Transforming Economies with Human-Centered Investments

Discover the transformative power of investing in each other as we tackle market and social problems head-on. This episode kicks off with Elias Krim, who proposes a radical "third way" in economics through social co-ops emphasizing human-scale economies and community engagement. We’ll also uncover the environmental and social repercussions of PetroPeru's oil and gas activities in the Amazon, driven by financial instability, and explore Connecticut's innovative debt relief program designed to combat healthcare worker shortages and burnout. In a compelling discussion, we’ll also dissect the significance of divestment, particularly in light of student protests against university investments in major weapons manufacturers.

Join us as David Lidz of Streetwell shares his remarkable journey from personal recovery to social enterprise and community revitalization. You'll learn how his struggle with addiction led to the creation of an employee-owned contracting company and an impactful real estate portfolio focused on historically neglected neighborhoods. We then shift gears to reveal how cooperative economics can transform businesses into genuine community assets. With insights from Paul Saginaw of Zingerman, we illustrate the real-world success of prioritizing fair wages, good benefits, and community reinvestment over profit maximization. Prepare to be inspired by stories of enhanced worker compensation, improved worksite conditions, and true community upliftment.

https://streetwell.co/
https://www.wmar2news.com/local/an-employee-owned-cooperative-is-taking-on-baltimores-vacant-housing-crisis

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Chapters

• 0:00 Investing in Social Enterprise and Divestment
• 9:48 Recovery, Employment, and Community Development
• 17:37 Community Impact Through Cooperative Economics

Transcript

Joel: 0:33

What if investing in each other could change the world? I'm Joel Skeen with bizradious and this is the Mindful Marketplace, very grateful to get to spend this time here with you all today, if this is your first time with us on this program. We talk to a variety of people entrepreneurs, advisors, industry leaders, investors, economic experts. All of them are not only just solving a market problem to make a profit, but they're also solving a social problem to make an impact, and they are questioning the assumption that there's just one bottom line in business and in investments. Today I'll be talking with David Liggs of Streetwell, but before we get into our conversation with him and the good work he's doing in the Baltimore area, we got to hit the balance sheet the assets, liabilities, debts and investments All right In the assets column.

Joel: 1:29

There was a really great interview in the Main Street Journal with Elias Krim. Elias Krim founded a group called Solidarity Hall around 2012 to discuss what he calls a third way in economics, which is neither capitalist nor state socialist, but rather the economy of people, the human scale economy, including informal economies. He describes a third way as the economy for people. Krim is particularly enthusiastic about the idea of importing the foreign model of social co-ops into the US, which are primarily created to deliver different forms of social care at high quality and low cost. Social co-ops, like worker co-ops, are worker-owned and democratically managed, but they are multi-stakeholder and can include things like volunteers, family members, community members. And while there are no full blown social co-op models in the US currently, there are opportunities for investors to find co-op opportunities with a modest rate of return for investors, but also a social rate of return, especially in their own communities. Crim definitely acknowledged that there are some challenges in finding listings of investment ready co-ops, and many of them are using crowdfunding. But what's cool is that CRIM is about to begin a social co-op academy to educate people in collaboration with this group, the Rocky Mountain Employee Ownership Center, covering topics such as the model overview, advantages, financing, business foundation and experiences of practitioners in certain care sectors and public policy implications.

Joel: 3:02

All right next in the liabilities column. So last week, a delegation traveled thousands of miles to tell the leadership of Wall Street's biggest banks to stop lending money to Petro Peru, which is Peru's state-owned oil company. The company's relentless pursuit of oil and gas, they say, is threatening the lives and livelihoods of local communities and destroying the world's third largest forest carbon sink, which is very important to the Amazon rainforest. They say it's edging closer to an irreversible tipping point. Indigenous communities inhabit one of the most intact and biodiverse areas of the planet in the northern Peruvian Amazon, which is crucial for the future of a lot of different ecosystems on the planet. The relentless pursuit of oil and gas by Petro Peru is threatening the lives and livelihoods of local communities. Petroperu is threatening the lives and livelihoods of local communities. The delegation traveled to the US to tell the leadership of Wall Street's biggest banks to stop lending money to PetroPeru. Citi and Goldman Sachs were the only banks that they actually got to meet with face-to-face to hear the delegation's case, while JPMorgan Chase had agreed to meet but then canceled just before it was scheduled to take place. Petroperu is reportedly considering arranging a new $1 billion bond, as it needs an additional $2.2 billion to survive creating this pressure to drill for more and more oil. Petroperu is deeply in debt to other banks and is facing financial collapse as those loans come due, unless it can maximize its oil production and secure new financing. All right in the debts column I want to talk about.

