Robert Frost, Never Left Home

 

103. Robert Frost

SPEAKERS

Will Bachman, Robert Frost

 

Will Bachman  00:02

Will Hello and welcome to the 92 report conversations with members of the Harvard and Radcliffe class of 1992 I’m your host. Will Bachman, if you visit 92 report.com that’s just 92 report.com you can read the full transcript of this episode and every episode, you can sign up to get a weekly email to get notified the latest episodes. And I want to say I’m now happy to be here today with Robert Frost. Robert, welcome to the show.

 

Robert Frost  00:33

Thank you. Thank you for having me. I’m excited to be here,

 

Will Bachman  00:38

Robert. Tell me about your journey since graduating from Harvard?

 

Robert Frost  00:41

Well, you know, I 10 days after we graduated, I got married. Oh so I and it’s, it’s sort of part of my, part of my Harvard story. I married my high school girlfriend, Nava, and we were still married. I should add much, much to her chagrin, but we we grew up in the same apartment building, and we graduated. She went to Brown, and we stayed together all through college. Most of my friends knew her, and we had a big wedding, and on Long Island on june 14 of 92 after we graduated on June 4, and it was sort of the it was also kind of a big graduation party, if you will, because a lot of people from our class were there. And we moved back to New York. We moved back to the same building, albeit a different apartment that we had both grown up in. So the way I liken that for people who aren’t from New York is, you know, I married the girl across the street and bought the house next to my parents, right in a in a New York City version of that. And I took a few weeks off, and I started working at a consulting company called a A.T. Kearney because I had in college, spent much of my time at Harvard student agencies, which, for my last year I ran, and I had run an agency while there, and I was very interested in business, and thought that consulting would be a good thing to do for a few years before I could go become the CEO of somewhere. You know, it was a more efficient way to get to the top, if you will, than than working for 30 years at a big company. And I realized about three weeks into it that consulting was probably not for me. Oh, not because of the of the work, but because of the more senior process that I mean, I know you’re a consultant, but the sort of selling and the client relationship, I liked the work, and I really want to be doing that when I was more senior. And obviously it was the fall of 92 there was an election upon us. I had majored in government, and a A.T. Kearney had a group, which was sort of fledgling at the time, called the Global Business Policy Council and the global business policy group, where they were trying to provide political advice, or really a view of the world, to senior leaders in business, and also advising governments on business practices, principally governments in Central Europe and Eastern Europe that were transitioning at the time from centralized economies, and because of my background, I had done some work on that. And the day that I was assigned by the Automotive Group at A A.T. Kearney to spend nine months in Saginaw, Michigan, I went into them and I was like, Look, I’m either going to Saginaw, Michigan, and you’re never going to see me again, or or I can transition to your group. And they made arrangements for me to do that, and I spent the next three years working in this group, which was small, on projects, advising a couple of the country, the now countries of the former Yugoslavia on how to transition to free market economies, or versions of free market economies. And also working with the firm, not so much on the actual advice we gave CEOs, but on the cultivation of C suite level clients, Kearney, at the time, was trying to transition to that, as opposed to sort of being an operations firm, and I think they’ve done that quite well. But after a few years of that, I didn’t really think that there, that was where I wanted to spend my life. I went to business school. I went to business school at Columbia,

 

Will Bachman  04:40

very, very fine school, if I do say so myself, yeah, I

 

