Season 02 Episode 10
Jonathan Dodson, real estate developer and CEOHow a healthy mindset, big dreams and unwavering resilience can produce a greater future for all

Going from a career path to life as an entrepreneur

Chris Allen: Well, Jonathan Dodson, thanks for joining us on The Entrepreneur’s Studio. Glad to have you, man.

Jonathan Dodson: Thank you so much for inviting me.

Chris: Yeah, absolutely. I think one of the coolest parts about what we get to do here is that while we don't talk about Oklahoma City (OKC) too much on the studio — our audience is obviously a little bit broader, but one of the things that I think is a really compelling story is from the building where we shoot every single one of these episodes. It's literally a block away from the site of the Oklahoma City bombing. And we had Amy Downs on the show to talk about a personal experience she had being in the bombing, surviving and her story of recovery all the way to becoming the CEO of a local credit union.

I think that those stories are really important. One of the other things that I think is really important is a lot of the work that you do centers around the local communities and things like that, and real estate and development and thinking about how cities and communities operate.

One of the other things that I'd say is really hard on a city like Oklahoma City is that in the 1980s you had the oil crisis. A lot of talent left OKC. That's something you talk about a lot that we'll get into. And then in the mid-1990s, you had the Oklahoma City bombing.

Since then, Oklahoma City has really had a chance to grow. And there was a lot of money that came in. The thing that I find really interesting is how you found your way into real estate development. It's like you went from banker to developer. I think it'd be really, really helpful just to hear what you think about how Oklahoma City has changed, how you've seen the opportunity and how the spark of you getting into development occurred.

Jonathan: No, great commentary too, just on our city. When you think about Oklahoma City and Oklahoma in general, really half of our state was in Mexico. Obviously the Native Americans, the first Americans were here first. Then after the abolition of slavery, a lot of the African Americans from the South moved here. It was really kind of like a Wild West that was for anyone. And somewhere along the way, we kind of lost that. We forgot that this was a place that was for everyone. So then you throw in, even in the 1960s, we had a guy named I.M. Pei who came in and blew up about 200 buildings downtown because he felt like the way you compete with the suburbs is to be the suburbs. We were going to build a giant super mall, but then we had the oil crisis and we had the [economic] crash and nothing got rebuilt.

Fast forward to the 1990s, this is post-bombing, and one of our council members said, “Downtown's dead, and we're the ones who killed it.” There's this saying attributed to an old saint, “Even if your mother's a whore, you love her.” It's kind of like, “I can speak bad about my mom, but don't you dare speak bad about my mom.” So Oklahoma City has all these flaws and all of these problems that I think if you live here you see can be really aggravating. But I would say for me and for many folks who've kind of come out of all of the heartache and heartbreak that has occurred, there is a sense of, “This is our mother and we love her, and even if she's flawed, we're going to do what we can.” We want to make it a place that is for 8-year-old children and 80-year-old adults. So there's a lot of work that needs to be done to make that happen.

Chris: I mean, that's so true. It's a big deal to have somebody stick around, and see through that, right? So talk to us about how you went from banker to developer.

Jonathan: I wish I could show you guys. I have a great photo, it's a Banker John photo, but very clean cut. When my wife and I moved to Oklahoma City in 2003, Oklahoma City was terrible. For a young family, it was not the place you wanted to be. Everyone wanted to get to Tulsa, you wanted to get to Dallas, you wanted to get to some other city. We were like, “This is a stopping place.” But we quickly fell in love with it. We quickly started seeing all of these really creative folks doing things that just quite hadn't landed yet, or were in the process of landing.

They were able to stand on the shoulders of people who had been doing this stuff, even when it wasn't the popular thing to do. I got into banking, and when I got the loan officer job, I journaled that night. I was like, “Dear God, let my job have meaning.” I ended up reading this lady, she was a Southern mystery writer, and she wrote, “Our life is... we're most human when we create order out of chaos.” The idea is that if anybody can actually create order out of chaos, you can find meaning in that. Whether that's a blue-collar job or a white-collar job, if you're actually creating order, you're bringing meaning to the world and finding your fulfillment. I started trying to do that in lending. I started finding all of these folks who are trying to come into the urban core and do projects.

I just started lending them money. Then we had the bubble in 2007 and 2008, the housing crisis. What I found was all of the things I was doing in the urban core remained solid. It was the stuff on the periphery, the suburbs—

Chris: Residential.

Jonathan: Yeah, the sprawl was damaged. I was like, “Man, if I ever got into real estate, I would do this.” So I walked in and I told my wife,, “Five years from now I'm going to quit my job and I'm going to get into real estate.” And she was like, “All right, whatever.” And five weeks—

Chris: Does she know you as a dreamer, or does she—

Jonathan: Actually, I think she was just like, “Yeah, we'll see if this happens.”

Chris: And she's like, “Yeah, OK.”

Jonathan: Yeah. Five weeks later, my boss walks in and tells my assistant in front of me that if she wants to keep her job, she needs to have sex with him.

Chris: Oh, geez.

Jonathan: And I'm sitting there in the adjacent room.

Chris: So you heard this?

Jonathan: Yeah, I heard it. We went through the whole… First, it's not necessarily my story to tell because it's her story. Though in some ways I was impacted, though to a much lesser degree. I don't want to elevate any trauma that I had. But essentially what happened was I told the CEO, the CEO gave my assistant four months to find a new job, didn't fire the president, and gave him a year with full benefits to figure out what he wanted to do and still remain with the bank. For me, that was the first time that I had kind of been put in a situation where I was like, “I guess I’ve got to quit.” So I quit, sold my car, liquidated everything, all of our savings.

