenge of the nerds. If one had a basket of public stocks that are easy to access or something like that, then I mean, in some ways you would think it should trade like below NAV because it's taking fees from it. And so it's partially the reason these things trade above NAV is that, you know, there, these are scarce resources that are hard to get. Is that, is that correct?

• 5:12Speaker 01

  Yeah. So before we took Innovation Fund, Fundraise Innovation Fund public, I went through a very interesting process because I did something fairly novel, arguably novel period, like no one had ever done it before. Because normally when companies go public, they're a private company. And then they list and become a public company. And then there's funds who were like, uh, you know, already public and they list. And it's all, it's a secondary, it's a direct listing. And the only reason they list, the only, pretty much the only reason a fund that is a non-traded, you know, like public fund, like a private credit fund or some, is because they have to.

• 5:52Auren Hoffman?

  Yeah.

• 5:52Speaker 01

  They, they have a lot of selling pressure. They have a lot of retail investors can't redeem. And so they go public to get liquidity for investors. And that's why there's a closed end fund starts non-traded public and becomes public. And so we were a, a public 40 act fund, but we had no selling pressure, right? Nobody wanted to sell. And, and so that caused like, we were sort of neither fish nor fowl. And so when I, when I went to talk to different lawyers and different investment banks and different, the SEC, literally they all said, it's going to trade down. And they always insisted that was going to be the case and I had to put it in my disclosures constantly and I had to be, tell everybody it's going to trade down and I kept saying, well, I don't know if it will because I don't know who the seller is here.

• 6:37Auren Hoffman?

  Yeah, basically supply and demand, right?

• 6:39Speaker 01

  Right.

• 6:40Auren Hoffman?

  Yeah.

• 6:40Speaker 01

  We put it to a shareholder vote, we had a hundred thousand shareholders and we put it to a shareholder vote of, do you want to take it public on your stock exchange? Do you want to lock up your shares for six months and then do you want to raise our fee? Eighty percent of people voted to take it public, but 20% of people voted against that and those 20, you know, 20,000 people, like they didn't want the volatility, they didn't want it to trade down, they kept giving me grief on Reddit. It does show you, I mean, like a broad meta lesson for me is that experts are often wrong about novel things.

• 7:09Auren Hoffman?

  Yeah, that makes sense. Like these closed end funds, like they could basically wander from NAV indefinitely, right? And is that a feature or a bug?

• 7:18Speaker 01

  There's this challenge, right? Which is that private markets are now huge, companies, great companies stay private, you know, trillions of dollars, public is being excluded from them. How do you solve that problem? That's the question. And so people have tried it a lot of different ways. I've tried a lot of different ways. The way that most people in the public markets have been trying to do it is with an ETF. An ETF is different than what we did, which is a closed end fund and most venture funds are closed end funds, right? Like, you know, you raise money into the fund and then usually you just, you liquidate it. In our case, we took it public.

• 7:51Auren Hoffman?

  Yeah.

• 7:51Speaker 01

  An ETF, the underlying stock gets redeemed or issued every day. Like you may hold 10% of your funds Meta and 10% of your funds SpaceX. And if the fund doubled in size in one day because people flooded in to buy that ETF, you'd have to buy 10% more Meta and 10% more SpaceX, which is easy for Meta and hard for SpaceX.

• 8:14Auren Hoffman?

  Yep.

• 8:16Speaker 01

  And so the ETF model doesn't work. It falls apart.

• 8:20Auren Hoffman?

  If you're private, right? Because you can't just like, you can't just rebalance that day. It makes you a very long time to rebalance and it's hard to even know what the mark is at that point.

• 8:29Speaker 01

  And so you've seen some SpaceX ETFs or other ETFs basically like kind of underperform expectations because the cost of buying those shares on a kind of like forced buying and forced redeeming is like, leaves it very exposed to.

• 8:45Speaker 01

  Different market traders who take advantage of it and sort of eat the upside that people expect.

• 8:50Auren Hoffman?

  Yeah.

• 8:51Speaker 01

  Close-in fund, I think, is the right structure for how to create access to private markets. The challenge and the normal expectation, everybody said, this is how the world works, right? Close-in funds traded at discount. So they all assumed this wasn't the solution. And they all, it's sort of like, no one will sleep on your couch at Airbnb. Like, everybody assumed a certain thing, and it's turned out they were wrong.

• 9:14Auren Hoffman?

  With a venture fund, let's say you have a $650 million venture fund. You make your investments over a period of time. You might have some follow-on. Then maybe you can even recycle 20% more. So if you have some exits, you can recycle that in. That might end up, like, netting out the fees or something. But you don't, like, add more later. Like, that $650 million fund doesn't bring another $500 million into that same fund later, because, like, it's hard to, like, re-market and stuff. In your case, like, you guys buy in public, you can now, if you choose to, you could sell shares into the public market and add more money into the fund and then make more investments in that same fund.

• 9:59Auren Hoffman?

  Is that right? Or am I getting that right?

• 10:01Speaker 01

  Yes, yes. So the difference between, like, I mean, essentially, a mutual fund and a private fund is mutual funds that last forever, right? There are mutual funds that are 100 years old. And so as long as it's trading above NAV, yeah, we could go raise more money into the fund. It's something we've contemplated. I mean, the advantage of that are that, like, you know, I mean, let's take a company, let's take Databricks as an example. Databricks, we hold it at the same, at market value. You know, you could buy more at market value. Do you want more Databricks? Or do you want to hold it? But like, whether or not we buy more or less, or less data, we go public, then we, whatever, there's reasons why an investor might say, oh, I'm excited for you to, you know, rebalance

• 10:46Speaker 01

  the portfolio or invest more in something I can't get access to.

• 10:50Auren Hoffman?

  Clearly a good investor, so I want to give you more money, invest more, or whatever.

• 10:54Speaker 01

  They might think that, yeah. And so, and so, yeah, you could raise more money. And so it's like a little bit of an existential question of like, what do we want to be when we grow up? Like- Do you want to be, you know, small fund with like high, high alpha and, you know, and don't pick winners and, you know, pick really like the, ride the winners? Or do you want to be a big fund, more structural, you know, like could sort of public market access to private companies be a hundred billion dollar business? Like, I think so. It's pretty easy to imagine.

• 11:27Auren Hoffman?

  Yeah, absolutely.

• 11:27Speaker 01

  That's something totally different.

• 11:28Auren Hoffman?

  And you'd also like, eventually if I went to start a series of five hundred million dollar funds, you have fund three, fund four, so you could also do that. You could just like, okay, we're just, well, this one worked out well and now we'll start the new fund and, you know, and then take that public eventually if you choose to or something.

• 11:42Speaker 01

  Yeah, this is, the challenge is that there's really high fixed costs in being public, whether we're traded or not, like the costs.

• 11:48Auren Hoffman?

  What are the fixed costs of being public? Is it like a three million dollar a year? Kind of, it's in that range?

• 11:53Speaker 01

  Something like that. It's in the low single digit millions. Being public in your stock exchange in some ways more expensive. We have more drama, more people to, stuff to manage. And also I think the market, you know, you wouldn't want to have 11 closed debt, 11 trading funds. It would confuse the market. The market wouldn't be able to differentiate well.

• 12:10Auren Hoffman?

  Yeah. So there's these high fixed costs and obviously you have like legal and regulatory costs and people sue you, all this other stuff. And those are like relatively fixed. So it makes sense to accumulate AUM or, or even have like a, you could even have a series of funds in a meta fund or something like that or whatever.