Joel: 4:45

Connecticut has launched a student debt relief program for healthcare workers, so a new program is launching in Connecticut to tackle student loan debt and recruit and retain healthcare providers. Certain medical professionals can apply to receive tens of thousands of dollars of student debt relief. The program targets providers working in primary care, dental, mental health care and in other underserved areas of the state. Future nurses and physicians assistants at Quinnipiac University are preparing for the workforce, amid soaring costs of medical education. Quinnipiac University are preparing for the workforce, amid soaring costs of medical education. The program aims to combat worker shortages and the burnout in the wake of the pandemic, providing $13.5 million in federal funding. The program requires a commitment to work or already working in the designated areas of need in Connecticut for two years, with full-time providers receiving $50,000 for student loan repayments and part-time professionals being able to receive $25,000. The program can help pay off private debt and is seen as a win-win for students, professionals and patients. And remember, in order to combat the debt crisis, the Mindful Marketplace is actually offering all of our listeners with a free, customized report on how you can best eliminate personal and business debt, based on what you're already doing and giving you the information on the debt you already have. Lots of families are able to use this report to eliminate all their debt, including mortgages, in nine years or less without spending any additional money. You can get free from debt by going to mindfulmarketplaceshowcom to get your free personalized debt report.

Joel: 6:22

Lastly, in the investments column. So there's a lot of talk right now about the student protests and divestment, so I figured we'd take just a couple minutes just to answer the question really quick. What is divestment? There are lots of articles about this. I felt like this Vox one did a pretty good job of giving an overview. Div. There are lots of articles about this. I felt like this Vox one did a pretty good job of giving an overview.

Joel: 6:40

Divestment is essentially reversing an investment and the goal of divestment movements generally is generated social and political pressure on the companies that are the targets of divestment. So right now the students are actually, across the country, are making some specific demands around this, seeking to focus their efforts on divesting from major weapons manufacturers that universities have already invested in, ensuring that their universities no longer accept research funding from, you know, say, the military or weapons producers, or ending academic partnership with the institutions they want to divest from. Divestment has been a tactic embraced by protesters in previous student movements opposing South African apartheid regime and fossil fuel companies contributing to climate change. Those calls for divestment have had varying degrees of success. To what degree? On how you define success in those terms, either financial or in political impact.

Joel: 7:38

Current calls for divestment from Israel are an outgrowth of the broader Boycott, divest, sanctions Movement, or BDS movement, which originated in 2005 and was inspired by the movement to divest from South African apartheid. The BDS movement has called on banks, local councils, churches, pensions funds and universities to quote withdraw investment from the state of Israel and all Israel and international companies that sustain Israeli apartheid. All right, that is the balance sheet. I am really looking forward to getting to dig in deep here with someone who I'm getting to know better and better and whose work has really impressed me, david Litz. David, welcome into the conversation, really glad to have you today.

David : 8:25

Really great to be here. Joel, Thanks for having me.

Joel: 8:27

Yeah, so enlighten our listeners a little bit about yourself. We talk a lot on this show about things like social enterprise around using business for good, to do positive community development, and those words all sort of became popular in the last 10-ish, maybe 15 years or so, but it sounds like this idea of doing good with business wasn't something you read in a book or heard in a TED Talk or heard a buzzword somewhere. It was something you've been doing just for a long time.

David : 8:59

Yeah, thanks, joel. So yeah, I'll give you the five-minute bio that explains how I stumbled into social enterprise. And it starts with me having a government relations career in the 90s, both in Annapolis at the state level and in Washington DC at the at the state level and in Washington DC at the congressional level, and also having a severe drinking problem. So I'm an alcoholic. I drank my career and everything else that was dear to me away and I ended up, you know, sinking to a pretty low bottom, so sleeping in the woods, smelling bad, scuffling with police, that kind of stuff. In July of 2002, my dad threw me into a rehab where I got it like. I got really impassioned about the idea of spiritual recovery and what I learned in there is that in order to stay sober, I have to stay close to my community, in that case the sobriety community, and also to help other alcoholics and addicts who are trying to rise up from this abyss. No-transcript. But I also found out that nobody wanted to employ me because of my recent past. You know Capitol Hill wasn't taking me back, home Depot wouldn't even hire me. So I was kind of like hanging around the streets of West Baltimore going to my, in between my halfway house and meetings and I found some cats that were working on foreclosed vacant properties. They were cutting the grass and cleaning them out, tarping leaking roofs, changing the locks and I got to talking to them and they didn't care about my recent past.

