Aoifinn Devitt: What are some of the tough questions that need to be asked about diversity in the investment profession? And how can a team that is diverse from a socioeconomic standpoint make better investment decisions? Let’s find out next. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Jenna Gerstenlauer, who is founder and managing partner of Soundmark Partners, a commercial real estate investment firm which focuses on investing in real estate debt for an institutional client base. The majority of the firm’s executives are female. Jenna was formerly Chief Investment Officer at CBRE Capital Partners and before that held a variety of positions at asset management firms within the real estate area. Welcome, Jenna. Thank you for joining me today.
Jenna Gerstenlauer: Thank you so much, Aoifinn, for having me.
Aoifinn Devitt: So can we start with a little bit about your current role? Can you tell us what you do? And then we’ll go back to speak about your journey into the role.
Jenna Gerstenlauer: Sure. So Southmark Partners was started in 2013, so about 7 years ago, actually a little bit more than 7 years ago. My day-to-day role here is really managing the business on a day-to-day day-to-day basis. So if you think a little bit about a chief operating officer type of duties, but my background is in investments, and so I do play a pretty hefty role on the investment side of the business as well in terms of making new investments, but also asset managing the investments that we have in our current portfolio. I started in the early 1990s. I, uh, had gone to college out west in Colorado Originally, though, I’m an East Coast person. And so when I graduated from the University of Colorado, I really wanted to get back to the East Coast. And so I decided that I was going to start in New York on Wall Street. And looking back on it now, it’s kind of funny. I think at the time, I really thought that I had a lot of student debt and I really didn’t have a home base anymore. My parents had sort of left the Boston So area. I, you know, I kind of felt like I would start in New York and get a job in finance. But I think looking back on it, it was really more of a challenge for me, sort of accepting a challenge of figuring out where I could start, where I could get the most experience and really be in sort of a hardcore atmosphere and prove to myself that I could build a career on Wall Street. And so that is what I did. I moved to New York and I took a role as an analyst working at a Wall Street shop and working in real estate finance, starting at the very ground level. And from there, really moved up, you know, did a lot of real estate finance underwriting. So worked on hundreds, probably thousands of deals in a very busy atmosphere. We were originating loans on commercial real estate. We were packaging them up, securitizing them and selling off bonds. So that’s really the way I started my career and probably spent the you first, know, almost 10 years of my career working in that role.
Aoifinn Devitt: And I know that nowadays there are real estate courses that can be taken at university, specific specializations. Did you do one of those, or do you think it’s something that was more suited to learning as by doing, essentially on the job?
Jenna Gerstenlauer: Yeah, so I, my undergraduate degree was in economics, which was pretty broad. Which is why I enjoyed it. I think that on-the-job training was so critical back in the 1990s. I actually still feel that way today. We do have some folks at our firm who have studied real estate finance, but I really do think, and with most, I think with most careers, your undergrad education is a great foundation, but I think working and learning the business is really where you’re going to get the experience that you need. And so I liked real estate because it was a hard asset class and something that you can go and see and tour. I did end up getting my graduate degree also in economics, but it was more of a personal interest. And I think understanding the macro economy is obviously critical, but I think that it was just something that sort of broadened my interest generally in economics and in finance.
Aoifinn Devitt: And I don’t know whether you would see this, but from the outside looking in, it seems that there are some particular skills that work in real estate, maybe because it has such a blend of individuals in there. It can be seen as being a little perhaps hard driving. Is that just a stereotype? Do you think there’s anything, any particular skills that are suited to the world of real estate investing?
Jenna Gerstenlauer: I think in real estate investing, you meet such a broad range of people on the ownership side. I mean, you could be somebody who comes up through a family business, or you could be more coming from a private equity real estate fund side as an owner-operator. And so I think being in the position we’re in, where we’re lending mostly to real estate owners, I think you really do have to be able to relate to a broad base of clients. And but I do think that hands-on experience with what we do is really important and relating to people sort of all different backgrounds is really critical.
Aoifinn Devitt: So you made the leap to establishing your own firm. What was the appeal in carving your own path?
