“The Future of Work”…As a real estate investor, you’re probably NOT thinking about that very much. After all, work is work right?…Well, not exactly. Our understanding of “work” is changing dramatically and the changes are going to have major repercussions on all aspects of society – especially real estate.
About The 7 Rules Podcast For Real Estate Investing
What do they know that you don’t? Find out on “7 Rules For Real Estate Investing. This show brings you today’s most successful real estate investors, as they take everything they know and break it down into 7 clear rules. On each episode you’ll hear a different guest with their own set of 7 rules. The episodes also go beyond the 7 rules too, so you’re able to learn even more from these “titans” of the REI world. And – just so you know – this is NOT going to be boring either. Not a chance. In fact, you won’t believe some of the entertaining topics guests talk about – along with their 7 Rules for Real Estate Investing. To hear those topics, plus the 7 Rules.
Transcript:
Nick Raithel [00:00:00] Coworking, virtual reality and what apartment buildings will look like in 20 years? All that coming up on this episode of Seven Rules for Real Estate Investing Episode 58.
Grace Flack [00:00:15] What do they know that you don’t? You’re about to find out. This is Seven Rules for Real Estate Investing. The show where today’s most successful real estate investors take everything they know and break it down into seven clear rules that you can use right now, no matter where you are in your real estate career, whether you’re working toward your first property or you own hundreds of properties. Each episode is guaranteed to teach you something useful. Ready to learn? Then grab a pen to take notes or borrow one if you’re at the gym. It’s time to begin this episode of Seven Rules for Real Estate Investing. And now here’s your host, Nick Raithel.
Nick Raithel [00:01:04] Hi fellow investors and welcome to Seven Rules for Real Estate Investing, I’m Nick Raithel, your host and the creator of the Seven Hour book. Now, in this episode, we’re going to be tackling a very big topic. That topic that you’re going to hear about is the future of work. Now, given how broad it is, it might seem to some, that it’s out of reach and it’s not applicable to real estate investing. Yet, with the rise of things like Upwork and coworking spaces, it’s clear that work is indeed changing. And with any substantial change like that, there are inevitably going to be repercussions in our own lives, both personally and, of course, as real estate investors. That is the future of work. And what are those implications for us being real estate investors? Those are but a few of the questions you’re going to be hearing about in this episode, to give us the answers to them and to broaden out the conversation beyond that. Looking specifically at real estate and other matters, too. Here’s our guest for this episode — the founder of Alliance Virtual Offices, a man who is a true pioneer in the virtual office space. He’s been at it since 1992. As someone who is, well, on more humorous note, by his own account has a better beard than most millennials. That would be our guest for this episode, Mr. Frank Cottle. Frank, welcome to Seven Rules for Real Estate Investing.
Frank Cottle [00:02:38] Thank you, Nick. It’s a pleasure to be here.
Nick Raithel [00:02:41] Getting started, give our listeners a sense of how you came to be in your current role with Alliance.
Frank Cottle [00:02:51] Well, we actually started our company as a property company in 1979, land banking, a type of real estate investment that many of your people might be familiar with. We would buy a piece of land in the path of progress and build a building on it, hoping that progress moved our direction. And in order to buy the largest piece of land and put the smallest amount of investment, more bricks and mortar on that land, we discovered these funny little things called executive suites back in the late 70s. And so we started building purpose built buildings, custom built buildings that had eight or 10 times entitlement. And we built executive suites, or business centers as they’re now called, into them. They’re now also called coworking centers. So we were one of the first companies to do that. We’ve built quite a number of projects, a large portfolio across the southwestern United States between 1980 and 1990, at which point we sold that portfolio successfully.
Nick Raithel [00:04:03] Just want to reiterate what you’re saying. You were saying 1980 is when you were getting into this?
Frank Cottle [00:04:09] We actually started our first project, it was called the Commons in 1979.
Nick Raithel [00:04:17] So what do you make then of the rise and the seeming ‘discovery’ of coworking by everybody else?
Frank Cottle [00:04:25] Well you know, few people recognize the shoulders that they stand upon when they build anything. So everybody, as they say, every generation thinks they invented peace and sex, and so the coworking generation believes it invented this industry when in fact, there were many, many people for decades before doing exactly the same thing. What we call community now, we used to call networking. It’s a very, very simple, basic transition. However, it’s really wonderful to see that after so many years, the concepts of flexibility in the workplace, the combining of people, place and technology into a single product has taken hold. And it’s very rewarding to see, actually.
