Podcast: PropTech Real Estate Investment Trends

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February 24, 2020

Listen to Nate Loewentheil of Camber Creek discuss his family's entrepreneurial and public service background, time in the Obama White House, and leadership role within an industry that's been captured by buzzwords like PropTech and IoT.

On this episode I’m speaking with Nate Loewentheil, Vice President at Camber Creek - a venture capital firm providing strategic value and capital to operating technology companies focused on the real estate market. Nate supports Camber Creek’s deal flow, diligence, transactions and investor and public relations.

Further Reading - see the article PropTechs Explained and Why Companies Must Adapt

Prior to joining Camber Creek, Nate founded and scaled multiple national organizations, including the Roosevelt Campus Network. He also served as a Special Assistant to the President at the National Economic Council in the Obama White House, where he led work in areas like transportation, aviation and urban policy.

He has written for the New York Times, Washington Post and dozens of other outlets and is a former Forbes 30 under 30 and Baltimore Business Journal 40 under 40.

Podcast Transcript

Transcripts aren't always 100% accurate. Please excuse any typos!

Chris Arnold:
A few quick notes before today's episode. If you enjoy the podcast, please rate it on iTunes or other platforms where you listen. This is a huge part of helping us grow and it's much appreciated. This podcast is produced by Authentic Form & Function. We're a design and technology studio working in the real estate space. We help developers and architects innovate their work with unique brands, websites and digital tools.

Chris Arnold:
Last year, we launched Amplify, a digital real estate marketing platform that combines high-touch custom design with out-of-the-box real estate marketing technology. Find out more at authenticff.com/amplify. Finally, we want to hear from you. Email your feedback and ideas, as well as who else we should speak with, to podcast@authenticff.com.

Nate Loewentheil:
What we find is that to convince an institutional real estate company to switch from their current portfolio management software to a new portfolio management software, you can't be 10 percent better, or even 50 percent better. You have to be 10 times better. There ares huge costs involved in adopting software at the enterprise level.

Chris Arnold:
In this episode, I'm speaking with Nate Loewentheil, senior associate at Camber Creek. Nate supports Camber Creek's deal flow, diligence, transactions and investor and public relations. Prior to joining the firm, Nate founded and scaled multiple national organizations, including the Roosevelt Campus Network. He also served as a special assistant to the President at National Economic Council in the Obama White House, where he led work in areas like transportation, aviation and urban policy. He's written for the New York Times, Washington Post and dozens of other outlets, and is previously a Forbes 30 Under 30 and Baltimore Business Journal 40 Under 40.

Chris Arnold:
I'm your host Chris Arnold. Let's jump right in. Nate, thanks so much for joining me today.

Nate Loewentheil:
Thanks for having me, Chris.

Chris Arnold:
I want to start out, I know that you come from quite a few generations that have had quite a hand in the real estate space, so how many are we talking about here and what's the story there?

Nate Loewentheil:
Yeah, so I'm fourth generation of a real estate family. My great-great grandfather started out selling building supplies in Westchester County outside New York City. His son, my paternal grandfather, took over that business and then said, "Why are we just selling the concrete? Why don't we actually use it?" He started doing commercial and residential development, also in Westchester County, and built the house that he and my grandmother lived in and raised my father and his siblings in.

Nate Loewentheil:
Then, all three of his kids, my dad, my dad's brother and my aunt, well, really her husband, all, in different ways, have been in the real estate business. It's sort of in the bloodstream.

Chris Arnold:
Yeah, wow. Where did your parents call home originally, and what were they working on as you all grew up, as you were a kid?

Nate Loewentheil:
Both sides of my family are from the New York area. My mom grew up in Brooklyn and my dad, as I said, grew up in Westchester, but I actually grew up in Baltimore City. My mom was in law school in D.C., my dad started doing some redevelopment work in southwest Baltimore City. My mom got a job there and then we moved to a neighborhood called Hollins Market, which is an historic neighborhood, sort of just west of downtown Baltimore. We lived there when I was a kid. My mom was a federal public defender in Baltimore, and then, yeah, eventually moved out to Baltimore County.