Jenna Gerstenlauer: Yeah, so we— I really think of it more as a team effort. But when I started Soundmark Partners in 2013, you know, this was not a dream that I had had over the course of my career to start my own company or my own business. I had been in a handful of jobs. And, you know, sort of when you get to a point in each job where you feel like you are maybe ready for the next step or you want to change, you know, if that isn’t available in the company you’re in, you know, for me, I’d always sort of take a step back and figure out where I wanted to go from there. You know, generally, find a new job, a new position. But in 2009 to 2013, I was working at a previous platform. And that’s really where my colleagues today, where we all sort of came together and started working. So we were at this previous platform. And, you know, it was just apparent to me that things were not going to move forward at that platform in the way that we felt was necessary. Both for our investors as well as for investment making. And historically in my career, that would have sort of sent me back to the drawing board of, you know, let me go out and see what other opportunities and jobs there are. But I was working with a team of people who were just, I thought, really spectacular at what they did, really professional, really smart, wise. And so for me, it was really hard to think about leaving this team. And so that was really the first time in my career that I thought, you know, we have something special here, great chemistry, great skill set. And I really just didn’t want to leave that behind. And so that’s where the idea of Soundmark Partners came from. It it was— came from this great group of people I was working with. Um, we had been making investments, we felt they were doing well, we had really good relationships with our investors. And instead of sort of up and leaving that, um, we decided to start Soundmark Partners where we could bring that chemistry together, we could continue making investments, and we could you hopefully, know, engage or reengage with a set of investors who we you really, know, had been working well with.
Aoifinn Devitt: And what were some of the trade-offs there? Because obviously you were going to go without having a large infrastructure of a big firm, perhaps big brand recognition, an IT department. How did you assess those different trade-offs?
Jenna Gerstenlauer: So You know, to be honest with you, I sort of just jumped in. We were at a big firm that did have a good infrastructure. However, I think it’s a little bit misleading at times because when you are part of a big company, there’s a lot of bureaucracy and it takes a lot to even make one investment. And so our team really had come up individually and then together as investors and deal doers. And when we were at the previous platform, we were really seeing some great opportunities opportunities, but because of the size of the company and the culture, it was very hard to remain nimble and to get the investments done that we wanted to do. So really, the majority of our skillset and contacts and relationships came with us to that previous platform. And so when we decided to leave, for us, that was not— we were not worried about not being able to find deals or not having brand recognition. You know, my concern was more in starting a business, to your point, was, you know, signing a lease and getting an IT department going and starting an HR group. But the reality is it became something that I really enjoy doing and it was not difficult to figure out. You know, I think we have used some great resources and relationships. But at the end of the day, know, the, the, you the more difficult part about starting your own company is that And this is true for me and my partners now. You know, there’s really never a day where you’re on vacation. You might be someplace out of the office. But when it’s a business that you own and run, there really is never a day where you’re not thinking about what you can do and how you can improve things or where you’re not thinking about certain investments you have that might need some extra help or extra attention. So I would say the trade-off is really there there is, is really no vacations anymore.
Aoifinn Devitt: And why do you think there are not more female founders of investment firms? Because certainly you are in a minority in that respect.
Jenna Gerstenlauer: Yeah, I you know, I think, think one of the main reasons really has to do more with starting a business, being a boutique firm. A lot of the challenges that we face as a small firm are that we have prospective investors who like what we’re doing, but until we have a large enough size, they have a difficult time investing in a smaller firm. And I think that that’s a challenge. It’s a little bit frustrating because we do feel like we are niche investors and we provide very high-touch communication with investors. We approach our business in that way. We like personal connections. We like to understand what our investors need from investing with us. And so there’s this constant challenge between having a small business and a high-touch management team and having investors who really need to see us as a larger investor with a critical mass. So when we started the business, we did think we wanted to keep a small, you know, very small boutique size. But over time, we have learned that, you know, we can manage up and that being a little bit larger is more suitable for our investors. And so we’re, we’re sort of moving into that phase of our business cycle. But I think that starting a new business and having a smaller, you know, AUM is a challenge. And I think that it It has more to do with a small boutique-size firm, I would say, than necessarily being female-owned.
Aoifinn Devitt: No, it’s true. I think there are definitely barriers to entry for all boutique managers, and probably those barriers are growing right now, especially as we have some of the strains of the pandemic-related challenges, as well as just various regulatory barriers that are increasing. How many of your executive team are females, and does that make a difference, do you believe, having quite a notable representation by women on the team.
Jenna Gerstenlauer: Yeah, so we’re actually 100% female managed and owned. So it’s not by design. It just happened to be the team that came together. And so we are diverse, I would say, in terms of socioeconomic backgrounds as well as ethnic backgrounds, which I do think is really critical and helpful in managing a business and making good investments. So we are big supporters of diversity. So in terms of, you know, how do we, from the outside, how do we think we’re perceived? It is interesting. I think most people remember us. So there’s an advantage there. There aren’t a lot of female-owned and managed real estate investment firms. So I think we are notable from that perspective. We also have, you know, in my opinion, we have a different approach. So when we are negotiating with clients, I think, you know, it’s a, it’s a different approach than maybe a firm that’s managed by, you know, all men or mostly men. I think we have a different touch. We have a different viewpoint on how we invest, our relationships, how we approach the business.. And so I do think we stand out from, from that perspective.
