In this conversation, we have the opportunity to talk to Alex Rodriguez, or ‘A Rod’ as he is better known, arguably the greatest baseball player of his generation and now prolific VC investor.
Simon Brewer 02:31
If I said Lionel Messi, Serena Williams, Virat Kohli or Tiger Woods, you'd know they've been masters of their game. And if I said Alex Rodriguez or A-Rod as he's better known, you probably know I'm talking about the greatest baseball player of his generation. So today, we're going to Miami to talk to someone who has gone from dominating his sport to developing an impressive portfolio of investments and businesses through his investment firm, A-Rod Corporation. So Alex, welcome to the Money Maze Podcast.
Alex Rodriguez 03:01
Great, thank you for having me.
Simon Brewer 03:03
Well, Alex, this is a first for the Money Maze Podcast. It's a first to have a former professional baseball player and World Series champion. It's a first because I am a cricket fanatic, and as my prep for this, I watched my first ever baseball games to observe you in action. And it's a first as our audience is now in over 100 countries and we haven't had a sports professional turned financier until today. So lots of compelling conversations to have. But if you allow the pun, let's go to first base, your childhood. You were born in '75 in Manhattan to Dominican parents and I think your father played baseball. But I remember reading Andre Agassi's brilliant book 'Open', I think it's the best sports book I've ever read, and his father was a dominant figure driving him to improve. I wonder, were you simply a self-starter who didn't need parental motivation?
Alex Rodriguez 03:59
I do agree with you on 'Open' with Andre Agassi. A good friend of mine wrote that book, J.R. Moehringer, who I think is one of the great modern writers, just a fantastic human being. As far as me, yes, I was born in New York City by two parents that are quite opposite, both Dominican. My mother is still alive. She's 86. She’s just had a birthday. She was here in my office yesterday kicking around. She's strong. She had a lot of fortitude and a lot of determination. And my father was a lot more passive. He was brilliant with numbers. He was really good at baseball and business. Yeah, he would just let me kind of be me. So I would say the opposite of 'Open'.
Simon Brewer 04:37
So what stays with you most about your childhood?
Alex Rodriguez 04:40
I would say a few things. Being in New York, watching baseball from the time I was born, both Yankees and Mets because my father always had them on, I think too the entrepreneur spirit was lit very early in my life because my father was the ultimate entrepreneur, where we had a shoe store are in our Washington Heights apartment in New York City. I can't tell you how many people over the years, if I had a few bucks for every time someone said to me, 'I used to buy shoes from your father,' I would have a great collection of coins, that's for sure. Those are the two things, a love for baseball and a love for business probably.
Simon Brewer 05:19
Right. But I'm going to steal a phrase from Professor Jordan Peterson. He says, essentially, but here's the question is, were you built to go uphill?
Alex Rodriguez 05:28
Was I built to go uphill?
Simon Brewer 05:29
Yeah. Were you built to go uphill?
Alex Rodriguez 05:31
I think so. And I think just watching my mother fight the fight every day has created a moat for me that is one that I just understand, never quitting and keep fighting and keep putting forward. I have two daughters, Natasha and Ella. I often talk to them about when things get tough and there's adversity to do two things. One is stay very calm, stay in the pocket, and then two, never give up. And I've shared this with John Gray, who also has girls, I believe he has four girls and now young women. I have a couple of young girls that are now also young women, a 14 and 17-year-old. So yeah, I would say that I'm built for the grind.
Simon Brewer 06:15
Well, I have two daughters slightly older, but I am looking for lessons and instruction as I go along. Let's just stay with sport. You were the first high school player to try with the US national baseball team, regarded as the top prospect in the country. The University of Miami approached you for baseball, and I read, as a quarterback in football, and you turned down their scholarship. You signed with the Seattle Mariners, and I guess my question is, how did you weigh out that decision? Was it an early version of the investment risk-reward trade-off?
Alex Rodriguez 06:46
Yeah. It was a lot more difficult that someone like yourself may think or even at the time. For some, it was an obvious, they thought I should have gone pro, because like a LeBron James or Kobe Bryant, being the number one pick in the country, there's not much upside after that. So the one downside that if you went to the University of Miami or any university at that time, you had to stay a minimum of three years. And as it played out, I ended up going to the Mariners. I signed a professional contract, I bypassed the University of Miami and also playing football at the University of Miami. And as an 18-year-old at the time where I would have been a freshman, I was already in the major leagues. So I'm very happy that I decided to go pro. And then I spent basically the next 25 years being a professional.