Robert Frost  04:44

like, you know, I like it more then than I do now. But I, I liked my time at Columbia. I was there at a great moment to be at Columbia. You graduated business school in 97 or 98 you know, it was pretty easy to get a job, and it was sort. Of some of the headwinds that we’ve faced over the last 25 years weren’t there, and I was attracted to investment banking. I’d been thinking while I was at Kearney that I wanted to go into some version of private investing, whether that was private equity or something else, but I needed a little bit more technical training, so I did that, and I ended up working at Bear Stearns in what was called the real estate gaming and lodging group for you know, from 97 to 2000 and I actually really kind of liked it. I liked the work. I liked the people a lot. I did not like the lifestyle, and some point in there, I found a partner, and we started buying some real estate. Real estate is, I mean, it’s definitely private investing. It’s a version of private equity. I like to tell people that real estate is like finance for for people who aren’t smart enough to do real finance. And I think I I fit well in that category. And we bought and sold real estate New York as there was. It wasn’t even a an up and down. It was just an up market. So we would buy and we would sell, and we thought we were very smart. And then in 2006 we were like, wow, there really is nothing to buy. So we sold almost everything that we own, and we were looking for opportunities. And so with another partner, a guy who had been the Speaker of the city council here in New York, not a Harvard grad, E and I, began buying up a lot of real estate in the Bronx we, which ended up being we rezoned it. It was old, sort of tired, industrial real estate. We ended up doing the largest private rezoning in the history of the Bronx, and that’s now resulted, we ended up building it. We didn’t originally anticipate building it. We thought we would sell it to a builder, but those markets closed, so we ended up building it. We’ve now built about 2000 affordable housing units entirely in the Bronx. And during that time, we expanded what we bought, and we had other partners come in. And, you know, we I run a real estate business. Two other things happened since then. One is in 2011 I became the president of what’s called the Lucius Littauer foundation. You may remember Littauer as being a a series of names on buildings at Harvard. The Kennedy School was originally the lit tower school, and I’d been on the board for a while, and that’s been a great joy, because I get to give away other people’s money, and it’s fun to do, and the process is great. We were able to do some things to streamline that foundation. It’s a relatively small foundation, as foundations go, but, but that’s an exciting part of my life, and more recently, as as our sort of real estate business, I don’t want to say stabilized, because nobody in the real estate business right now feels like it’s stabilized, but we, you know, we’re not, we’re not a new business. We’ve looked to do a few other things that we would argue are real estate related to our spouses, but aren’t really. So we recently bought a third division soccer team in Portugal, and we’re spending a lot of time on that, because Opening Day is on Sunday. I should add my and if my children are listening to this, they would be upset. After about nine years of marriage, my wife and I started to have kids. We have four children, all either in college or heading to college, in college or out of college, and we still live in the same place that we lived in in 1992 we bought an apartment below us, we expanded and did a bunch of things, but I really lead a pretty small town life for a guy who grew up in New York,

 

Will Bachman  09:04

okay, there’s a lot of different directions I want to go in, but let’s start with buying a soccer team in Portugal. You said. So that is a bit of a non adjacency to New York real estate, talk to me about how that came about. So

 

Robert Frost  09:25

it’s definitely not an adjacency to New York real estate, but it actually is adjacent to what we’ve done most of our business career. So my partner in our stuff in the Bronx, we believe in sort of investing where there’s complications that are related to either the government or to history. So when we were buying in the South Bronx and rezoning, that’s a very complicated process to do a rezoning in New York City, it’s a very expensive process, and the value was in unlocking that process. And that’s sort of true. Um. Time in the in Portugal as well. So we have started, as I told you, in 2006 2007 we had started looking for places where we could make where we could make money. That wasn’t just the regular market. That’s why we’re by land. We’ll rezone. And in 2001 2002 sorry, 2021 and 2022 we had the similar thought. We didn’t see anything we really wanted to buy in the United States. The election had just happened. We knew a lot of people who were very anxious about, whether for good reason or not, very anxious about and existentially anxious about the United States and Portugal, amongst other places, has a golden visa program where you can invest a certain amount of money, and if you do certain things, become a permanent resident of the EU and so what we initially did was we raised a fund for people, into which a venture fund into which people could invest. We were going to buy real estate in Portugal, and they could then obtain their residency. And then the government of Portugal and its wisdom, announced that they were going to end the golden visa programs. As a footnote they have since they didn’t end them, but at the time they ended them. And my business partner, I don’t want to say it, was going through a midlife crisis, because he was enjoying every minute of it, but he was kind of having fun. He bought a place in Portugal. We were like, you know, we’ve always wanted to buy a football team. Originally, we were many, many, many years ago, we were going to buy York City, which is in the fifth division in England, and we were going to call it the New York City Football Club. And then, of course, New York City now has a club called New York City Football Club, but that was really more of a goof than anything, and we but we actually started to look around. And Portugal has a lot of it’s not been as picked over as the English leagues and some of the French leagues, so there’s a lot of value. And we found a team in Lisbon, for many people, it’s sort of everybody’s second team. It’s called Athletico club to Portugal, and it has a beautiful old stadium. But they had no money, and they had worked their way up from the eighth division to the Fourth Division. They were now in the third division, the third division in Portugal, you have to start paying bills. It’s no longer amateur. You have to pay players, so they needed money, and we want a bit of a bake off. It didn’t cost us that much. We raised some money from investors. We’re still raising money from investors, if anybody’s interested, but we raised some money from investors, and we bought the team from the club. So there’s a there’s a larger organization, and all we’ve done is professionalize it. We’ve brought in a head of football. We’ve brought in a head of administration. We have a scouting department. We’re investing money in this beautiful stadium called the tapandinha. This is the real estate play, and we’re bringing in a whole hospitality suite, where not suite a suite of hospitality, so a restaurant that or restaurants that will serve different foods, and we think it’s going to become a real destination for people visiting Lisbon who want to have an incredible view of the of The Lisbon Bay and see some pretty inexpensive fun football. So that’s the sort of business play to it. It does have a big real estate component. Some of our real estate partners invested in it. I will admit that I don’t have a even a child’s history of being an athlete, so I, you know, barely know a midfielder from from a defensive back, but I like all the business aspects of it, and we’re having a lot of fun doing it. And it’s not quite you know the Wrexham story that you may have seen on on Netflix, because we are not as famous or as good looking as those guys but, but it’s a lot of great fun for a bunch of guys in their mid 50s.