Chris Arnold:
Your dad, being a developer, I know he had a project or two when you were growing up, and kind of got you, got your eyes on that world a little bit more, kind of one to one. Was there anything that he developed during that stood out to you?

Nate Loewentheil:
My dad would, what he was trying to do and it was, in a sense, kind of a family effort, was really help revitalize the Hollins Market neighborhood. He bought up a number of row houses and was improving them, some were selling, renting out. I wish that the story was a great success. It wasn't. It was, and is still, a challenging neighborhood, and never quite turned out the way he had hoped, but my family stayed very involved in the neighborhood.

Nate Loewentheil:
My dad ended up becoming an antique book dealer, rare book dealer, and he had a book shop right across from the Hollins Market and then later, he opened a Mexican restaurant called the Cultured Pearl. If you talk to someone between ages 40 and 60 in Baltimore, who lived in the city in the late '80s and '90s, they all used to hang out at the Cultured Pearl. I grew up spending a lot of time there and in the book shop. He was more successful as a restaurateur and book dealer than as real estate developer.

Chris Arnold:
These were in Baltimore City proper, but you actually ended up moving out to the suburbs. You've told me in previous conversations that you tried to stay and you ended up staying pretty connected to city life in a few different ways, including your father's shops. In what other ways did you find yourself trying to remain connected and, I guess, a secondary question there would be, why were you trying to stay connected?

Nate Loewentheil:
It's funny. In retrospect, things always come out more clearly than they did at the time, but I think I always felt torn between the sort of bucolic green yards of suburbia and my childhood in Baltimore City. My mom was a federal public defender in Baltimore City, and so her life was very much tied up, for better and for worse, with Baltimore. In high school, I helped found this project to raise money to build a house with Habitat for Humanity, and organized students to actually physically build the house. Again, it's funny looking back.

Nate Loewentheil:
I didn't think about it at the time, but obviously, it's like another real estate-type thing, construction, so I learned to actually hang dry wall and what not, and also how to raise money. We ended up doing this project where it was 10 houses in 10 years in the Waverly neighborhood of Baltimore, and my school became a real leader in the greater Baltimore area for our community service effort, which really put us, as you know with Habitat for Humanity, you build alongside the future homeowners, who put in sweat equity to the project. It was great way to get to know folks in the Waverly neighborhood. Again, my dad's business was down there, the restaurant was down there, so we spent a lot of time in the city throughout my high school years.

Chris Arnold:
You also took a class, I recall, specifically on the history of Baltimore. What was that all about?

Nate Loewentheil:
In high school, my school was just outside city limits. There was a teacher that was really interested in Baltimore and how it had evolved over the years. I took a course on that, which gave me a real perspective on, what were the forces that had shaped Baltimore? Why had so many families, especially white families, left the city? How the federal government used red-lining to make it more difficult for African American families to get mortgages, what impacts had that had in terms of the city's segregation? Looking at the transportation infrastructure in Baltimore, why did 83 South cut through downtown, but there was no great fixed-line public transportation system?

Nate Loewentheil:
The history of Baltimore has a lot in common with the history of many other post-industrial cities, from Pittsburgh to Cleveland to Detroit, so it was, in a sense, a history of how much of American cities had fared the second half of the 20th century.

Chris Arnold:
Throughout your high school career, clearly, you're kind of getting your hands dirty, literally and figuratively, building houses and learning about the area. Something happened, though, right at that decision point when you kind of had to figure out, what I am doing next, where am I going to school? Someone came to visit your high school and sparked your interest, and you ended up sort of following that lead to some degree. Can you give us that story and that transition into college?

Nate Loewentheil:
Yeah, it's funny again. You get in sort of moments, at least I have in my life, where I hear about something someone's doing and I'm like, I'm going to do that. I really like and I get after it. I must have been, maybe a sophomore or junior in high school, and one of our graduates from the Parks School, Baltimore, came to give a talk. He had gone to Yale as an undergraduate and majored in this program called Ethics, Politics and Economics, which is this special interdisciplinary program. He had used that as a way to focus on studying cities, and he came back to actually talk about the research he had done. I was like, "I'm going to do that." That sounds exactly right.