Chris: And your wife's like, “This happened faster than I thought. This is not five years.”

Jonathan: I really started trying to figure out what to do. I officed at a coffee shop, my business card had the coffee shop on it, and I received checks there. They would give them to the barista, and the barista would hold them and hand them to me when I got there. Over the next two years, I started basically figuring out how to use the skills that I had to work and get my way into the real estate world.

In 2014, one of my buddies got an old movie theater, which was then an old porn theater, and was vacant. He got that under contract and he said, “Hey, what if we became equal partners and we tackled it together?” That was the birth of Pivot. It really actually got me going into real estate. I didn't know anything about it, but I knew I could figure out how to raise money. I figured we could find debt. I really wanted to do something that was tangible.

Making a broader impact on culture and community

Chris: Well, I think it’s really interesting how we met. You guys have Ponyboy. You've got the Tower Theatre right there, which has been a Heartland customer for forever. I think I was at a concert and I talked to you there and you were all hyped about how you were bringing music and culture back into the urban area. So talk about how you went from just being interested in real estate and then getting this interesting opportunity with the theater to thinking, “Ah, I'm going to affect culture with what I do in the community”?

Jonathan: In reality, real estate developers, all we do is create covers for books. Everyone is willing to pick up a book if it looks interesting. But what we are best at is picking, I think (or I hope), good storytellers, and those are our tenants. And our tenants become the storytellers who affect change in communities. So very rarely does a developer actually do anything outside of curation, and that's important. It's not diminishing our job, but what makes a great city is the storytellers. It's the artists, it's the breweries, it's the music venues, it's the restaurants, it's the offices that are thinking about things differently. It's all of those things. While I was officing at this coffee shop named Elemental Coffee, which may be visible from here, I started finding that when I was in lending, I was around a very specific demographic — essentially 50 to 70-year-old men who had been very successful at what they do. I moved from that to being in a coffee shop where it's what I would say is the kaleidoscope of what makes Oklahoma City beautiful in a coffee shop.

I got to be a part of that on a daily basis. It started shaping the way I saw what a city could be versus a way I saw the city whenever I was driving up to the bank in Edmond and lending money and doing that. And so really relationships, I mean, it's a long-winded way to say that I started meeting people who are different from me. I realized wisdom is not knowledge, but wisdom is actually knowledge married to relationships. I'm always cool if people have convictions, I want to have convictions, but I wanted that to be held in tension with loving people.

It's hard to love someone if all you have is some kind of hyperbole or some caricature of what that person is like. Being able to be in the room with people who I'd never been around was like, “Oh, this is actually... they see things that I've never seen in the world, and I want to see the world better, and I want to make buildings that can bring them in so we don't lose them to other cities.” That was probably one of the fundamental pieces to that.

Chris: Well, a big transformation for you was going from lending someone else's money to needing to get into real estate, which requires I'd say some money. So talk to us about some of the best-kept secrets of how you arrived at funding.

Jonathan: Well, yeah, I mean, I'll share one really funny story. But the first is to say that we didn't come from money. Me and my two business partners, Ben Sellers and David Wanzer. Really what we would do is we'd just go find really complicated buildings and figure out what credits were out there. We did all sorts of things, all legal, but to get into the game. I'm so grateful that we were able to do some of the first projects, Stonecloud Brewing Company and the Main Street Arcade building, a lot of these buildings were historic rehabs. One of the most tenuous situations that we had was we had a music venue or operating group, and they had signed a 20-year lease on the Tower Theater, and they defaulted within the first 12 months of operations. They were supposed to put $1 million dollars into the building to build out the theater. So they weren't going to do it, and they were basically like, “You can see us in court.”

I was at Elemental, and a buddy of mine came up and said, “Hey, I think I can actually operate it. I think I've got you.” I was like, “Well, let's meet.” He and another friend, Steven Tyler and Chad Whitehead, pulled me aside and they had this business plan. I didn't know anything about the music operation business. I mean, frankly, they just had vision and a massive amount of guts. They were like, “This is what we're going to do, but we need to raise $1 million dollars in 120 days.” We needed it because the bank was going to put us in default. We got Citizens Bank of Edmond to work with us, but they're like, “You’ve got to go find $350,000.”

So we got introduced to a lender, and the lender said, “All right, I like you. Meet me on the fourth floor of this building at 4 o'clock on Monday afternoon.” So me, Ben, and Dave are like, “Cool.”

Chris: You're like, “It's probably not a fight.”

Jonathan: Yeah, exactly. Yeah. What's funny is the person who developed it said, “By the way, do you play ping pong?” And I'm like, “No, I'm terrible... I wish I did. I mean, I can play, but I—”

Chris: So was this before or after he offered the meeting?

Jonathan: It was after the meeting. He calls me, and he's like, “Do you play ping pong?” I'm like, “Ah, not good.” He's like, “Find someone who's good.” The guy who actually developed the building we're in was a friend of mine, and he's played so much ping pong that he had a tennis elbow at one point. I called him saying, “Dude, I need you. I don't know what this is for. You’ve got to show up.” He's like, “I’ve got you covered.”