 

Will Bachman  14:08

What do you know now that you didn’t know then about what it means to run a sports team from a business perspective?

 

Robert Frost  14:17

Well, it would be a bit of an exaggeration to say that I run it. My business partner really runs it and and then we hired local people. I think the interesting thing about it is there’s so much passion in sport, and this is true at the highest level of sport, and it’s true at the lowest level of sport, that people do forget, that you have to keep the lights up. Okay, so you there are just countless teams. This is particularly true in football and worldwide football, where somebody will come in by a Fourth Division team try to put, you know, a trillion dollars in in their hope that they’re going to go to whatever their country’s premier league is, that really is a very bad way, or it’s a very easy way, to lose a ton of money, right? Right? No matter how much money you put in, you’re not going to beat Manchester United if you’re coming up from the fourth division in English football. And so it’s been interesting to try to figure out how to run a kind of more of a mom and pop business, right, or more of a small business than one that’s trying to be, you know, Sporting Lisbon or Benfica or Porto. We’re not trying to be that and tempering people’s love for the sport and maybe love for the team with the reality of what we can afford to pay a player or what we can afford to pay a coach, or the fact that we have to watch, I mean literally how much gas we put in the bus, right? That has been an interesting experience, and I think we’ve actually been pretty good about getting the right people who are on the same page with us. Our real estate business, for as large or small as it is, has almost no employees. We hire other companies to do almost every activity, whether that’s property management or accounting or the like. I you know, we have three, four or five people who work for us, but so this has also been sort of the first venture into managing more people and a bigger operation. And that’s been a real learning experience. Been fun. Let’s

 

Will Bachman  16:21

talk a little about your experience. At the Lucius in lit tower foundation. I imagine that you weren’t recruited as president and CEO Just out of nowhere. Have you been like active in the Jewish community? Tell us about how that came up.

 