Nick Raithel [00:05:19] Well, considering your insight into these ideas are from the way you’ve described it, essentially unchanging and always around, no matter what the year is, no matter what the decade, even is — how does someone differentiate between the things that truly are going to stand the test of time from an ideological or even from a business standpoint and things that are just passing trends?
Frank Cottle [00:05:46] Well, you know, it’s funny. I think the things that add to the betterment of life become a major trend. So as opposed to fads, they truly add to the betterment of life. So we could say a technology has added to the betterment of life so we could say, sharing and the concepts of embracing community and open communications has added to the betterment of life. So anything that can contribute to improving the way people live is going to last. Things that are clever — avocado toast — may or may not last.
Nick Raithel [00:06:29] Shifting gears now to talk a little bit more about one of your specialties. One of the things that you’ve really distinguished yourself in being an expert on, is this area the future of work. Considering your expertise in that, I wanted to dig into that deeper, starting with the question of what that even means. So, Frank, as an expert on it, what do you believe the future of work is exactly?
Frank Cottle [00:06:53] Well, the future of work changes every day as we go forward, of course. But I think that it’s the application today, as I said just a moment ago, of learning how to more effectively combine people, place and technology into a single activity or a single product and ensuring that you deliver it with the product with a high degree of flexibility. If you were to look at businesses today, we could say just like people have to have, you know, food, shelter, air, water, things of that nature — all businesses have to have access to capital, they have to have customers, and a product that’s worth selling to those customers. And they have to have flexibility. And that’s something that has been very elusive for a long time. We’ve worked in very rigid structures in business. But flexibility now, in the sharing economy, is key to the future of work.
Frank Cottle [00:07:56] And that really comes down to thinking of people that used to sit in offices, which the real estate term for commercial real estate used to be referred to as occupiers. Those ex occupiers today are now travelers; you don’t work from one location anymore, you don’t go to your office. You go to an office, and it could be a Starbucks, it could be your car, it could be your home, it could be your traditional office. In all likelihood, it’s going to be a multitude of places from which you work. Now, technology allows that and our social structures and management now allow that. In the future, we’ll be seeing not just virtual officing, but we’ll also be seeing virtual reality officing and that will hugely change the structure of commercial real estate and the way that real estate is used, the way cities are designed. So thinking through these processes and being a year or two or even a decade ahead is really where the future of work and our play and the future of work comes in.
Nick Raithel [00:09:07] Virtual reality, I think, to some people seems very far off. And yet if you look at, many of the trade shows now, many conventions, it’s leading the headlines at these events. People are trying on various units, experiencing it now. How far off, realistically, do you think virtual reality is, maybe from the standpoint of how it’s going to impact real estate specifically?
Frank Cottle [00:09:32] In the officing world, it’ll start in 2022 – 23. You know, I’m making a pretty definitive statement there. It will absolutely start 2022 – 23. It’ll take about 10 years to become ubiquitous and then it’ll be just as ubiquitous as smartphones are today.
Nick Raithel [00:09:55] So that’s a definitive statement. What gives you the confidence in being that conclusive about it?
Frank Cottle [00:10:01] Well, we’re actually working. If you look at Gen Z, which is our first native digital generation, you said virtual reality is a ways off and it’s kind of this and that. Do you know a Gen Z person that isn’t a gamer?
Nick Raithel [00:10:21] That’s an interesting point. No, I’m… I’m not sure I do.
Frank Cottle [00:10:26] OK, so let’s assume that you don’t. Or maybe, you know, a few, but not many. Ok. Everybody plays video games, right? Virtual reality, if you look at that industry, which is massive and you want to blend it with concepts of community and video gaming. Let’s take League of Legends as an example, as one of the larger games. At any moment in time the evil legends will have an online community of people playing the same game in teams with each other and against each other, of eight million people. So the numbers are pretty staggering. Now, when these large video game companies say, you know, our agenda is growing up, man, they leak. They currently spend two hours a day or three hours a day, you know, in video gaming; when they’re 23, 24, they’re going to be at jobs, they won’t be doing that anymore. How do we preserve our market share? Well, I guess we need to shift over to where they’ll be, which is in the office. So a number of the large video gaming companies actually have business plans in place today. And we’ve been working with and advising a couple, chatting with them about how to migrate classic video game technology into the office environment.
