The Importance of a Board of Directors

The neighborhood REIT itself, I'll sort of focus the answer about what the company is on that, and what we're really trying to do with this model is create a new way for radically more people within a community to be able to build wealth and participate as financial stakeholders in a fair, flexible, incremental way.

And so really it's a new product type. I would also say that we are organized as something called a benefit corporation, which is, in some states, it's called a public benefit corporation but what it does is it really shifts how we make decisions and it sort of shifts our concept of fiduciary responsibility to be one that balances the financial returns for our shareholders with the social and environmental impact of our business on a larger group of stakeholders.

And so for us, with this new business model and this new vision for the type of future that we want to be a part of creating, we chose to create a board of directors at the REIT level that can really help to inform how we execute the model and how we process and really develop a new way of being. As decision makers and as a professional leadership team with respect to growing and developing this new model for community investing.
TH:Max, what have you found to be some of the advantages in having your board in regard to decision-making and in particular, how has it improved your ability to make strategic decisions?
ML: Yeah, it's a great question. I mean, a few examples come to mind and I'll maybe touch on one or two of them in a second, but for me having the right people. A board is just a group of people and it's got some powers, but I think it's really important to talk about the specific people who are involved in the board and in our case, when composing the board, we really tried to create a diversity of experience and a diversity of knowledge. And obviously we're looking for folks who had a collaborative spirit as we tried to find what our business and what our model is about.

And so, for the management team and I, being able to really lean on the board and say, "Hey, does this make sense? Are we thinking about this the right way? Do you agree with this? Do you disagree? Do you have different ideas?" has been tremendously helpful. And an example was that we were qualified by the SEC in I think it was March 30th or 31st of 2020 and so that was a very, very specific early COVID, things are up in the air moment-in- time.

And so in that moment, we were able to basically have a series of conversations with the board about how COVID was going to impact our business, what we thought was going to happen. And specifically for us, a benefit corporation, we were laser focused in the early days of COVID, and remain so, on how we actually help to generate stability and security for our residents and commercial tenants.

So that was a big focus early on and I think having the board that we have and having the different perspectives and experience of people on the board was tremendously helpful in being able to pretty quickly rollout a rent assistance and community wealth program to help support our community at that time. And I think a lot of that has to do with the individual perspectives of the board members, the group conversation the board was able to have with myself and the other members of our leadership team. And then also, I think we were very lucky in a sense, to be able to hit the ground running with our board in terms of mission alignment, values alignment, and all that stuff.

And so the idea of doing something basically as our first action as a board, as out of the box as our rent assistance program was, I think there was a lot of structural work as being in a benefit corporation, but also work in assembling the board and building that rapport and introducing that group to each other that allowed us to do something pretty bold very quickly and I am happy, it felt like a big payoff for us to be able to move that quickly, based on all of the work that had gone into putting the board together and setting the board up to be able to act quickly and be decisive and make decisions so early in the game.
TH:Thank you for that, Max. We can clearly see the strategic value of your board, especially in times like these and speaking of the unprecedented times that we find ourselves in, how is your board learning and staying informed so that they can stay on top of the strategic decision making?
ML: Yeah, it's a great question and we're pretty early on, we've been a public company now for about six months, so we're still definitely getting our strive in terms of what the cadence of communications looks like, and so I expect it to evolve a little bit over the next year or two. So far, it's been broken out between formal communication and then less formal, less structured communication. And so the formal channel is really oriented around our boards of directors meetings and the sort of conversation that typically leads up to those and then follows those.

And in that context, the management team is typically circulating a packet to the board with support on various agenda items, depending on what we're talking about. It can be mutual analysis or deals that we're looking at, making an investment on or evaluating investment on, so on and so forth. And we typically are doing that type of meeting and that type of process every two to three months at the most.

And then I would say there's this sort of informal process, which tends to be more regular calls, usually with individual members of the board, depending on what we're running by them or ask them to weigh in on, or we're asking for advice on. So that tends to be less formal, less structured, but is also quite helpful. So I would say it's I think, legally and formally it's less important than the structured board meetings, but probably in terms of helping to drive outcomes and add value, it's at least as helpful.
TH:Max, as you look to the future to fulfill your strategic potential, what additional board members do you anticipate needing to fill to achieve your goals?
ML: So the board that we have is a fairly new group, it's a new group of people. As I mentioned before, we're a fairly young company, so the board and its engagement with the company is pretty fresh and I think that when we put the board together, we did so really with a lot of focus and emphasis on real diversity of experience and skill set.

And so as we are today, I think we have a great board and a great mix of skill sets for what we're tasked with now over this year, or two, period. I think that it's hard for me to imagine the spirit of that changing much. So, on our board now we have asocial impact design researcher, we have a board member who runs a local nonprofit community oriented design studio and we have a board member who's a very experienced senior level public company, long time public company read executive.

And so, I think that that composition of folks is really well suited for where the company's at now and what we have to do as a company and as a board of directors. And I think that as the needs of the company change, we will seek to evolve the composition of the board in a way that is most supportive to that. For now, I think we're in a great spot and we love the different perspectives that our board members bring to each conversation, but over time, I'm sure those needs will shift a little bit and we'll use the same spirit and same approach of trying to make sure that we have subject matter experts who are also collaborative and able to understand and be excited about the bigger picture of the model that we're putting forward through NICO.
TH:And one final question, Max. What advice or words of wisdom would you like to share with our audience about forming or maintaining an effective board?
ML: Three words, communication, communication, communication. In our experience, keeping people in the loop is more than just good practice. It's really essential to being able to build the trust and the cohesion within the group that allows it to be effective. And so people have different styles for how they communicate. I have a certain style and you have a certain style, anyone who is putting together a board will have their own style. And I think it's just important to be true to that and to make sure that you build collaboration and I would also say that I think within certain contexts, a board can be a scary idea because there's a group of people who are making decisions, not everybody agrees all the time.

And I would just say to the extent that the board can be put together in a way that you believe will be genuinely helpful, that you'll be excited to use as a resource versus view as a pain or view as something you have to deal with. I think there's really an opportunity to lean into the construction composition of a board where it really becomes a strategic asset and I think that companies that are able to do that have such an advantage over companies that aren't.

And so that'll mean different things to different folks, but from our perspective, that's really been the priority for us and I would say that is the only way I could imagine having intention to set up at board.
TH:Thanks so much for spending time with us today, Max. I'm sure that our audience found this just as helpful and inspiring as I did.

Absolutely. Thanks so much for having me, I appreciate it.