Faith, Wealth and and Corporate Responsibility with Jeffrey Small Jr.

Do you ever wonder about the relationship between faith and business? That's exactly what we address with special guest, Jeffrey Small Jr, CEO of MDH Partners. Together, Bishop Wright and Jeff navigate the complexities of economic growth and ethically sound practices. We gain invaluable insights from Jeff’s journey, from his walk with Christ and his business ventures that led him to better serve the world with his unique skill set as an industrial investor. With a focus on industrial properties, we tap into the significance of corporate responsibility while challenging listeners to consider the role of faith in business.

Bishop Wright and Jeff discuss the relationship between wealth, faith, and the immense power of partnership in addressing societal issues. Jeff also brings to light the impact of socially responsible investing by sharing the history of the 1980s divestment movement, which initiated a pivotal shift in the perspective of investment returns. Listen in for the full conversation.

Jeffrey Small is the co-founder and CEO of MDH Partners. His primary responsibilities include leading the strategic direction of the Company, overseeing the pursuit and underwriting of its new acquisitions and developments, and managing its relationships with its investors. Under his guidance, the firm is currently investing Fund II, which comprises $750 million of equity, and expects to close Fund III in late 2023 with over $1 billion in equity. In addition to its fund business, MDH also has separate account asset management joint ventures with two global institutional investors, totaling an additional $1 billion in equity. Previous capital partners included Harvard University’s endowment (HMC), Bain Capital, Wells Fargo, and multiple Blackstone joint ventures.

Jeff graduated with a BA in Political Science with Distinction from Yale University (summa cum laude), with a JD from Harvard Law School (magna cum laude), and he earned a Masters in the Study of Religions from Oxford University in England (Oriel College).

In his spare time, Jeff enjoys writing and has published two award-winning, best-selling novels along with an academic text. Jeff and his wife, Alison, spent over a decade as competitive ballroom dancers, winning the US Amateur Championship in their division and representing the US at the Word Senior Latin Championships. Today, they enjoy more mellow outdoor activities, such as hiking, biking, and kayaking. He and Alison live in his hometown of Atlanta, and their daughter Ella is a Ph.D. student at the University of Texas in Austin. Jeff worships at The Cathedral of St. Philip in The Diocese of Atlanta. 

Transcript

Jeffrey Small: 0:00

the practicalities of a world in which we need a growing economy, then it raises the question how can you do that in a ethically beneficial way and keeping the right perspective of why you're doing it? Because if it's about my ego, that leads to one result, and if it's about an outward focus, and is that not? The fundamental basis of Christianity is that we are a social religion and that we are called upon not just to better ourselves, which is a part of it, but how do we better our societies?

Bishop Wright: 0:40

Hi everyone, Bishop Rob Wright here and this is For People. We've got a special guest today. Jeff Small Jr. is with us today. Jeff is the CEO of MDH Partners. Before I go too far with his wonderful experiences, let's just say good morning, good morning Jeff.

Jeffrey Small: 1:03

Good morning Bishop. I'm so excited to be joining you.

Bishop Wright: 1:07

Thanks for making time. You're going to help me today to talk about this wonderful intersection of a robust faith life and a real commitment to excellence in business, and I think those two things go together. How about you?

Jeffrey Small: 1:22

I couldn't agree more and I'm excited to get into the topic with you.

Bishop Wright: 1:27

Well, before we get there, let me just tell you a little bit about Jeff. Jeff is a CEO and co-founder of MDH Partners and over its history MDH has done $6 billion in acquisition and I'm sure that's climbing. He is a lawyer by training. His undergraduate was at Yale and he holds a JD from Harvard. Interestingly enough, with all of that, he has a master's in the study of religion from Oxford in the UK at Oriole College. He's a husband and a father. He's husband to Allison and father of Ella, and he has worked with capital partners such as Harvard, bain Capital, wells Fargo and Blackstone. Now here folks may be the most interesting thing about the whole guy here. He was also a competitive ballroom dancer for a season. So, jeff, tell us a little bit. Well, let's talk about competitive ballroom dancing for a little while and then we'll get to business.