Aoifinn Devitt: No, you definitely do. And I think that’s an important point because ultimately an investor wants a diverse portfolio, which should have cognitive diversity built into that. And having a team that approaches something quite differently is going to enrich, I would think, the portfolio as a whole. I also think the impression you give as an all-female team is, well, you’re certainly not just paying lip service to the notion of diversity. You are living it every day. And in a way, the proof statement is right there in your success. So I think it is notable being all female. It is still quite a rarity, I would say. How well in general do you think the financial services industry is doing in terms of promoting diversity?
Jenna Gerstenlauer: So I think that I will be really honest with this answer because I think we need to have honest conversations today. And I don’t think that the financial services industry is doing a very good job. Of paying attention to diversity and creating diverse platforms. I think there’s a few reasons for this. The biggest reason is probably that historically and still today, the majority of senior people in finance are white men. And when the majority stays silent or doesn’t engage, it’s really hard to enact change. And I think that You know, here we are now in this pandemic, and in the US especially, we’ve seen a lot of attention being paid to social justice reform. And so I think that there’s been a lot of conversations. We’ve certainly been involved in conversations and, you know, watched and participated in webinars where diversity has become a hotter topic. But I will just say that, you know, I have been a little bit disappointed in the things that I’m hearing. Because what I’m hearing a lot of is sort of check-the-box kind of response. You know, what are, you know, these large firms doing to increase diversity? And I hear a lot of talk about recruiting more diverse candidates and just what I would describe as sort of checking-the-box type of mentality. And what I think we really have to get to the bottom of is why we need to have more diverse senior management and why companies need to be more diverse and why aren’t they. You know, this has been an issue for a long time. Why haven’t things changed? Why haven’t senior leaders made changes? And I think when people really look inward and try to think about those topics, I think that is when we’ll see change. We need to engage, we need to embrace these issues, I think one of the things that we feel is important at Soundmark that isn’t talked about quite as much is socioeconomic diversity. And I think that, you know, when you’re trying to recruit candidates and you’re focusing on the same, you know, high institutions, the Ivy Leagues or the, you know, the top business schools in the country, and that’s your focus, I just don’t think you’re going to get the type of diversity that you you really should be aiming for. I would say that at Soundmark Partners, we have that diversity and it just makes us sort of better investors. And I’ll give you an example of that would you be, know, we have invested a lot in affordable housing. And so whether that be rent regulated or whether that be you just, know, workforce housing, I think in order to really understand that asset class, and you understand, know, the investment when you go to see it, you need people in your team and you need to be somebody who understands how people live and work in this country, in different areas of this country. And so, you know, we’ve financed a lot of properties in the New York area, so the Bronx and Brooklyn. And when we go see properties, it’s really important to you understand, know, we’re looking in units, we’re looking in properties, and we’re seeing working-class people, you know, families where you have a mother working the night shift, a father working the day shift, sharing responsibilities with kids. If that’s not your background and you’re not aware of what’s going on when you show up at a property and maybe somebody’s sleeping during the day and there’s kids arriving home at night, I think it’s a challenge to understand why that’s a fantastic investment to make and why the tenants in that property and the landlords who own that property are solid and quality and, you know, people that we should be investing in. And so I think diversity goes a lot deeper than just checking boxes. And I think we need to have tough conversations. And I think management and senior members of companies and teams really need to embrace and ask themselves some tougher questions. I think the data is there. I think we all know that diverse management teams, or if we don’t all know, we should all know that diverse management teams have the best results. It makes sense. And I think that if you are not investing in diversity, if you’re not embracing that culture, you really need to sort of ask yourself why.
Aoifinn Devitt: It’s so true. And I think even if you haven’t necessarily grown up in a diverse background like that, maybe the experiences you’ve had throughout your life. For example, I waited tables for a large part of my college years. And even on a small sample set, but even in that, at least 2 of the restaurants I worked in closed down while I was working in them. So, I saw how easy it is for a restaurant to fail. And I suppose during these recent pandemic times and the closures, I have viscerally felt the pain of those restaurant and bar owners, even though it’s been 2 decades since I’ve worked in that arena, because you never forget just how close these businesses are to closing down even during normal times. So I do think it improves your empathy, certainly, to have had a range of socioeconomic experiences. Really interesting insight. So in terms of your own career, it’s been quite a long one already. You must have had some setbacks and challenges, not only in setting up your own firm. Was there anything that you learned from them or from some investment mistakes that you may have made?