• 12:28Speaker 01

  I mean, again, this is like, we could, I mean, we're at kind of a fork in the road and we could try to, you know, stay, have smaller funds. The way our platform works where we already have a couple of million customers on Fundrise, we could launch another fund, have it not be traded, raise from our clients. And then take it public in a few years. Like that's a different model than like having a public fund and trying to get it to a hundred billion. And, you know, try to get really big. And then I think what would happen if you got really big is you'd lower your fees. You'd basically try to be the low cost. Index for private markets.

• 13:05Auren Hoffman?

  Yeah, got it. Okay. So you could just slowly lower the fees over time. Okay, right now you're at, what are you, 1.85% or something? So you could just say, okay, we're 1.85% for the first billion and then for the next billion, we're 1.5 and for the next billion, 1.4 and then you kind of like lower it over time or something like that. So people get lowered fees. They'll kind of like end up like BlackRock or something.

• 13:27Speaker 01

  Yeah, like Vanguard. And so that's kind of more my in the spirit of what I'm about.

• 13:33Auren Hoffman?

  Cause they're just high fixed costs essentially. So if you can like accumulate it, then you might as well lower the fees and pass that on to your customers, which are these individuals. Yep.

• 13:43Speaker 01

  You just end up being the lowest cost, biggest. And then I think that helps us with the private companies. Like if you're the hundred billion dollar fund, like, you know, most companies will say, okay, well, I'll take, you know, a billion from you.

• 13:55Auren Hoffman?

  Yeah, especially if you have your long term, if you show your long term, because you're not selling their stocks. So people might be selling yours, but especially if you have like good retail interests, they're going to stay. So they're going to want you involved. Now, what happens? So like, how's it work? So like, some of your companies will go public, right? And how will that work? And if like a certain percentage of the thing is public, do you like, is there a point like you're going to have to manage it and decide to rebalance or something, right?

• 14:22Speaker 01

  Yes. I mean, that's a question that's coming for us because a lot of our portfolio, I think will go public in the next 12 to 24 months. And I think that like first thing, if we're public, there's a six month lockup. And I haven't articulated to the market what we're going to do it because I'm, we're still, I mean, there's a lot that's going to happen over the next 12 to 24 months to help us understand what to do. But I could imagine again, going with this sort of ethos of democratization, building something structural to the market. I could say, okay, you know, we're going to continue to hold SpaceX, but our fees on SpaceX will be 15 bips, 20 bips.

• 15:00Auren Hoffman?

  Oh, got it. So if you effectively will lower the overall fee for like, if you have certain names that are percentage of your NAV or something.

• 15:08Speaker 01

  Yeah. So maybe we say, hey, like, We want to hold SpaceX. We think SpaceX is a good hold. We don't want to sell it right now. But you don't want to pay us to hold something you can buy direct. You know, we'll just put like our normal ETF fee on it. And then maybe, you know, like whatever, at some point in the future, you sell and you rebalance into the next SpaceX or the next.

• 15:27Auren Hoffman?

  So you almost have like two types of fees of, you know, or almost like three. You have fees for private and that depends on your AUM for private. Your fees for public and that also may even depend on your AUM for public or something. Those fees go, go down as you get more AUM. That makes a lot of sense to me, actually.

• 15:47Speaker 01

  Yes, exactly. So I, what I'm trying to do, which is like, I'm playing a different game than the venture manager. I'm trying to make what we're doing structural. I'm trying to make it so that it's like antiseptic. It's just like, this is just how the market works. You pass an index into private tech through a low fee regulated wrapper.

• 16:06Auren Hoffman?

  Yeah, it's interesting. And venture is different. So venture has management fees on what you raise. Not on the NAV. That NAV could go down or that could go up. And you still get the same management fee, which is a yearly management fee, typically 2%. But you know, that depends on the venture fund. And then you've got to carry, you know, typically 20% on what, and you may have a hurdle rate or something. And that carries, you know, once you start returning money to investors, when you return more than 100% of the money to investors, then you start participating in this carry. In your case, you just benefit on the NAV. And so you're kind of aligned with the investor. As the NAV goes up, you get your, your fees go up essentially.

• 16:48Speaker 01

  Yeah. So the question is like, so I don't have a profit share. And so the people say, okay, that's good and that's, or that's bad. For me, I think I'd like to debate both sides of it because like, obviously in theory, I'm more incentivized to make good investments if I got 20% of the profits. But I mean, I'm already incentivized, right? Because obviously the better my returns, the better my fundraising and the better, like the bigger the fund gets and the more our fees. So that's like, there is an incentive there.

• 17:19Auren Hoffman?

  Kind of your NAV dulls. Your fees, you know, essentially, maybe your fees don't exactly double, but they they go up quite a bit.

• 17:24Speaker 01

  Our NAV did double before we listed, right? We had 100,000 shareholders before listing. So we are. And so, on the other hand, one of the reasons I've been against the carried interest, and this is less true in venture than it is in other sectors. But in the 2008 financial crisis, I watched a lot of people have kind of a one-way incentive.

• 17:43Auren Hoffman?

  Yeah, they were very risky. They went up 100%. They got their fee and then the next year went down. They just closed the fund down.

• 17:50Speaker 01

  Yeah, if they lose 100% of people's money, they don't give back 20% of the fees. And so, and actually, interestingly enough, like, the SEC doesn't let you take a 20% carry for retail funds, but they do let you take a fulcrum fee, which is a two-way fee. So they'll let you take 20% of the ups.

• 18:10Auren Hoffman?

  Ah, if you go, if you take money on the down.

• 18:13Speaker 01

  Take 20% of the downs.

• 18:14Auren Hoffman?

  Oh, I didn't, I didn't know that. It's called a fulcrum fee?

• 18:18Speaker 01

  Yes. And so they're only willing to do it.

• 18:19Auren Hoffman?

  Is there other funds that have, I've never seen that.

• 18:23Speaker 01

  I don't know if any funds ever had the balls to do it.

• 18:27Speaker 01

  I've thought about it a lot. It's really interesting question. But yeah, you're like, if there's reciprocity, essentially, like, if you're going to take 20% of the upside, why don't you pay 20% downside? And so I think that there's a lot of incentives that can warp decision-making around the carried interest. Obviously, it's, there's pros and cons to it, but the fulcrum fee is really interesting.

• 18:48Auren Hoffman?

  Some venture funds are somewhat like that, where if you take carry before you return 100%, and then it goes down, like, you do owe that carry back. So there are some funds that, depending on the LPA agreement, that has something like that. But once you pass the 100%, you know, you, you get your carry, and then if it goes down, it goes to like, there's not a, it is what it is at that point.

• 19:11Speaker 01

  Yeah, I mean, it's, it's a very different business model. And ultimately, like, I mean, I've gotten some positive and some negative feedback from venture industry as I've sort of taken V C X public in particular. And I think that ultimately, it's so, our incentives and our structure is so different than venture, that we end up being the sort of, I think we're going to be the sort of complement, like, we sort of become, because it's also passive.

• 19:36Auren Hoffman?

  There's all these funds that essentially are very late-stage funds right now. So let's say Thrive is a very, very late-stage fund. They're putting very, very big dollars to work, late-stage, like.

• 19:48Auren Hoffman?

  What's the difference between like a thrive and you guys like you're like a thrive, but you have like tons of retail investors thrive is more like they have sovereign wealth funds, they have other types of things there, right? But like, what does it do the industry? If folks like you start to be successful?