Nate Loewentheil:
Then I ended up applying to Yale and got in and, I don't want to get ahead of the story, but then I ended up actually majoring in this program, in Ethics, Politics and Economics, which at the time was the only way to really study urban policy and politics at Yale as a major. You could have done history or sociology, but to really take courses in the economics department and the architecture school and history and combine them all together, EPE was really the only way to do it.

Chris Arnold:
When you got to Yale, did you end up doing a lot of extra stuff, sort of extracurricular groups and organization-type of work, or did you stick primarily to kind of the book work of that program?

Nate Loewentheil:
I was always very kind of mixed up in what was happening in New Haven. Again, I just felt like it would have been easy to get lost in the quads of Yale, but New Haven's a great city and a place I really fell in love with. I was very involved in an organization called the Elmseed Enterprise Fund, which is still around. It's a nonprofit that provides micro-credit loans to low-income New Haven entrepreneurs. I could spend a lot of time with a group of folks who were starting hot dog carts or consignment shops. I didn't know anything about business, honestly, so I didn't pretend to advise them on that, but I helped raise the money for Elmseed and facilitate the loans. We connected them to resources around New Haven.

Nate Loewentheil:
I remember my first summer, I had an internship in New York City, working with the New York City Parks Department, and I was still running these weekly New Haven sessions with the group of entrepreneurs. I felt a real commitment to that, so I was shuttling back and forth on the New Haven Line every Wednesday night to make the 7 p.m. meetings that we had. I got very involved in the Yale Entrepreneurial Society, and had a couple of hopelessly failed startups.

Nate Loewentheil:
I also was very politically engaged, so I ended up helping start this organization called, then, The Roosevelt Institution, now called the Roosevelt Campus Network. That ended up becoming kind of a defining experience, that part of my life, because it was this effort to get students more engaged in public policy outside of the campaign cycle. Rather than just knocking on doors, students could contribute ideas and substantive research and advocacy, so it was sort of a student think tank in a sense. We started it at Yale and Stanford, then it ended up becoming one of the largest student organizations in the country. To this day, it has over 10,000 members in about 120 schools around the U.S.

Chris Arnold:
Looking back, I'm really curious because, and this kind of a big question, but looking back, it's easy, it seems so easy for you to sort of rattle off these two, three, four things that you became involved in and you were dedicated to, and very much community-building, leadership, entrepreneurial activities. Where did that come from? Is that simply seeing your family and your father work through those businesses, or do you feel like it can be attributed to multiple things?

Nate Loewentheil:
That's a good question. I think my mom always had a very strong ethic of service, and my father came from a line of people who had built their own businesses, so I think I've always been a little back and forth between the entrepreneurial side of me and the kind of public service side. Roosevelt was a great opportunity to bring both of those interests together in a sense. My sister now runs her own very successful business, my brother's working with my dad, so I think we're just a group of people who like to maybe have control of our own schedule some of the time.

Chris Arnold:
No, that makes a lot of sense. You were at Yale, you've done all of these incredible things, in terms of thinking about the average college student who's probably pretty wrapped up in campus life, enjoying the parties, drinking beers on Thursday, Friday, Saturday, Sunday night kind of thing.

Nate Loewentheil:
Right.

Chris Arnold:
Something happened after that experience and you actually took a trip to Bolivia. You told me it's sort of called The Bolivia Year for you.

Nate Loewentheil:
Yeah.

Chris Arnold:
What was that story about? What was that all about?

Nate Loewentheil:
After I graduated, I moved to D.C. for two years and I ran the Roosevelt Institution, which was a 501(c)(3) nonprofit. I was raising money and managing the team and supporting our chapters and connecting them to progressive political people and organizations around the country, but after three years as an undergrad and two years full-time in D.C., I thought it was time to pass the reins to the next generation, so to speak, and hired a fabulous person that did a much better job than I did taking over the organization.

Nate Loewentheil:
I thought it would be great to travel and see a little bit more of the world but, also, I had gotten very engaged while I was at Roosevelt on climate change and environmental resources and sustainability. I ended up choosing Bolivia as this very interesting place where they recently elected Evo Morales, who at the time, was much heralded. He's had a more mixed experience since then, but he was an indigenous leader, the first indigenous president of a country that's two-thirds indigenous. Bolivia is very, very poor. It's, about half the country's very mountainous, it doesn't have ocean access. It's like if you were playing Civilization, it's a tough place to build a country.