David : 11:02

I got work, you know, cutting grass and changing locks and trashing out properties and long before I'd ever heard the term social enterprise, what I had stumbled my way into, quite literally, is what I now, now that I know the lexicon, I call a low barrier employment opportunity. No check the box, no training needed. I could come in and start cutting the grass and learn my way up from there. And what I had stumbled into was an opportunity. We were hired as 1099 contractors and we could build our little businesses in whatever direction and as big as we wanted to. So I stuck with it. It started to grow, the little contracting company. As it grew, I did what I was hearing in these recovery rooms, which is to help others that are trying to follow the path that I'm now on. So I hired people coming back from rehab and people coming back from jail Again, not because I had ever heard the word social enterprise, but this is what I was doing to stay sober myself and to stay grounded. That model kind of just grew over the years. I got some licenses. I got my real estate license, I got my general contracting license, I started to get my real estate chops, so to speak. My real estate chops, so to speak, started talking to investors and doing some property management, which led to us opening up some sober houses, some recovery residences and still long before I'd heard anything about any of these terms like employment, social enterprise or housing first models we had all that. We had a model where folks could come back from rehab or jail. We had a model where folks could come back from rehab or jail, get a bed in one of our sober houses and get stabilized and start getting engaged in peer recovery programming, recovery programming and once they were stabilized and had some footing they could come over to the construction company and stay with us temporarily to kind of get back on their way or grow, you know, advance their skills and grow with us.

David : 13:20

As we turned in at this point to a full scale renovation company. Again, we are a company that specializes in managing, maintaining and renovating foreclosure stock for pretty much national lenders or government institutions like Fannie Mae or FHA or Freddie Mac, and we are finding more and more that these institutions are sending us into really poor urban neighborhoods throughout the Maryland DC region. Urban neighborhoods throughout the Maryland DC region and, unlike the rich neighborhoods that they send us to, which would be like Montgomery County, maryland or Potomac Maryland, when they send us there, they send us to do a full renovation, get the property ready to go back on the market so that community can enjoy some form of recovery. But when they send us to Baltimore or to historically redlined blocks of Hagerstown, maryland, or to Prince George's County, which is a majority black county in Maryland that was just decimated by the foreclosure, by the Great Recession, they're just sending us there to board up and to abandon these assets and at the same time, they don't like, they don't give a crap about our social mission, they don't pay us well, they don't want to like help us with our sobriety programming.

David : 14:40

So we come up with a thesis which is hey, man, why don't we become our own developer? Why don't we see if we can raise some money and start buying some of these assets, focus, investment of our own in what we are now understanding historically redlined and historically oppressed Baltimore neighborhoods, and if we can do that, if we can raise some impact investment I know we are kind of on the lingo, you know with some catalytic terms, some concessionary terms, some impactful terms, we could raise a neighborhood that's been just historically abandoned and trashed for generations by our financial institutions. We could create better pay and better supports for ourselves institutions, we could create better pay and better supports for ourselves. Once we finish these severely distressed homes that we're renovating, we could rent them out and create a form of affordable housing. And we're doing all this in a shared equity or a cooperative kind of model, which we call an impact real estate portfolio. We can distribute the equity of everything we've built to the workers that did the work and to the tenants that moved in, and then to other neighborhood stakeholders.

David : 15:52

Began pitching this around 2018, 17 or so by 2019,. We get a funder. That's Seed Commons little bit later about what that looked like, but short of it for now is they funded our conversion from this construction company that I had begun called Appalachian Field Services. They funded the conversion of that from me being the sole owner into an employee-owned co-op, and then they advanced their funding as they got to know us better, to support this IREP model and by now they have issued a $5 million line of credit for us and we are up to 22 properties, 30 workers and we can get in maybe a little later. It's probably time for me to shut up here, but about all the impact that financing and this model has driven.

Joel: 16:46

Well, and it sounds like, because there's a bunch of stuff I'd love to follow up with you on and we'll follow up here, but also this is going to be a two-part conversation where we're going to get to dig a little deeper. You mentioned, you know, I used to be in in homeless case management and so there's a lot of stuff I'd love to talk to you about housing first and all that. But to to kind of stay on on topic, you know I was thinking about what you said when you were talking about the difference between the way that you, the companies, have you, approach the one neighborhood from the other. The redlined neighborhood that hasn't had the same access to resources has actually been divested in. We were talking about divestment earlier.