Simon Brewer 07:35
Right. As we talk about focus and determination, and that will lead us into investment later on, I read, correct me if I'm wrong, that you were so keen to practice on that throw that was coming at your face at 80 miles an hour that you bought a machine. I'm looking at your face and it looks pretty good to me so I guess it worked. But tell me why you did that. And I'm smiling as well because in English cricket or cricket around the world, we use the expression for a googly, a delivery that's very difficult to read. And the English actually use curveball a lot, but I don't think most of us understand what it is. So tell me about that and your machine.
Alex Rodriguez 08:12
Well, a curveball is just basically a ball that spins and unlike a fastball that is straight like a bullet, the curveball spins and is a lot slower and it has kind of a hump on it. Think about it like a rainbow, and that's the action of the ball. And it's not a natural thing for anyone to do is to hit a rainbow, but we can all hit a straight line if you time it well. So I just thought it was a matter of reps and the machine really helped me getting reps, getting used to it, and as a result of those 696 home runs, I'm sure a couple of hundred of them were on breaking balls.
Simon Brewer 08:47
It's another version of Malcolm Gladwell's 10,000 hours, isn't it? So look, I know that the average baseball player plays his career or his five years, you played 20. But let's shift the lens to investing. I just got the impression reading about you that in fact, the early inspiration for investment probably came from your mother. Was that right?
Alex Rodriguez 09:08
I think even earlier than that. I think it was just watching mom and dad hustle. My mom, in the early days in the late '70s, worked for General Motors and my father stayed at home taking care of the shoe business. I just thought it was fascinating that I was always good with numbers, so was my father. And probably around the age of 10, I had two dreams. I call it the two B's. I wanted to be involved in baseball and I wanted to be in business. Luckily for me, as I look back in my life, I feel while some people call me a hard worker, I feel because of the things that I've done with so much passion and love, I feel like I've never worked a day in my life.
Simon Brewer 09:46
Well, one of the things that struck me as I did my research is that you had the unusual experience to get to know, I guess, the investor universally revered, who is of course Warren Buffett and you had two experiences with him which must have framed a lot. Just tell us about those two experiences because I thought they were just fascinating.
Alex Rodriguez 10:06
Well, I'm not sure which two. I've had a lot more than two. I've known Warren now over 20 years. He's been a friend and a mentor. But I got to tell you, the things that we have in common, again, are business and baseball and a sense of humour, except he's a lot funnier than I am, but I certainly laugh at all his jokes because he's very witty. But just to tie in baseball on business, his favourite player in baseball was the legendary Ted Williams, who for some of your European audience, Ted Williams would be like a Pele, basically, like the greatest of all time. And one thing that made Ted Williams, who played for the Boston Red Sox, so unique, he was uber disciplined at the play. And Warren Buffett talks about investing by not stretching the strike zone, staying in your circle of competence, and then when you get a pitch, make sure it's a fat pitch and make sure you go for home run, not just a single.
Simon Brewer 11:00
Got it. And that's why he says you don't have to swing at every pitch. Now we've exhausted the limit of my baseball terminology and knowledge, but I do want to just stop on the one that you told which was in relation to a contract that you were going to sign and you wanted more money and the other side wanted less and you called Warren.
Alex Rodriguez 11:19
Yeah. So when I opted out of my contract in 2007 going into 2008 season, the Yankees and I were stuck at a standstill in our negotiations and we were about $30 million apart. I had one call, just like the game show, and I called Warren, of course. I called Mr. Buffett, and I picked up the phone. I said, 'Warren.' He always says the same thing. I call him Mr. Buffett, he says, 'That's my father, call me Warren.' I said, 'Warren, I've got a problem for you, a little challenge.' I said, 'We're negotiating with the Yankees. They're being very generous, but we're about $30 million apart on a 10-year deal, which feels like we're very, very close. What do you think?' Then he went silent for about a minute and I said, 'Warren, are you there? Are you there?' And he goes ‘Yeah, yeah, I’m thinking’. And he basically came back and said, ‘You can set up this incentive package that if you hit home runs that are record-breaking, Hank Aaron, Babe Ruth, Barry Bonds, each one of them should have a $6 million bonus attached to it, and there's five of them, and there's your 30.' And I said, 'Holy smokes! That's brilliant.' I said, ‘Call the Steinbrenners back. They will love it. Call me back if you need anything else.' And sure enough, I called the Yankees and I said, 'I have an idea. I've been thinking.' I didn't give up who was my thinking. I said, 'What about this incentive package?' They kind of paused. They said, 'We love it.' And about a week later, we were having a press conference and the unsung hero of that negotiation was Warren Buffet.
