Greatness is a Choice
Ethan Penner
Founder & Managing Partner of Mosaic Real Estate Investors
Speaker, Author, Professor & Philosopher
Ethan Penner is the Managing Partner of Mosaic Real Estate Investors, a Los Angeles-based investment manager founded in 2015. Mosaic specializes in the intersection of structured finance and real estate.
Ethan is a recognized pioneer in the fields of real estate and finance, specializing in real estate, mortgage credit, and financial markets. Ethan is most well-known for his work with Nomura Securities in the 1990s where he is broadly credited with being the driving force behind the creation of the CMBS industry. With Nomura’s financial backing, he established a real estate finance operation that re-defined the mortgage finance industry, making Nomura the dominant brand in the U.S. real estate finance industry. In recognition of his work, Ethan received many awards including being named one of the U.S. Real Estate industry’s 100 icons of the 20th century, being voted the Real Estate industry’s Financial Services Executive of the Year for five consecutive years, and being included in Global Finance Magazine’s list of the world’s most powerful people in Finance. In 2011 Real Estate Forum voted him one of the industry’s 65 living legends in their 65th anniversary issue.
Ethan’s career goes back to the earliest days of the mortgage-backed securities industry, including stints at Drexel Burnham, Morgan Stanley, and CBRE.
Ethan has recently written a book on his philosophy, entitled “Greatness is a Choice,” which was published by Wiley in October 2023. He has been an adjunct professor at Pepperdine’s Graziadio School of Business since 217 and before that at the University of Southern California, teaching real estate and mortgage finance, capital markets, and global macroeconomics.
To purchase a copy of Greatness is a Choice, please visit: https://www.wiley.com/en-jp/Greatness+Is+a+Choice-p-9781394186198
Kirby Rosplock
Welcome to the Tamarind Learning podcast. I'm your host, Dr. Kirby Rosplock. And I'm so excited because today we have Ethan Penner with us who is an incredible real estate guru. He's built all kinds of businesses and is a maverick in the real estate space. He is the founder of Mosaic as well as a managing partner and has had an incredible career as a pioneer in the field of real estate. Really, 30 years of working in the space and is credited with creating the commercial mortgage-backed securities market, which is a pretty incredible accomplishment because that obviously was a major influence on the whole real estate finance space. So, Ethan, thank you so much for being with us today.
Ethan Penner
It's a pleasure to be with you, Kirby. Thank you.
Kirby Rosplock
So I had the wonderful experience of hearing Ethan speak a few months back. He was a keynote speaker at an incredible real estate conference being held. And I was so taken with his passion and his zest and his vision. And so I was so thrilled to have him join us on the podcast today because he's done something pretty miraculous. Not most people go from finance and investing in real estate to now an author. So congratulations on your new book. I'd love to hear more about it. So tell us what inspired you to write Greatness is a Choice?
Ethan Penner
Well, it's a good question, you know Kirby, from the time I was a young kid, being introduced to books by my mother, especially have been kind of a philosophical person, looking at the world and trying to understand the world and then trying to find my way within that understanding. Right. And so even in my career on Wall Street, creating the CMBS market and starting off as a bond trader in the mortgage-backed securities area to being a real estate investor, I've always been someone who looks at the big world first and tries to figure out where the big world is and where it's heading and then try to position myself accordingly. And I think that's served me very well. So I've kind of always been philosopher first or observer first. And naturally, the book is, in the end, a philosophy book. But I think the book is a book that will be seen by people who are investors and business people as a very helpful book in understanding how to see the world and frame the world to make good decisions on the investment and business front as well. I think that, you know there's a chapter in the book that we've spoken about called Intersections, and I also teach.
Ethan Penner
And so I've been teaching for about nine years at graduate business school. And people ask me well, what do you teach? And I call it life, according to Ethan. But really, it's the intersection of everything, right? So I don't teach finance or real estate in isolation. My classes really kind of explore the intersection of how everything affects those businesses and how they interact with each other. And I think that's very important. My chapters are quite short by design, so I have 69 chapters that are one to three pages long and that are pretty independent of each other. And I think that that serves the reader very well, especially in today's very busy world, where people don't have a lot of time to read. But the intersections, the way I see the world kind of at intersections is how I've lived my life. Now, getting to the specific story of the book, I was sitting at my breakfast table, and it was ten days before Christmas in 2020, which was a COVID, as you know, Christmas. And my daughter, who was then a high school student, a senior, doing mostly online because of COVID was having breakfast with me, and she asked me what I was going to buy my brother-in-law and his family who were coming for Christmas.