• 20:06Speaker 01

  Yeah, so I think that is much more competitive with growth equity funds than venture capital.

• 20:11Auren Hoffman?

  Yeah.

• 20:12Speaker 01

  I think the seeds.

• 20:13Auren Hoffman?

  Yeah, late stage, like these later stages are putting a hundred plus million dollars to work. And some of those like started out as seed, but then they kind of like thrive kind of startup. But now they're mostly writing like very, very large checks right into into companies.

• 20:27Speaker 01

  Yeah. And if you saw this, like Blackstone announced that they're going to start writing checks into the late stage privates too.

• 20:34Auren Hoffman?

  Yeah, so there you go.

• 20:35Speaker 01

  And if Blackstone does it, then Brookfield will do it and Apollo will do it. And so the consequence of companies staying private longer is that all this money needs to and wants to flow into, you know, the post series C check. And there's a lot more fees to be made doing that than having those companies be public. And so whether it's Blackstone or DST or Fundrise, like it's, I think that to some extent, they're all the same. Like, I don't think there's a lot of value add in the late stage checks. Most of the value adds in the.

• 21:10Auren Hoffman?

  Yeah, you're not on the board usually or any of that. You're just giving them money.

• 21:14Speaker 01

  That's my view. I mean, occasionally there are people, I think, I think thrive and I think A16Z are like, you know, they have late stage stuff. I think they do add more value than like.

• 21:22Auren Hoffman?

  I agree. You can call that that person. If you call Josh Christian, like he's a super smart guy and that's great. Or you call, you call Mark Andreessen, like, I mean, that's worth a million dollars for that hour call for just to call him, right? So there's value of just being able to call those people. But like calling a random Blackstone manager, like, who cares? Like, that's not going to add that much value for most companies.

• 21:44Speaker 01

  Right. And I think there's, I think there is differentiation and like we have millions of customers. So like, you know, we can bring, you know, we're kind of a sales and marketing channel for the companies. So we're all different, but ultimately at the scale of dollars we're talking about, like, it's not really that. There's just room for a lot of money. I mean, it's just like,

• 22:03Auren Hoffman?

  I mean, their company is now raising $100 billion. Like, if you're raising that much, like, they need a lot of capital.

• 22:10Speaker 01

  Multiple companies, yeah. Prometheus, I mean, there's just so much money flowing to private markets. I don't think it's really about, oh, there's not enough to go around. I mean, like, I think this is just, it's just gonna be so normalized. And I think companies just really don't go public. I think that companies going public that don't have to go public isn't gonna happen.

• 22:28Auren Hoffman?

  As we see more closed, obviously, you guys, and you mentioned Robin, there's a few others that are kind of coming out. Essentially, there'll be more supply for investors. Like, at some point, would you expect they all kind of trade relatively close to NAV? Let's say plus or minus 10% or something, but not 3X or 2X NAV?

• 22:47Speaker 01

  Yeah, that's the logical answer, but the public markets aren't always very logical.

• 22:52Auren Hoffman?

  Yeah, that's right. Yeah, so I've learned that. Yeah, the hard way sometimes, yeah.

• 22:57Speaker 01

  Palantir, SpaceX, some of these companies traded these premiums that other companies don't. They traded premiums because of brand, because of the founders, because of narrative, because of, you know, some other reason. And so I wouldn't be surprised that some companies just don't trade as well. In the public markets, you know, I mean, I now have a public fund and I, one of the great things of having a public company is you get a lot more data about who's buying your stock, who's selling your stock. You really get to understand the markets better.

• 23:28Auren Hoffman?

  Though you knew before you had 100% of the data when they were buying it on the Fundrise platform, right? Now you have less than 100% because it's somewhat opaque. They're buying it through Robinhood, they're buying it through this other broker, they're buying it through E-Trade, or, you know, whatever it is, right?

• 23:42Speaker 01

  Yeah, less, but more than me as just a straight public investor, right? I know more about my stock than anybody else. And, um, and I, I feel like the public markets, I mean, they're sort of falling apart. The passive indexing thing, like, it eats all the flows. All the flows go to the passive indexing companies. And then if you're not in the index, you're sort of left with hedge funds, quantitative traders, and retail. And all three of those, you know, are very different kinds of investors. And so your stock trades very differently than the companies in the index.

• 24:15Auren Hoffman?

  Yeah. And if you're in the index, like it's very weird because like a very high percentage of your company starts to be owned by these random indexes. And then of course, they can't own more than a certain percentage. It starts to be like very odd over time.

• 24:29Speaker 01

  I did a company presentation this week and there were 200 people at our company. And they were asking me about why V C X trades the way it does. And I was like, everybody in this room, every paycheck allocates to 401 K and allocates into the public stock market. And you don't know what you bought and you don't know what price you bought it. Like, that's the majority of the market.

• 24:48Auren Hoffman?

  Yep, that's right.

• 24:50Speaker 01

  That's the opposite of the way a private market investor invests, which is like straight up fundamentals, ground up underwriting, relationships. This is something Brett Weinstein talks about a lot, but like just the public markets, when indexing was 5% of the market, it really worked. Now that's whatever, 60% of the market.

• 25:05Auren Hoffman?

  It's really, really like changes everything.

• 25:07Speaker 01

  Yeah. So anyways, that my point is when it comes to like, how do these, how do funds like ours trade, they're not going to be in the index. And so I think that they're going to have zynocratic trading dynamics.

• 25:20Auren Hoffman?

  How do you think about these indexes in general? It's like, if you're an index and you own every oil and gas company and every clean energy company and every, all in one, like, you don't care if Exxon goes down as long as like the overall economy goes up or something. So it's like, you're a very weird shareholder because like imagine just not caring about your holding, any particular holding you don't really care about, unless you're like super over indexed, like maybe Nvidia is like super over indexed to most of these places. But like the average, like they just don't care about Exxon at all, either way.

• 25:57Speaker 01

  And the way that manifests is that when they vote the proxy, they end up voting it not the way you or I would vote it, because we would be thinking like a founder, thinking like an investor, they would, they're thinking more like the most institutional, which I mean institutional in the worst way, like, like you ever read One Floor with Cuckoo's Nest?

• 26:17Auren Hoffman?

  Yeah, of course.

• 26:18Speaker 01

  Yeah, like institutional in that sense.

• 26:20Auren Hoffman?

  Yeah.

• 26:21Speaker 01

  Like, it's all about C Y A, it's all about check the box, it's all about, you know, whatever institutionally safe.

• 26:27Auren Hoffman?

  Or even worse, they actually could do things to actively harm the company, but to make the, all their other companies go up or something.

• 26:34Speaker 01

  Yeah, or like they have a political agenda, or they're, or they're worried about being fired and they're trying to be, you know, politically correct or whatever it is. But like, it's, it's not like. A fundamental investor, the way you and I think about investing. And so that's the market is just, it's warping. Like every, every year it gets more warped warped as a result.

• 26:56Auren Hoffman?

  Now, there's these amazing late-stage companies, some of which may go public, some of which may never go public. Right. You've got the Anthropics, the Open AIs, the SpaceX, the Databricks. You've got Stripe, you've got, you know, all these different companies that are all, let's say, over a hundred million dollars in value. Super incredible.

• 27:14Speaker 01

  Hundred billion.

• 27:15Auren Hoffman?