Frank Cottle [00:11:56] And it’s a natural evolution as we go and look at instrumentation and things today. If I go to Sweden right now and I want to get on a train, I might just have a small chip implant that allows me to pass through the gates and pay for my ticket. If I’m in another country in Japan, I can now apply a chip to my fingernails with a fingernail polish type material and I’ve got haptics. So the technology is changing quickly. The native marketplace is going to become the next generation of workers. They’re used to the technology, the best rendering technology, and the world comes out of video gaming, it’s 2022, 2023. That’s when we’ll start.
Nick Raithel [00:12:52] With that, you mentioned videogame technologies are coming into the workplace. What are some examples off the top of your head that would be indicative of that?
Frank Cottle [00:13:02] Microsoft HoloLens. Are you familiar with HoloLens at all?
Nick Raithel [00:13:08] I’m not now and I’m not sure if our listeners are either. How would you describe it?
Frank Cottle [00:13:12] The Microsoft’s HoloLens technology, which is very immersive today, allows you to put on a video game type headset, although a very light easy version, and people are projected into your real environment. You’re seeing a real environment with that headset — it’s like clear glasses, kind of like old Google Glass and the images of the people you’re talking to, they can walk right into the room with you and be a thousand miles away. Think just Star Trek, beam me up, Scotty. A little bit of that’s going on. So you can design an office in a video game let’s say, let’s take a building. Let’s assume that we’re in New York City and we own a 50 floor building in front of Central Park and on the top floor. It’s the most expensive office in that building and it’s a thousand foot office, gorgeous view. Ok. I can recreate that office inside of a technology, inside of virtual reality technology so that you can’t tell whether you’re in the real office or you’re in the virtual office. So what’s that going to do to the value of the real office? Well, it’s going to compress it quite a bit. So if I need only 48 square feet for a workstation in order to believe I have a 1000 foot office overlooking Central Park and I can use holographic projection for people to come in and out of that office to meet me, sit down at my desk, down at the conference table, whatever. Also access all my files in the cloud as if I was a normal computer. The value of that real estate is going to be tremendously altered on a commercial basis. Number one, is it going to be able to be repurposed? So that 50 floor building now, maybe instead of 50 floors of office space now only needs fifteen floors of office space to get the same value and benefit out of it. So the other floors can be repurposed to residential or retail or services space. So you’re going to see the redevelopment of cities at a higher density rate because of this center rearrangement of transportation as well. That’s what the future of work will entail.
Nick Raithel [00:15:36] Well, if offices are essentially shrinking in the way you’ve described it, for our listeners who are looking at asset classes and maybe even doing developments, does it make sense for them to seriously think about investing in offices? And if so, maybe a little bit more specifically, in what cases do you think it could make sense?
Frank Cottle [00:16:00] Well, as I said earlier, all businesses need three things. All of our investors need access to capital, they need a product for customers, and they need flexibility. So I think the key, and this plays almost to year seven rules a little bit, is one of the keys to successful investing is having some flexibility in your investment model. If you don’t, then you’re liable to be the one stuck, you know, with the wrong building in the wrong place. It’s not always location, location, location so much as timing, timing, timing. All locations are good at a certain moment in time, and some locations or most locations are bad at a certain moment in time. You can use New York and the swings in the marketplace. There is a good example of that. So from an asset class point of view, I would hesitate to invest in commercial real estate. I would just make sure that I had paid attention to timing and I had some flexibility in how I was in the real estate, which would mean I’d probably choose today to be a little bit under-leveraged as opposed to maximizing my other people’s money leverage plan.
Nick Raithel [00:17:24] With timing being important as you’re mentioning, is it possible for an investor to strategically time a market? I know that there’s a lot of discussion on either side of this. Some people are saying that you can’t time, and then other people are more in favor of it. What would be your take?
Frank Cottle [00:17:46] Well, that’s a tough question. I guess I’ll say I don’t know, which is a terrible answer. But we’ve been lucky with the markets and I think that our concept of timing markets is not necessarily to try and pick the highs and lows, but to pick the utilization structures. Where are people going? And why are they going there? And what can I build that will suit their needs as opposed to if I hit the right deal, I buy at the bottom and sell at the top. If you’re in the path of progress, always, you’ll always do well. But that’s why I’m probably more timing sensitive than I am more location sensitive.