Ethan Penner
And I just thought, somehow I said, I'm going to write a book, and I'm going to give them the book. And she laughed and said, well, it's ten days before Christmas. When are you going to write the book? And I said, literally right now. And I wrote what became the first draft of this book at that table in about 4 hours. And 4 hours later, she came back for lunch, and I said, I'm done. And she said, what are you talking about? I had finished about 100 pages and about 65 short chapters with each one of them kind of my life, ideas, or observations. And that book, the reason I was able to do it like that, though, is because, and this is probably an idea worth sharing specifically with your audience, although I think it's relevant to everybody, somehow. I came up with this idea, Kirby, that it would be really great to have a family heirloom that was passed down generationally, that reflected the ideology, ideas, and observations of a patriarch. I dream that I could have that from some ancestor of mine, and if I did, it would be my most treasured possession.
Ethan Penner
And so I've always thought, well, if I would treasure it, why don't I just create it for my descendants, right? And hope that my kids pass it along. So I've always had this notion of as a father creating some version of this kind of a book for my own descendants. And I took notes, and I've always been like a notetaker in the notes section of my iPhone. Whenever I have ideas or observations, I would put them there. So being able to reference that, facilitated me writing that first draft so easily. Then I circulated that book. I ended up going to a printer and I wanted to print ten copies initially, and the printer would only print runs of 100, minimally. So I had many more copies than I had really needed, and I started giving them away. And then I started getting feedback from people, people who weren't even really close to me, or some that I never had met before. And the feedback was incredible. This book I had thought would be a family heirloom at best, was now a book that I saw as having value for other people in the world.
Ethan Penner
So then I spoke to a literary agent that a friend of mine introduced me to, and he said, well, nobody would buy the book as it is in the format. It was really a personal first draft family book. I sat on it for about a year, and I'm going to share one story just because I think it's important to understand what the book can be in its best form. There was a guy whom I had been introduced to by a mutual friend who was living in the Middle East, in the Gulf States and he was running a big real estate investment business there. He was a US guy who had moved over there with his family, and he got the book, from a friend of a friend, I didn't know him at all. And we started talking across the world and he said to me, because of my hours and I'm not home that often, but I have a twelve-year-old son. I've read your book and I love your book, but I love it so much that I now keep it on the nightstand of my twelve-year-old son. And every night that I do get to put him to bed, we read a chapter of your book together and spend 15 minutes discussing it.
Ethan Penner
And I thought that's the dream thing for me, the ability to influence and inspire values, and communication between a father and a son through the lens of my book. What's better than that, right? What's a bigger contribution that one can hope to make with a book like this? And so that inspired me to think that I have something that may be valuable beyond just a family heirloom for my family. And I took about a year and I kind of just modeled on how I'm going to rewrite the book or reposition the book to make it something that someone who didn't know me would buy. And I rewrote it. About a year later, that version found its way through a friend to a literary agent, who gave it to the Wiley Publishing house, who then kind of cold-called me and said, we got your book, and we want to send you a contract and sign you. And I was thrilled. And then about six months of editorial negotiations with their editor resulted in the final version, which I'm very proud of and very excited about.
Kirby Rosplock
Well, I'll give a shout-out to Wiley, because they're my publisher, and I think that's just a great acknowledgment of the body and breadth of this work, but also that you made it so accessible. And I think that's one thing I really appreciate because you connect right to the reader where they are. I mean, the fact that a father and a son, a pretty young son too, can connect on the themes of your book. The content is so relatable. And I think from your chapter on being human to what's your purpose? I think these are all key questions that maybe all of us ask ourselves, right? And at some point in our life. And I think it's just incredible that you were able to bring all this together into an ecosystem of stories that really represent, really reflect mankind and where we're at. Is there one chapter or one story that jumps out to you from the book that you're most proud of, or that you think, really, when you wrote it down, you thought, oh, I am so glad I captured this moment.