Robert Frost  16:37

So I actually think that, if you’ll indulge me for just a second, I’m going to talk about my father for a moment. So my father went to Harvard. He was not an immigrant. He was not a child of an immigrant. My grandfather was born in the United States in the 1890s which for Jewish immigrants from Eastern Europe was early. Most Jewish immigrants were post from Eastern Europe were post 19th century. And my grandfather was an accountant and went to City College and and had a bit of a complicated history. I won’t bore you with that, except to say that that he did go to jail for arson for a brief moment. But my father grew up as the fourth of four children and the fourth of sorry, the fourth of four sons and the fourth of five children, and graduated high school actually in December of 44 they were trying to graduate kids early so that they could get a little college under their belt before going to World War Two. So, and that may seem odd that my father was in World War Two, but I’m the youngest child of a second marriage, so it was sort of skipped a little bit of a generation, and my father doesn’t really remember how, but he was it was suggested to him that he applied to Harvard. His plan had been to go to City College like his brothers, and he ended up going and got a semester and a half in and went to the Navy. Didn’t if you were born in the second half of 26 you probably didn’t see much action, if any, but because they were preparing them for the invasion of Japan and and he got out of the Navy, and he came back, and he did like another semester and a half or two semesters, and they gave him credit for his naval service. And he was done with Harvard. But while he was at Harvard, he was the founding president of the Harvard hill up okay, and the 1940s were a great time for Jews and really non wasps at Harvard, because they opened up. And the classes of 4748 and 49 were amongst the largest classes at Harvard and the most diverse. Because if you had been there as part of the V 12 or one of the other military training programs, Harvard let you stay right. So if you had been a kid who went to University of Iowa but were training for the Navy at Harvard, they were like, you know, you can stay and be a graduate of Harvard. So he met all these people from all over the world and and he was, you know, just a public school kid from Queens. But for him, Harvard was kind of a transformative in a way, maybe not for me, transformative experience. It opened his eyes up to a lot of things. He ended up going to Yale Law School, went in the Foreign Service, got his master’s degree from the lit tower school, or the lit tower center, now the Kennedy School, and left the Foreign Service and went into business. And he remained very involved at Harvard, and when they wanted to change the name of the lit tower school, or whatever it was called, the lit tower center, to the Kennedy School, you might imagine that the guy who ran the lit tower foundation wasn’t too excited about that. And my father was kind of sent as an emissary from Harvard. He was. Somehow involved in Alumni Affairs to smooth things over. And he did. And if you go to the Kennedy School now, you’ll see there’s a sign that says the late our center of public administration. And he so impressed the guy who ran the foundation. The guy asked him to be on the board so and my father took over that board when that guy died is that man was named Harry Starr. Harry was also Harry was also a sort of poor Jewish kid whose life had been transformed by Harvard and by Harvard Law School, and for reasons that are probably related to my father’s lack of creativity, he put me on the board at some point, and I was a pretty active board member, and so when he died, I don’t want to say it was mine for the taking, because it definitively was not. But after much discussion at the board, I think they felt that generationally, I was right and and probably had some vision for what we wanted to do. So Lin tower does a couple things. It it as traditionally, so maybe in the 50s, 60s, 70s, especially in the 50s, was kind of dealing with the post Holocaust world. So there was a lot of funding of immigrants. In that context. They meant Jewish immigrants. Now we just mean immigrants. There was a lot of funding in the 60s and 70s to create and sort of make permanent departments of Jewish Studies, Jewish professorships, Jewish Book funds. So much of the department of the Judaica Department at Harvard. We funded many of those professorships, and Harvard has the preeminent collection of Judaica outside of Israel, and we and others, but we were very involved, funded a lot of that. We don’t really give to Harvard anymore, but Harvard was a subject in my house when I was a kid, right? So I’ve, I’ve listened to a lot of these of your interviews, which I love. And one of the things that that I noticed when I listened to them, I was listening to my friend Andy Aarons did one. And Andy and I were friends in college, and Andy was like, you know, a nice kid from Iowa, going to Harvard is a little bit like landing on the moon, right? Like, like, how did I end up here? He kind of, he talked about it, yeah, and he and others, I’m also struck by a number of these interviews. He and others talked about how, you know, they thought they would go, they would go back to where they were from. They’d become a district attorney and maybe the state’s attorney, and maybe the governor and maybe president. That was very much not the context for me. I knew plenty of people who had gone to Harvard, and none of them were the president. Okay, I was fully aware that that that wasn’t for me. And I think it’s also fair to say that that, you know, listen, I was a strong candidate for Harvard. I don’t think it hurt that my father was involved. Wasn’t his personal money that he was giving, or maybe wasn’t even money. It was more time than he was giving. But certainly, like it didn’t hurt that my father and my sister had gone there, and a number of my cousins, so my experience at Harvard was less spectacular. I think it’s probably the right word. As a result, wasn’t as wowed by the place. I didn’t think it would change my life in a way that I think it probably did for many people now. I wasn’t coming from like you know, hadn’t been here for 200 years. I didn’t go to Andover. My great, great, great grandfather didn’t, you know, go to Harvard, right? But, but I wasn’t the first guy to show up from the frost family. Yeah, and then, and now, I’m not sure was it 100% the right place for him, like I did fine there. I loved working at Harvard student agencies for all the ups and downs that I had while I was there. But, you know, I I’ve talked about this with my kids, none of whom are going to Harvard or have gone to Harvard. If I were applying to college today, I don’t know that I, first of all, I don’t know that I’d be a candidate. That’s for sure, true, but I don’t know that it would have been the right place for me. I think I, in retrospect, might have preferred an undergraduate business school. And I mean, when I think about Wharton, I mean, I think we can all agree, nobody wants to go to that place, but, but I don’t know where I would have gone, but I just It struck me when I listened to you to some of these interviews. What a what a transformative experience of really being accepted to Harvard was for some of these guys, and for me, it was just a little bit less unique in the context of where I came from. And I don’t mean that i. Say that to be arrogant. In fact, I say it sort of to be the opposite. My path to it. It wasn’t assumed. Wasn’t like. I mean, my two of my sisters didn’t go it was but it wasn’t like, so special. Does that make sense? I’m

 

Will Bachman  25:18

curious if you could share any stories or reflect a bit about your father’s experience as a Jew at Harvard in a period where it’s really opening up accepting many more Jews. And founder of Hillel, co founder of Hillel, right? Um versus your experience there, um, and I know you’re not there now, but, sir, but you know, I wouldn’t necessarily ask you to reflect on experience now, you know, but your experience, you know, versus what you heard from your father, what it was like. Why did Hillel what that was like that?