Simon Brewer 12:47
Fantastic. But I think I'm right in saying you did execute on the deal.
Alex Rodriguez 12:50
A hundred percent. The Yankees loved that. They thought it was a great deal and it was a win-win. It was an example of Warren thinking outside the box and bridging what could have been a high-stress situation for both sides.
Simon Brewer 13:06
Well, if at the end of this show, you have had such an extraordinary experience and enjoyed it so much that you find yourself talking to Warren one day, you may just say, 'You know, Warren, there's one more thing you should do. Appear on the Money Maze Podcast.' Anyway, let's talk about A-Rod Corp. You're chairman and CEO of it. It's an investment holdings company and you started it way back in 1995. Just tell me a little bit about why you formalised the company and how it's shifted over the years.
Alex Rodriguez 13:33
Yeah. It started organically and it started out of fear. I saw the way my mother grew up and my father left when I was a 10-year-old boy. And he left my mom and my two siblings, the four of us at home, in a neighbourhood called Westchester here in Miami. I always wanted to take care of my mother and I wanted to be involved in business and be an entrepreneur and go to school and go to business school and all of this, but I was obviously occupied with baseball. So the one thing I went back to is my circle of competence. Because we were lifelong renters, I understood that as a child, we had to move every 18 months because the landlord kept raising the rents. And I remember as a young boy praying saying, 'Boy, if I can ever switch places with the landlord, I will certainly do that.' And about a dozen years later or so, I had my first opportunity to buy a small duplex when I was still playing with the Seattle Mariners in my early days. I bought that duplex and then I bought four units and then eight units, and that grew to over 10,000 apartments in about 14 different states. And that was the start of it. But the point of is you start small and you start with something that you really understand.
Simon Brewer 14:42
We all know the power of real estate and some people never leave that successful silo when they have established that sort of footprint in there, but you start to go wider. Just talk about what happens next, both in terms of the motivation and the execution.
Alex Rodriguez 14:58
What we started understanding was that if you have a competitive advantage and you have a great team and you have a vision, that opportunities will come your way. And it came to a point where we got bitten wide and shallow. And over the last three years, we've kind of reeled it back in. And A-Rod Corp, essentially, is a holding company, miniature Berkshire Hathaway, obviously much, much smaller and private, not public, and it has a collection of companies in there that we own stakes. We do two things. We do real estate and we do venture private equity investing. And within the real estate, there's an entire ecosystem, fully integrated from construction company to over 9000 single-family homes, to about 8500 multifamily apartments, to hotels. And on the venture side, we own parts of 30 companies. We've taken a handful of them public. And essentially, that's what we do. And I think in moments like we have today, which the capital markets have dried up some, interest rates have gone up, things are very fluid, and the voice from me to our team is let's really focused on the two things we do best, that sports with the Timberwolves, and that's real estate.
Simon Brewer 16:16
So Alex, my understanding is what we're talking about here is principal capital and it's not open to the public. There are no fund vehicles.
Alex Rodriguez 16:23
That was right, Simon, for a really long time. And about 15 years ago, I brought in a magnificent real estate expert, and his name is Stuart Zook. He used to work for one of my mentors, Jerry Reinsdorf, in the late '70s, and then worked for Sam Zell for a very long time, who was an icon titan here in America. And he's been with me for over 15 years now. He came to me about 10 years ago, and said, 'Alex, why are we only using your capital? We should go out and create opportunities for partners.' And we started a fund, we're now in fund 5. We've deployed hundreds of millions of dollars. We acquired almost $2 billion of multifamily apartments, and over the last 10 years, our returns net of fees have been close to 35% IRR. So we've been very lucky, very fortunate. It's been a great market. But we have expertise, and Stuart Zook, like Warren Buffett, they share the Ted Williams discipline and only swing at a very few pitches that are fat and juicy to hit out of the park. And that's what we've done the last 10 years in real estate.
Simon Brewer 17:35
And is that all commercial and all US or is it a mix? How wide within that silo do you feel comfortable going?
Alex Rodriguez 17:44
So on the multifamily side, historically, we've been probably 90% of those apartments that we've acquired. And in our career here, we've acquired over 20,000 apartments and those 20,000 apartments, probably 90% of those are in the Southeast United States, in markets that have great rent growth, markets that are growing with businesses and jobs. South Carolina, North Carolina, Houston, are examples, Tampa, all over Florida. And on average, we've acquired units anywhere from $100, 000 to $140,000. Average rent could be anywhere from $900 to $1, 400 or $1,500 [per month], and those rents keep going up obviously. And the harder it gets here in America to buy homes with interest rates rising, it gives us great opportunity over time to continue to improve rents.
