On the growth of Adaptive

I have a very clear vision for my career. I have known where I want to go (I want Adaptive to be a huge company) and I know what I have to do to make that happen (a series of very good deals for the people who trust me with their money, so that they will trust me with more of their money and tell their friends).

The annoying part is that the kind of deals we do unfold over years. Because we do such extensive renovations, we usually aren’t able to begin returning capital for 14-18 months, when we refinance the projects. And, thereafter, we settle into a boring series of quarterly distributions… not exactly the kind of thing that makes people jump up and down and tell all their buddies at the country club.

Some of our savviest investors pay close attention to the market and our regular investor reporting, and can see pretty quickly, well before the deals stabilize, that we’re doing a good job. These are the people who have turbo-charged our growth over the past 3-4 years, because they have been willing to commit more and more capital to us, without waiting to get to the end of the initial project(s). And these investors have been rewarded for their faith.

But, for most investors, committing capital to us is much more passive. They like what they hear, they write a check, and then they tune out, sometimes to a comical degree. I’ve had investors email me asking if the deal is over, because we returned all their capital after 18 months. And I have to explain that, no, this is just the beginning, you’ve got your money back and now you’ll be receiving checks forever.

The problem with those tuned-out investors is that they kind of inhibit our growth rate. Because there’s no big moment where we sell the property and announce that we’ve got them a 26% / year return or a 140% ROI or whatever crazy numbers you want to imagine, there’s no prompt for them to realize that, actually, things have worked out incredibly well and maybe they should tell their friends.

And that’s where things like speaking at conferences, networking, cold emailing, and, yes, this blog come in. For years now, I have been doing what I can to bring in new capital partners and start driving them up the learning curve about what we do. And, finally, recently, we have begun to see the fruits of this labor, where old investors are committing more capital and helping us bring in new investors, who, in turn, we hope will do the same in the years and decades to come.

Growth is almost never as fast as you want it to be… that’s the nature of our business. But, if you consistently provide a really good service and consistently communicate about it, eventually you enter into a kind of feedback loop where good things compound.