 

Robert Frost  25:56

My father would tell you that he experienced no anti semitism at Harvard, okay, but that’s because he only surrounded himself with Jews. I’ve my father took a picture. He had a picture taken of his nine roommates while he was at Harvard. Every single one of them is Jewish. That’s not coincidental, okay? And but the anti semitism that existed then was different from the anti semitism of the 20s, which was, which other people have written about and talked about, which was sort of aggressive anti semitism, the anti semitism of the 40s, maybe the 50s. 50s was social anti semitism. Now, you there, you weren’t going to be a member of the porcilian If you were Jewish in 1948 I mean, they just, you know, you weren’t going to be in the Hasty Pudding, right? But the first football coach of Harvard in the 1890s was Jewish, Lucius Littauer, okay, so his experience was one of pride, I think one of they were trying. We were so removed from Europe that none of our relatives died in the Holocaust. We had no relatives left in Europe, which is a little unusual. And so he was there as an American. That’s how my father viewed himself. He wasn’t a religious person. He viewed himself as an American who was also Jewish and was very thankful to be an American. He’s very proud of his naval service. He was very proud of his state department service. He had been in the Foreign Service, and so it didn’t give him. He didn’t allow himself to see any social slights that he that may have existed. But I can tell you is he didn’t have any institutional slides. There was no there was no issue with grading or with access, or with, you know, any professors or anything like that in a truly wonderful time at Harvard. And I really do think that the 40s and maybe the early 50s were a great time because Harvard was opening up at that moment to public school kids, or a certain type of public school kids. There’s a book called The chosen that Cara Bell wrote, which is about the admissions into Ivy League basically through the 60s and 70s. And they talk about this, that that Harvard for sure, had a quota, right as they have quotas for other groups now. And my father fit well into that. He was Jewish enough to be obviously Jewish, but he wasn’t religious. He didn’t work a yarmulke. He didn’t he certainly didn’t keep kosher. His parents didn’t keep kosher. They he was, he was sort of culturally acceptable. My experience was even better. Okay, at maybe I had one or two relatively benign moments of I wouldn’t even call them anti semitism. I would call them sort of people who didn’t know a lot of Jews who asked a silly question, okay? And I actually think for people my age, and part of what you’re seeing in the world or in the Americas right now, people my age are so shocked that this still existed, because if you’re in your 50s and you’re a Jew who looks like me, right, you know, I don’t have religious paraphernalia on or whatever, the United States has been a pretty great place today. Certainly, New York has been a pretty great place today. And now maybe, you know, either things are changing or things are being revealed, or whatever. But my experience at Harvard, I didn’t need Hillel. He may have needed Hillel as a social center, as a way to sort of rebuild the Jewish people post World War Two. I went to Hillel on Passover, you know, and was kind of annoyed that the kids who were more religious, who had gone to a Jewish Day School, knew what they were talking about, and I didn’t. And I didn’t really fit in right, sort of like a Catholic who doesn’t, you know, know the Sunday Mass, right? Um, and, and I had gone to a Protestant high school too, so I knew how to fit in. In a diverse world, Harvard today is an interesting place. I mean, you know the the guy who is the professor leading the anti semitism Task Force, Derek penslar, who was a friend of mine or friendly with is the William Lee frost, Professor of History. Okay, when my father died, we endowed a professor in his name, or the Foundation did. And you know, for whatever reason, it’s not Harvard today has more anti semitism than it did then, certainly more than when I was there. Some of it’s institutional. Some of it’s not intentional. In fact, maybe much of it’s not intentional. Some of it is definitively intentional. And some of that has to do with the groups of students who attend. Some of it has to do with the way schools teach now. Some of it has to do with the fact that rights and wrongs are are cloudy to some people, and some of it has to do with there’s legitimate conflict in the world, and there are people on different sides of them. But, you know, I have faith. I think that Harvard, unlike Columbia, where I think is, is maybe too far, has gone, too far afield, in in, in its sort of institutional view, I think Harvard will survive this moment, because I don’t think this is the existential moment for Harvard in the same way that it is the existential moment for Harvard’s Jews. Then, you know, that’s what I I want to ask you

 

Will Bachman  31:49

about another topic. Thank you for that history and sharing that. I want to ask you about another topic. I want to ask you about rezoning. Yeah, so you rezoned. You said, one of the largest private rezonings in New York City history. You said, You also mentioned that you had a former, you know, what speaker, Speaker of the New York City Council, who brought, I imagine, may have helped you navigate that politically. Talk to us a little bit about, you know, for listeners not in New York, and I live in New York so I don’t know. What does it take to do a rezoning in New York City? What does that process look like? So

 