Jeffrey Small: 2:28

So that's definitely one of the more unusual things on my resume. But my wife and I, for well over a decade, started out just as a fun hobby when we were dating back in the mid-'90s and we got bitten by the bug and this is prior to dancing with the stars kind of taking off and making it a little bit more mainstream. But it was this quirky hobby we got into and we ended up traveling around the country and even in Europe competing.

Bishop Wright: 2:53

It was a lot of fun. I love those kinds of bits and pieces in people's resumes. It just gives you a little bit of a little color commentary about what sort of excites them. Well, let's talk about this business piece. So you're doing big work. Say a little bit about MDH and what do you do?

Jeffrey Small: 3:12

Yeah, so we are a real estate investment company and we specialize in industrial real estate. So what is industrial real estate? It's warehouses, manufacturing buildings, e-commerce, distribution. It's one of the real estate asset classes. I mean, we were all reading about the problems with office around the country, with your from home, and the issues it's having in the economy. On the other side, industrial, because of the explosion in e-commerce over the last eight years, has really boomed, so more goods are being made or are being stored. Having to be closer to people, it requires more of a demand for that distribution space, and so we specialize in that.

Jeffrey Small: 3:54

We're coast to coast. We're in about 35 markets around the country today and we manage money from large institutions. So we raise funds our new fund it's $1.25 billion and large institutions trust their capital with us to go and invest in these properties. And one of the unique things about us as well that kind of ties into this kind of mission-based thinking that has its roots in my faith background is that all of our investors are nonprofits. So we're investing on behalf of very large university endowments, large foundations, and our goal is that as we, as we hopefully, make them money, that then their money goes back to serving the public good in a better way. So it kind of multiplies what we do and gives us an extra kind of purpose to the vision and the mission of our company.

Bishop Wright: 4:51

And so has that always been part of your equation. In business, I mean, you went into the law first and then into business and, I think, worked with your family business for a little while. I mean, has that always been part of your equation? How have you held those two things together in your journey?

Jeffrey Small: 5:06

It's really evolved over time and you know, when I was young, it has my faith journey. I've always been a seeker and searcher, which is why, as you mentioned, I've had a master's in religion that I got at Oxford. I didn't do that right in the midst of my 20s when I was going to school. I did that during the financial crisis in 08 and 09, when real estate was dead. I went as a 42 year old to go study religion and so I've always been the seeker.

Jeffrey Small: 5:35

So early in my career, I started out with my family's business and then I co-founded this company. You know, we worked with other large private equity firms and it was this evolution over time that, from 2013 to 2018, we had the fortune of working with Harvard University's Endowment and that kind of got me into that world and it's kind of it added that extra layer of purpose for what we do. But and we can talk about ESG and some of these other themes that unfortunately, are becoming controversial today but ways in which corporate responsibility for those of us that manage very large amounts of money, what kind of impacts that can have beyond just the financial in our society?

Bishop Wright: 6:23

That's a great point. So what do you say to those people who would even find you as a curious guest here with me, a conversation partner? Say, well, why you got a money guy here. You know, isn't sort of following Jesus antithetical to managing large amounts of money and amassing? You know well how do you explain that through for some people who may sort of look at us curiously for having this kind of conversation.

Jeffrey Small: 6:52

Yeah, so one. I think there's no question, when you take Jesus' teachings literally and even not literally but at all kind of close to what he's saying about the dangers of money that you know it is a religion in which and I think this is as a student of world religions you find similar teachings in Hinduism, buddhism and Islam that when your mind is focused on wealth, what that's saying is that it's a very self-centered, inward focus about the ego of how much more money can I get, and the search for happiness, for power, prestige, for material things. It's distracting from the spiritual. And that's where you know no mind. You can't be focused on money and God At the same time. You know Jesus was preaching in a time, in the first century of upheaval, when the reality is both Jesus, paul, his other disciples they were expecting this imminent upheaval of the world, right, his apocalypse. That didn't happen, frankly, during their time, and so he didn't have to worry about running an economy and how you clothe and feed people and house people. And we live in a complex global society today in which economies are critical to the way we all live. So if you accept that you have to have money and you need robust economies because it improves all of our qualities of life. Then the question comes can you do that in ethical ways?