Chris: That's like that Ben Affleck meme that goes around. He's like, “Oh, we're going to get in my car. I can't tell you what it's going to be about.” He's like, “Yes, OK. There's a big ping-pong match. I know you're pretty good, but you’ve got to come with me.” I'm not going to—

Jonathan: Yeah, you’ve got to go. An hour before he is supposed to come, he calls me, he's like, “Man, I can't make it. I'm sorry, but I’ve got a friend, he's not as good as me, but he is almost as good.” At this point, I'm like, “Man.” We all show up, we go up the elevator to this fourth-floor event space. The elevator opens, we hear a toilet flush in the other room, and a guy walks out in gym shorts, and he looks at our ping-pong player, and he goes, “Oh shit.” What I didn't know is they knew each other and they just played each other in a ping-pong tournament. We still don't even know what's at—

Chris: You're like, “I don't know what the stakes are. I don't know why we're doing this.”

Jonathan: And they know each other. I mean, I was like, “I didn't even know there were ping-pong tournaments.” We discovered this banker owned the bank — though I will note that he is no longer in banking. He basically said, “You need $350,000. We're going to play. If you lose, you get $275,000 and you have to pay more in interest. If you win, you get the full amount.”

Now, at this point, we had borrowed everything we had. We literally had no money in the account. Personally, everything it was, we were broke. Telling me I needed $75,000 at this point in my career was like telling me I needed $1 million. It was like, “I don't have it.” The ping-pong game starts, and we're watching a $75,000 ping-pong game that I feel like my whole world is dependent upon. I'm sweating, I've sweated through all my stuff, and to wrap the story up — we lose match point in the fifth set, and it's over.

I'm like, “We're done. Pivot has had a very short run.” The banker starts laughing, and he is like, “Well, here's what we'll do. We'll give you a little bit more money, not all of it, but you're going to pay another interest rate increase.” We played again, and our guy smoked them three straight sets, destroying them. We got almost all the money we needed. We paid a lot more money than we should have, and it was all because of a ping-pong game. I look back at that and one, probably not legal, probably not OK, but we needed the money and we got it.

That was really the inception of Tower getting the money we needed. It was really important for us and for Chad and Steven to have a venue that acoustically sounded great, that made people feel welcome, that was a place that Oklahoma City could be proud of, and they accomplished that. There was a lot of stress along the way, but it happened.

Chris: Well I mean, I couldn't tell the difference when you first said that it was a Russian mob movie or a Ben Stiller, you know what I mean?

Jonathan: Yeah. Come now, now is the time. Yeah. Yeah.

Chris: Wow, that's really interesting. So tell us a little bit about the Pivot Project. Now that you've got traction, there's things that you guys are doing. Talk about some of the construct of the business and how you guys operate today.

Jonathan: Yeah, so we're a full-scale development company. A lot of times when people say real estate development, what does that mean? They're like, “You must be the one to build it.” And I'm like, “No, that's the general contractor.” They're like, “Well, you design it.” “That's the architect.” “Well, you're the ones who are putting all the money.” I'm like, “Well, not really. We get investors.” So trying to understand what we do is really just going in and we quarterback and push projects. We find an asset that we like and we say, “We think it could be this.”

We put together the overall financial structure for that. It means we need to have good capital partners, we need to have good tenants. I think a couple things to think about in terms of what's happened in the past versus what's happened now is that in the 1950s and 1960s we had integration of school. We had the first white flight, then it led to a middle-class flight. So it was really anyone who was in the middle class knew they needed to get out of the urban core. All of these homes got built out in the suburbs, and there was no retail out there. There were no gas stations, there was no nothing. So people started putting gas stations in, and every two miles there'd be a gas station with a nail salon and a liquor store two miles down.

All of the financial industry started saying, “How do we think about this differently? How do we know this one's better than that one?” And they said, “Well, if you have more locations, then you're stronger.” So Little Caesars is better than Empire Slice or your local pizza shop. That's what the bank said.

Chris: That's what they think. Yeah.

Jonathan: That's what the appraiser said. What really happened was this ubiquitous redevelopment of areas that was driven by money. It's not critical or anything, it's just the way that it was. If I build a Starbucks in any kind of suburban setting, the moment I get a Starbucks lease and I get them open, that is the most expensive that real estate will be because it's based upon the term of the lease. It's not based upon how much the asset is worth. It's based upon the fact that you’ve got 10 years left, so if you wait seven years to sell, you've got a less valuable asset. So what happened was in the suburbs, everyone had to build, fill, and flip. Then you had to reinsert that money into a new system. The whole system was based upon recreating the same thing over and over again.

Leading the charge with joyous disruption

Chris: To sell buildings that had really well-curated tenants?

Jonathan: The idea was that you get your strong, anchor tenants, your national credit tenants, you get them to sign a lease and then you sell it. But you now have this money that you’ve got to put back to work. It's a cycle that forces itself. People are like, “Well, why does there continue to be sprawl?” Well, the whole economic system is based on that. There is a great book, it's called “The Great Inversion and the Future of the American City”. It basically reads that we're following European cities. We're just 100, 150 years late to the table. As wealth is starting to come back into the core, what happens is there's all these neighborhoods that exist, but an artist or a retailer would come in and drop something that's cool, and then someone would come in next to them.

That's cool. Then someone goes, “Well, I want to live next to that because I want to walk to that.” So they go buy this home that was really undervalued, and they fix it up, and now they're close to all this stuff. Whereas housing led the way in the 1960s, retail was leading the way in the 2000s. It really creates a complicated system for banks and appraisers and the financial markets because for 50 years our whole economic system has been based this way. Now you're coming in and you're flipping it on its head... there's no comps, there's all this stuff that doesn't make sense. You’ve got a tenant who only has one location, and you think this is better than a Little Caesars. They're going through all these questions and they can't figure it out.