Robert Frost  32:28

there’s a kind of formal process and an informal process. The formal process is pretty straightforward. In a formal process, you get an environment you get a draft environmental impact statement, you file it, or it gets, I forgot the exact term, but you file it, and then it goes through a series of reviews and approvals by various constituencies. So it goes to the community boards, it goes to the borough president, it goes to the city council, and eventually to the mayor, and they’re mandated time zones that goes through a process called you learn, sure, I’m getting some of this wrong. This is a while ago, but there’s a very significant informal process that happens in the community before that you can’t just show up with a with a draft environmental impact statement, so the scoping of what you’re going to study in the environmental impact statement is a very important process. So we probably had, we were our site was a little bit complicated. We were in two different community boards, two different council districts, two different congressional districts, although that’s not so important. And so we met. We had no less than 50 community board meetings where we would go. We would show mass things. We would get feedback, by the way, most of it quite positive. There’s a New York City did a series of plans. I think they’re called 97 A’s. I can’t quite remember. Years before we started doing this, we’re sort of like, what would an ideal community look like in this community, what would and so we are. I talked earlier about the stadium and what we’re trying to do there. We try to do what the people want, not what we want like. It’s a much easier path. And so we design massing and buildings that reflected a process that they had already gone through. I mean, their process was more theoretical, our process was more practical, and then when you get into the tenant mix, that’s a whole different conversation. But, for example, our environmental impact study resulted in the fact that the city determined they would need another primary school, and so we carved out a piece of land and we sold it to the city for $1 and there’s a brand new primary school. You know, in our development, I mean, they built it. We didn’t build it, but we gave them the land. And so the process at the time took about four years and cost about $5 million um. Rezonings are not of that scale. Are not typically done privately. They’re typically done by the city themselves. But our plan had been Mayor Bloomberg when he ran for mayor in 2005 or six. By the way, my business partner had run for mayor, and of the four people who ran in the Bronx, he came in fifth. That’s the joke we’ve been but, but Mayor Bloomberg had designated certain areas in New York to remain industrial. So you’re from New York, or you’re you live in New York, in Brooklyn, that would be East New York industrial area in the Bronx Hunts Point things like that. And he said, in these areas, we will not do rezone, which inherently meant that outside of those areas, he would do rezone, so they would do rezone. And so we focused on areas outside of the industrial business zones. We focused on areas where we could buy up a lot of land in as few transactions as possible. We didn’t want to buy 25 by 100 lot and 25 by 100 lot. So I think we bought up seven or we all. We owned 11 of 17 acres. I think we bought those 11 acres and six transactions. We had dummy, you know, we had companies that had funny names so people wouldn’t know we were doing a land assemblage and things like, but it really was done hand in glove with the community boards. And there my business partner was great, because he knew some of those people and or at least had some relationship, you know, where he could do it, and then I would come in and do some of the business side of it. But it’s really about putting together teams. We had great advisors, we had great lawyers, we had great architects. And I think if you were to go to those communities, I know they would tell you that we did it right. And then the other thing we did is our affordable housing is real affordable housing. It isn’t like some program where we build affordable housing so that we can build more market rate housing. We have almost no tenants who make more than 60% of the average median income, and our rents are programmatically sized to that some of our buildings are 20 to 30% people coming out of the homeless system. It’s very hard to do now because of inflation and land costs and and and and construction costs. But we were basically we weren’t the first people to do this. By any means, this industry had existed for a while. Most of the people who did it in the 90s and early 2000s did it with excess New York City land. So New York City had taken so much land in the 70s and 80s in tax forfeiture that they would then sell it to people for $1 we actually had to buy our land, and now the land is very expensive. There’s almost no land left in New York on which to build true affordable housing unless the city does additional rezonings and has additional requirements, so we’re not really doing more of that now. Now we have a we buy a lot of medical office properties. We have some random commercial properties, and, you know, sort of, sort of maintain and asset manage what we previously built.

 

Will Bachman  38:19

So what it sounds like, the city puts up a lot of barriers to building more housing, and which then, because there are barriers, that just increases the cost of housing. What would you say would be, if it would be the best one or two or three things that New York City could do to make it easier to build more housing?

 