Simon Brewer 18:34
So the second part of the business is venture capital, and let's maybe just start at the highest level, which is that you're well-known. You must get approached with all sorts of 'great' ideas, I say great with inverted commas. How's your filtering process to be able to get down to look at a shrunken universe?
Alex Rodriguez 18:53
I think one of the things we've gotten really good here is saying no. We take a lot of phone calls, we look at a hundred deals, we may underwrite five or six, and we might pick one. Again, the message to the team is quality, not quantity. We have very specific things we look for and when we see it, we can identify it quickly. But more importantly, what we found, Simon, is when something comes to us, we don't like to create dust. And dust means you'd rather have a quick yes or a quick no than a slow maybe. So one of the things we try to do is we're always very gracious about the opportunity, but we always like to get back usually within 24 hours and say, you know, this is not what we're looking for or maybe it's a little bit too early for us, but please stay in touch or if there's other opportunities, keep us mind.
Simon Brewer 19:40
It's always helpful when guests on the show who are investors talk about specific projects that they've been involved with. And one of the ones that I read, which is always topical, was I think that you got involved in a telemedicine business, I think you did it with Jennifer Lopez, and you ended up floating it, as in listing it on the stock market. So I'm quite intrigued. How did that appear, and then again, how much did you get involved? Because you provide finance, but I suspect that you and your team have so much expertise that the borrowers want a bit more than just finance.
Alex Rodriguez 20:10
So Hims & Hers came to us by a great company called Atomic. They're based out of San Francisco, they also have an office now in Miami. And what they do is they start companies from the ground. And telemedicine is something that I wish when this company came to us an opportunity, what I said to myself is, 'Could I be a customer and do I know 10 or 15, 20 people that would also be customers?' And the answer was a quick yes. The reason why: imagine when I was eight, nine years old, I may have pink eye, my mom would say, 'All right, go to school, it’ll get fixed.' I didn't have the luxury to kind of sit around and go to the doctors and go spend $500. And with Hims & Hers, we have a few thousand doctors just like this, that are certified, that can look at me, give me some opinions, if I need medicine or whatever it is, and you can do this all for like under $50. And I thought, 'Boy, I wish I had that when I was a young lad,' and I didn't have it. So I think it created a great opportunity, it has a great management team and I loved it. And we got very involved, we did a commercial. We're still very involved when it comes to anything they need. We're here as partners. We came in very early, it went public, and it's still a great asset that sits in our portfolio today.
Simon Brewer 21:24
So that's healthcare, but you've been in lots of other businesses. And of course, the challenge is you've got skills but you don't want to go too wide. So what is it when people approach you that gets you excited?
Alex Rodriguez 21:36
I think things around sports, health, media, things that we understand, like Blackstone. One of the great things that Blackstone does, they’re one of the greatest private equity groups in the world based in New York, is you can cross-sell over the portfolio. So if there is something that if Simon has a business, that it's cleaning lawns and you can be helped by having 20,000 additional doors to your business, then there's an argument that Simon's lawn business attached with A-Rod is better together than you are apart. We look at synergies for the portfolio. We look at things that we're passionate and understand really well, and assets that we like that need more than just capital. Because capital, you can go get anywhere. But can our capital plus our commitment plus our team, plus our platform, can it help you get from A to Z like Simon's lawnmower business, or Him & Hers where we came in at a few hundred million dollars and we took it public around $1.7 billion.
Simon Brewer 22:39
Now, one of the things that you said, which had me pause when you were talking about building culture and building business teams, you said you wanted missionaries, not mercenaries, and then you added long-term thinkers. But of course, there's a trade-off, isn't there? We want honourable citizens around us and good colleagues, but we got to make money in the business when you are reporting back, whether it's to yourself or to others. So how do you think about managing that tension?
Alex Rodriguez 23:02
Yeah. My partner has a great line. He says, ‘A lot of people say they're missionaries until you have to make a hard business decision and you’re going to lose a lot of money, and then they just become mercenary just for that one day and they go back to missionary.' And it doesn't work that way. I mean, the truth is, you got to make tough decisions, reputation is everything. I've lost millions of dollars to do the right thing and I will continue to do that. Never, ever, ever want to lose anyone's capital, I'd rather lose mine, and that's why we've been so successful, lead with my capital first. We're usually the largest investor in everything we do. To me, that's what it's about. That's what I've learned from my mentors and leaders and we're very proud of that.