  Sorry, a hundred billion. Sorry. That's what I meant to say. Well, I said a hundred million. Oh, wow. Okay. Yeah. A hundred billion dollars in value, just like, you know, hundred X what I just said. Sorry, thousand X what I just said. And just like incredible, incredible companies, incredible founders doing incredible things. If I was them, I would want the public to own some of me. Now, I can understand why I don't want to become public, like Stripe may never go public. Because there's all these problems with being a public company and getting sued and all these. You just read Matt Levine and you're like, I don't know if I'd ever want to be a public company or something like that. But like, I think they'd want like the retail investor to benefit from their success.

• 27:58Auren Hoffman?

  And so in some ways I would want you on my cap table rather than like some random endowment from the Philippines or something like, you know, I would prefer to have you guys on the, on the cap table. How is that conversation go with those types of companies?

• 28:18Speaker 01

  Yeah. So that's, that's my pitch and that's my belief. And I, and that conversation has evolved because when we first started, people, the companies were really confused. And they're like, how many people are going to have on my cap table? I was like, one or one or, or like Fidelity or like BlackRock. And Co2 launched a fund like this. And so.

• 28:41Speaker 01

  Our Kathy Wood has won. And so to some extent, as you know, any kind of like, you know, you've built tech startups like the, it's not competitive. You're just trying to build the category. And as you build the category, the category expansion is more important than winning, you know, your share of the category. And so companies have started to like to see this as normalized. And at first they were just, you know, they were worried about it. And they weren't focused on the benefits. They were focused on the risks, transparency, things like that. And then they, it started to shift over the last, especially like back half of last year started to shift. And now, you know, when I especially want to talk to these most important companies who are growing like crazy, I say to them, here's my counter

• 29:25Speaker 01

  factual for you. If the mag seven had stayed private, just weren't public, and everyone's 401k basically was the same as it was in 1995.

• 29:38Auren Hoffman?

  You wouldn't get any appreciation, like all the appreciation can from like a small number of companies.

• 29:42Speaker 01

  Right. Do you think our social fabric would hold together?

• 29:48Auren Hoffman?

  Yeah, no, I mean, imagine a 401k is just not working. Maybe a few pension funds like benefit and that that flows through. But like, if it just like the Yale and Dowling got bigger, like, that's not good for our social fabric, right?

• 30:00Speaker 01

  Yeah, and most people don't have pensions anymore. And so like, so like, there's a, you know, the way capitalism works is that there's these sort of knock on benefits to, you know, GDP growth and new job growth and people's 401k is getting bigger. And if we create this dynamic where AI takes away people's jobs, and they don't have, and their 401, they don't get any wealth, and the world changes under their feet, like, that's a disaster. I mean, it's a catastrophe.

• 30:28Auren Hoffman?

  And if you're one of these iconic companies, in some ways, like, you owe it to the public to not just benefit from your great products, which we all do. Like, I'm extremely thankful of all these companies because I get to benefit from their products and their innovation and all these other types of things. But you kind of owe it to the public to get them to benefit from your success as well. If they buy into it, right? Obviously, it's their choice.

• 30:52Speaker 01

  Right. I think that the companies, like, we're lucky, the AI companies today are, I think, are very socially minded and they, and they want social success. They're very focused on that. And so I think they absolutely want that buy in. And I think about Amazon and Google and other big tech companies that have at various points were very unpopular. I mean, Amazon used to be the, when they were closing down Main Street, they had, I mean, there were all these negative feedback about it.

• 31:21Auren Hoffman?

  And their stock was down too, right? For some period of time, right?

• 31:23Speaker 01

  Yeah, I mean, the stock had fallen during, during 2001. So, but I really think that the fact that it made people wealthy really helped manage some of the negative side. The reason why government ultimately didn't break up Google or break up Amazon, I'm sure the fact that it would have been bad for people, for the voter, for the people's 401Ks like mattered to that decision. So this growing divide between public and private markets, I just think has a lot of hidden risk for American society.

• 31:55Auren Hoffman?

  Now, if I'm buying private shares today, if I want to buy shares in Databricks, like there's a secondary market, I can go on to these different secondary brokers. Some of them are like, seem very legit. Some of them seem a little sketchy when I'm interacting with these secondary brokers. I can buy some Databricks and there's, there's some liquidity there, at least for like the big names, I can go buy it. Sometimes like, it's not like clear, like Databricks knows that I bought it. Like I'm not like directly on their cap table or something like that. I'm like on some, somehow some flow through, or I'm buying a piece of an SPV, or, or I'm buying a forward contract with somebody who has shares and stuff like that. It seems more opaque, whereas if I buy a public company, like it gets, it's like those shares are in my account or something.

• 32:40Auren Hoffman?

  How do you think about that as a manager who's trying to like manage all the risks and manage all these types of things?

• 32:46Speaker 01

  So I think most people don't know anything about buying shares in secondary, aren't accredited investors.

• 32:52Auren Hoffman?

  Yeah, let's, but let's say somebody wants to put, you know, who's got an extra $10 million and they want to put in the Databricks or something like that. Yeah.

• 32:59Speaker 01

  This is not the customer I normally focus on.

• 33:01Auren Hoffman?

  Yeah. Or you or your competitors, right? Who want to get more access to Databricks today?

• 33:06Speaker 01

  Yeah, I mean, I mean, we're on the cap table of Databricks, we're on the cap table and roll like.

• 33:11Auren Hoffman?

  If you want to get more Databricks tomorrow, like there's not necessarily an opportunity to like get on the cap table tomorrow, but there is an opportunity to, to go on the secondary market or something.

• 33:19Speaker 01

  Yeah, well, so the secondary markets didn't really exist any, any scale until the last couple of years. It's really become a new, a new space. You know, there's a lot of things that are, the market's trying to figure out. And so for one, it's very grindy getting hold of shares. And typically, if you want to get company approval, you need a big block. You know, they're not, company's not going to mess around.

• 33:45Auren Hoffman?

  A $400,000 block or something.

• 33:47Speaker 01

  Yeah. So you're saying 10 million. Okay, maybe a company might be willing, you sort of sign it up. It goes to the company, like you sign it up, it goes to the company, company.

• 33:58Auren Hoffman?

  Them write a first refusal or something, maybe or something. Yeah.

• 34:01Speaker 01

  Stripe, I signed up five different blocks of Stripe over the course of three years. And Stripe wrote for it every single time.

• 34:09Auren Hoffman?

  Oh, wow. Okay.

• 34:10Speaker 01

  I thought they wrote for it $100 million on me or something over five years. Like, so like, yeah, so like the companies will sometimes wrote for it, sometimes proven, sometimes reject it. And so, and that's like a process with secondaries and there's different companies have different philosophies around this.

• 34:26Auren Hoffman?

  And by the way, that makes me mad because like Stripe, like I think more is Stripe is an amazing company with amazing founders, amazing products. Like I wish more retail had access to Stripe. But I feel like that's almost they're doing a just, I love the callousness, but that to me, that seems like they're doing a disservice by not allowing funds like you in.

• 34:44Speaker 01

  I haven't, I have engaged a lot with Stripe, so I have kind of like a bitter sense of it. And I think Stripe, I think they were trying to figure out, they were more worried about the downside risks.

• 34:53Auren Hoffman?

  Yeah.

• 34:54Speaker 01

  They were trying to figure out.

• 34:55Auren Hoffman?

  Obviously, they think it's cheap, they should go for it, right? So if they're like, oh, you're getting the deal, they might as well, they might as well buy it, right? I mean, that that seems reasonable, right? If you're buying it for 80% of what it's worth, well, they might as well go for it at that point. If they have a better view on the value of the of the share.