Jenna Gerstenlauer: I mean, this is a little bit cliché to say, but I think that, you know, we learn the most from the mistakes that we make, and that’s on the investment side. On the sort of personal interaction side with colleagues. But, you know, early in my career, as I mentioned, when I was on Wall Street, we— it was a factory. I mean, we were underwriting deals, we were closing deals, hundreds, probably thousands of transactions. And so it was a great training ground to see the mistakes that were made and to see, you know, on the workout side of the business, which I spent about 8 years in workouts after leaving my first job on Wall Street, I stayed on Wall Street but worked in workouts, which is really fantastic experience. I mean, your day-to-day job is really to look at the mistakes that were made by a lender, whether it was your own team or whether it was a loan you bought. But you’re looking to see what went wrong, how it could have maybe been the loan or the investment could have been structured in a different way to avoid what went on. And so it was great training ground for me. And many of my team members come from that same background. But I think that we do learn from mistakes. What I would say now you is, know, our portfolio, you know, every portfolio is going to have hiccups, especially where we are now in the pandemic. And, you know, there were assumptions that we never would have made from a rational standpoint that now we’re seeing For example, hotels. Hotels are a riskier asset class and we do very little hotel financing, but the hotel financing we do, we underwrite that very conservatively. But I don’t think anybody who is making investments rationally could have thought that the hotel business would completely shut down and close down. And that’s what’s really happened here in the US. And so I think that past experience with workouts and foreclosures, as well as just overall general experience, has helped us as a team. I think we, we don’t panic. Know, You I think we know that we’re doing a good job underwriting and structuring our investments. But I think it’s more of that lifelong experience where, you know, you sort of have this idiosyncratic risk that you, you, you know, try to work around and do your best with. But, you know, a pandemic hits and you have to rely on the skills that you have from your past and in order to sort of see the portfolio through. But I think to answer your question, the mistakes or the issues that we’ve had with investments in the past in our careers is the most helpful. You know, everybody likes a successful transaction, but you definitely learn more from those transactions that were less successful.
Aoifinn Devitt: And in terms of key people or key pieces of advice that you received along the way, did you have a mentor or a sponsor, or did anyone give you advice that you live by?
Jenna Gerstenlauer: So early in my career, I really did not have a mentor. I came up early with a group of guys mostly who were my age. We were sort of peers and colleagues, and we sort of got through the tough times together. It wasn’t until I was in my late 30s, I would say, that I really felt like I had found a mentor. Um, it actually is um, a, a guy who’s an investor. He was an investor at our previous firm. He’s an investor here. Um, when I first met him, I would have never thought he would have had such an impact on my career. Um, but he has. And I think that probably the biggest impact he really has had on me is You know, he’s a believer in transparency and communication. He’s a big believer in providing, you know, constructive criticism, accepting criticism. And so I have really learned a lot about how to manage people, how to manage through difficult situations, how to accept constructive criticism. And it’s made me a better investor and a better manager. And it’s also taught me to sort of bring that culture into our company. So, you know, one of the things that we talk about here at Soundmark, especially when we’re hiring people, is, you know, you need to be somebody who can take constructive criticism and be open and communicative, share your thoughts. And so I think that that’s probably the best advice that I have experienced and, you know, definitely have a mentor, but probably later in my career than most people.
Aoifinn Devitt: That’s not uncommon, actually, funnily enough. Finally, just a final two questions. What is it you like most about the investment world?
Jenna Gerstenlauer: So I think that for me, the investment world, know, you what I like is that there’s a clear answer. There’s measurable results. You know, I’ve always sort of been more of a math and science person in my life, less of a creative person. And so I think when you’re making investments, you know, you can really measure results, you can compare yourself to others and you can hold yourself accountable. And so I think I really, I really like that.
Aoifinn Devitt: And if you were to give advice to your younger self, what advice would that be?
Jenna Gerstenlauer: Well, I’m lucky for my children. I give them advice all the time, all the things that I would have liked to have heard when I was young in my career. But I think it’s mostly about confidence. I think confidence is such a critical part of who we are as people. And I think there’s no one answer for how you develop confidence. I do think challenging yourself and really forcing yourself to take risks creates confidence. I also think that as a younger person, I wish that I had cared less about what people thought. I wish that I had realized that no one really cares that much about your failures or your successes. And so it’s really you who you have to impress. And so I think that those pieces of advice Pieces of advice would be things that I wish I had exercised a little bit more.
Aoifinn Devitt: Now, that’s really interesting, the point you make about confidence. And I think in line with the kind of growth mindset that we’re all supposed to be adopting, not only for our children but for ourselves, is that confidence can be developed and can grow at any time in a career. And I see that in some of the mentor relationships I have to try to develop the confidence of younger women in the workforce, that just because they don’t arrive fully confident in every dimension doesn’t mean it can’t change. So that, that’s really useful advice. Thank you. Well, thank you, Jenna. It’s been a pleasure speaking with you today, and thank you very much for sharing your insights with us.