Simon Brewer 23:40
And when things haven't worked, we're all investors so we know that it is a numbers game, how do you undertake whether you call it a post-mortem or just trying to assess, like reviewing a game, what you should have done differently so it helps you?
Alex Rodriguez 23:54
So first of all, you have to have senior team members around you that are complementary, have a complementary set of skills. You also have to empower them to be able to say no to you at will. Fortunately for me, I have an army of great people that are a lot smarter than me that love saying no to me, and that's the way I like it. I have a lot of ideas and they can come in and shut it down with the best of them. But that's good. So a vetting process is really important. Problems, I always tell our team, never get smaller, they get bigger. So when there's an issue, when there's a challenge, come from it, lead with it. We meet every Monday morning in our Monday huddle meetings and that's where issues need to come off. If people need to go sidebar, we do a sidebar, but we like to run a very transparent company. We put the good, the bad and the ugly every Monday on the table, and then we address it during the week. And if there's a challenge and we have partners, the first thing we do is I pick up the phone and say, 'Here's the problem. Here's two or three ways we're thinking about doing it but we wanted to let you know first. Even if we think it’s not going to manifest to a bigger problem, I want you to be aware.’ And I found that to be very important in building trust and alignment with your partnership and then address it.
Simon Brewer 26:58
Reflecting on your experiences in sport, what's the one or two things that have really helped you become a better investor?
Alex Rodriguez 27:04
I think it really comes down to having a great team. I think playing 25 years of professional baseball has given me a certain amount of experience in the clubhouse and on the field competing. There's a pattern recognition that comes with being a major league baseball player, with being a champion. One thing I can do is I know how to identify great talent and I know how to recruit them. And luckily for us, we do not have a lot of turnover here. But when I think about talent, Simon, I think about, there's a picture here of Aaron Judge, like that's a great talent. My partner here, Javier Gomez, he's a great talent. It's being able to identify not only talent, but can you weave that in with great character and judgment. Because I think the world focuses so much on IQ, and that's important, you need to have really smart people, but then you need EQ and LQ. And in a world like today where things are very challenging, the EQ part and dealing with your partners, dealing with people, being inside a room, judging a room, having self-awareness, are all things that are very important. And then LQ may be the most important, that's love. Are you passionate about what you're doing or are you just coming in to collect the paycheck? We do not want that. We're one of the few companies, I don't let any of my team members, they don't have to sign non-competes. I always say the door is always open. I asked for two things. Number one, if you leave, give me some months to find your replacement, and number two, don't take any of my people with you. But you can go work wherever you want, whenever you want.
Simon Brewer 28:43
Right. Well, that's very fair and unusual, so credit to you. I just want to talk about mentors. I see that both Greg Norman and Magic Johnson have been mentors to you, two enormous figures in their sports. Greg Norman, we're actually hoping we may get on when we do a sport and finance series to talk about LIV Golf. But how did they help you?
Alex Rodriguez 29:02
Yeah, I think both are guys that I looked at as role models when I was playing because they were able to basically take a Hall of Fame sports career and convert that into the boardroom to a Hall of Fame business career. Both those guys are wildly smart and creative. Magic Johnson is an example. About 25 years ago, he took me out in Rodeo Drive in LA and we went out to Nashville to Steakhouse. We were supposed to meet for 30 minutes and we met for about three hours. And in that meeting, I took about seven pages of notes. He basically shared his playbook with me years before I was retired. But I started thinking about wiring my brain and thinking of the path that I wanted to take once I was done playing baseball. And I was lucky because I was early in my playing days, and I started to think about life after baseball and the things I have to do and the education I have to attain and collect before retirement. And then Greg was someone very bold, thinks in a very disruptive way, obviously what he's doing today, and everything he's done in his career has been pioneering. Everyone kind of cringes at first and then when you look up, he's the smartest guy in the room. And whether that was King Cobras early on or the Reebok with the shark, and he was one of the few early guys that had his logo, he’s always talking about the importance of that, and then to what he's doing today, he's been incredibly disruptive and very smart and way ahead of trends and he's been a fantastic investor and fiduciary to his brand.
Simon Brewer 30:38
We're in a tough economic climate, difficult to make predictions, but this could last some time. Inflation has historically proved very difficult to extinguish and central banks’ starting positions were not optimal, given how long they kept rates. How are you thinking about the squeeze that is happening on incomes and on businesses and rents, etc.?