Nick Raithel [00:18:33] Talking now beyond just office buildings, about other asset classes, too. How do you see the changing nature of work in the workplace impacting, for example, student housing, which could conceivably change thinking about it, since students are attending higher education to prepare for jobs after graduation? And if those jobs and the nature of work is changing, then higher education and the way it’s delivered is probably gonna change, too. So what do you see as that impact?
Frank Cottle [00:19:04] I really do think that education is changing. I know a number of friends, children that are going into the college area right now and a number of us saying, you know, I just don’t need to go to college. Why? Well, because everything I need to learn, I can grab off the internet. I can go listen to 10 TED presentations on a single topic a day and that they’re all current where if I go to college, I will be sitting with an old professor and he’s going to be telling me what’s in the book that he wrote 10 years ago. College is not relevant. So, college today is more a time to create circles of friends, create contacts, and most importantly, to learn how to make decisions, to have enough time to learn how to make decisions. And if you can do that, your education will be very fulfilled. So I think college is less relevant today, there are many, many skills that aren’t necessarily learned sitting in the classroom. College is more just a time to mature, in my opinion. Of course, this comes from a guy that got kicked out of college at the end of his sophomore year. So maybe, maybe I have a bias.
Nick Raithel [00:20:28] Maybe, maybe with college changing in the way you’ve described, the ways you’ve described. How do you see that impacting student housing specifically as a real estate investment asset?
Frank Cottle [00:20:40] Well, people are probably only going to need some place to live. Right. Just like people have to eat, they have to have shelter. So student housing is an asset class, which has been very popular the last several years and I have several friends who are heavily invested in that, they do quite well with it. As long as you have an aggregation of people around a university or around any center, then the housing needs are going to have to be met. I think the concepts around co-living are going to be disruptive to classic housing quite a bit, but not in the mainstream immediately. This is something that’s just trickling in now. Coworking has been very successful so naturally everything that’s ‘co’ is cool right now. Co-living is starting to work out – I think it has a place and will probably become a replacement model for a lot of traditional student houses.
Nick Raithel [00:21:43] With co-living certainly and with the virtual reality technology that we were talking about a little bit earlier in this interview. How do you see that, the technology most specifically, impacting the nature of classrooms and even going to college? The idea there being that if, as you say, spaces can be rendered virtually, will we even still have people getting in their cars? I guess in that sense, having the cars drive them to where going, to be automated, but having their cars, getting in planes as well and traveling off to college and university and the way they do now, or is the university space going to become virtual? And if it is, then will students still need student housing?
Frank Cottle [00:22:30] First, we’ll probably all be riding, you know, bird scooters instead of cars. But, you know, when you’re in a confined environment, we’re going to find electric bikes, scooters, things of that nature becoming much more standard and normalized. I know here in Los Angeles, they just installed 350 new electric bikes yesterday into the bike pool model and they plan to replace all of the traditional bikes with electric bikes over the next 36 months. That’s going to expand the last mile issue quite a bit to the last five miles issue.
Frank Cottle [00:23:10] So transportation is going to change. But human beings are naturally gregarious. We like being around other human beings. Generally, most people do at least. So centers of activity, whether they’re educational or whether they’re business or just social, are always going to occur. Cities are going to become, if you look at the trend of movements, particularly in third world countries right now — everybody’s moving to the city, that’s where the jobs are, that’s where the action is, etc.. So I don’t think that’s going to materially change. Universities are always hubs for any variety of things. So I don’t think that’s going to change either the way housing is built and the way housing is used and the way the student experience is set up. Today, you go to a lecture hall and you hear the professor speak, well at some point in time, and in the future that professor may or may not physically be there. You may still go to the lecture hall or you may take half your classes remotely and half your classes in person. But in order to meet the need of learning how to make decisions, you’re going to have to have direct interaction with real people. You can’t lose your social skills since in life or in business, social media only does so much, if anything, to enhance your social skills.
Nick Raithel [00:24:48] One more question for you before we get into your rules for real estate investing. I wanted to get your take on how the changes that we’ve been discussing with the future of work and, of course, the technology, how all of that is going to impact an asset class that gets a lot of discussion but may still be under the radar for a lot of people. And that asset cost, of course, being self-storage. How do you see these developments impacting self-storage of all asset classes?