Jeffrey Small: 8:25

And one? There is, especially in my world, of this kind of high octane private equity world where people can become so focused just on money as the goal, and I've had periods in my life where that was it and the periods where I was least satisfied. I had tremendous financial success when I was in my 30s. I built a ginormous house and realized I wasn't happy with these material trappings and I needed to dig into my own spiritual center and try to find something else. But what's interesting is I did that. I didn't decide just to spend the rest of my life on a mountaintop, but I ended up looking at my life in a different way and said how can I use the gifts that I'm given? You know I'm not, was not called to be a minister but how can I use my gifts to make the world a better place, while I'm benefiting my nonprofit investors, and that we're investing money responsibly in a way that's gonna benefit not just my investors but our society, as we're building buildings that are greener than we would have before, as we're focused on diversity in our organization and trying to be responsible investors.

Jeffrey Small: 9:40

So I think, then, the practicalities of a world in which we need a growing economy. Then it raises the question how can you do that in a ethically beneficial way and keeping the right perspective of why you're doing it? Because if it's about my ego, that leads to one result, and if it's about an outward focus, and is that not? The fundamental basis of Christianity is that we are a social religion and that we are called upon not just to better ourselves, which is a part of it, but how do we better our societies? And so this where I think that this intersection, what I love, what you're doing with this podcast here, is we can't ignore commerce, we can't ignore business, because it is so critical to our societies. We're not gonna change things without getting in there and saying how can we think about these topics in these other segments of the economy?

Bishop Wright: 10:42

Hi listeners, thank you for listening to For People. A space of digital evangelism. You can keep up with us on Instagram and Facebook at Bishop Rob Wright. And now back to For People. No, that's exactly right, and I appreciate just hearing your mind work on that. I mean, I hear that it's been a journey for you and I appreciate that you've ensured your own personal journey with wealth and recognize that focus is everything the Bible says. If wealth should increase, set not your heart on it, right? I mean so. It makes provision that wealth could increase, might increase, maybe even will increase, but it asks us to think about our heart as that all happens. I really do appreciate that.

Bishop Wright: 11:36

I think that you know, speaking for the church, if I can, you know we have not done enough to say to the business community. You know, please, by all. You know, by every stretch of the imagination. You know be excellent in business, be excellent in innovation. You know be prosperous. You know multiply those talents you know in ethically and morally sound ways and then think about neighbor. I don't think that we've done that enough.

Bishop Wright: 12:05

My joke always is is that we always are sort of we want to welcome the fruits of business, particularly in stewardship campaigns, right, when the church needs money, then she looks to her wealthy, her wealthy members. Saint Paul, you know, was standing outside of, you know, people's synagogues and trying to launch this fledgling startup called the Christian Church, and thank God for Lydia, a woman who had means, and if it wasn't for Lydia's ability to write a check, I'm not sure we'd have the Christianity that we could recognize right now. And so we've always had a complicated relationship, you know, with wealth, and so it's that's why I wanted to have you on. It's just, it's really exciting. Talk a little bit about socially responsible investment, because that's what you're talking about enabling good right with these dollars. So talk a little bit about that. What excites you about that sector?

Jeffrey Small: 13:01

Yeah. So what it comes down to is so that you hear these buzzwords today ESG the initials, so it stands for environmental, social and governance, and it's this kind of and unfortunately, as I said, it's become, it's gotten to the realm of politics which, as soon as we see that, you know things get polarized and mischaracterized. And what the basic, fundamental idea here is and this is not something meant to be mandated by governments, but you know I deal with private investors but that and I saw this the the beginnings of this happened when I was in college in the 1980s and and I remember being at Yale and there were protests. Then it was during the time of apartheid in South Africa. Sure, and you had this booming economy in South Africa with a who's who of American companies that were doing business over there. And the college students of the time started to say to these university, large university endowments, when you are investing in corporations that then are investing hundreds of millions of dollars in an oppressive country, you are inadvertently helping that country to keep an oppressive system of government because it was holding the economy up. So this huge divestment movement happened in the 80s of these protests and after a while the investor started to listen to that. The bad publicity came around and they started divesting and it put pressure. Then when, once the actions follow money, and so, as the money started pulling out, corporations started saying, hey, we can't keep doing business in South Africa, that then creates that economic strain that eventually leads to the fall of the apartheid government and to the place where you are today. But it was really without that financial pressure would Mandela and Tutu have been able to do what they did in that country? I'm not sure.