Alex Rodriguez 30:57
About a year and a half ago, we decided to take a lot of capital off the table. And that came two or three different ways. One was to take the stock market and take more of a cash position. Two, some of the companies that were kind of on the line of do we take it public or not, we ended up taking those companies public, as an example, Hims & Hers being one of them. The same thing in real estate. We took the philosophy in real estate that we can sell 3000 units and buy 1000. Why? Because there was so much capital on the sidelines looking for yield. We had these great assets. Our last asset that we recently sold, we made almost 7x our equity, and it was a phenomenal buy. We bought it early in the cycle after 2010 and it was just an incredible asset and we traded it. So we're sitting here in a position today of waiting, understanding what's going to happen next, not trying to do too much, but always looking for opportunities. And I always describe it to the team and to the people that we talk to, is for the last 12, 13 years, you've had 90% of a foot in accelerating and like 10% on brakes. And today, that's opposite. We have 90% on brakes and 10% accelerating. And the reason why 10% is important, you always have to be able to play offense and be ready when most people are not. And thank goodness, we're in a great position to strike when things get more interesting.
Simon Brewer 32:28
Your early mentor, Warren Buffett, has proved exemplary at that from his bailout of Salomon Brothers all the way along the lines. Being there with capital when others are running is just such a great position to be in. Next year on the Money Maze Podcast, we're going to do a mini-series on wealth management. When one builds capital, a new set of challenges emerge: responsibility, philanthropy, investment priorities. And I wonder how well you think the wealthy are served by the private wealth industry that has had pretty dramatic growth, in part courtesy of these very cheap interest rates for 20-plus years.
Alex Rodriguez 33:05
Well, I think it's been an incredible environment over the last, call it dozen to 13, 14 years. And quite honestly, all you had to do was be in play and chances are you would have done pretty well. The most interesting things is in times like we've had here in the last six months is how hedged are your positions, did you make some protective bets and take some cash off the table? There's a lot of ways you can go, right? A lot of people don't want to miss the upside. But I know that there's been a lot of people that have been wiped out because they did not hedge their positions. My favourite movie is Wall Street with Gordon Gekko. It usually comes down to greed. If you take a step back and you can manage the greed a little bit, that means that you're going to miss some opportunities and you're not going to be first, and nobody can time the bottom. And whoever tells you that, they're probably stretching the truth a lot. That's a really important element. If you understand what you like and you see that there's value, whether that's multifamily, whether that's a company that's in distress, or if that's the stock market, I always think about investing like Warren, very, very long term, not short term, and that's why we've had some success.
Simon Brewer 34:18
We had an interview last year with Helen Watson who is the Chief Executive of Rothschild's wealth business in the UK, and she was making the point, particularly about wealth transfer between generations, is that when it goes wrong, as it typically does, it's a failure of communication, complication, and conviction. One of the challenges many of us have in this industry is talking to our children about wealth, discipline, etc. How do you think about that? Because it is hard.
Alex Rodriguez 34:44
It is hard and I would add one to your three; guardrails. I think for the next generation, it's important that you have those three things you just mentioned, but also guardrails where if they wanted to go absolutely nutty, that they can only do so much damage. And again, that's something that's really important in sports. I think it's really important with the next generation. But I think you're right, I think communication is vital, and then really educating the next generation on financial literacy. One book that changed my life about 28 years ago, when I read it was 'Rich Dad, Poor Dad’. And I've had many conversations with the author, Robert, about what impact that made on me, and the truth is, our parents, or at least my parents, taught me everything I need to know to stay poor for the rest of my life. And hopefully, what I'm teaching my daughters is something that can help them not only create revenue but more importantly, grow their revenue for the next generation. And there are two different things that parents, rich dad and poor dad, are teaching their children.
Simon Brewer 35:47
I don't know that book so that will be added to the list. Thank you and we'll put that on the show notes as well. Let's just talk about charity. I know you're a very generous donor to charities, but there are lots of demands for folks like you. How do you think about prioritizing the asks?
Alex Rodriguez 36:04
This is one of the most challenging aspects of people who have created a significant net worth. Again, I took this from Warren Buffett. He said, 'Stay in your circle of competence, do what you do really well.' You've seen a lot of people get in trouble in philanthropy because that's a full menu that you need to go to school for and understand. So I've taken the approach of the two institutions that have meant a great deal to me, are both local here in Miami, the University of Miami and the Boys & Girls Club, and I sit on both boards and have given a significant amount of resources over the years, and time and effort. When calls come in, I always tell people, here are my two passions. Every once in a while, if there's some type of hurricane or earthquake or some catastrophe, we get involved, and then we kind of go back and do what we really understand really well, which are Miami, the university, and the Boys & Girls Club.