Frank Cottle [00:25:17] I think self-storage must be very strong. In fact, coincidentally, my very first partner in the commercial property business was a fellow by the name of Wayne Hughes, who’s the founder of public storage. Public storage, going back, as a self-storage company, which is sort of the big dog in that hunt — they were looking for, back in the late 70s and early mid 80s — they were looking for another product, and one of the products they were looking at that had a lot of the same characteristics as self-storage were executive suites. And that was one of the reasons we teamed up with them and the company by the name of Christopher Whalen Company, which was the investment bank that funded our initial projects. So I think self-storage is going to become more important. You might have less to store however; I think that our current generation, both millennial and Gen Z, will be more experience oriented than they will be possession oriented. So we may have less to store, but we will store more stuff of what we have because we’ll be living in smaller, more flexible housing, and we’ll be moving a lot more. Not permanently, but we’ll be moving around and traveling a lot more.
Nick Raithel [00:26:50] Well, Frank, you’re clearly an expert on real estate and offices, maybe more specifically within that. So let’s dig in now to your rules for real estate investing. What would you say those are?
Frank Cottle [00:27:04] Oh boy. I would say that the first one is choose your partners wisely. And that’s just a general business rule. Your partners in real estate can be actual operating partners, investment partners and colleagues, banks, construction partners, etc. But choose your partners very, very wisely and very carefully. A good plan, a good architect, a good contractor, a good banker can really make a project sing. Any one of those are bad and you’re going to have some sleepless nights. So I think that’s a key component overall to all investing, but in particular, if you’re going to be doing developmental projects. The second one would be, all real estate and politics is local business. So, if you’re going to choose that partner and if you’re going to build someplace outside of your own neighborhood or your own scope of direct experience, you really have to have a local knowledge and that probably means a local partner. Certainly — we’ll call this rule number three for a moment — once you cross a border, you absolutely need a local partner. We work internationally, as you know, and we could not be successful, you know, in Russia or the Gulf states in the Middle East or across Europe or Asia or wherever we happen to have a project going — we could not be as successful if we did not have local partners. So pick those partners wisely. Remember, you need one and especially when you cross the border, you need one. Fourth one I’ll shift gears; all companies that are tenants in major buildings are really also real estate investors, not necessarily on their own behalf. But if you’re building a company and you have to take office space in order to operate that company, make sure that it’s got enough flexibility to meet your needs. Don’t get yourself locked into where you’re investing in someone else’s property and yet you have a never ending debt in the form of a lease. You can never pay a lease off — it’s forever debt. So if you’re going to be taking office space as part of your business model, have lots of flexibility. Do things as short term as you can, have as little investment… as small amount of cap-ex as possible into that leased property overall, because as many large corporations have found, and now it’s found in public accounting, leases are not an asset. Ever. They’re a liability. That liability of leasehold interest can impact your credit materially because that’s a negative in your balance sheet, if you go to financed projects as you’re developing, whether you’re investing for cash or whether you’re developing. So those are fairly important rules. I’m not the one who’s real favorable towards debt and leverage.
Frank Cottle [00:30:38] I like cash projects or joint venture projects more than highly leveraged projects. That goes against the grain of a lot of startup investors. But as you start moving deeper and deeper into larger projects, you’ll find that a lot more cash investment goes into those projects because they become longer-term yield structures as opposed to shorter-term projects that people just want to, as you were saying, time the market, flip in and out of. Most real estate investors, commercial real estate investors, are much longer term investors and very much yield oriented as opposed to profit oriented in terms of flipping projects. So that’s not too many, but I think the key that I’m always for is not having too many rules. And it goes against your seven rule theory a little bit. But I think if you have too many rules, it constrains you a bit. And you’ve heard me use the word flexibility a lot in this conversation, I think that’s one of the major keys. And if you have too many rules, then all of a sudden you start to diminish your own flexibility. Markets change in timing, trends change in design, partners change in banking changes, cost of money changes. So flexibility is probably the key more than, to me at least, more than a lot of rigidity in the overall investment or property process.