Jenna Gerstenlauer: Thank you so much, Aoifinn.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces Podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice. And all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: What are some of the tough questions that need to be asked about diversity in the investment profession? And how can a team that is diverse from a socioeconomic standpoint make better investment decisions? Let’s find out next. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Jenna Gerstenlauer, who is founder and managing partner of Soundmark Partners, a commercial real estate investment firm which focuses on investing in real estate debt for an institutional client base. The majority of the firm’s executives are female. Jenna was formerly Chief Investment Officer at CBRE Capital Partners and before that held a variety of positions at asset management firms within the real estate area. Welcome, Jenna. Thank you for joining me today.
Jenna Gerstenlauer: Thank you so much, Aoifinn, for having me.
Aoifinn Devitt: So can we start with a little bit about your current role? Can you tell us what you do? And then we’ll go back to speak about your journey into the role.
Jenna Gerstenlauer: Sure. So Southmark Partners was started in 2013, so about 7 years ago, actually a little bit more than 7 years ago. My day-to-day role here is really managing the business on a day-to-day day-to-day basis. So if you think a little bit about a chief operating officer type of duties, but my background is in investments, and so I do play a pretty hefty role on the investment side of the business as well in terms of making new investments, but also asset managing the investments that we have in our current portfolio. I started in the early 1990s. I, uh, had gone to college out west in Colorado Originally, though, I’m an East Coast person. And so when I graduated from the University of Colorado, I really wanted to get back to the East Coast. And so I decided that I was going to start in New York on Wall Street. And looking back on it now, it’s kind of funny. I think at the time, I really thought that I had a lot of student debt and I really didn’t have a home base anymore. My parents had sort of left the Boston So area. I, you know, I kind of felt like I would start in New York and get a job in finance. But I think looking back on it, it was really more of a challenge for me, sort of accepting a challenge of figuring out where I could start, where I could get the most experience and really be in sort of a hardcore atmosphere and prove to myself that I could build a career on Wall Street. And so that is what I did. I moved to New York and I took a role as an analyst working at a Wall Street shop and working in real estate finance, starting at the very ground level. And from there, really moved up, you know, did a lot of real estate finance underwriting. So worked on hundreds, probably thousands of deals in a very busy atmosphere. We were originating loans on commercial real estate. We were packaging them up, securitizing them and selling off bonds. So that’s really the way I started my career and probably spent the you first, know, almost 10 years of my career working in that role.
Aoifinn Devitt: And I know that nowadays there are real estate courses that can be taken at university, specific specializations. Did you do one of those, or do you think it’s something that was more suited to learning as by doing, essentially on the job?
Jenna Gerstenlauer: Yeah, so I, my undergraduate degree was in economics, which was pretty broad. Which is why I enjoyed it. I think that on-the-job training was so critical back in the 1990s. I actually still feel that way today. We do have some folks at our firm who have studied real estate finance, but I really do think, and with most, I think with most careers, your undergrad education is a great foundation, but I think working and learning the business is really where you’re going to get the experience that you need. And so I liked real estate because it was a hard asset class and something that you can go and see and tour. I did end up getting my graduate degree also in economics, but it was more of a personal interest. And I think understanding the macro economy is obviously critical, but I think that it was just something that sort of broadened my interest generally in economics and in finance.
Aoifinn Devitt: And I don’t know whether you would see this, but from the outside looking in, it seems that there are some particular skills that work in real estate, maybe because it has such a blend of individuals in there. It can be seen as being a little perhaps hard driving. Is that just a stereotype? Do you think there’s anything, any particular skills that are suited to the world of real estate investing?
Jenna Gerstenlauer: I think in real estate investing, you meet such a broad range of people on the ownership side. I mean, you could be somebody who comes up through a family business, or you could be more coming from a private equity real estate fund side as an owner-operator. And so I think being in the position we’re in, where we’re lending mostly to real estate owners, I think you really do have to be able to relate to a broad base of clients. And but I do think that hands-on experience with what we do is really important and relating to people sort of all different backgrounds is really critical.
Aoifinn Devitt: So you made the leap to establishing your own firm. What was the appeal in carving your own path?