Robert Frost  38:47

Yeah, I don’t so, so it’s a very complicated question. What I will say is, is that what New York City has done is basically the same housing policy, I mean, with tweaks and, you know, different things to it since the Koch administration. So most of the Affordable Housing Program is a leveraging of the federal program called the Low Income Housing Tax Credit Program, where the federal government issues tax credits which are to a not for profit, who’s part of your ownership structure, and you then sell those tax credits to a taxpayer, and you get money for that. So the federal government forgoes tax revenue, and the developer gets it to build affordable housing of a certain that meets certain criteria. The problem is, if you’re building an Oklahoma City low income housing, tax credits plus a first mortgage probably get your project built in New York City for all these reasons, it’s too expensive, so New York City has been pretty good about providing supplemental financing. So they will provide second mortgages, third mortgages, grants that are very low interest rate to get these projects built. But there are sort of two. Problems to that. One is they the grants or the amounts that they give have not caught up with the inflation of construction and land costs. So your to answer your question directly. If the city really wanted more affordable housing, they would have to give more money off their balance sheet, and I don’t know that that’s actually a practical thing to do. The second thing is completely unrelated to affordable housing, but related to general New York commissions. There’s a lot of regulation in New York, and I’m not necessarily critical of that regulation. I don’t think it’s a bad thing for buildings to be green or for safety standards to be better, but they do cost money, and so there isn’t really a dialog between those who are passing the laws and those who are also encouraging affordable housing. Like you can’t tell me that I have to put in a million dollar system for whatever and then tell me that I also have to build more housing, because now I have a million dollars less to do whatever. And then there is some administrative hurdles. I mean, New York is understaffed. It’s been understaffed for a while. In doesn’t mean the people who work there aren’t good or don’t work hard. Many of them are good and do work hard, but there aren’t really enough of them to process so. So I’m telling you all the problems, I’m not telling you the solutions. I should add, there’s another problem, which is that New York city owned housing, which are the what you are, sort of, I think, sort of unkindly called the projects, but it’s really just public housing has been so neglected for so many years that I think the public statement, I could be wrong about this, but I think the public statement for the amount of deferred capex in those buildings is like 30 or 35 billion, and the amount of real is probably more like 70 or 80. So the city, using a federal program called rad, has tried to let tried to turn section nine buildings, which is what those are, into section eight buildings, to allow for private people to improve them and and work through them. But it takes, it sucks up a lot of the resources that would normally go to new development. So I think the real issue in New York as relates to affordable housing is more money, maybe a touch less regulation. And then if you really, really wanted to get political, and I want to say that I don’t endorse this, but there is a theory that if you got rid of rent stabilization, that it would then shake out in the market. So you wouldn’t have some apartments being crazy expensive because some were crazy cheap. I think that is an interesting economic theory that forgets that you’re dealing with real people and where they live, and so like people getting moved around. And, you know, a million people moving a year, while you find those levels is a pretty scary and truly unkind thought, but I’m not sure there’s a solution as the other than more money is the real answer.

 

Will Bachman  43:13

You mentioned that you decided to you didn’t like consulting because, looking ahead, you realized that you would need to be responsible for client development or selling. But then, of course, you are selling in your current job, right? You’re selling to investors. Well, how is your perspective on sales and selling changed since, since that time at Kearney?

 

Robert Frost  43:39

So first of all, my 23 year old self and my 53 year old self aren’t necessarily on the same page about everything. Yeah, I’ll tell you a moment at carne, which you as a consultant may appreciate. So I had a lofty title. After a year in this global business policy group, I was the Chief of Staff. Now just to be clear, there was no staff. Okay, I was the staff. Maybe there was an administrative assistant, but that was my title, and, you know, whatever. Okay. And we had a guy come in, I won’t say his name, but I will say the firm. He came in from McKinsey. And I presume he came in because he didn’t make partner, you know, whatever the McKinsey upper out system is. He was a little annoyed that he was now at A A.T. Kearney instead of McKinsey. And I was sent in by somebody to brief him on what our group did, right? So I go in and I’m spewing some, some, you know, early 20s, the kind of thing a kid in the early 20s would say, where we can give you sales support and we can do this. And, oh, Robert, Robert, stop. And I was like, what? Because we don’t sell things. We’re consultants. And I was like, right? But when you’re pitching for the business, like the pre sale, and he goes, Robert, we consult, we we work with our clients. And I was like, Well, I don’t know what they call it at McKinsey, but at a A.T. Kearney, when you put them in. Engagement letter in front of a client. We call that a sale, right? And because I was obnoxious, I’m not, I’m still a little obnoxious, but I was much more obnoxious then, and he kind of poo pooed me. I did get a call from my boss that was like, Can you please not annoy the new partners? But, but that moment, I was like, Oh, I don’t want this. Bs, right? As a 53 year old, I recognize sometimes you have to sell stuff, sometimes you have to sell stuff, but it wasn’t the problem with consulting, for me, wasn’t, wasn’t, I mean, it was a little bit that, but I wanted to be in charge, right? That’s really what I wanted, and what I had thought when I was in college was that I wanted to run a big organization. And what I realized in my 20s was I actually didn’t. I don’t I don’t like that level of responsibility over people’s lives. I didn’t want to get angry at somebody because they needed five more vacation days. I didn’t want to do all that stuff. And I like running a small organization. I like having our services or be provided by third parties. Because that level of human I don’t mean business, the business responsibility I get, I’m not afraid of that, but the human responsibility, that kind of power over somebody’s life, I don’t enjoy it all. And then that’s really how I’ve structured I’ve structured my business and and I will say also, I don’t want to feel like I have to do a transaction, you know, in order to keep the machine fed right. If I think the markets are weak, I can do nothing. I think the markets are strong, I can, you know, gather the forces and do what I want to do, because real estate tends to be a pretty slow moving venture. It’s not we’re not trading in liquid markets, and we have time to make mistakes. We have time to correct those mistakes before we actually get to a trade. And I like that too.