Grace Flack [00:32:24] The seven rules you’ve just heard are only part of this episode. There’s more to come. So don’t go away. Before we continue, here’s a quick word on our gift for listening to this show. As a gift, we’ve prepared two free guides that will help you become a better investor. The first free guide shows you how to raise capital for your real estate deal. It contains the best advice from our past guests, guys like Dave Lindow and Victor Menasche on how they’ve raised millions upon millions of dollars to fund their deals. As for the second free guide, it shows you where our guests are investing. If you’ve ever wondered which markets to invest in or if you’ve struggled to pick the right asset class, you’ll love this second guide. Want those two free guides on raising capital and where to invest? Then grab your phone right now and text the word rules to 6-6-8-6-6. That’s the word rules texted to 6-6-8-6-6. When you text rules to 6-6-8-6-6 we’ll send you those two guides absolutely free. Don’t have a phone? Don’t worry. You can still get those two guides. Just go online to 7rulespodcast.com/gift. Now back to the show.
Nick Raithel [00:33:57] Continuing on that theme of flexibility. One of the things that I found interesting that you referenced before we began this interview in our e-mail exchange is that you consider yourself a loner and enjoy solitude and time to simply think. On that point, I wanted to ask then how you’d recommend our listeners, particularly those who have substantial responsibilities and many employees to manage, how would you recommend that they find time to think and really get away from it all?
Frank Cottle [00:34:31] That’s a discipline you have to force yourself to make that time, not get trapped inside of the moment to moment activity so the company is running you, and that’s a trap that many of us have fallen into, I certainly have at times. But if you’re going to consider everything necessary to run an expanding business, you really need a clear head and just some basic data with which to make decisions. One of our mantras in our company is get the data, so I like to get a lot of data. When we say get the data, data becomes information, information converts to knowledge, and knowledge turns to action. So we’re always trying to find as many data points as possible and convert that into knowledge, and once you’ve got the data, then you can sit there very quietly by yourself and make good decisions, much more sound decisions than just running the company. The other issue around getting away is, I said pick your partners wisely, well, every team member you have in your company is really a partner. So your team that you create and that you surround yourself with, having them do one of the things that I said earlier, having the ability to make decisions, well, your whole team has to have the ability to make decisions. We have a little speech for people that come to work for us. You know, sort of the first day interview thing is, is that if you can’t make decisions, that’s the one thing we will fire you for. You have to be able to make decisions on your own and you are empowered to make those decisions within the scope of your job, period. Because if you don’t, you slow everybody else down. And people make mistakes when they make decisions and you correct them. But the biggest mistake that you can make is not making the decisions or not having your whole team make their own decisions as they move forward, because that just slows you down and you will never get to the future of anything.
Nick Raithel [00:36:55] If making decisions is that important and someone is also, though, taking in such high amounts of data, where does the point between overanalyzing and not analyzing enough, where is that point?
Frank Cottle [00:37:12] The old analysis paralysis routine.
Nick Raithel [00:37:14] Exactly. Yeah.
Frank Cottle [00:37:17] That’s a really good question. I think if you’ve got the right data, it’s clear. The problem with analysis paralysis usually is a constant seeking of new data because you don’t know if you have the right data. You need to understand your own business and what the KPI is for your own businesses or what the KPI is or for the business plan you’re trying to execute. That’s the data that you should be looking at. If you just get more data for its own sake, then you’re a collector. You’re not a good building engineer. So I would say that’s where the line is drawn on the paralysis issue, not knowing your business well enough to know what data you need.
Nick Raithel [00:38:02] Shifting gears from that, I want to talk now about some of your other efforts that you’ve been involved in, not real estate specific, but no less interesting. One of them being the fact that you run the only coffee company in the US where 100 percent of the profits go to charity. What led you to become involved in a coffee company, of all things?
Frank Cottle [00:38:24] Well, we also run a fairly active, a very active charitable foundation called the All Good Work Foundation. You can see that at allgoodwork.org. We provide office space to other public charities that are located within the communities of our business activities, and by providing them office space, we provide them also with their infrastructure. So office space, bandwidth, telephony services, meeting room services, etcetera, everything they need to operate. And this helps a lot of small charities that wouldn’t otherwise be able to succeed, and give as much to their community to be successful. So we run that, we started that several years ago and find great joy in helping others. And we looked at our own industry and we thought, well, heck, coworking, business centers are sort of caffeine fueled. So every center has coffee so, we might as well sell them what they’re buying from someone else, and then we’ll just donate those profits back to the Foundation and charities. So it really was a simple business model that we thought we could execute in a way to raise money for the charitable activities that we support.