• 35:11Speaker 01

  Yeah. And I think they made good money on those roffers. I just think a lot of companies were nervous about the new structure and didn't, you know, just it was more about risk management. It wasn't like they're said no to retail or anything like that. It was just like, what is this thing? Is this thing, is this, is this, is this like going to create regulatory problems for me? They're just trying to manage risk and it wasn't like the ethos problem. I think that over time, I just think every company, this is going to become so normal. I think that like companies like, like Stripe, you know, they're going to raise tenders, Revolut, they raise tenders, they're going to stay private. And, and they'll, I think I'm, would be shocked if they're not like excited about, you know, opening access in a way that's like good for the company and good for the investor.

• 35:55Speaker 01

  And that is just a point of like creating these norms and creating these like practices that are win-win for everybody.

• 36:02Auren Hoffman?

  Now, you are, now you're running a public company, essentially. At least one of your companies is a public company. And I personally would never want to be a public company CEO. It just seems like terrible.

• 36:13Speaker 01

  It's terrible.

• 36:14Auren Hoffman?

  Like, like, walk us through what it's like that maybe, maybe someone who isn't running one would not understand, even though you're not, you're running like a, a fund, it's not exactly the same.

• 36:25Speaker 01

  It's not exactly the same. I mean, there's some similarities. I mean, things that I feel like happen, and most public CEOs probably experience this, is that, um, so at any point in time, you have some percentage of your stock that people are short. You're like, the average short in a stock is a few percent. Some stocks have 10% short. And that's like actually a functioning market, because you know, lots of long, short funds and things like that. So, so shorts are normal part of the market. But there's a sort of part of the shorts market where they will take a short and then put out media, social media.

• 37:00Auren Hoffman?

  They may even close it out before they do it, or something like that, or whatever.

• 37:04Speaker 01

  Yes.

• 37:04Auren Hoffman?

  They disclose, they say, hey, we might have already closed it out by the time you read this, right? Or something.

• 37:09Speaker 01

  Right. And so, so part of now being an executive at a public company is that you're like a source of way for them to sort of drag the stock down by throwing shit at you. And this will attack you personally, attack, you know, like they'll dig stuff up, they make stuff up, they just try to create innuendo. And so you get more people attacking you, you get the public, you get more individuals attacking you.

• 37:29Auren Hoffman?

  Right.

• 37:30Speaker 01

  Everybody thinks I got rich. Everybody's like, oh my God, you must have made a billion dollars. Like, my, my 14-year-old son, in eighth grade, nobody knew who I was, and then all of a sudden they're like, oh, you, you must be a billionaire. And I'm like, I literally made zero money on taking public, zero.

• 37:46Auren Hoffman?

  Right, right, right. Because your, your, your company makes money and, you know, it has some revenue, right?

• 37:51Speaker 01

  I didn't buy any shares and sell any shares before anything like, and it's just put like, it just, there's this perception, I mean, you run a public company, you must be rich. You know, oh, the company's worth billions of dollars, blah, blah, blah. Because at one point, the stock was worth like, V C X was worth like $20 billion. Right? How does a, how do I run a stock that took from zero to 20 billion and making zero money? What did I do wrong?

• 38:13Auren Hoffman?

  Cause also like closing funds are different, right? Obviously, if you were, if you were, if you're, if Fundrise itself goes public and hits $20 billion valuation, you will have a significant wealth.

• 38:24Speaker 01

  Right, but, but that's confusing to people.

• 38:27Auren Hoffman?

  Yeah, that's right. That is very confusing.

• 38:28Speaker 01

  People find that confusing and so it created like, I just gave more of a target for, for drama.

• 38:36Auren Hoffman?

  Yeah, interesting. And then I confuse you like there's this other Ben Miller who did something like, you know, went to jail and it's like, oh, look, it's the same, you know, it's like you have a.

• 38:43Speaker 01

  There's actually an actor, famous actor, I think named Ben Miller. So he's like number one on Google.

• 38:48Auren Hoffman?

  That's a good one to get actually confused.

• 38:50Speaker 01

  I gotta hang out with that guy.

• 38:51Auren Hoffman?

  Yeah, totally, totally. I actually meant to have him on the show, but we got you by accident. Yeah.

• 38:56Speaker 01

  Yeah, totally.

• 38:58Auren Hoffman?

  Yeah. Okay. Now, I mean, one of, okay, we talked a lot about like these closing funds, which are like super interesting. You guys started in real estate and most of your funds are in real estate. And now you're kind of dealing with this kind of like AI wave in real estate. And there's kind of like two things. There's like AI making you a better investor. And then there's also investing into the wave, data centers, you know, energy projects, et cetera. How do you think about the AI wave?

• 39:26Speaker 01

  Yeah. So actually there's, there's this two things and a lot of real estate people are asking me about AI because I sort of like, I mean, knowing more than real estate people is not saying that much.

• 39:36Auren Hoffman?

  No, not at all. I mean, I feel like they are some of the least tech people. When I interact with the real estate people, it's like, it's like Excel is like the top of the, the, the, the stack. It's like, they don't have anything really. They have very little data, almost no, like no, like machine learning, the AI is almost zero, et cetera.

• 39:54Speaker 01

  No, no, the machine learning, I mean, like some of them just use yellow notepads. I mean, that's where.

• 39:58Auren Hoffman?

  Totally. Like they're touching the dirt and stuff.

• 39:59Speaker 01

  Some of the best ones are just the yellow notepad people, but.

• 40:02Auren Hoffman?

  Yeah. I mean, maybe there's a feel. You have to go there. You have to see it. You have to kind of see how the sun shines on it or something like, I don't know. There's something about it that is very visceral. It's real, right?

• 40:11Speaker 01

  Totally. The sun shining out. That's right. But so I, there's the. The way I articulate to them is that there's like how AI makes their operations more efficient. Maybe they're run a hundred percent company or 10% company and they're going to try to automate asset management or analysis. And then there's like how AI is going to impact their real estate, like the apartment buildings and, and how is it going to affect San Francisco versus Austin?

• 40:36Auren Hoffman?

  Yeah, oh, investing, but also pricing and management and, you know, whatever might be.

• 40:41Speaker 01

  Right. How's it going to affect their asset versus how's it going to affect their, their holding, their GP, you know, the actual? And I say the asset's going to be a much bigger effect, much more important. The asset, the effect on asset is going to be tens of percent and the effect on the operations like, we have a $5 billion real estate portfolio with like, you know, the real estate team is probably 60, 60 people or something, you know, like I can't, the amount of, if I can get 10% change in, in the real estate, that's half billion dollars. I can't get half a billion dollars in savings from the, from the team, right? So the asset matters a lot more and AI is going to have incredibly large effects on the asset.

• 41:23Speaker 01

  And that's something that people don't really see coming, even though you as somebody who lives it, will more intuitively understand the impacts once I, if I chain them together for you, if you're game.

• 41:34Auren Hoffman?

  Yeah, let's do it.

• 41:35Speaker 01

  So everybody knows AI data center is a great investment, but like, okay, here's what I think. As a real estate investor, you buy real estate property, let's say you buy something, a hundred million dollar building. You're really thinking about it as a five to seven year investment. And so you're talking about 2031, 2032, 2033 is when you're exiting. So you're really on the other side of the AI.

• 41:57Auren Hoffman?

  Sorry, I didn't know that. So it's five to seven years is typically when people exit.