Simon Brewer 37:00
Now, I'm seeing your portfolio and you alluded to it, you are an investor, I think it's the Minnesota Timberwolves, which is basketball. You know the sport you were in very well, you've invested in a different sport. Tell me a little bit about what was the economic rationale for that.
Alex Rodriguez 37:15
Yeah, I think we were uniquely positioned. We took a run at acquiring the New York Mets. We came in second. So we're the second winners there. But as that door shut, about six months later, we were very fine-tuned on what are the levers you have to push in these entertainment platforms like the Mets. We were very excited about it. And then when we looked at the Timberwolves, we thought the league was a very progressive league, it was a global league, there was tremendous upside in Minnesota. Minneapolis is the ninth wealthiest city in this country, which a lot of people do not know. You have over 50 Fortune 500 companies right in the Minneapolis area. So it had all these kind of levers that you can pull. The league was tremendous. We were acquiring it at an attractive price. Mark and I, my partner Marc Lore, we pulled the trigger very quickly and we're thrilled with the investment and our involvement.
Simon Brewer 38:09
I was lucky enough to meet with a gentleman called Ed Woodward, who has actually ended up as CEO of Manchester United. We were talking about soccer on Monday and growth that is going on there and that's why you've seen Todd Boehly buy Chelsea and some of these sovereign wealth funds buy. I mean, there's a whole shift of ownership going on. But do you look through the lens of basketball as being much more than a domestic game and hence it's actually got a greater runway than baseball?
Alex Rodriguez 38:37
I do. And I think it's just advanced from a global point of view. If you look at the top three sports in the world, you're probably looking at soccer, MMA and basketball. I think in 10 years, basketball will continue to grow up the charts, both domestically and internationally. It's also a very young sport. It has great leadership with Adam Silver, the Commissioner. And at the end of the day, the way you should look at sports is over the last 30 years, the art market, the contemporary art market, has exploded. More specifically in the last 10 or 15 years, when you think about Warhols and Basquiats. Sports are the same, except they have revenue attached to them. You don't hang them on a wall, but you can actually enjoy them like the game that's behind me, and there's only 30 of them. So there's scarcity around these assets. And as more owners that are blue chippers keep getting involved, they're not going to multiply these assets. These assets will stay the same, 30 teams or 32 teams.
Simon Brewer 39:33
Well, actually, we're talking about art. One of our sponsors is Mintus who have developed a fractional ownership of modern art and it's approved by the regulators. It is a very interesting investment category that typically has belonged at a very high end, but now is being democratised. I've got a few closing questions. JK Rowling, the author of Harry Potter said, 'Rock bottom became the solid foundation on which I rebuilt my life.' Now you had a suspension in 2014 for a year, I wonder how you reflect on that and share the lesson with your children.
Alex Rodriguez 40:05
Yeah. Well, 2014 was the single most painful experience of my life to be able to, in the prime of my career or towards the end of my career, to serve a year suspension. That was very difficult. It was something that I was very candid with my daughters about, as candid as you can be for girls that are under the age of 12. But I look at my life pre and post-suspension, and pre-suspension, I thought about winning completely differently than I think about it today, post-suspension. Pre-suspension was home runs and championships and nice cars and a bunch of nonsense. And today, I think about winning, about collaborating with my team, about raising two beautiful girls with high self-esteem, making others around you better and collectively winning together. I think of the suspension, pre, my front 9, post-suspension, the back 9, and I hope that because of those experiences, the good, the bad and the ugly, I'm able to take that and continue what I've done post-suspension in my life.
Simon Brewer 41:15
Right. One of the questions we actually never, almost never, ask our guests so I'm going to ask you that, is does religion play a part in your life?
Alex Rodriguez 41:23
I come from a very conservative background, Dominican-raised here in Miami. I went to a Catholic and Christian school. But I don't talk too much about religion or politics or anything like that. Those are kind of my personal beliefs and I do have my connection with that.
Simon Brewer 41:37
You are obviously, having survived the machine that chuck balls at you at 80 miles an hour, intact. You look in great shape. Tell me, how do you keep fit and how do you keep motivated to keep fit when the spotlight of professionalism isn't on you?
Alex Rodriguez 41:52
It certainly gets harder and harder with age, right? It was much easier at 27. But it's nutrition, and then it's a diversified way of kind of going about things. I get bored easily so I like to get some lifting in, some hot yoga. I spin on my bike, I went for a walk last night after dinner. We just try to always stay active. I now have my iWatch so I watch my calories and some of my measurements and all that stuff, and just keep it fun.
Simon Brewer 42:18
Got it. You've met some really great and interesting people over the years, but who's out there that you'd most want to have dinner with?