Chris Arnold:
Right.

Nate Loewentheil:
It's much less developed than some of its neighboring countries, and had a very strong ethic of environmental protection, stewardship and, at the same time, their natural resources, timber, natural gas, were some of their only economic opportunities to develop as a country. I thought it was a very interesting place to see how development was happening in real time and how the leadership of the country was going to handle the twin pressures of sustainability and growth. I just moved down there with basically no plan and lived in a city called Cochabomba.

Chris Arnold:
How long did you live, you lived down there for a full year, or was it longer than that?

Nate Loewentheil:
Just less than a year.

Chris Arnold:
Okay.

Nate Loewentheil:
Almost a whole year, yeah.

Chris Arnold:
You threw in a last-minute anecdote that I have to touch on, just kind of a last-minute note that we had in our podcast notes today. Tell me about this bullfight.

Nate Loewentheil:
This is like one of my great moments in life where I was living, the last couple of months I was down there, I was in a very small rural village in the south, the country called Pasorapa. They had an annual festival where they would bring in bulls. It wasn't a bullfight where you killed the bull. The idea was they would tie little silk handkerchiefs, or not silk, but cloth handkerchiefs to the horns of the bull, with a small cash prize inside the handkerchief. You had to let the bulls charge you and try to get the handkerchief off the horn, where it was tied very, very tightly.

Nate Loewentheil:
The first day, they had for the kids, they had like the calves come, these little skinny young cows, bulls, running, with the purses tied to their horns. I had gotten very close with two brothers, who were a little bit older than me, and they were like, "Oh, you go in with the kids' round, basically," which was humiliating, of course. I went and did that. I was like, "All right." They were very, they were like kind of the prominent members of the community, so the next day, when they had the real bullfighting- these were serious animals. They were 800, 1,000-pound bulls, large horns...

Chris Arnold:
Wow.

Nate Loewentheil:
Scary-looking. My two brothers, these guys I was with, were like, out there the whole time. Neither of them could actually get the purse off the horns. I was like, "All right. I'll never live this down if I don't get out there," so I went out and let the bulls charge me. I got slightly gored on my leg. I also failed to get the purse off, but for my heroic efforts, the town awarded me the cash prize, which I learned subsequently, you then had to spend on buying drinks for everyone else in the town.

Chris Arnold:
Oh, perfect.

Nate Loewentheil:
Yeah, the end of the evening.

Chris Arnold:
Was it worth it? I guess that's the big question.

Nate Loewentheil:
It was honestly, it's one of those things where I'm not sure now I would get in the ring, but it was certainly one of the greatest experiences of my life. Someone in the town had a quite nice camera, actually, who was visiting, so I have some great photos of me looking at my very, most kind of action-packed moment of my life.

Chris Arnold:
All right, well, if we can get any copies of these photos-

Nate Loewentheil:
Yeah.

Chris Arnold:
These top secret photos, maybe we'll put them-

Nate Loewentheil:
[crosstalk]

Chris Arnold:
Put them up in the show notes.

Nate Loewentheil:
Public distribution, yeah.

Chris Arnold:
Hey, listeners, just a quick reminder that today's episode is brought to you by our firm, Authentic Form & Function. I wanted to let you know about an internal research project we recently completed, where we analyzed the digital strategy of over 75 commercial real estate projects across multiple asset and project classes. We distilled this research into an ebook called, The Real Estate Website Blueprint, which you can download for free on our website at authenticff.com/blueprint. In it, we provide several strategies and tactics you can use on your next project to better position in the market, increase project awareness and accelerate leasing. To download the ebook, be sure to visit authenticff.com/blueprint.

Chris Arnold:
I want to get into an aspect of your career that's really unique and really pretty cool, and that is the transition into the White House. Without getting too far ahead, talk about that transition from The Bolivia Year into that role and what was that transition like.