Jeffrey Small: 15:14

And so today that concept has been broadened with these institutions and when you think about, and a lot of their, these university endowments, many people don't realize the size of some of these endowments. For the large Ivy League universities, you're talking in the 30 to 50 billion dollars per institution, a capital that they have to invest. Now, these are large research universities and they, you know they can cost a couple billion a year just to run. Then you think about large pension funds that might have 100 billion dollars In Europe. These concepts are where they think a little bit more socially responsible. You have these huge European pension funds as well, with some of them approaching or exceeding a trillion dollars. Well, when you're investing that amount of capital.

Jeffrey Small: 16:09

There is an effect that those dollars have in the world when you're putting it out, and so at some point people started to say do we have a greater responsibility? Yes, a key one is what kind of returns on our money that with your foundation and endowment pension fund, you need to get a return on that money because that's funding the payments, scholarships, everything that you make, and it sustains that organization for the next hundred years. But also, is there a greater societal impact of those dollars? And so the effect of investing in a company that's say, pumping out a lot of carbon into the atmosphere, versus someone developing green technology those dollars can make a real difference in our society. So these institutions started taking a broader view on investment returns, where part of it is that how much money am I gonna make, but a part is what are those other actions those dollars will do in society. So, as a company is someone who receives this money and I want to be happy investors I started thinking philosophically about those same issues. How do our actions when we go and we are developing a building by developing, I mean, you know when we need more buildings, you know more goods and sold, and Sometimes developing a building is not the greenest thing in the world, where if you got a bunch of trees and I've got to cut down a bunch of trees to build a big warehouse on.

Jeffrey Small: 17:43

But there are different ways in which we can do that. We can employ and there's cutting edge new concrete technologies, for example, where the concrete is actually carbon negative. Where there's this technique, this technology we started using a few years ago. We were the first developer to really pioneer this Is it's called carbon cure where what they do is they take a liquid CO2 that's coming from some manufacturing process, they injected into this calcium carbonate mixture and they they form calcium mixture and they form calcium carbonate, one of the ingredients. It goes into the concrete. So you're actually taking CO2 and it bodies it in your concrete.

Jeffrey Small: 18:27

So you know things like that of using, you know much more efficient LED lighting. You know great watering systems for your irrigation. All these techniques. It might cost a little bit more in a building but gives you a much greener, longer lasting, sustainable product. Is is a way in which we can give back and use our investors capital. That okay, so maybe our returns are slightly less than if we're like how can we just build the cheapest building possible, sure, but we can invest a little bit more and have something that's going to be better for the environment, that are, you will invest more in In skylights in the buildings. Well, you put a bunch of skylights. Skylights are expensive to put in. You have to turn your regular lights on less and your warehouse workers have natural light, which you know is a much more pleasant working environment.

Jeffrey Small: 19:21

Right, there's all these little things that you might not think about, that you can do as a responsible, more sustainable investor that's going to better our world while, at the same time, still benefiting the economy.

Bishop Wright: 19:33

I really appreciate that because that takes us down into the minutiae of the thing, because I think you know we're talking about making sure that people's pensions get paid, we're talking about the livelihood of families, we're talking about passing our wealth. In some cases there's a lot of good down there, and so this sort of naive castigation of wealth, I think, just doesn't measure up in reality. Right, and so it's at least it's encouraging for me to hear business people like yourself, really mindful of all these other goods that can happen while you get people, you know, a good return on their investment. You know, unfortunately, in politics and other places, you know, our thinking is too black and white and the truth of the matter is that the world is much more gray than we're comfortable with. And so how can we do both? And I think we can walk into bubblegum at the same time, and I think we have to in this space.

Bishop Wright: 20:22

I was just in Kenya and I got a chance to visit, you know, the second largest slum in the world. It's a place called Kabira, about a million people, and you know, thousands from thousands of children, and what was really heartening there is that they're using as many companies it was a German company in particular is using this space, kabira, to pioneer some concrete block technology and to figure out how to get people adequately housed, sustainably housed, healthily housed, really for pennies on the dollar. And this company in Germany is trying to figure out how it can thread this needle of profitability and, at the same time, being a great neighbor in this global community. And so I was really excited about that and seeing all kinds of people come to the table the residents of Kibira, people in Germany who really don't have to care about this place, but they're all sort of figuring out how they can work together.