• 42:02Speaker 01

  Five would be, yeah, I would say the norm, but, but reality is five always becomes seven.

• 42:07Auren Hoffman?

  No, I didn't realize five is the norm. Oh, wow, because I would, I would think you just hold it forever, like, you know.

• 42:13Speaker 01

  No, they're in a closed end fund.

• 42:15Auren Hoffman?

  Okay, so most of these are fun. So you're, you're competing with closed end funds and that fund has a 12 year date on it. Or whatever, maybe it could start expanding a few more years or something. But, uh, but yeah, you're right. So it's five to seven years. They need to, they need to exit out.

• 42:31Speaker 01

  Right, and you know, you're raising your next fund. You need to show returns in the last fund, much shorter than that. And, and so let's just say five years is 2031.

• 42:40Auren Hoffman?

  Yeah.

• 42:40Speaker 01

  Right, and so with 2031, like, a big part of the impact of AI will have hit the economy when you're trying to exit your business plan.

• 42:47Auren Hoffman?

  For sure.

• 42:48Speaker 01

  AI doesn't exist in their business plan. It doesn't even, it's not even in the business plan today. But you and I probably say it's the most, certainly top three, if not the number one most important thing that's going to happen to their business plan. Just like COVID was the most important thing to happen.

• 43:02Auren Hoffman?

  Yeah.

• 43:02Speaker 01

  In during the, you know, you buy something in 2019, guess what?

• 43:05Auren Hoffman?

  Yep.

• 43:06Speaker 01

  COVID changed the entire business plan.

• 43:07Auren Hoffman?

  Yeah, that's right.

• 43:08Speaker 01

  And this is like, um, very simple, but like, AI is going to replace cognitive labor. And so white collar workers are going to be impacted and probably mostly young white collar workers. And so you're going to see this sort of like, impact on white collar workers, good and bad, and growth in productivity, growth in GDP. And so if you sort of break that down, that means like, well, maybe less normal jobs, but more stuff. There's more wealth, there's more stuff, but there's less jobs, I think. And so you sort of say, okay, well, you trade that by being more industrial because stuff moves through the industrial system. You need like to store stuff and move stuff.

• 43:51Speaker 01

  But, you know, you don't want to be in office. And then there's certain places that the typical back office.

• 43:58Auren Hoffman?

  And still like, I mean, office is so bad right now, but you still don't, you don't think the office is just going to get worse.

• 44:03Speaker 01

  I, I think office is worse for sure. I think that like, it's like buying a farm after the mention of the combine. I guess, you know. The effect on agriculture was of technology was massive. I think the effect on office is like you're moving from farm to factory to office to the next thing, whatever the next thing is.

• 44:23Auren Hoffman?

  Yeah. And also offices will probably look differently because if the teams are smaller and you know, they're just gonna have, or they may want to have more, if you're, and if you're, if each person is adding a lot more value, you may want to have more amenities and there, there's might be a whole different way of how they look. And so there might be a lot of investment you need to make to attract those types of companies.

• 44:42Speaker 01

  Yeah, but I mean, like this, the things that I think will happen is the driverless cars will become normal within five years. And so where do people live? I think they disperse more. I think work from home technology, like you and I, will we be wearing eyeglasses? Will it be three dimensional? You know, will it be like full sensory like?

• 44:59Auren Hoffman?

  So you think work from home keeps going up? Obviously, kind of like it's been going up. Well, obviously, there's a COVID kind of thing, but it's been going up. If you take out COVID every year without COVID, but you think it's just that that trend keeps going?

• 45:13Speaker 01

  I mean, again, if you can live wherever you want, because you can have a driverless office, right? You get it. Oh, I live in like, you know, ever you're in San Francisco, I live like way up in like, you know, Petaluma, it's awesome.

• 45:25Auren Hoffman?

  You're still going to the office every day. Maybe you're just living further because you can, you're okay with the longer commute because you're in a driverless car. But what you're saying is that the work from home will go up.

• 45:36Speaker 01

  Well, I'm saying both because I'm saying like exactly what that office looks like and how it works. And I'm just saying there's this big changes coming as a result of of technology and those changes like we'll have future effects in real estate. And where I was going with the other one was there's all these cities like Charlotte where a lot of the white collar, young back office people move out of college, they move out of college and they go work in Charlotte and they get hired. And I think that kind of job is the kind of job most impacted by AI. That kind of back office young person at a big company.

• 46:08Auren Hoffman?

  Yeah, if there's like a process around, obviously like a BPO would be the first ones to go. Maybe most of that's in India or the Philippines or something.

• 46:16Speaker 01

  Phoenix has the biggest concentration of customer service back office in anywhere in the country.

• 46:22Auren Hoffman?

  Okay, so you would be, you would be a bear on that market or something like that.

• 46:26Speaker 01

  Right, so there's certain, certain, and you wouldn't want to be buying apartment buildings focused on people coming out of college in Charlotte.

• 46:34Auren Hoffman?

  Yep, interesting.

• 46:35Speaker 01

  So this is very, I mean, and you sort of hear about that, you're like, well, that kind of like, it may be wrong, but doesn't seem like a good bet.

• 46:41Auren Hoffman?

  Yeah, it doesn't seem like there's high upside and there's definitely a high downside. So, okay, that, that's a, that's not a bet I want to take right now. It's hard to tell a story that that goes up, though. I mean, I guess you could find one, but I'd be interested in our, I'd be interested in our audience members coming up with the other story, yeah.

• 46:57Speaker 01

  Yeah, there's, I mean, there's lots of, I think, but the point is like, this is, I go back to, I've been in real estate in Texas since the late 90s. And so, you know, when the internet showed up, people had lots of thing, oh, the internet's going to do all these things. And the internet didn't do all the sort of grand things people said, but it did cause e-commerce to eat retail.

• 47:15Auren Hoffman?

  Yep.

• 47:17Speaker 01

  And it just slowly but surely ate retail.

• 47:19Auren Hoffman?

  Yeah, you didn't want to be like a random mall or something or whatever.

• 47:22Speaker 01

  All retail was repriced over, it took like 20 years of repricing to finally get to bottom.

• 47:27Auren Hoffman?

  And has it reached bottom now or is it still going down?

• 47:30Speaker 01

  It did. It reached bottom like maybe two years ago. So it took, you know, more than 20 years. It's basically from like 1995 to 2024 or something. It took, it took that long for real estate to reprice to the bottom. And so you sort of have that, I think, with office. I think that like, and I just, and there's falling populations. And so falling populations are bad for different kinds of residential units for young people. So there's all these like, it all, the macro, it seems very intuitive. But these kind of intuitive analyses are not really how institutional investors in real estate make decisions. If you can't put it in a spreadsheet, it's very difficult for them to price it.

• 48:10Auren Hoffman?

  Yeah, exactly. It's interesting. So, so what is an area that maybe is like, you're bullish on that, like, maybe somebody like me wouldn't have thought of?

• 48:19Speaker 01

  Oh, you wouldn't have thought of? I mean, so obvious. New York, San Francisco, bullish.

• 48:23Auren Hoffman?

  Still, okay.

• 48:24Speaker 01

  Oh, yeah.

• 48:25Auren Hoffman?

  On housing and, you know, all that stuff and.

• 48:27Speaker 01

  Just everything we saw in 2010s, there's this agglomeration effects that I think are compounding. And all this wealth from, from the, you know, tender offers and these AI companies.

• 48:39Auren Hoffman?