Jenna Gerstenlauer: Yeah, so we— I really think of it more as a team effort. But when I started Soundmark Partners in 2013, you know, this was not a dream that I had had over the course of my career to start my own company or my own business. I had been in a handful of jobs. And, you know, sort of when you get to a point in each job where you feel like you are maybe ready for the next step or you want to change, you know, if that isn’t available in the company you’re in, you know, for me, I’d always sort of take a step back and figure out where I wanted to go from there. You know, generally, find a new job, a new position. But in 2009 to 2013, I was working at a previous platform. And that’s really where my colleagues today, where we all sort of came together and started working. So we were at this previous platform. And, you know, it was just apparent to me that things were not going to move forward at that platform in the way that we felt was necessary. Both for our investors as well as for investment making. And historically in my career, that would have sort of sent me back to the drawing board of, you know, let me go out and see what other opportunities and jobs there are. But I was working with a team of people who were just, I thought, really spectacular at what they did, really professional, really smart, wise. And so for me, it was really hard to think about leaving this team. And so that was really the first time in my career that I thought, you know, we have something special here, great chemistry, great skill set. And I really just didn’t want to leave that behind. And so that’s where the idea of Soundmark Partners came from. It it was— came from this great group of people I was working with. Um, we had been making investments, we felt they were doing well, we had really good relationships with our investors. And instead of sort of up and leaving that, um, we decided to start Soundmark Partners where we could bring that chemistry together, we could continue making investments, and we could you hopefully, know, engage or reengage with a set of investors who we you really, know, had been working well with.
Aoifinn Devitt: And what were some of the trade-offs there? Because obviously you were going to go without having a large infrastructure of a big firm, perhaps big brand recognition, an IT department. How did you assess those different trade-offs?
Jenna Gerstenlauer: So You know, to be honest with you, I sort of just jumped in. We were at a big firm that did have a good infrastructure. However, I think it’s a little bit misleading at times because when you are part of a big company, there’s a lot of bureaucracy and it takes a lot to even make one investment. And so our team really had come up individually and then together as investors and deal doers. And when we were at the previous platform, we were really seeing some great opportunities opportunities, but because of the size of the company and the culture, it was very hard to remain nimble and to get the investments done that we wanted to do. So really, the majority of our skillset and contacts and relationships came with us to that previous platform. And so when we decided to leave, for us, that was not— we were not worried about not being able to find deals or not having brand recognition. You know, my concern was more in starting a business, to your point, was, you know, signing a lease and getting an IT department going and starting an HR group. But the reality is it became something that I really enjoy doing and it was not difficult to figure out. You know, I think we have used some great resources and relationships. But at the end of the day, know, the, the, you the more difficult part about starting your own company is that And this is true for me and my partners now. You know, there’s really never a day where you’re on vacation. You might be someplace out of the office. But when it’s a business that you own and run, there really is never a day where you’re not thinking about what you can do and how you can improve things or where you’re not thinking about certain investments you have that might need some extra help or extra attention. So I would say the trade-off is really there there is, is really no vacations anymore.
Aoifinn Devitt: And why do you think there are not more female founders of investment firms? Because certainly you are in a minority in that respect.
Jenna Gerstenlauer: Yeah, I you know, I think, think one of the main reasons really has to do more with starting a business, being a boutique firm. A lot of the challenges that we face as a small firm are that we have prospective investors who like what we’re doing, but until we have a large enough size, they have a difficult time investing in a smaller firm. And I think that that’s a challenge. It’s a little bit frustrating because we do feel like we are niche investors and we provide very high-touch communication with investors. We approach our business in that way. We like personal connections. We like to understand what our investors need from investing with us. And so there’s this constant challenge between having a small business and a high-touch management team and having investors who really need to see us as a larger investor with a critical mass. So when we started the business, we did think we wanted to keep a small, you know, very small boutique size. But over time, we have learned that, you know, we can manage up and that being a little bit larger is more suitable for our investors. And so we’re, we’re sort of moving into that phase of our business cycle. But I think that starting a new business and having a smaller, you know, AUM is a challenge. And I think that it It has more to do with a small boutique-size firm, I would say, than necessarily being female-owned.
Aoifinn Devitt: No, it’s true. I think there are definitely barriers to entry for all boutique managers, and probably those barriers are growing right now, especially as we have some of the strains of the pandemic-related challenges, as well as just various regulatory barriers that are increasing. How many of your executive team are females, and does that make a difference, do you believe, having quite a notable representation by women on the team.
Jenna Gerstenlauer: Yeah, so we’re actually 100% female managed and owned. So it’s not by design. It just happened to be the team that came together. And so we are diverse, I would say, in terms of socioeconomic backgrounds as well as ethnic backgrounds, which I do think is really critical and helpful in managing a business and making good investments. So we are big supporters of diversity. So in terms of, you know, how do we, from the outside, how do we think we’re perceived? It is interesting. I think most people remember us. So there’s an advantage there. There aren’t a lot of female-owned and managed real estate investment firms. So I think we are notable from that perspective. We also have, you know, in my opinion, we have a different approach. So when we are negotiating with clients, I think, you know, it’s a, it’s a different approach than maybe a firm that’s managed by, you know, all men or mostly men. I think we have a different touch. We have a different viewpoint on how we invest, our relationships, how we approach the business.. And so I do think we stand out from, from that perspective.