Nate Loewentheil:
In between, I went back to Yale for law school. I was living in D.C. running Roosevelt before Bolivia when President Obama was elected to the White House, and I just thought this was an opportunity to contribute to an administration and a leader that I deeply admired. While I was in law school, I got an internship at the Domestic Policy Council, which is a policy office within the White House that works on urban affairs, healthcare, many other issues. I specifically was in the urban affairs office. After I graduated, I landed a job at the National Economic Council, which is kind of a sister organization within the White House, but the focus is obviously more on economic issues. It goes by the NEC. I was at the NEC for three and a half years. I can tell you a little bit more about that experience, but that was kind of how I ended up getting into the White House.

Chris Arnold:
Yeah, please do. What was the day to day like and what were you in charge of at that time, and where did you have your specialties kind of looking over at that point?

Nate Loewentheil:
I'd actually written my senior thesis at Yale on public transportation in Baltimore City, or lack thereof, really. I was really interested in that side of urban development, so I ended up running the transportation portfolio at the National Economic Council, which meant everything from I wrote the rules for integrating drones into the commercial airspace in the United States, working with the FAA, to finalize regulations. That was super interesting. I ran the President's Build America Investment Initiative, which was an effort to mobilize private investment in infrastructure and, at the same time, kind of lay down rules for the road about how that investment could support good jobs and infrastructure that would provide benefits to citizens.

Nate Loewentheil:
Through transportation, also ended up running other infrastructure policies. I led the President's Broadband Opportunity Council, I worked on water infrastructure and ports, kind of anything that involved federal spending on infrastructure. I was also very, always hoping to do a little bit more on cities, and in 2015, the unrest in Baltimore caught national attention and shone a spotlight on some of the challenges in my hometown. The White House ended up standing up a task force for Baltimore City, which I ran for the last year of the administration. We had 15 federal agencies coordinating very closely to kind of provide direct, immediate access and response to Baltimore. Through that, we mobilized about $110 million in federal funding for Baltimore, we launched jobs programs, we improved some of the city's infrastructure, helped deal with the opioid crisis. That was probably, from the perspective of someone from Baltimore, to have that opportunity was one of the great experiences of my life.

Chris Arnold:
Yeah, absolutely. Give us a quick time check. About what year is this?

Nate Loewentheil:
That was the last year of the Obama Administration, so starting probably December, 2015 through January, 2017. I was in the White House from September, 2013, after I graduated law school, right through January, 2017.

Chris Arnold:
Okay, and what did you find yourself doing after the White House stint? It seems like a, looking back, it's probably just another story to you, but it's so fascinating to move into the White House, then transition out of it with the administration. Then obviously, there's this piece of venture capital, which is a huge part of the story, and the meat of the conversation we're about to get into. What did you do after the White House, and did you go right into the venture capital world?

Nate Loewentheil:
I did not go right into the venture capital world. Through this White House task force, had a lot of exposure to the city and state government, as you can imagine. I was, I would say, frustrated to put it lightly, at the lack of focus on the violence in Baltimore. Baltimore has had the first or second highest murder rate in the country every year for the past five years. The bloodshed is truly horrific, and it's 95 percent African Americans, 90 percent African American male victims, and it's horrible.

Nate Loewentheil:
I went back to run for public office. I moved to southeast Baltimore and I ran for the state legislature on a kind of progressive, violence-reduction and crime-reduction platform. I ran kind of headlong into the Maryland Democratic Party establishment, which was an important learning experience for me, and so I lost my campaign. That was about a year of knocking doors. I knocked 6,000 doors, raised a lot of money and really hustled.

Nate Loewentheil:
Then it was really after that, that I joined my current firm, Camber Creek. I'd been laying the groundwork for that for years. Again, Camber Creek is a prop tech-focus venture capital firm, so we're one of the leaders in the country investing in real estate technology companies, companies that provide products and services to the real estate industry. The family history in real estate and work I did at the White House on emerging technologies like drones, it was kind of a natural fit for me.

Chris Arnold:
That's a great transition. For those that aren't familiar with your firm, let's start there as we dive in. Give us the brief overview and, for those who aren't familiar, what's the work that you find yourself knee-deep in, and who are some of the companies that you're working with today?