That's what we walked into from a development standpoint. At our core, we have said, “We're going to build to hold. We want to chase asset appreciation. We want the buildings we redevelop to be worth more in the future than they are today. We're going to chase cash flow and we're going to do it. Our values are that we want to do it with excellence. We want to be resilient, but we also want to be joyous disruptors.” That means we're hopefully pulling joyous disruption, when we see things that are broken, we either use paternalism or shame and guilt. So we're like, “They're not smart enough to see it, so I'm going to come in and help them.” Or we're going to use shame and guilt, and say, “You're such an idiot, why don't you see it?”

We've said, “Well, we're going to try to be passionate about what we're doing, and if you want to come be a part of our story, we would love it because we're actually joining someone else's story. This isn't our story. We're a part of someone else's story. Let's just go on and go do it.” That fits into real estate, and it impacts where we develop, how we develop, who we develop with, and how we think about the communities we're impacting.

Chris: That is amazing. It was interesting you said Empire Slice because we had Rachel Cope on… she's a rockstar.

Jonathan: She's awesome.

Chris: Literally a rockstar entrepreneur in hospitality — and there are these unique ways, even the way she described getting into her first building to do Empire Slice was that it was a competition that the developer had put on to sort of be like, “Hey, what should we do here?” To me, it sounded a little bit like involving the community to see what shows up. I was like, “That wasn't you guys, was it?”

Jonathan: No, it wasn't. Yeah, it wasn't.

Chris: We do cooler stuff than—

Jonathan: No, no. Steve's incredible. Yeah. What's interesting is once you redevelop an area — and this is the tension we see today with gentrification, it's kind of a buzzword. Gentrification can be good and can be bad. If gentrification displaces people, it becomes problematic. In retail districts, what happens is as a developer, I'm inclined to say the gravitational pull of money is comfort. The gravitational pull of development is to get as much money as I can to have as much comfort as possible. The way you do that is you develop little areas. You get an artist to come in and you say, “Hey, just pay me $5 a month.”

But by the time you've redeveloped your whole district, the person is paying you $30 a month, and the person who started paying you $5 as the artist, you're like, “Dude, I could make six times the money I'm making. I think you need to pay me six times.” The artist is like, “My whole economic system is not based upon me paying rent six times of this.” We kick them out and we bring someone else in. It's really hard for developers in general to have restraint — not restraint in vision, but restraint in saying, “How do we actually have a longer-term view other than just making money?” It's hard to do. There are some people who just don't even think about it. They're like, “Yeah, the goal is to make as much money as possible.”

Chris: Well, the only value is money, right? When that artist created value by saying yes and was an anchor, it wasn't necessarily like an anchor tenant, but it was one of the people who gave you sort of initial traction to be able to grow. It's like, “Well, I only value the money, so I'm going to come back to them and say, 'You need to do this thing instead of valuing the position and the role they play to get them to the $30.”

Jonathan: Absolutely. And when we view people, if wealth leads to comfort, the problem with comfort is it builds walls. As they build walls, what that does is it prevents us from experiencing pain (we all are pain avoidant). But it also forces us or makes us miss out on experiencing joy because joy and suffering are typically bedfellows. They're right next to each other and this has become... I was thinking about this the other day, why is it that I tend to think about the world that way? Because it's true for me. How do I prevent myself from actually having to suffer? But if you talk to an opioid addict, where they're at now, they don't feel anything, but they don't feel any joy. And that's the emptiness that's there.

That's the dilemma of wealth. Wealth is not a bad thing. But when we let wealth or money dictate how we make decisions within development, I think we miss out on this whole opportunity to see the world really, really differently. I mean, it really erodes something.

Committing to create lasting change

Chris: Yeah, absolutely. You see that all the time in business. So you've got this flipping model where there are no comps, bankers are going crazy. They're like, “I don't know how to value this, therefore I'm not going to loan anything against it or whatever.” And they can't see the vision.

So talk about how you raise funds if sometimes you have to go adjacent to bankers. What are some of the things you guys have had to do to really sort of raise funds for people to catch a vision? Because it sounds a hell of a lot like SaaS companies. It's like, “Hey, I've got this really great software.” You know what I mean? You’ve got to sell the vision to investors because banks are like, “Eh, no. That's not—”

Jonathan: Not interested.

Chris: Real estate is their game.

Jonathan: I never realized how important bankers were to redevelopment that matters. We started by finding complicated buildings. We used historic tax credits, we used Tax Increment Financing (TIF) from the cities, we used all these layers that allowed the bank to get to a place where it could handle it. I think where we hit our wall, and I don't know at what point we want to talk about some of our work on the east side, but when we went to the east side, which is our historic African American and Black community, that's where things got vastly different than from when we bought the Tower Theater.

I didn't have any money to put into the project. We were using tax credits. We didn't have any tenants when we bought it. Me, Ben, and David had no money and we got a bank to say yes. Wow. Part of that was reputation. We don't take it for granted within, I would say the white community, how much favor we're given just by being in the community and doing stuff and being a banker provided me credibility that I didn't deserve. We got a headstart that we didn't deserve, but we’ve been used to that. There's a lot of people who don't get that. So if we couldn't have borrowed for the Tower Theater, Pivot wouldn’t exist.

Prioritizing diversity, equity and inclusion

Chris: Wow. So tell us about the Eastside Project. Talk about how that changed things for you.