Joel: 17:27

That's actually been divested in from Wall Street and private equity versus these other neighborhoods that are being invested into. And it seems like there's just a fundamental mindset difference between the way you and your group are thinking about doing real estate investment or doing business development investment and the way that some of those other groups might be doing that, and I think that that might kind of get a little bit to the more holistic approach that you and I have talked about, that you take in your business where, yes, profit is important, profit is a thing that must be had in order for a business to stay in business, but that there's more to it than that. In the long run, a lot of people, when it comes to business, would just say, well, just maximize profit and that's kind of the only thing that really, at the end of the day, you know when the rubber meets the road, that really is going to matter. I guess you know how has that mindset, how has that mindset set up the work that you're doing now?

David : 18:33

Oh, it's so, it's so exciting. So for years this was just theoretical, but now we're like, really in it and so I can give you some, um, I can give you some great examples. So, uh, yes, we're all for profit. We are a for-profit cooperative. So, um, we don't get anything in the way of grants, really a couple little nickels and dimes here and there. But, um, we use a loan to go out and purchase and renovate these properties alone that we then have to pay back Again. The rates are very good that we've got I hope we talk about that later.

David : 19:03

But, to your point, a little wacky at the beginning because we emerged into this idea as kind of a startup. So we're like, figuring out our way and then COVID happens. But now we're at the point in the last 18 months or so where we are emerging into profitability and into, you know, beyond break-even, and into profitability and towards a positive balance sheet. And so some of the things that we're experiencing in this community equity model, which is what it is, is we are highly focused on providing good wages and good benefits for our workers, which was a thing we could not do when we worked for these corporations and for the like, contracting with the federal government, with these supposedly white-hat agencies, you know, like FHA and Freddie May, we could not pay our. So our wage range prior to 2019, when we converted to co-op, was $11 an hour to $17 an hour and at the time we've only stayed like $2 ahead of minimum wage. I think minimum wage was somewhere around nine or 10. Anyway, 11 to 17. And then, since we've converted and really gotten our proof of concept to prove out, our wages have not. We have taken this thing that you might otherwise call profit and we've invested in our own workers. We've, you know, let our own workers own the fruits of their labor and our wage range has shifted from 17 to $48 an hour, I think, in like three years time.

David : 20:37

And again we're about to, which is just, by the way, it's amazing and we have some benefits now and we're able to train much better and run safer and cleaner work sites and we're able to invest in the surroundings. So outside of our property any property we might own there might be abandoned vacant lots that are full of trash and rats and lead and all that, and we can spend a little money on investing and just cleaning up our more. You know, a community. Look at how we own an asset Right, we are now looking at popping into a positive balance sheet, probably in 2025, maybe 2026.

David : 21:17

And now we'll have this real conversation where, at the end of the year, we'll say, hey, we have these profits, do we want to distribute dividends to our workers and tenants and we have a growing value in our balance sheet? How do we want to talk about and distribute that equity to our cooperative members in the form of, like, long-term wealth building, pulling everything you can out you know to I don't know become uber rich and you know, when you're not solely focused on profit but instead you think of reinvestment and thinking of lifting up your peers and yourself. I just think it's a way more creative and way more powerful way to run an economy, and I think we have a great like little Petri dish showing that there's truth to this man.

Joel: 22:21

Yeah, and that's why I wanted to have you on was to show those examples. Paul Saginaw, who started Zingerman's up in Michigan they're now one of the biggest food distribution and restaurant kind of worker-owned co-ops up there told me once that it's amazing what you can accomplish in business when your main goal isn't to make money, you'll make money, but like when your main goal is to do something else. And that's what I see you doing and I'm really looking forward to digging in and part two with you here on, more specifically, on how you let those values evolve from um, where you're starting a business with a mission, to where you're actually making it a community asset, to where you're actually making that business an asset for the community, not just an asset for your own portfolio. So really excited to dig in with you on that.

Joel: 23:10

Remember, you can listen to us now on all of the Spotify, itunes, iheart Stitcher all of the places you get your podcasts. Obviously, listen to us live here on Biz Radio US on Tuesdays and check us out on YouTube. Now we are up on video on YouTube, so subscribe there as well and until next time, tune in next week to listen to the rest of the conversation with David Lids and until then, remember we are each other.