Nate Loewentheil:
Camber Creek, as I said, is one of the country's premier prop tech venture capital firms. We're based in suburban Washington, D.C., with offices in New York and San Francisco. The firm's model is built around a network of limited partners, so our, the investors who invest in Camber Creek's funds, the large majority of those investors are themselves real estate owners and operators. The firm has about a billion square feet of commercial property, and hundreds of thousands multi-family units, as well as construction and other verticals represented in our investor pool.

Nate Loewentheil:
What that allows us to do is to, number one, when we are diligencing a company, rather than kind of speculating about their ability to sell, or trying to figure out how valuable the product is for a real estate firm, we just go to our LPs and say, "Will you take a meeting with these folks?" If they say yes, and they get pitched and they buy the product, that's a very good sign to us. If they say, "That's not that interesting," or "not that valuable," and we hear that two or three times, that's also a good indicator that's probably not a good investment. We think of that as kind of our beta lab for products.

Nate Loewentheil:
Then, once we do invest, we're able to bring the strategic benefit of this network to bear to help companies grow. We're able to provide this direct market access and set up introductions and relationships in the real estate industry, which can be incredibly valuable, because it's an industry that be very difficult to break into. That's the Camber Creek model. Some of our investments include VTS, which is a billion-dollar-plus company that's an online platform for leasing; Latch, which is one of the leaders in smart access, really cool company, beautiful products for the multi-family sector; and a big partnership with UPS to deliver into non-doorman buildings in major cities. The WhyHotel is another great company. They run pop-up hotels in luxury residential buildings during the lease-up phase. Those are a couple of examples of our portfolio.

Chris Arnold:
Yeah, and tell me about your role on the team. You just kind of went through more of an assessment and advising arm of the business. Is that where you really reside, or are you focusing more on particular aspects or emerging technologies, kind of going full circle back to the work you did with the White House?

Nate Loewentheil:
Yeah, good question. We all do a little bit of everything at the firm, so spend a lot of time talking to entrepreneurs every week, we do anywhere from six to 10 calls with startups, hearing about the latest and greatest, which is fun. You learn quickly when you're being sold something that's legit and when you're being sold something that's less legit, and it's a great way to keep track of what's happening across the market. Once you decide that they're selling something legit, you have to go through a pretty extensive diligence process. Some venture firms are a little more shoot from the hip, so we met them twice, they seem smart, we're in, which works for some people.

Nate Loewentheil:
We are on the much more thorough side of things, so we're going to conduct 10 to 20 market interviews with competitors or potential customers, we're going to dig through your financials, we're going to get reference calls on you from current employees, former employees, friends, colleagues, some are mentors. We're going to do a 360 review of the people involved, we're going to dig into the financials in pretty significant detail, so that diligence process takes four to eight weeks, usually. I'll do a bunch of the diligence work. I also do some of our PR and media work and I help the firm raise money as well.

Chris Arnold:
Now, talk to me a little bit more about that due diligence phase. How would you describe what are you are looking for in those portfolio or partner companies, and is there anything unique that you can speak to that you look for, that you feel like others out there do not look for?

Nate Loewentheil:
I think as a firm that's not based in San Francisco, we tend to look with a little bit of skepticism at folks who have a big idea and are raising major financing rounds without much of a product in hand yet. We see those as bets and we don't like making bets, we like making smart investments. We like to find companies that have been scrappy, that have put together a real product already and gotten it into the marketplace without huge resources, that kind of hustle and scrappiness is real important to us.

Nate Loewentheil:
Second would be having a new twist on a product or service that allows you to differentiate in the market in a meaningful way. What we find is that to convince an institutional real estate company to switch from their current portfolio management software to a new portfolio management software, you can't be 10 percent better or even 50 percent better, you have to be 10 times better. There are huge costs involved in adopting software at the enterprise level. We look for folks who are really approaching a problem in a new way.

Nate Loewentheil:
I think a great example there is the WhyHotel, which I mentioned earlier. Every developer who's building a multi-family building worries about the first 12 to 18 months, the lease-up phase, because they're hemorrhaging money while they get people in the door to actually rent these apartments, and they're worried about whether they'll get rented at all. WhyHotel comes in and says, "Look, as you're leasing up, we'll run a pop-up hotel in your building and provide you this found money, a completely new source of revenue, to help defray some of the risk during this initial period."