Jonathan: Yeah. I was still at Elemental in Oklahoma. University of Oklahoma had a race incident where a college student was singing on a bus about lynching a black man. It was caught on camera. They do this race reconciliation conference. One of the people stands up behind me and says, “If you know what it's like to be in my shoes, when was the last time you had someone like me over to your house for dinner?” That night I went home and I journaled, and I don't typically journal at night, but I did that night, and it was really pathetic, and I've shared this before, but I just said, “Dear God, let me find a Black friend.” I didn't have any Black friends. My whole world was excluded from really any demographic other than white men. Over the next couple years, I started just meeting folks and being intentional, learning about what it’s like to be a Black person and then to have to walk alongside the burden that entails in terms of racial inequity, disinvestment, but then you become friends with someone and then they're wanting to walk through, they've got to become aware of the situation and what does it mean to have white privilege and then what does it mean to actually not become paternalistic about it and fix the problem?

What does it mean to just be a friend and to walk alongside them? I had friends who were just willing to do that for me. It is not fair for them, but they did it and they extended grace to me in that way. At some point, the city came to us and said, “We would like you to develop on the Eastside. No one's done any new development in 35 years. Would you guys take a chance?” So—

Chris: The city came to you?

Jonathan: The city, yeah. What we realized was we had just seen some people try to do development over there and they did it wrong. Really quickly, we just said, “We're going to have six principles that guide how we do this. The first is to say that anyone who has access to power and money usually thinks they're a blessing to the community they're going into. But one, that’s fundamentally wrong. That's also paternalistic. What we said is, “If we leverage that, we believe that what makes great humans is community. It's overcoming obstacles, it's sticking together. It's doing things that people said couldn't be done, and that exists in abundance in the Black community.” We said, “Hey, if we leverage the things that we have, would you just let us be a part of your community?” So one was flipping the power wealth dynamic on its side.

The second was to say, “Typically when we decide we want to do something good, as long as we can stay in control, then we're comfortable with it.” So we said, “That's also problematic.” We called Sandino L. Thompson, who is a friend of mine, and said, “Hey, would you become the lead for us on this? So you get to speak on behalf of the project, you get authority over the project, you become an equity member in the project, you get development fees. And we will submit to you if you feel like things are going in the wrong direction.” The third thing we did was we said, “We're going to take money that we get from the city and we're going to pass it onto our tenants instead of protecting the investors.” So we reduced rent by 30%. We gave six times the amount of buildout to build out the spaces.

The fourth thing we did was, we talked about this earlier… Gentrification that leads to displacement is really problematic. We don't know what we're going to be like in 10 years. What we said is, “Instead of hoping that we still have great values and all of these things, we're actually just going to roll our tenants in as owners in the space.” So if they signed a lease, they became a 15% owner in their space. Now we flipped the whole tenant-landlord relationship into something where they’re now our partners and we're going to figure out how to do this together. Then what we did was we said, “We're going to pay the community to tenant the buildings.” Instead of us bringing in a broker or us trying to tenant the spaces, we said, “If you know someone within your community who wants to come here and they sign a lease, we'll pay you the brokerage commission for it.”

And so we called it a consulting fee so that we don't—

Chris: Because it's against all real estate?

Jonathan: Yes. We just paid them a consulting fee. They didn't negotiate the lease, they just brought the person there, and we got to pay a bunch of people. We never would've had the tenant mix that we had, had we tried to go fill that ourselves.

Chris: I mean, it's a big deal to pick your neighbors.

Jonathan: Yeah, it is. It is. It is. Then the final piece was we said, “We're going to use this development to find other people who are interested in development and try to train them up in future developments so they can learn how to redevelop their own community. So those were kind of the six core principles that guided us. We got a healthcare tenant to actually move their headquarters from OU Health, which is the big healthcare center within the city.

And they're a 110-year-old company. They moved their headquarters to our space. They signed a lease, a 10-year lease, they debt serviced all of our... so I'm so excited. I tell our team, this is the easiest debt I'll ever get. I started calling banks and we called over 25 banks and they wouldn't even give us a term sheet. What most of them said, almost all of them said, “Well, there's no comps.” Some of them said, “We just don't lend money to that side of town.” What was fascinating for me was here, this is literally two miles due east of the Tower Theater, which is where we started our career. We had no tenant. We had no money. We were able to borrow 100% of what we needed to get in. Here we have 40% of our costs covered because the city's investing money, and we’ve got a 110-year-old clinic.

Finally we got a bank that said, “Hey, if you get a guarantor that's richer than you, and they guarantee the debt, we'll lend you the money to do this.” So we have a buddy, he's got the largest single malt scotch collection in the country. Right now I think it's $7 million of single malt scotch.

Maintaining resilience in the face of rejection

Chris: Please tell me he used that as collateral.

Jonathan: Well, I was like, “Dude, who else wouldn't you want to guarantee? If you have to foreclose on that, how great would that be?” So we sent over his personal financials. He said, “I'm in, man, I care about what you guys are doing.” And the bank called me back and said, “We've decided he's not rich enough.” At that moment, it hit me that if three guys who all we do is develop, we have a 110-year-old clinic and we have a guarantor who has more single malt scotch than we need in debt, and we can't borrow money on the Eastside, how do you think a 20-year-old Black kid is going to get any money to be able to do anything? So there's always this statement where people will look at communities that are underserved and be like, “Well, it doesn't look very nice. They probably don't care about their community. It's not our problem to solve, it's their problem.”

Chris: But they're real headwinds.

Jonathan: In reality, they can't get any of the things that we have access to. That became a personal challenge for us. The last banker I could think of was Jill Castilla, the CEO and President at Citizens Bank of Edmond. For context, she's a suburban banker, but at a female-owned bank. I basically just vomited everything. I said, “Pivot's not going to make it, this project's not going to land. We're going to lose the healthcare clinic. They're going to move somewhere else.” She said, “I'm in. Let's do this.” So she ended up lending us the money to go do that project. It became an important piece for us to realize that part of the redevelopment that we're doing and the joyous disruption we're doing is actually creating comparables so that when someone in the Black community wants to finally go do a building, you can't say, “Well, there's been no development over here in 35 years.” You say, “Well, there was, and it's been successful.”