Aoifinn Devitt: No, you definitely do. And I think that’s an important point because ultimately an investor wants a diverse portfolio, which should have cognitive diversity built into that. And having a team that approaches something quite differently is going to enrich, I would think, the portfolio as a whole. I also think the impression you give as an all-female team is, well, you’re certainly not just paying lip service to the notion of diversity. You are living it every day. And in a way, the proof statement is right there in your success. So I think it is notable being all female. It is still quite a rarity, I would say. How well in general do you think the financial services industry is doing in terms of promoting diversity?
Jenna Gerstenlauer: So I think that I will be really honest with this answer because I think we need to have honest conversations today. And I don’t think that the financial services industry is doing a very good job. Of paying attention to diversity and creating diverse platforms. I think there’s a few reasons for this. The biggest reason is probably that historically and still today, the majority of senior people in finance are white men. And when the majority stays silent or doesn’t engage, it’s really hard to enact change. And I think that You know, here we are now in this pandemic, and in the US especially, we’ve seen a lot of attention being paid to social justice reform. And so I think that there’s been a lot of conversations. We’ve certainly been involved in conversations and, you know, watched and participated in webinars where diversity has become a hotter topic. But I will just say that, you know, I have been a little bit disappointed in the things that I’m hearing. Because what I’m hearing a lot of is sort of check-the-box kind of response. You know, what are, you know, these large firms doing to increase diversity? And I hear a lot of talk about recruiting more diverse candidates and just what I would describe as sort of checking-the-box type of mentality. And what I think we really have to get to the bottom of is why we need to have more diverse senior management and why companies need to be more diverse and why aren’t they. You know, this has been an issue for a long time. Why haven’t things changed? Why haven’t senior leaders made changes? And I think when people really look inward and try to think about those topics, I think that is when we’ll see change. We need to engage, we need to embrace these issues, I think one of the things that we feel is important at Soundmark that isn’t talked about quite as much is socioeconomic diversity. And I think that, you know, when you’re trying to recruit candidates and you’re focusing on the same, you know, high institutions, the Ivy Leagues or the, you know, the top business schools in the country, and that’s your focus, I just don’t think you’re going to get the type of diversity that you you really should be aiming for. I would say that at Soundmark Partners, we have that diversity and it just makes us sort of better investors. And I’ll give you an example of that would you be, know, we have invested a lot in affordable housing. And so whether that be rent regulated or whether that be you just, know, workforce housing, I think in order to really understand that asset class, and you understand, know, the investment when you go to see it, you need people in your team and you need to be somebody who understands how people live and work in this country, in different areas of this country. And so, you know, we’ve financed a lot of properties in the New York area, so the Bronx and Brooklyn. And when we go see properties, it’s really important to you understand, know, we’re looking in units, we’re looking in properties, and we’re seeing working-class people, you know, families where you have a mother working the night shift, a father working the day shift, sharing responsibilities with kids. If that’s not your background and you’re not aware of what’s going on when you show up at a property and maybe somebody’s sleeping during the day and there’s kids arriving home at night, I think it’s a challenge to understand why that’s a fantastic investment to make and why the tenants in that property and the landlords who own that property are solid and quality and, you know, people that we should be investing in. And so I think diversity goes a lot deeper than just checking boxes. And I think we need to have tough conversations. And I think management and senior members of companies and teams really need to embrace and ask themselves some tougher questions. I think the data is there. I think we all know that diverse management teams, or if we don’t all know, we should all know that diverse management teams have the best results. It makes sense. And I think that if you are not investing in diversity, if you’re not embracing that culture, you really need to sort of ask yourself why.
Aoifinn Devitt: It’s so true. And I think even if you haven’t necessarily grown up in a diverse background like that, maybe the experiences you’ve had throughout your life. For example, I waited tables for a large part of my college years. And even on a small sample set, but even in that, at least 2 of the restaurants I worked in closed down while I was working in them. So, I saw how easy it is for a restaurant to fail. And I suppose during these recent pandemic times and the closures, I have viscerally felt the pain of those restaurant and bar owners, even though it’s been 2 decades since I’ve worked in that arena, because you never forget just how close these businesses are to closing down even during normal times. So I do think it improves your empathy, certainly, to have had a range of socioeconomic experiences. Really interesting insight. So in terms of your own career, it’s been quite a long one already. You must have had some setbacks and challenges, not only in setting up your own firm. Was there anything that you learned from them or from some investment mistakes that you may have made?