Nick Raithel [00:39:50] Of those charitable activities that you do support, are there any that you’d like to mention now for listeners to be educated and informed?
Frank Cottle [00:39:57] I like one, well… I like them all, and we support a wide variety of charities across the entire United States. And some of those charities work locally. Some of them work offshore. One I particularly like is called the Hope Train, it’s actually three trains that run back and forth across different parts of sub-Saharan Africa. And each car is a separate clinic. So you have an ophthalmology clinic and a heart clinic and a dental clinic, etc in each car, and these move in and out of areas that have very poor or no health care available to them. And last year, we donated the space for their headquarters, their corporate headquarters in New York. And because of that donation, they were able to do eleven hundred additional cataract surgeries. So, in that part of the world or any part of the world where that has to be done, you say, well, gosh, that’s nicely done. Eleven hundred cataract surgeries, so that’s eleven hundred people now that can see. Well, those people now then can earn a living in their village, those people now can support a family, those people now can do other things that contribute to the community. So it’s not just the health care that you’re contributing when you work in a charity environment, it’s not just the health care, but you’re contributing to the total sustainability of the society where that health care is going on. And that’s really what people need to understand.
Nick Raithel [00:41:45] Speaking of contributing, another area which you’ve made a contribution, maybe more of a personal contribution would be the America’s Cup. You mentioned competing in that, prior to us starting recording. Tell us a little bit about that experience.
Frank Cottle [00:42:02] Well, when I graduated, left college I should say, I worked for a few years as a commercial diver. And when I got married, my wife and I decided that wasn’t a good career anymore. It’s, you know, deep, dark, dirty and dangerous. So what I was doing, we decided that wasn’t good. So I joined a yachting company and we were very active in the brokerage business. And basically we sailed a lot and had a lot of activities. And we ended up building what in the late 70s was the largest yacht brokerage in the world, though we had a fabulous patron. Oh, you’ve used the term investors here, I use the term patron because the fellow that provided the capital for us to build this company — because we were all young guys, we knew our business, but we didn’t have the capital — as long as it was the best, he wanted us to have it. So he wasn’t concerned with the economic return on the company so much as the company’s quality and success at the quality level. It’s almost looking for a social return, if you will. And during that time period, I had the opportunity to sail with some of the better sailors in the world and matter of fact our architect for our building project, Bill Ficker, who was a defender of the America’s Cup with Intrepid, and I sailed with Bill a bit and then I managed the business into the Stars and Stripes campaign for a while as well. And, you know, it’s just being offshore that comes into that decision making. If you’re racing or sailing, let’s just use sailing as an analogy, you know, if you make a bad decision, you can die. You have to make decisions. The weather changes, the currents change, the crew changes, your competitors change. So decision making, quickly, decisively, based on as much information you can get, just becomes a natural part of what you have to do to win or just to survive sometimes, and I think that it’s the same in business. A lot of the business characteristics that I have today really came from my experiences with the ocean and on the water; I’ve been on the water all my life, but raised, you know, on the beach. So, understanding that there’s always something bigger than you out there and there’s always something more powerful than you out there. You have to learn to get along with it and adjust constantly to make your way. That’s an important lesson.
Nick Raithel [00:45:06] Your background in sailing and in the water, is that — on a more humorous note — is that why you’ve described yourself as having a better beard than most millennials?
Frank Cottle [00:45:16] Yeah, I kind of have that old captain’s appearance, but quite candidly, I think that’s our marketing department that threw that in there just to tweak me. But no, I’ve had a beard since I was in college. So that goes back into the 60s. And it’s just a part of what I drag around with me as a person.
Nick Raithel [00:45:42] For our listeners, considering your experience shall we say, and your expertise in beards, do you have any tips on growing and maintaining one?
Frank Cottle [00:45:54] My wife would say, no, no, no. Don’t follow his habits. Mine gets a bit unruly at times and at other times it’s quite sharp. I think it’s just what you enjoy. Or maybe you’re just too lazy to shave. It’s kind of a personal thing and not something that you should worry about too much.