Alex Rodriguez 42:27
That's a good question. I would like to say someone that's not even alive. Probably Jackie Robinson and Roberto Clemente.
Simon Brewer 42:35
I've got two closing questions, Alex. First, we've got a lot of young people who listen to this show who think about careers in finance, some will think about careers in sport. What general advice would you give to young people thinking about their career?
Alex Rodriguez 42:49
Well, I would say number one, identify what is your top passion and what will you do for free. What were you doing at age 10, 11, 12, 13, 14 that you absolutely love and your hair is on fire when you wake up in the morning that you're so excited to go there? That's number one. Number two, find a great mentor, someone that you can learn from, that can be your boss, that can teach you as much as you're willing to take on. And then I will say from age 20 to 30, don't even ask about salary. Obviously, you want to make sure that if you have a roommate, you have enough money to eat and to have a roof over your head. But I'm sure there's ways where you can have roommates and all this. It's really focused about learning and surrounding yourself with the best people in the world. Because ultimately, those four or five people you surround yourself with will be indicative of how your career closes when you're 75 or 80.
Simon Brewer 43:41
In 10 or 15 years or 20 years’ time, how do you want to judge yourself and what will give you the ability to pat yourself on the back?
Alex Rodriguez 43:50
I think ultimately, it's continuing to strive to be a better leader, to have made a big impact on people that are in my life, continue to learn, educate and also teach from my experiences, but ultimately, I would say that I have a healthy, strong relationship with my two daughters.
Simon Brewer 44:11
Fantastic. As a father of three, I absolutely agree with that. Now, Alex, our time is up. You've been very generous with your time. I always summarise with a couple of pieces of advice that have been offered and which I particularly noted, although I will say, quoting the earlier Professor Peterson, you are absolutely built to go uphill, and that's not said of everybody. So you have recommended this book, 'Rich Dad, Poor Dad', so we're going to add that to the list. You have made a point that I don't think anybody's made in 100-plus interviews, which is in your 30s, focus on learning and being surrounded by great people because implicitly you're saying that that takes care of a lot of good stuff, and follow something that you're really passionate about. As a father who might be sometimes prepared to drive my children in certain directions, I think I'm going to reflect on that quietly tonight. So Alex, it has been great having you. We look forward to seeing you in the UK. Best of luck with all your ventures.
Alex Rodriguez 45:08
Simon, thank you very much.
In this conversation, we have the opportunity to talk to Alex Rodriguez, or ‘A Rod’ as he is better known, arguably the greatest baseball player of his generation and now prolific VC investor.
The discussion moves from how he came to dominate his sport to developing a substantial portfolio of investments and businesses through his investment firm, A-Rod Corp.
Alex discusses the early years growing up in Manhattan, his love of baseball and becoming the top prospect in the country, and turning down a university scholarship to sign as a professional.
He discusses how Warren Buffett gave him invaluable advice, becoming increasingly involved in real estate and venture, and how he assembles his team. He then describes his investment priorities, sifting from the range of opportunities presented, culture, ambition, lessons from sport, and what the future holds.
Alex Rodriguez is an American former professional baseball player, businessman and philanthropist. He played 22 seasons in Major League Baseball (MLB), including for the Seattle Mariners, Texas Rangers and New York Yankees. He’s considered one of the game’s all-time greats, scoring 696 MLB home runs, and twice breaking the sport record for the most lucrative contract signed.
Alex set up A-Rod Corp in 1996, which invests in real estate, technology, wellness and media. Based in Miami, the firm is invested in over 30 companies, with partnerships valued at over $1 billion. Portfolio firms include Snap Inc., Vita Coco, Wheels Up, Wave, Acorns and Sonder Corp. Via A-Rod Corp and its subsidiaries, he co-owns over 13,000 real estate units.
In the episode, he discusses his investment into hims & hers, a U.S. telehealth and wellness company. It listed on the NYSE in a $1.6 billion SPAC deal. Alex also covers why he, alongside business partner Marc Lore, decided to purchase the Minnesota Timberwolves for $1.5 billion.
He covers his philanthropy in the interview, explaining why he’s made regular contributions to the University of Miami and the Girls and Boys Club of America. Alex is a regular media contributor, having appeared as a Shark Tank judge in 2017, and signing deals with the likes of CNBC, ABC and ESPN.
Alex credits reading ‘Rich Dad, Poor Dad’ for changing his life and transforming his view on personal finance. He also references ‘Open: An Autobiography’ by Andre Agassi as the best sports book he’s ever read.
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