Nate Loewentheil:
When we saw that, that's a great, that's a business process innovation that's not really a technology company. There is obviously technology involved, but it's really about finding a new way to use an asset. We love that kind of company. I think those two things, the kind of scrappiness factor and the kind of new value add, meaningful differentiation.

Chris Arnold:
That brings up another question for me. Our firm is very much on the technology and software and kind of app development side, but it makes me wonder about the companies in your portfolio and the firms that you look for. It kind of is all surrounding this idea of software versus hardware, is it software and hardware, or is it software versus hardware? Do you feel like it's one or the other, or both, or does it matter? Is it just more so the solution in hand that you referenced earlier?

Nate Loewentheil:
For us, we're never thinking in terms of categories like that. It's more about the specifics of the business and their ability to scale quickly and get good margins. Even on the margins, if you're a pure SaaS company, your margins could be 70, 80, 90 percent. If you're hardware, that's unlikely. They could be maybe 40 percent. That's going to come into play when we decide about your valuation, but not necessarily whether you're a good investment. For example, Latch, which I mentioned, they build a hardware product, the actual locks and also some affiliated products like a camera unit that sits outside the building, and things like that. They also have a software product that goes along with it. It's kind of a razor and razor blade model. You sell this in the box, and then there's subscription software to actually operate the locks. That's a great business.

Nate Loewentheil:
Curbio is one of our newer investments. They are a technology-enabled general contracting firm. Their focus in on presale home renovation, so they're not really a software provider or a hardware provider. They're really a service provider, but they've come up with a very targeted market, a very sophisticated technology back end and great execution, and they're crushing it. Again, it's more about uniqueness and the differentiation of product and the team behind it, and less about kind of hard details.

Chris Arnold:
Nate, as we start to wrap up the podcast, I don't want to miss touching on this point, and that is, you have a lot of experience in this overlap area of affordable housing and technology. What are you most interested in or maybe optimistic about within that realm at this point, and do you see anything on the horizon that you can speak to?

Nate Loewentheil:
That's a great question. I think affordable housing is a huge challenge in our country. I won't go through too many of the statistics, but in Baltimore more than half of renters are living in housing deemed unaffordable, in terms of the percentage of their income they're spending on it. Nationally, it's more than a quarter of renters, so that's millions and millions of people around this country who struggle every single month just to stay in their homes. The book, Evicted, that came out recently, if listeners haven't read it, it's dark but powerful storytelling about the challenge of folks being kicked out of their houses in the U.S.

Nate Loewentheil:
Affordability is a big issue. Technology is only part of the solution. Federal policy, state policy, local policy is critical, but technology can help do a couple different things. One is to provide new financial tools to renters. Historically, if your options are to get kicked out of your apartment or to get a payday loan with some unholy level of interest, it's still better to get a payday loan, but those are very predatory lending practices.

Nate Loewentheil:
We've been looking at a number of companies, there's one called Get Flex, for example, that provides renters with a, essentially a financial tool where they can pay FLEX on a week-by-week basis and FLEX up front pays for the full month's rent. If you live week to week paycheck, hitting months, every month paying a rent a month in advance can be challenging. FLEX helps solve that problem. That's a very tactical way to help people stay in their homes.

Nate Loewentheil:
We've also looked at companies that are in the modular construction space, who can help reduce the cost of construction, in turn, the cost of housing. We've been following very closely what's happening in California, which now has given as a matter of right the ability to have an accessory dwelling unit on your property if you have space for it. There are a lot of interesting business models coming out of the woodwork, so to speak, to provide very cheap accessory dwelling units, again, modularly constructed, which is, I think, another important kind of tool in the toolkit here to help address affordability.

Chris Arnold:
Are you feeling optimistic about what's next, or do you feel like there are really some pretty significant hurdles that we need to face, and do you feel like you can, you will play or be able to help play a role in maybe overcoming anything that you see coming down the line?