Jenna Gerstenlauer: I mean, this is a little bit cliché to say, but I think that, you know, we learn the most from the mistakes that we make, and that’s on the investment side. On the sort of personal interaction side with colleagues. But, you know, early in my career, as I mentioned, when I was on Wall Street, we— it was a factory. I mean, we were underwriting deals, we were closing deals, hundreds, probably thousands of transactions. And so it was a great training ground to see the mistakes that were made and to see, you know, on the workout side of the business, which I spent about 8 years in workouts after leaving my first job on Wall Street, I stayed on Wall Street but worked in workouts, which is really fantastic experience. I mean, your day-to-day job is really to look at the mistakes that were made by a lender, whether it was your own team or whether it was a loan you bought. But you’re looking to see what went wrong, how it could have maybe been the loan or the investment could have been structured in a different way to avoid what went on. And so it was great training ground for me. And many of my team members come from that same background. But I think that we do learn from mistakes. What I would say now you is, know, our portfolio, you know, every portfolio is going to have hiccups, especially where we are now in the pandemic. And, you know, there were assumptions that we never would have made from a rational standpoint that now we’re seeing For example, hotels. Hotels are a riskier asset class and we do very little hotel financing, but the hotel financing we do, we underwrite that very conservatively. But I don’t think anybody who is making investments rationally could have thought that the hotel business would completely shut down and close down. And that’s what’s really happened here in the US. And so I think that past experience with workouts and foreclosures, as well as just overall general experience, has helped us as a team. I think we, we don’t panic. Know, You I think we know that we’re doing a good job underwriting and structuring our investments. But I think it’s more of that lifelong experience where, you know, you sort of have this idiosyncratic risk that you, you, you know, try to work around and do your best with. But, you know, a pandemic hits and you have to rely on the skills that you have from your past and in order to sort of see the portfolio through. But I think to answer your question, the mistakes or the issues that we’ve had with investments in the past in our careers is the most helpful. You know, everybody likes a successful transaction, but you definitely learn more from those transactions that were less successful.
Aoifinn Devitt: And in terms of key people or key pieces of advice that you received along the way, did you have a mentor or a sponsor, or did anyone give you advice that you live by?
Jenna Gerstenlauer: So early in my career, I really did not have a mentor. I came up early with a group of guys mostly who were my age. We were sort of peers and colleagues, and we sort of got through the tough times together. It wasn’t until I was in my late 30s, I would say, that I really felt like I had found a mentor. Um, it actually is um, a, a guy who’s an investor. He was an investor at our previous firm. He’s an investor here. Um, when I first met him, I would have never thought he would have had such an impact on my career. Um, but he has. And I think that probably the biggest impact he really has had on me is You know, he’s a believer in transparency and communication. He’s a big believer in providing, you know, constructive criticism, accepting criticism. And so I have really learned a lot about how to manage people, how to manage through difficult situations, how to accept constructive criticism. And it’s made me a better investor and a better manager. And it’s also taught me to sort of bring that culture into our company. So, you know, one of the things that we talk about here at Soundmark, especially when we’re hiring people, is, you know, you need to be somebody who can take constructive criticism and be open and communicative, share your thoughts. And so I think that that’s probably the best advice that I have experienced and, you know, definitely have a mentor, but probably later in my career than most people.
Aoifinn Devitt: That’s not uncommon, actually, funnily enough. Finally, just a final two questions. What is it you like most about the investment world?
Jenna Gerstenlauer: So I think that for me, the investment world, know, you what I like is that there’s a clear answer. There’s measurable results. You know, I’ve always sort of been more of a math and science person in my life, less of a creative person. And so I think when you’re making investments, you know, you can really measure results, you can compare yourself to others and you can hold yourself accountable. And so I think I really, I really like that.
Aoifinn Devitt: And if you were to give advice to your younger self, what advice would that be?
Jenna Gerstenlauer: Well, I’m lucky for my children. I give them advice all the time, all the things that I would have liked to have heard when I was young in my career. But I think it’s mostly about confidence. I think confidence is such a critical part of who we are as people. And I think there’s no one answer for how you develop confidence. I do think challenging yourself and really forcing yourself to take risks creates confidence. I also think that as a younger person, I wish that I had cared less about what people thought. I wish that I had realized that no one really cares that much about your failures or your successes. And so it’s really you who you have to impress. And so I think that those pieces of advice Pieces of advice would be things that I wish I had exercised a little bit more.
Aoifinn Devitt: Now, that’s really interesting, the point you make about confidence. And I think in line with the kind of growth mindset that we’re all supposed to be adopting, not only for our children but for ourselves, is that confidence can be developed and can grow at any time in a career. And I see that in some of the mentor relationships I have to try to develop the confidence of younger women in the workforce, that just because they don’t arrive fully confident in every dimension doesn’t mean it can’t change. So that, that’s really useful advice. Thank you. Well, thank you, Jenna. It’s been a pleasure speaking with you today, and thank you very much for sharing your insights with us.
Jenna Gerstenlauer: Thank you so much, Aoifinn.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces Podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal journeys, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice. And all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