Chris: Yeah reframe the whole narrative.

Jonathan: Yeah. “And now we have to give you money.” When 80% of middle-class wealth is derived through home ownership, and we purposefully didn't allow a group of people because of the color of their skin to borrow money to buy homes for two generations, there's cycles that are going to be created. That's the system. We talk about the system as the thing people have a hard time seeing. The only time typically we can actually see the system is by entering into relationships with one another and then seeing what those systems are like. When I go with Jabee, who's become a friend of mine, and we fly together, almost every time he goes through TSA, he gets strip-searched. I film him. I go through first and then I film him because it happens every time.

I've seen he had a little lightning bolt necklace, and they were trying to take that away from him because they said he might use it as a weapon on a plane. Just those microaggressions they go through every day that I get pissed if someone pulls in front of me. That's my frustration for the day. They have taught me more about patience and kindness and goodness and the way we should see the world that I never would've been able to see had I not been welcomed by their community.

Using a healthy mindset to manage stress

Chris: It's an amazing story. The amount of stressors you've expressed where you've got your own personal viability on the line, you've got reputation on the line, you've got a family, all of those kinds of things, those things matter too. But you're sort of on a mission at the same time. And those stressors likely take a toll or there's a price to pay.

So talk to us through the mindset you use, practices you use to really work through some of those challenging times. You mentioned journaling. What are some of the other techniques or maybe some of the feelings you've had that you've had to process and how do you overcome those feelings?

Jonathan: Yeah. It's interesting because the weird thing about real estate development — and other entrepreneurs will understand this, is you're basically battling against everyone because everyone said, “Well, this building's empty because it doesn't have any worth.” You're going in and you're saying, “No, it does have worth, and it will be an asset to the community, and we will redevelop it.” So you're fighting for the money, you've got some tenants who want to come in and some that don't. You feel like you're constantly having to fight them to get them in. Development in general can really become about you very quickly. And typically, I can make a lot of things about me pretty quick. So one of the things that was intentional just from a system standpoint was that we said, "We are not going to build a development company around an individual.”

I told the team in one meeting, “I think the quickest way for us to launch our company...” We've since kind of reorganized and we're doing some bigger projects, but as we're talking about this, I said, “The best way to relaunch this is to make it about me, but the best way to make sure that it fails in spectacular fashion is to make it about me. And so we're going to try to build something that's bigger than any of us.” That's from a system standpoint.

And there are a lot of things that I do, whether it's running or I journal and I read. I try to read a lot, and I read a lot of fiction. Actually, I've read East of Eden five times in the last six months. If there are any East of Eden fans out there, I would love to just talk to you about it. Best book ever written.

But then it helps too to have a family that doesn't think you're that big of a deal. The reality is I get caught up in things that I think are really massive and important. We just developed a dog park bar called Bar K. It's down by the river and it's like a restaurant dog park. I was pulling my family in for the first time, and it was done. One of my kids was like, “Finally, dad, you've done something good.” All of the things we've done, they're like... and why? Because there's pets there. My oldest son was like, “Why do you just do breweries and music venues and bars? That's so dumb.”

And I'm like, “Oh my gosh.” But having that perspective is really helpful because we really can make what we're doing seem like it's the most important thing in the world. I think a lot of that comes out of insecurity and really understanding our place and how these things work. In two generations, I heard someone say this, and I've never forgotten it, “We tend to get caught up in legacy and what legacy are we going to leave. But really what that means is how... at its worst level, it means how can we control the narrative so people remember us the way that we want? And if they're not going to remember me the way I want, then I'm not interested in dealing with that.” And the freedom, if we flip it, is to say, “If our life is just an offering to others, take it or leave it.” It becomes so much less controlling in terms of how people take us.

So yeah, we're going to screw up. Yeah, we're going to mess up. Yeah, people are going to misunderstand our motives, our intentions. But if we're free of being caught up in that legacy trap, I think it allows us to actually do some meaningful things and not impact who we are at our very core.

Chris: It's incredible to hear. I'd say you articulate that, it was really well said. I think there are battles that entrepreneurs really go through. And one of the things that I have picked up, the signal that I've picked up is you've gotten really good at selling and bringing people together. So talk to us a little bit about what are some of the ways you've... what's a negotiation you've had to pull that you're like, “I had to get pretty creative on that one”?

Holding on to your vision —no matter what

Jonathan: Well, I feel like... so probably my best quality is that I don't stop. We pretty much just keep going. So I think to be an entrepreneur, you have to just... I always tell people, “If you tell me no, it doesn't hurt my feelings.” So one is just having a framework that not everyone is going to get, and I haven't always had this. We were doing the Eastside stuff and we couldn't get any support. I had a friend call me and he said, “I think you just care too much about Black people.” Those things, instead of me being able to process that well, it made me be like, “Fuck you.”

Chris: You're offended.

Jonathan: Yeah, I'm going to take everybody down. Yeah, I'm going to take down, I'm going to rat everybody out who said, “We don't lend money on this side of town.” I'm going to war. What you realize is that nothing is going to get changed through that.

It doesn't help my heart either. I always say, I want my kids to have soft hearts that can feel, and that does not allow me to feel. When we're free of feeling like we have to convince someone, and again, my dad, we lived off support as a family, so he was in the Christian ministry, and he was always asking people to support him based on a very long-term investment.