 

Will Bachman  47:06

Okay, I want to ask you to turn back to Harvard. You already mentioned that HSA was an important part a learning experience for you, any courses or professors that you had at Harvard that continue to resonate with you in some way. So this

 

Robert Frost  47:21

is going to sound horrible, and when I listen to your Richard Primus interview. And Richard is a friend of mine in college, I’m pretty good friends with his sister. He is, without question, one of the smartest people I ever met, so I took justice with him my freshman year, my now brother in law was a year ahead of me. He’s like, you gotta take this class. I took it, and I’m sitting in hearing Sandell talk. I was like, wow, that’s the most amazing thing I’ve ever heard. And then it didn’t occur to me there was actually a philosophy course that you had to go to section. And I show up in section, and I’m in Richard section, and he starts talking. I’ve told him this story. He starts talking, and I was like, Oh, I’m not in Kansas anymore, right? Like, like, this guy, I’m smart, right? We’re all smart, right? I worked hard in high school. We all worked hard in high school, this is like, a different level. And I I came back to my dorm and I told my friends, I was like, I may be in trouble here, because I don’t enjoy this at all. So he talked about how much he liked that class and h w Perry’s class. I didn’t really have a class at Harvard that I loved. I had a couple classes in business school that I loved, where I befriended the professors, you know, and and the like. But as I say, it was the the academic experience for me was significantly less relevant to my life than the HSA experience. So I’ll talk about that for a second.

 

Will Bachman  48:50

Yeah, what’s a takeaway from that?

 

Robert Frost  48:51

So we went through a process. So when I was there, right before I became president, the that there’s a, there’s a professional staff at HSA as well. And the person who ran it was a lovely woman named Hope Spruance, who was the general manager, and for reasons I don’t know, she left on like, I don’t know what that was. And the board, there’s a an adult board, and some students on it too, hired a person, and they hired the wrong person. Okay, it was before I was on the board. It was before I was President a few months and this person didn’t really understand what the role was, started calling herself the CEO, and did a lot of sort of what I now recognize as toxic corporate behavior, and some of that came out through a budgeting process. So we had a we did a process where each agency did a budget and we rolled it up. I remember it fondly because it was my first exposure to spreadsheets. We used Quattro Pro, and what I learned from that, except. By the way, I should add, I didn’t find the board to be particularly supportive of some of what I was going through, but in retrospect, I also recognized that I didn’t report it to them correctly, right? I was never like this person is is a lunatic, and you need to get rid of her. By the way, they did get rid of her several months after my presidency, but the process of protecting the people who worked for me, while also clearly we had to go through this complicated we rolled up a budget of 10 different businesses. We had a corporate overhead budget. None of us knew how to do it right. We were all learning on the job. Maybe I knew because I an agency manager beforehand. That was an incredibly valuable experience that I used today, and I used when I was at Kearney, and I used when I was at Bear Stearns that you can’t just be like, well, I’ll protect these people from this lunatic because they’re lunatics everywhere, because then you create a dynamic that is completely dysfunctional. You make it more dysfunctional. You also, I’m not the type of person who would sign up for the lunacy and and so that experience of being a 2021, year old and in a really challenging corporate environment was, for sure, the pivotal experience of my of my college, to my time in college. It wasn’t pleasant every moment, but like we came out of it at the time we were it was the most successful financial year HSA had ever had. We had renegotiated. And I was a little involved in this, but not directly involved one of my classmates, and Galton was very involved. He ran, let’s go in renegotiating a multi book contract and a multi year contract with St Martin’s Press. Like These were, these are real world things that had some real world implications and and so for me, it wasn’t a specific course, but Harvard student agencies was really the centrality of my education at Harvard, and I think about it now with some some blessing of time, quite fondly and and use lessons, good and bad from there, all the time,

 

Will Bachman  52:21

all the time. It sounds like you grew, grew through adversity there, yeah. I

 

Robert Frost  52:26

mean, it was, it was, there was some adversity and and some not adversity,

 

Will Bachman  52:31

yeah. Um, so Robert, thank you so much for this conversation. For listeners that want to follow up, where can they find you online?

 

Robert Frost  52:42

You know, I suppose, like we have so many different websites, but you can either find me at Littauer foundation.org, or at Signature urban.com Those are sort of the two key things we talked about. And my emails should be on there, and my phone numbers and yeah, I’d love to hear from people, anybody who wants to, you know, invest in a Portuguese football team. Let me know.

 

Will Bachman  53:10

Fantastic. We will include those links in the show notes. Robert, this was so much fun hearing about your journey. Thank

 

Robert Frost  53:17

you will. And thanks for having me on. I really appreciate it. You.