  And you're not worried about like random government things that make it, you know, okay, now all of a sudden they have excise tax and they have this and they have, you know, they have other types of things that make it, or if you know, if you're buying things over X, you have all these different kind of potential areas, right?

• 48:54Speaker 01

  What's definitely going to happen, it's already happening. I was just putting those places out as like, as like obvious. So the less obvious would be, I think that again, the, they sort of like the petalumas of the world or these like great cities that are, that were too far, the car. So this is something everyone in real estate knows, people outside of real estate generally don't know, is that there's like a, there's a ring of how far people will drive to their office. And beyond that ring, and that ring has certain kinds of infrastructure, roads and stuff like that.

• 49:23Auren Hoffman?

  It's on time, not, not, not miles, right? It's really based on time, right?

• 49:27Speaker 01

  Time, yeah.

• 49:27Auren Hoffman?

  Time at 8:00 AM or something, right?

• 49:29Speaker 01

  Time and commute. And it's like, it really falls off after 45 minutes of commute.

• 49:33Auren Hoffman?

  Yeah, makes sense. Yeah, that would suck.

• 49:35Speaker 01

  Right. It's just so horrible. And so driverless is going to change the living patterns. And I think we'll see more sprawl.

• 49:43Auren Hoffman?

  You think even in five years, like, a lot of people will be in driverless cars and stuff like that?

• 49:49Speaker 01

  Yeah. And also like so much of everything is priced both on the marginal consumer, marginal investor.

• 49:56Auren Hoffman?

  So you only need a small percentage to have driverless cars to make that, you know, petaluma thing very exciting or something.

• 50:03Speaker 01

  Right. And you're, if you're selling in 2031, somebody's buying 2036.

• 50:08Auren Hoffman?

  Yeah. Okay. Got it.

• 50:09Speaker 01

  You know, you just look at that and you see the trends and you say, okay, this trend is like clearly, because it's when the trend, institutional investor comes in when the trend's established and clear. And the entrepreneur comes in before. And so right now, we're in this entrepreneurial period where the institutional investor actually not putting money into real estate. Like there's certain sectors that are just X'd off because they don't know, they don't know a trend to buy that's totally invisible to them.

• 50:31Auren Hoffman?

  Cause today, even when I'm in driverless mode, even when my car like, I'm, I'm on, I'm honestly like still, I still have to like pay every once in a while, maybe I like, I'll pay a little bit less attention than normal, but I'm like, I'm still like paying attention. I'm, I'm on it. It's not like I can like do work in my driverless car if I'm the driver. Obviously if someone else was that, you know, it's like, if obviously if I'm in Uber, I can do work in the backseat. Like that's fine.

• 50:55Speaker 01

  Yeah. Or even better, like a, you, you. Or in probably a Ford, a car.

• 51:02Auren Hoffman?

  Yeah, especially if it was designed in a better way and there wasn't a steering wheel in front of me and stuff like that. But today in my Tesla, like I am, I'm, I'm listening to a podcast or I'm on, even on the phone, but I'm not, I'm not able to actually. So the commute does affect me even if it's driverless today because I have to pay attention.

• 51:18Speaker 01

  Yeah, we're not there yet, right? But five years from now, it's kind of like, uh, you know, Claude computer mode or something. It's like, it's using your computer, but it doesn't, we just use you to not have a computer and just go around that kind of like hu- human interface. So that, so we're in this transition period. And then like, and the obvious thing, we started a AI application layer called, uh, our application company called Real AI. And that's been building over three years. And like, you know, AI is going to also affect how you do analysis, how you do operations. Like every other sector, like, you know, Harvey does that for legal, Real AI does that for real estate.

• 51:54Speaker 01

  And as a result, like there'll be different kinds of things people buy and manage because probably things that are easier to manage with AI actually are, are, are more liquid and easier to buy and sell.

• 52:06Auren Hoffman?

  Yeah.

• 52:07Speaker 01

  And the things that are like harder to manage AI that need people, you, you sort of like, oh, I don't really want to deal with that. That would be like a non-obvious impact.

• 52:15Auren Hoffman?

  Going back to your trend that you and I both live in the DC area and there's tons of these like really iconic places to live in Maryland and Virginia. But like, let's say an hour, hour and a half outside of, um, and they're gorgeous and beautiful. And, um, and you just kind of like the type of place you like to go on, like you don't want to commute to DC from there. But you think like that's, those are going to be really great investments in the future.

• 52:43Speaker 01

  Yeah, I think it's the small town that is like Eastern Maryland.

• 52:49Speaker 01

  Where they have like a city center and they have like good restaurants, but like you can also get super affordable. There's enough people like you.

• 52:57Auren Hoffman?

  Yeah, maybe they have a good schools. Schools are really important, right?

• 53:00Speaker 01

  Like is Ojai like that for LA? I know it's a little bit, but like, you know, Santa Barbara is kind of like that for LA.

• 53:06Auren Hoffman?

  I mean, Ojai is already, you know, gazillion dollars or something like that, right? I mean, I don't know if there's any houses less than $10 million in Ojai. If there is, I'd like to buy one. Yeah.

• 53:15Speaker 01

  Listen, now whatever the next ring around that would be, that's like, so I think it still ends up being, it's not like you're in some forest in the middle of nowhere. I think it ends up being like.

• 53:24Auren Hoffman?

  Like Kewtown and it's got some, it's a nice little, it's a little main street and you got a nice school there and you got a football team for your kids.

• 53:32Speaker 01

  Yeah. Greenville was that for Atlanta. Atlanta had that with Greenville. Greenville was the Atlanta. So you sort of like, and a lot of real estate, again, in real estate is about buying the marginal change. You know, they, in real estate, they used to call it gentrification before it became unpopular, but it's like you're buying a change in, in the constitution of who lives there, population change. And that's, and that's like a form of growth. You go from average income 50,000, average income 100,000, and then that attracts more people. So you get sort of this compounding. Real estate is a derivative of people and, and, but a lot of people in real estate are less focused on the people than they are on the property, which is like a, some kind of institutional bias.

• 54:13Auren Hoffman?

  Also, like if there's going to be like a new, like people are building all these cool factories in Texas or something like that, and they're kind of like out there. Well, then certainly you need to build housing to, to support those people. And then eventually you're going to need to build schools to support it. Yeah. You need to have those types of things to, for that to be attractive for people to want to work long-term.

• 54:33Speaker 01

  Then there's a lot of jobs from that because there's all these, you know, you can go open a restaurant for like nothing in some of these towns where it would cost you millions.

• 54:42Auren Hoffman?

  If you believe in a town, like you're, you're buying housing, you're buying, you're, you're buying restaurant space there, right? You might be buying mini warehouses that are supporting that, right? So you're going like kind of all in on that town.

• 54:54Speaker 01

  Yeah, I've seen some wealthy people do that. They sort of move to a city and just try to like, partly they do it because it's kind of a passion. They're trying to build.

• 55:01Auren Hoffman?

  I'm saying you personally, like if, if you guys, if you guys believe that X place is gonna, is gonna get, like you're gonna, you're gonna try to find every way to invest in that town in a way?

• 55:11Speaker 01

  Yeah, for sure. And then I've done that actually before in cities. And because the thing is that you can make it happen. Like by, by actually.

• 55:19Auren Hoffman?

  Oh, true. The more you build, it is, it's a virtuous cycle. Like obviously if you like make a cool restaurant, it makes the other properties more valuable. And then it's the other property more valuable, makes the restaurant more valuable. It does kind of goes together. Okay.