Nick Raithel [00:46:22] Two more questions now before we do wrap up. I wanted to ask you next about books you’d recommend both for real estate and then in other areas like personal development and also more generally speaking, that would allow a person to, as you’ve been saying during this interview, learn to think and to make decisions.
Frank Cottle [00:46:47] This maybe a little bit odd, but I would say read some of the great books. I would read the Bible, the Torah and the Koran. That will give you a pretty interesting background in thought processes overall. Also, you learn the way people think around the rest of the world. But I would also say that I’m not… I don’t read too many of other people’s books. I’m more of a news freak, I very much want to know everything that’s happening in the world all the time, partially because we have distributed business around the world. But also, I don’t like reading somebody’s book that they wrote three years ago about things that they did three years before that. To me, maybe it’s egotistical on my part, but I’m just not interested. And that might be the loner in me, I don’t care what somebody wrote about their business five years ago, because that’s five years ago. And that doesn’t help me, I need to know what’s going to happen five years from now. And so I’m focused on current events and financial activities around the world more than books.
Nick Raithel [00:48:09] One of the things you mentioned in that respect earlier in this conversation about staying current in information that tends to be more current would be the TED talks. Do you have any ones that come to mind right now that are among your favorites?
Frank Cottle [00:48:22] No, not really favorites, I’m more of a browser. I’ll look at something and say, oh, that’s good. But nothing that stands out as being a driver. I enjoy a lot of the things around people exploring the future, concepts around what they think is going to happen next. And an awful lot of that, not just from TED, but from whatever sources I can find it. So I would be more likely to read essays than I would books.
Nick Raithel [00:48:58] Well, for essays or even more generally speaking, for forward thinking people, beyond yourself of course — are there any you could recommend for our listeners to follow or to read more of?
Frank Cottle [00:49:09] No, I would just say the Internet is your garden. Everybody has different interests and everybody has different ways of learning. So I would just pursue everything possible down the path that was of the greatest interest to yourself, because the information’s there. And it’s just gonna get better. So the one caution I would have, whether it’s a book that you read or this or that is, be careful who you listen to. You can have somebody that can write beautifully and express amazing thoughts, but they have no experience upon which to base it. So be careful who you choose as your guides, I guess, maybe that’s rule number six.
Nick Raithel [00:50:01] Maybe, bringing this to a close, they’re all the same. I wanted to ask you, with respect to Alliance, what’s in the pipeline right now among the 54 plus countries you guys are operating in with respect to upcoming projects and initiatives?
Frank Cottle [00:50:19] Well, we’ve always invested in and acquired other companies, and brought things into what we’re doing. We’re going to be expanding that activity on a private equity basis. We’re very focused on proptech and the technologies utilized in the way things will change. Some of the things that I’ve said, not just at the operating level, but at the management levels. Large corporations, government, etcetera, are some of our clients and how they manage the people, the HR side of moving people around into these new spaces and into a flexible workspace patterns is very interesting to us. And so we’re going to continue to spend more and more time in that area, both as developers as well as investors.
Nick Raithel [00:51:18] For those who are looking to follow your progress and even learn more about you personally. What would you recommend is the best way or ways for our listeners to do that?
Frank Cottle [00:51:29] Well, anybody can reach me personally at AllianceVirtualOffices.com. But I would say to follow our industry and what’s happening around the future of work, that the best publication for that is a publication called Allwork.Space. It’s published by our company and some affiliates that are participating with us, there is a fabulous journalistic team there, and they’re spot on with every imaginable thing happening around flexibility in the workplace and the future of work. There’s probably, fifteen new articles a day that were published in that one topic on that publication.
Nick Raithel [00:52:16] Well, thank you very much, Frank, for coming on. I want to thank you for sharing all your insights, including your rules for real estate investing.
Frank Cottle [00:52:24] My pleasure.
Grace Flack [00:52:27] That’s our show for today. What’s next? Two things. First, check out the show notes. They’re online at 7rulespodcast.com. Then get your copy of our free guides on raising capital and where to invest. These two written guides will show you how our guests have raised capital for their deals. What markets they’re investing in and which assets our guests have achieved success in. To get those two guides absolutely free, text the word rules to 6-6-8-6-6. Text the word rules to 6-6-8-6-6. Don’t have a phone, can’t send text messages? Then go online to www.7rulespodcast.com/gift. Thanks again for listening. See you next Tuesday for another episode of Seven Rules for Real Estate Investing.