Bishop Wright: 21:21

And now that technology is gonna move from Kenya and gonna move to other places in Sub-Saharan Africa to try to work against this housing deficit that we have, and then it moves into sanitation Now we're thinking about water and food and all this sort of stuff, and I really see business moral and ethical business as really being a catalyst for this, and so it's exciting to have these kinds of conversations with people who are sort of doing that work right now. I'm wondering, as you do this work, I wonder if there's a story, if there's a pet story from Jesus or a pet piece of scripture or even a line from the Book of Common Prayer that keeps coming back to you as you do your work. I don't wanna put you on the spot, but my guess is that there's something that's there, or maybe a couple of things.

Jeffrey Small: 22:10

That is really. That is a really interesting question I have never been asked before. I would say two things stick in my head, and then the one that makes it it was kind of how we started the conversation In Jesus's story of the man that comes to him the wealthy man and wants to follow him is basically give up everything that you have and he couldn't do it. As someone in my field.

Jeffrey Small: 22:48

That's a disturbing story and that one always sticks with me and it's that test of well, how deep is my faith really? And I've had to struggle with that and especially, I mean I live a very comfortable lifestyle and am I willing to go that far? And I think that lesson it pushes me in some of these directions that we talk about. But I think that's part of the magic of Jesus and the Buddha was very similar and their styles of teaching were to make people uncomfortable. They both spoke in aphorisms and they would tell people really difficult things, and I think part of that style is to challenge you and to make you really examine everything behind what you think you believe, and so I think that's maybe for someone in an American capitalist society that's one of the biggest challenges. So obviously I haven't given up everything to go live in a cave or move to Kenya and just serve the poor. But how can I, on a much smaller scale, try to make the world a better place with the gifts that I have?

Bishop Wright: 24:06

No, I really appreciate that Dr. King is the best reference for so many of these things. But Dr King said of that story that that is not a wholesale castigation of wealth. When the rich young ruler comes to Jesus and he says, hey, I've kept the law, I've done a good deed, I've got a good life here. And Jesus says basically in my newly revised Robb Standard Version, it's basically like that's cool, if you wanna move to the lightning round, sell the stuff and let's go. And what Dr King says is that that's not a wholesale castigation of wealth. That was an individual prescription and so, as Jesus did so many times, he had some sense of individuals and just like a doctor or a tailor would make a bespoke garment, that was a bespoke invitation for that young gentleman.

Bishop Wright: 25:00

And I like to think of it that way. And so you're absolutely right. I think all those conversations about wealth in scripture are supposed to keep us on our toes and they're cautionary about the power of the seduction of wealth. And so, as you know, a mature life of faith has to live in tension. And if it's not living in the tension of I've got a lot, how much is too much? I look out my window at my neighbor. How's my neighbor doing If we're not living with that tension? I think somehow we've aired in one direction or the other.

Jeffrey Small: 25:39

Yeah, that is an excellent point and it reminds me, takes me back again as a student of multi-religions, which is something that's.

Jeffrey Small: 25:47

Some people ask, well, why you didn't convert to Buddhism or Hinduism after you studied these different.

Jeffrey Small: 25:51

When written about these different religions, I'm like, no, it made me come back to my Christianity with a different perspective. But one of the Buddha's favorite exercises when he would have a one of his like top monks, like a monk who was seemed to be excelling above all others, who was but maybe was a little proud in his abilities, and the really high performing monk, he would give them a new meditation exercise where he would send them down to the cemetery grounds where often they wouldn't even bury the dead in the poor cemetery and they would just bodies would be there and they'd be bloated and flies and he would say they were called the charnel grounds. He would send his most proud monks you have to go to the charnel grounds and go and spend the next few days meditating there With the idea being, no matter how powerful and impressive I am, one day this is me, this is where I'll be, like the poorest, the wealthiest of us. We all end up that, you know, food for worms at some point.

Bishop Wright: 26:53

Exactly.