Nate Loewentheil:
This is a national challenge of pretty significant proportion, and it's closely related to the challenge of homelessness. Gavin Newsom, the governor of California, gave his state of the state address last night and talked extensively about homelessness in California. There's no quick fix here, and it's a challenge that the U.S. has dealt with for hundreds of years. I'm cautious in saying I'm sort of cavalierly optimistic, but I do hope that, there definitely are some exciting technology companies that will, on the margins, reduce cost. I think these financial products have a big role to play, but I'm saying that we need some serious policy change as well.

Chris Arnold:
One of my favorite questions to ask towards the end of these podcasts is always surrounding who else that you think we should be paying attention to, so as a podcast host, as a listener to the show, obviously, you're an extremely bright guy and you have a lot of accolades attached to your name. Naturally, I'm curious who else should we be taking a look at and who do you feel like is doing inspiring work out there?

Nate Loewentheil:
The other area that I sort of stay awake at night thinking about is sustainability and climate change. The housing and building sector is about a third of U.S. greenhouse gas emission, so it's up there with the transportation sector as a whole. I think you're going to see a lot of pressure coming to bear on the real estate industry to reduce carbon emissions and greenhouse gas emissions more broadly. That's coming from big institutional investors.

Nate Loewentheil:
I think that BlackRock wrote a very public letter about how they're going to be weighing kind of climate exposure more heavily in their investment decisions. You see a lot of consumer demand for greener buildings and greener products generally. Increasingly at the local and state level, you're seeing significant regulatory pressure. New York City, for example, has passed a very aggressive climate change bill that's going to require 80 percent reductions in emissions by 2050, which sounds far off, but if a typical building is built for somewhere between 50 and a 100-year lifespan, 30 years out is not that far, actually. The first kind of targets are in the mid-2020s, so four, five, six years out, buildings are going to start getting fined if they haven't started to reduce their carbon emissions.

Nate Loewentheil:
All of that is creating a kind of perfect storm for technology around sustainability, and that's a space that I'm really excited about. The work that Sidewalk Labs is doing, they're a subsidiary of Google focused on smart cities, they've put forward some extremely creative and, I think, powerful ideas about using mass timber to build high-rise residential buildings. Timber is much more sustainable, kind of counterintuitively, than using concrete and steel, because the production of concrete and steel creates a lot of emissions. This idea of mass timber, cross-laminated timber, construction is really cool and I'm eager to see what comes of their work in Toronto.

Nate Loewentheil:
There are companies that are helping with energy retrofits. I recently came across this company called Radiator Labs. We're not investing in them as a firm, but they'll upgrade your radiators and do really simple things that help you reduce energy expenditures in a building. Another really critical piece around sustainability is measurement and reporting. You can't manage what you can't measure. Our portfolio company, Measurable, is a real leader here. They provide a software that aggregates utility data across a portfolio of buildings through some proprietary APIs with, essentially, every major electric utility in the U.S., which allows you to basically spit out, very quickly, very accurate reports on all of your utility use across a large portfolio of buildings. They're doing some really interesting stuff, in terms of benchmarking around environmental, social and governance issues. Definitely keep an eye on Measurable.

Nate Loewentheil:
Finally, I think paying attention to what's happening in New York City. It's the largest urban real estate market in the country, and because this climate legislation is going to be a real sort of lab test for innovation around sustainability. I'm optimistic technology's going to play an important role in helping to reduce our carbon emissions.

Chris Arnold:
Those are great suggestions, Nate. We'll be sure to post those links to those in our show notes so listeners can take a look and dive a little bit deeper and get a little bit more educated on those topics. Thank you for sharing those.

Nate Loewentheil:
Great.

Chris Arnold:
We have reached the end of the podcast, and so there's only one more thing to do, Nate, and that is to roll out the red carpet for you. Tell the world what you're up to, where they can find you online.

Nate Loewentheil:
Great. Camber Creek is just cambercreek.com, so you can check out some of our portfolio companies like Measurable that I mentioned. You can find me at LinkedIn.com/natelowentheil, it's probably the easiest way, or on Twitter. There's very few Lowentheils, you spell it L-O-E-W-E-N-T-H-E-I-L. You'll find me on every social media platform if you just type that in.

Chris Arnold:
Perfect, Nate. Thanks so much again for joining us today.

Nate Loewentheil:
Thanks so much, Chris.

Chris Arnold:
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