• 55:31Speaker 01

  I've done this many times over the years. It used to be in the 2010s, you do this in emerging neighborhoods. You go to Bushwick, you go to LA Arts District. I mean, back in the day, the mission was like, you know, the mission was like this emerging neighborhood. And you, you go there, you open restaurants, you buy up apartment buildings, you build, you build stuff. And then it just becomes this cool place and it gets really expensive. And then you move on to the next place because it's too expensive to do anything there anymore.

• 55:54Auren Hoffman?

  In San Francisco, there's actually like two different rich guys kind of doing this. And, and, and neighborhoods are already good. Like there's this, there's basically one guy doing it in Jackson Square. He's kind of a well-known guy and he's basically bought up all the different buildings in Jackson Square and just like making it. And Jackson Square is already awesome. He's making it better. And there's another guy doing it in like, there's a Fillmore corridor in Pacific Heights. And someone's basically bought like probably 50 different buildings in Fillmore. He's making the restaurants way better. He's doing all these different things. And obviously it's already incredibly incredible place to live and, but, but he's making it like even better in that very, very micro area.

• 56:31Speaker 01

  Yeah. And actually, I love that because there's this fake narrative about how change happens. But like Soho, you know, there was a person who did that?

• 56:43Auren Hoffman?

  No.

• 56:44Speaker 01

  Yeah, Tony Goldman. And then he went down to the Miami and built a, uh, uh, Wynwood. When would he created one? And then he did it again.

• 56:52Auren Hoffman?

  He created Wynwood?

• 56:53Speaker 01

  Yes. So.

• 56:54Auren Hoffman?

  Oh, my gosh.

• 56:54Speaker 01

  The thing you're describing.

• 56:55Auren Hoffman?

  So he created Soho and then Wynwood, like two iconic places?

• 56:59Speaker 01

  Yes. And then Dan Gilbert.

• 57:00Auren Hoffman?

  Is this guy still alive?

• 57:01Speaker 01

  No. So Dan Gilbert hired him and they were going to go do Detroit together. And then, and then he died. He, I think he did one more city. I don't know. Miami Beach. He did Miami. He did Soho, then he did Miami Beach, and then he did Wynwood.

• 57:13Auren Hoffman?

  Wait, what? This guy's a legend. Oh, my gosh. Yeah. That's crazy. I had no idea. I thought it was, I thought it was just like, kind of like.

• 57:21Speaker 01

  Organic.

• 57:21Auren Hoffman?

  Yeah, organic. Yeah. It's too hard to do. I can't like, it makes sense. You need someone with a vision to really be pushing it.

• 57:28Speaker 01

  I have this theory. I have a friend who's like this populist and he has this, you know, criticized all these movements because there's some people behind it.

• 57:35Auren Hoffman?

  It's kind of interesting. That's, that's the question we always ask on this podcast. What's a conspiracy theory you believe? And I believe there's conspiracy theories everywhere. Essentially, there's a conspiracy to build Soho. There's a conspiracy to build Miami Beach, considered to be winward. Like, it was someone who had this conspiracy, who had this idea of making it happen. Like, that's how these things happen with conspiracies. Everyone's, all, so many people on this podcast are saying, I don't believe in conspiracy. I'm like, how do you think things get done? Like, every, almost everything that, that got done out there is a conspiracy. And the more you learn about it, you're like, this didn't happen organically. Like, this happened because like, someone or a group of small number of people had a vision to make it happen.

• 58:11Speaker 01

  Exactly. And like, and like, it's only conspiracy if you don't agree with them.

• 58:16Auren Hoffman?

  Right, right, right, right. Exactly. Or it's so fanciful that it's like, you know, they came in and injected you with alien dust or something, you know, whatever it is.

• 58:25Speaker 01

  Well, I do believe in UFOs, so.

• 58:27Auren Hoffman?

  Oh, so do I, actually. Of course, I mean, you have to, you have to do that. Back to DC, maybe the last question. Like, you, you and I both are in the DC area. We're both in like, the tech world in the DC area. There's not, you know, it's, it's, it's okay. Um, you know, but if we had a rank order, it's, you know, what, 3% of the size of San Francisco or something, and maybe it's 10% of the size of New York or some of the tech community. And maybe it's bigger than other people think. It might be as big as, as bigger than Austin or something. I don't know. But like, how does the DC tech community become better? Or do you think it will ever become better?

• 59:06Speaker 01

  Yeah. I mean, the beautiful thing about getting older is you see the patterns. And so I was here when AOL, AOL was the most important tech company in the world briefly, right? From like, late 90s and they were based here because the internet is here.

• 59:20Auren Hoffman?

  Yeah, started. That's where it started. Yeah.

• 59:22Speaker 01

  This is where like, all the, the biggest, most data centers are here. There's their biggest pipe and because of DARPA net. And so I watched that wave and then it ultimately, you know, went away and then went through another wave in the, or after 2008 because.

• 59:37Auren Hoffman?

  Like Living Social or something, right? It was a couple of companies.

• 59:41Speaker 01

  And there was this other dynamic happening in that period where. Washington DC bailed out the entire world, entire financial system, and became so important. Everybody had to be here because it was the source of all power for this period. And then they kind of receded.

• 59:57Auren Hoffman?

  But there weren't a lot of iconic companies, right? I mean, back then or?

• 1:00:01Speaker 01

  Well, I mean, it depends on it because what I was going is like, you know, a lot of defenses here. I'm just thinking things that connect to government. And I think that I think that AI is going to end up becoming more and more government connected, whatever.

• 1:00:16Auren Hoffman?

  They'll have an office here and they'll have, they'll hire a bunch of lobbyists and stuff.

• 1:00:20Speaker 01

  Maybe.

• 1:00:21Auren Hoffman?

  Do you think engineers will be here, right? That's where, that's really how you know, like, there's, there's innovation happening.

• 1:00:27Speaker 01

  This is a question. This is because if AI gets to a place where it's like actually AGI, ASI, the government is going to have to be like, like a defense, you know, the, the buildings will have no windows. We won't be able to get in without, I mean, it's probably going to be in, near DC because they're not going to let, you know, it's, or some big part of it. It's going to be more like the NSA.

• 1:00:48Auren Hoffman?

  You should be in the real estate world of just like building SKIFs.

• 1:00:51Speaker 01

  Yeah, our CTO was, built the fingerprinting for the FBI. And he talks about, talks about what that was like inside those like windowless offices for eight hours. But yeah, so, so I think DC ultimately is about, I mean, AOL ultimately is downstream of DARPA. Everything is downstream of the government. And, and the government's like always going to be essential to technology. And that's where I think that DC has a, like a permanent place, but it's not. The culture of, of innovation is like, is runs kind of into the culture of government. And that's where, kind of puts a ceiling on how much, you know, how much like people want to start and grow here.

• 1:01:29Auren Hoffman?

  All right. This has been awesome. Because you're a second time guest, I'm not going to ask you our normal questions because you've already answered them. So we can, we'll link to the notes of the, the other podcasts if people haven't listened. I'm sure almost everyone's listened to that one because it was so popular. But if they haven't, we can go back to that one. But this has been awesome. Thank you, Ben Miller, for joining us on Summation. I, by the, I follow you at Ben Miller Eyes, which I love. I love that handle on X. I definitely encourage our listeners to engage you there. You're a great X poster. Uh, so, uh, thank you very much for being on Summation.

• 1:02:01Speaker 01

  Thanks, Owen. This is awesome.