Company Profile

COMPANY:Cadre

HEADQUARTERS: New York City, NY

YEAR FOUNDED: 2014

2016 REVENUE: 20 to 50 million

EMPLOYEES: 45

Editor's Note: Inc.'s 12th annual 30 Under 30 list features the young founders taking on some of the world's biggest challenges. Here, meet  Cadre.

Ryan Williams is noteworthy--even without factoring in his famous co-founders Jared and Joshua Kushner, the former of whom is not only Donald Trump's son-in-law, but is also a key adviser in the Trump administration.

Although the Kushners helped found the real-estate investing startup with Williams in 2014, their roles today are strictly as advisers, says Williams, who met Joshua when they both were undergraduate students at Harvard University. However, it was reported today in The Wall Street Journal that the elder Kushner still maintains his investment in the company, which allegedly wasn't disclosed upon joining the administration. (The Cadre investment is said to be held by an entity called BFPS Ventures, listed as owning unspecified New York properties valued at more than $50 million, according to the initial disclosure filing.) Williams was unable to be reached for comment on the allegations.

Even so, the 29-year-old Williams is a force, as is his company. Since launching, Cadre has generated nearly $1 billion worth of deals, raising close to $70 million in funding from high-profile investors such as Peter Thiel, Goldman Sachs, and Jack Ma.

The Idea

The idea for Cadre didn't come immediately to Williams. He started his first business during puberty--a sports apparel manufacturer called Rapappy--which he sold before graduating from high school. Later on, when attending Harvard, Williams launched a second startup, connecting undergraduate students to business school professors.

It wasn't until the housing market crashed that he got his biggest idea: As small, commercial properties were being auctioned off for pennies and cents, "there was clearly a disconnect between what the homes were worth and what they were being auctioned for," he recalls. He wanted to buy into the opportunity.

So Williams set up a website where he could analyze these homes using a tax parcel ID--which tracks the value of a property over time--and measured this against what they were selling for. Using the data, and bolstered by the cash of wealthy Harvard alums including the Kushners, he started buying dozens of properties and flipping them for three times their original price. "By the time I graduated, I was at a crossroads: Do I scale this business nationally, or do I do tech banking at Goldman Sachs?" he recalls thinking.

Williams decided to do both. He pulled 18-hour days as an investment banker--and then would quietly work on his startup from the comfort of a supply-closet-size room by night. Real estate, he figured, was a valuable asset that ought to be made available to more (and more average) investors.

The Premise

Cadre is an e-commerce site for investing in real estate. It connects customers--primarily wealthy individuals, referred to as "qualified purchasers"--to property deals across the U.S. (Cadre requires a minimum investment of a few hundred thousand dollars; that's somewhat less than what a traditional fund requires, but likely more than what you'd pay to buy into a real estate investment trust, or REIT, which trades like common stock.) Williams declined to comment on what exactly the company charges its investors--it asks for an upfront fee and a recurring subscription rate--though notes that it's in the range of a "couple hundred basis points." A fund, by contrast, will typically take 2 percent of the investment, and then 20 percent of profits over time.

Think of it this way: "We're giving people direct, deal-by-deal access to commercial real estate, like you would buy and sell something on Amazon," says Williams. The technology, he says, allows the company to be more nimble than some competitors. Deals on Cadre can be completed in weeks, rather than the standard months. The company also claims that its deals are more transparent than a typical fund's, where the managers, not the investors, are the ones making decisions about the assets.

The Opportunity

Analysts agree that transparency is something that is largely lacking in the industry. "Traditionally, the market has been dominated by brokers, and there are very few people who are aware of the price of a deal being struck," notes Surabhi Kejriwal, the real estate research leader for the Deloitte Center for Financial Services, a consulting firm. "Now, the difference is that a lot of these technology startup companies are trying to disrupt the space."

Although Cadre faces competition mainly from the traditional brokers, a growing number of startups have emerged in the real estate leasing space, such as 42Floors, a San Francisco website that lists commercial real estate and office rentals, and Rofo, an online marketplace for property listings and potential tenants that can facilitate lease deals without broker intervention. (The former, incidentally, has received investment from Joshua Kushner's Thrive Capital.) In a recent report, "Commercial Real Estate Redefined," Deloitte suggests that over the next several years, brokerage companies will be forced to "transform into technology firms."

In this climate, it's perhaps not surprising that Cadre has grown rapidly. Williams says that a Series C fundraising round is soon to come. The company has also reportedly generated a $250 million "backstop," a pool of capital from the family office of George Soros, a prominent investor and philanthropist. In an interview, Williams declined to comment on the source of this backstop, though he did say Cadre will use the funds if there's a property it wants to buy before it has investors lined up.

The Challenges

Still, the size of the opportunity itself is unclear. "The real estate industry itself is niche," says Deloitte's Kejriwal, who notes that Cadre may struggle to compete with traditional brokers over time. "At one level, you could say they're being more transparent, but the traditional players also have their own space. We're not sure if people are receptive to doing real estate deals online."

Samir Kaul, a founding partner with venture capital firm Khosla Ventures and an investor in Cadre, also points out that getting to scale could be a challenge for the one-year-old company--and its wunderkind co-founder.

"They are bringing technology to real estate," Kaul says, "so they'll face the same kinds of challenges that tech does." While many tech startups boast a trove of venture capital funding, comparatively few are profitable; it's therefore unclear how a startup like Cadre might fare during an economic downturn, or as the Federal Reserve continues to hike interest rates. Kaul characterizes these as challenges that are "beyond" the company's control.

Williams, for his part, is well aware of the challenges ahead--and harks back to the early days, when he couldn't afford to offer salaries and paid his employees out of pocket. "I love proving people wrong," he says. "There have been some instances where things have seemed uncertain, but I like absorbing uncertainty. That's my role here as CEO."

Correction: An earlier version of the story misstated the amount of Cadre's backstop. He has a reserve of $250 million.

Cadre - 30U30
Published on: May 2, 2017