Chris: Very long-term like internal investment.

Jonathan: Internal investment. So I believe what we are doing is financially solid. I believe what we're doing, even though there are hiccups and who would've expected Covid, there are things that happen. We are dedicated to actually making these projects work. When I'm asking people for money, I'm pretty free of being like, “I'm actually trying to put your money to work so that it will make money for you.” That does not feel like I even have to sell. It just feels like I just have to be really honest with who I am. And there are times I can go into sales mode. But I think one of the good kinds of maybe polls that my team has given me is that we see people who sell.

At some point, you never know when they're not selling. I realize that I don't want to become that person. I don't want to always be selling. I get really excited and my enthusiasm will bleed out and you'll hear it, but hopefully I'm not trying to sell you a bag of goods. Hopefully I'm being real honest. I had someone tell me, it's like, “Man, I realize that I basically... it's probably not that I tell all these white lies to get a deal done.”

It's not that I'm the truth police or anything like that, but there is a sense of saying it's a value we do care about is trying to be honest when we're communicating with people because it allows us to be ourselves. You don't have to worry about any of this stuff, “What did I say to this person versus what did I say to that person?” So I don't know if I'm answering your question, but—

Developing a long-term view on relationships and sales

Chris: You totally are. Because if you think about it, I mean, being good at selling, I think selling is about helping people make connections. If you've got this vision, it's like, “Man...” The model, the industry, the system can't see the vision. Your selling is like, “I can help you make the connection. I can help somebody see the vision.” I think that those are the big moments, that's when people say yes. If you think about selling, it's the 13-50 yeses you got along the way to get the deal signed. There are those temptations, and I think it's really powerful to face the temptation to tell half truth, to tell lies to say it's true because I said it this way, but it's really kind of not true if you really knew all the context.

That's why material facts and things like that matter in real estate. But I think at the end of the day, there is a good tension that I think is really powerful where you can face the temptation to, “I'm going to say this, but if I do, it's outside of my value system.” It takes even more creativity to see somebody to help them make the connection and still have held fast to your values. That doesn't mean you have to be perfect. Sometimes, yeah, I mean, you're like, “Well, I told half truth there and the next time I'm not going to do that. I'm going to stay away from that, ”Oh, I could have said this and that would've been different." I think that those growth moments are really powerful. But I would say that entrepreneurs, mostly their traction really comes when they're able to help people make the connection with something that's brand new.

Jonathan: No, that's good. I think what I've realized is that some people can't make the connection or they've chosen not to make the connection, or they're too smart to make the connection at this point in time. So as a development company, we have different things we need at different points in our lifecycle. Being gracious enough to say, “I've exhausted everythingI can think of.” There is also a freedom in saying, “Maybe this isn't the right time for them. They're not the only person in the world I can pitch. So I'm going to go find someone else who would buy into this.”

Chris: And that's knowing when to push and when to hold back.

Jonathan: Absolutely.

Chris: Because you could circle back with that person with something else, right?

Jonathan: That's what we always tell people. We're always saying, “Hey, just because you say no today doesn't mean I'm not going to be back. I'm pretty resilient. We'll come back to you in 12 months and see if that's the deal that works for you. And if not, I'll be back in 24 months.” We want to keep doing these kinds of things, which means we need to have a very long-term vision in mind.

Using big projects to finance the ideas you love most

Chris: I love it. Well, tell us about what's next? What's on the horizon for you and the Pivot Project?

Jonathan: During the pandemic, we did some recalibrating. We said we'd really dabbled in the project range of $5-$15 million. Those were really fun projects, but what was happening was we have all these resources and they get caught up because they're all complicated. You might find three oil and gas tanks buried underground and that delays your project by a year or this or that happens. So we decided to reaffirm who we are. We're going to spend a year working on our values and our purpose, but then we're going to chase some larger projects to give us bandwidth. Those larger projects give us the ability to have basically 18-24 months of operational income to do the things we want to do.

So we've got five or six really fun projects. We've got a hotel, a $30 million hotel on the east side of Oklahoma City, right across from EastPoint. It'll be 51% minority owned. We've got Monarch by two sisters from the Eastside. They're actually going to partner with another development company to develop it. Sandino's involved with it. We've got several people who have ownership in the real estate. That will be a really fun project. It's a really complicated project. You can't really do market-rate deals there yet. There's been 30 years, 40 years of disinvestment. So we've got so many layers of capital and we're really waiting on one final piece to be able to pull the trigger and go. It'll be fun. We've got a project in Tulsa that's a hotel, multi-family, garage. There's a lot of just bigger stuff going on.

It's all fun. What I think we're really committed to right now is building a team. We just brought on a brokerage company and decided to be intentional about how we hire. So joyous disruption doesn't mean we have to be out in your face. It just means we're going to hire differently. There's not many female developers. There's not many female brokers. There's not many minority developers or brokers. We've just said we're going to be intentional about trying to do those things. I think it makes us a far more interesting company because we have a bunch of people who see the world differently than every other development group. That makes it a lot of fun. But yeah, we're in a really fun stage right now. I think over the next two to three years, what's interesting, we alluded to this — when we had all the talent leave in the 1980s, all of the development within Oklahoma City has really been done by individuals, really talented individuals who have put together some incredible projects.

This building we're in, I mean, we can just walk downstairs and show some incredible projects, but none of them have been development companies, companies that are actually built to do this. Even with our name Pivot, we're being intentional about when people drive by, “Oh, that's something Pivot did, right?” That's not Wanzer or Dodson or whoever. We're trying to build a team we think can go do more, and hopefully we can do more in Oklahoma and outside of Oklahoma.