Jeffrey Small: 26:55

And it's that idea that bringing, bringing you back down to those trappings of whether it's wealth or ability, oratory ability or whatever it is, you know, intellect, that we're all still human.

Bishop Wright: 27:09

Yeah, yeah, there's no doubt about it. I mean, I've done my share of funerals, my share and then some, and I'm always struck that you can be the bishop, with your fancy outfit on and all of your ecclesiastical authority, but at some point somebody's going to put your remains in a hole. They're going to say their prayers and then they're going to say let's have lunch now. And nobody gets better than that, right.

Jeffrey Small: 27:33

That's right, exactly, that's exactly the point.

Bishop Wright: 27:36

Nobody gets better, and I don't find that morbid, I find it grounding, and pardon the pun, but I find it grounding, but I find it very sobering. And I was just also in Katmandu and we watched these open air cremations and I was struck that that was done out loud, not behind any curtains, et cetera, and then, once the individual was totally cremated, completely ashes, they pushed everything, the ashes of everything, into the river and then next, and so you know, we can't take it with us whatever it is. And so then I think what Jesus teaches us and others is how do you hold it, how do you trust worthy steward of it? You know, muslims have a wonderful theology on this. They actually bless and thank the beggar who finds them and begs from them, because the beggar is keeping them right from fixing their heart on wealth. You know too tightly.

Bishop Wright: 28:41

Well, look, the last question I wonder about is is that so you're a guy who manages incredible wealth and successful at it, and you're already doing it in some amazing spaces? You know, if you had a magic wand and you look out the window and you look and see what the world is? Or even Atlanta you're a native Atlanta, basically a native Atlanta moved here when you were two? What space in terms of our neighborhood, if you will would you want to direct incredible wealth towards? Because you know there are so many needs, the needs are so vast, even in our own city, our own metropolitan area. So if you could just bend an investor's ear who had an appetite for some risk and an appetite for doing real good and closing the gap, where would you point them?

Jeffrey Small: 29:30

That's a great question and it's challenging because I think, as we look at how do we solve these problems that we have societal, there's often too much of a well, just throw money at it, and you know, and that hasn't worked. I mean, you know, you go back to Lyndon Johnson and the you know great society is like. Oh, you spend you know $100 billion and you're going to solve poverty in our country. Well, you know, we've in different giveouts, we've spent trillions of dollars since then and it's not solving the problems. So it needs to be some combination.

Jeffrey Small: 30:06

I'm a big believer in public-private partnerships and so you know, can you help go into communities and do development where you can create jobs within those communities? Just giving people money, while it feels compassionate, I do believe it creates people who are then to become more and more dependent. You know, versus, can we create, have development opportunities in these poor communities where a lot of times the money doesn't want to go because it's harder to make money there. You don't have this wealthy people where it can bring, you know, meaningful jobs in those communities and also goods and services. You know you have a lot of places in Atlanta that become food deserts, meaning you don't have good grocery stores and restaurants. You know that the communities can use.

Jeffrey Small: 31:02

We actually we're in a joint venture right now on the southwest side of Atlanta on the Beltline. It's on the West End. It's called Leigh White and it's five 1950s warehouses that we've been redeveloping and just opened a food hall there and there's we got breweries, a lot more retail, we're opening offices. It's close to the Atlanta University Center and so it's bringing high tech jobs, food, food jobs into an underserved market. And you know, I think can we do more of that kind of development that can bring, like, say, goods and services and jobs, because you know we won't solve these issues unless people can be self sustaining themselves and not just relying on government.

Bishop Wright: 31:50

That's right, and it seems that Jesus really, really thought about partnership a lot. I mean, he seemed to not do for people what they could do for themselves. And you know, his challenging to all of us is always where's your agency right? Join me in partnership, and one of my favorite Bible verses comes from Saint Paul, which is is that God can do infinitely more than you can ask or imagine, according to the faith at work in you. So there is a cosmic and personal partnership for you, for your public and private partnership. Well, Jeff, thanks a lot. It's been great to talk to you. Jeff Smalls folks. He is the CEO and co-founder of MDH Partners. Thank you.

Jeffrey Small: 32:41

Bishop, it was wonderful speaking with you, thank you.