Rapid-fire questions

Chris: Yeah. It's been incredible to see what you guys have done. I think there's always these really complimentary whispers, conversations at events and in different places about the work you guys are doing. I think in the community here and even in the company that I work for, that there are a lot of people who are really proud of the work you guys are doing and that they want you to keep doing it. I love a good Tower Theater show. I really just enjoyed this conversation. And I have some rapid-fire questions I'd like to ask you. We did not share any of these with you.

So, first question, are you a morning person or a night owl?

Jonathan: Morning.

Chris: Morning. See, I guessed this one. My next question is, what's the most important or unique part of your morning routine? You could say coffee.

Jonathan: It's the five minutes I stand doing the pour over, waiting for the water to boil, what have I pulled up on my phone or what am I spending my time thinking about in those five minutes.

Chris: Well see, yeah, when I said coffee and you're like, “Well, the pour over.” You definitely have good taste. The world ends on Monday. What are you doing? How are you going to spend this next weekend?

Jonathan: Telling people things I should have told them that I hadn't and spending my time with my family.

Chris: That's good. That's good. Now there's a food scene here in OKC that I'm super impressed with. Living in Denver, coming here, I'm like, “Wow.” It's interesting, the food scene here, it's really good. What's your favorite restaurant in OKC?

Jonathan: I have to cheat. For the people, I go to Elemental Coffee. For dinner, I'll go to Frida Southwest. For burgers, The Flycatcher Club.

Chris: Flycatcher. I haven't tried that one. OK. All right. I'm going to go. Who is your greatest business inspiration?

Jonathan: Well, the two people that I'd really like to meet in the city are Gene Rainbolt and Sam Presti. Mr. Rainbolt is a progressive individual who has opened up branches in every small town in Oklahoma. His understanding of how to care for communities and have a viewpoint that at times could be deemed as incompatible with those communities, and to do it in the way that he has is incredibly impressive. Sam Presti has built a team using processes to show people that he cares, which is a really hard thing to do.

What's interesting is I have found more lessons in my life through the fictional characters that I read. It's easy for me to be like, “Well, this would be a fictional character who has taught me a lot, or this would be a fictional character.” I have a lot of friends who totally geek out on all the leadership books. I would probably be better off if I read them, but I would rather read “The Grapes of Wrath" or read Cormac McCarthy or read something else. Yeah.

Chris: I mean, it's so powerful. All right. What has been your most satisfying moment in development?

Jonathan: This is going to sound super petty. When we did the EastPoint Project, we were so proud of it and we lost out on some local awards, which really hurt because we had never felt like we had put together something better than that. We ended up winning the International Award of Excellence, which only the Devon Tower and Gathering Place had won. It felt like we didn't need the validation, but sometimes you feel like you're doing something that's really important and no one in your own community realizes it. Or they realize it, but they don't understand it right. Then to have someone from the outside come in and say, “Hey, this matters, this is unique, this is cool.” I think it gave all of our team just a sense of, “Oh, we weren't crazy,” because we started to feel that way. You're like, “Are we missing it? Do we not get it?” And so that was definitely it.

Chris: Most satisfying. That's good. All right. How do you define success?

Jonathan: I think it's hard for me to make it personal. It's more about Pivot and its entities are created or are there to promote human flourishing. Human flourishing means it's for our stakeholders, but also our shareholders. It's about how do we create a community for 8-year-old children and 80-year-old adults? If we do that, I think we will have achieved success regardless of the financial implications.

Chris: Oh, love that. What do you enjoy most outside of work?

Jonathan: I love skiing. I have learned to love skiing more because my kids love skiing. I used to love it for personal reasons. Now I love it because I get to be with them and they're stuck with me on the lift.

Chris: It is great. I have four boys, so I have the same feeling.

Jonathan: Yeah. It's like you can't leave. I like to run, I like to read. I love to watch movies with the kids. So yeah, really it's like someone shared this the other day, I think actually we're drinking from his cup, Mike Beckham. He shared this on LinkedIn. He said, “Our family or what we view as the traditional family life, we only have 16 years of that.” My oldest son is about to turn 17. My time with him is just about done. And all of the books you read as a young parent and all of the things that you tried to orient your life around, that chapter's almost over. So really the time I get with them, however it looks, is awesome.

Chris: And I have to say, I had a little bit of a panic attack. My oldest is 15. When he turned 10, I was like, “This is almost done.” I was like, “I’ve got to change this up,” because I'm sitting here chasing all these things and I realized, “Man, this thing is going way faster than I thought.” It's a real thing. We had Mike Beckham on the show. He was awesome.

Jonathan: He's great.

Chris: Super good dude. Well, OK, this is the last question. 10 years from now, what is the one thing that you're like, “I hope that I have accomplished X in 10 years”?

Jonathan: I hope I'm not CEO of Pivot. I hope Pivot is doing better without me than it was with me. I hope I'm getting to go take some of these things that I'm doing and go to other communities with other smart people and do cool stuff.

Chris: I love that. Well, I’ve got to say, Jonathan, it's super incredible to sit down with you. From having beers at the Ponyboy, to hanging out with you and having this conversation, I have a lot of respect for what you guys do, and I respect you as a man. I appreciate you coming on the show.

Jonathan: Thanks so much. And you didn't ask for this, but what Heartland has done by moving to the urban core and investing in communities is pretty transformative. So you guys are very well beloved in the city and I appreciate you guys having me on.

Chris: That's awesome. Thanks, man.

Jonathan: Thanks.