Ethan Penner
Well, maybe I'll touch on two, because you mentioned being human, which I don't know that I would have thought of that one, but because you mentioned it, I can address it. And I think it's a good example. The Be Human chapter is representative of the book in a very important way. And that is to say that people don't, I think, really appreciate how important it is. Well, we all have our internal life philosophy that drives us. And I don't think people are fully aware that they're philosophers and that they have a life philosophy and that that life philosophy is alive and organic and is constantly being challenged and modified, even in a subconscious way, based on their walkabout in life. Right. What they experience, what they see, what they hear, their successes, and their failures. And I think that these foundational belief systems that we're not fully appreciative of that we have are what both create our successes and also block our, you know, create our failures, block us and create our failures. And I think that my book is a way to kind of bring them to the forefront and to examine them and challenge them.
Ethan Penner
And that's what it's about. And I think that even the chapters that seem to be disconnected from even, let's just say, work or investing, they are very connected, right? So the Be Human chapter really is about kind of finding, realizing that the way the world is set up, so much of it is about the way the world is set up. So the way the world is set up. And I guess I would say a lot of time is spent fighting the way the world is set up rather than accepting that that's just the way it is. You know what I mean? Gravity exists. We're not going to defy gravity, and so we might as well figure out a way to live with gravity. And I think there are so many other things about the world that are like gravity that we don't particularly appreciate. So one of my observations that is the foundation of that chapter is that we are all in this world, in our bodies, and our bodies have certain biological needs, the need for survival, right? Very few people commit suicide, for example, because no matter how hard their life is, the body itself is hardwired to fight to survive.
Ethan Penner
The body, okay? And one of the things I do in my book is separate this notion of the person from the body, right? The body has a purpose. But obviously, when I move my fingers, I'm not my fingers, there's me, and I'm telling my fingers to move and they're moving. So there's something other than the body that is me. And I think that's something people don't think about too much. But in being human, it's derived from this observation that we are all here competing for the world's resources to fulfill our needs, our bodily needs, which are food, shelter, security of whatever, and survival. And when we go out of our front doors into the world, it's a competition for resources, right? And competitions bring out the hard side of people. A lot of times, brings out what I'll call the non-human side of people, right? We like to think of human qualities as good qualities, generosity of spirit, kindness, sharing, all those beautiful traits that I think. I mean, when I say be human. But that, I think is often lost in the scrum of competition for resources. And how many people do we know? Perhaps we've been that way ourselves, where we can say to a person, wow, that guy or that woman, they're so nice.
Ethan Penner
Except in business. In business, they're really difficult or they're really tough. Well, we all know people like that, and hopefully, we're not like that. You and I. But we certainly all know people like that who you can be great friends with, and they're wonderful friends. As long as you're not competing for resources with them, you're not in the scrum with them. It's a call to remember that even in the heat of the competition for resources that the world places us in, be human. Right. That's an important balance to find. Right. I know that in my career, and I've had a very successful career, thank God. I'm proud that I've never lost myself. And myself is the kind part, the benevolent part, the win-win. I always look for win-win in every business dealing. And honestly, if a business dealing finds its way to me where I might win but the other person might lose because it's just not because I'm in a senior position, maybe I'm making a loan, I would rather not be in the deal than know that I'm heading down a path that's likely to be confrontational and put me at odds with this person where one will win and one will lose.
Ethan Penner
I don't enjoy that. I don't think that's fun. And I think we could all be successful enough adhering to win-win commitments and being human, if you will, even in the face of the competition for resources that we often find ourselves in the midst of. So that's that chapter, and I like that chapter very much. I think I said I had another chapter that I like very much, and I think is an interesting insight as well. And I called the chapter duality. And it's born out of this observation that so much of what we see in life, we can't really decide whether one extreme or the other extreme answer is the correct answer. They could both be true. And it's a really weird phenomenon to think of two opposite or opposing perspectives both being true. But I give a few examples in the book, and I'll give one or two here just to illustrate it. But Take, for example, the notion that, well, we are human, right? You and I and everyone who will listen to this podcast, all know the limitations that we face by being human. We're likely to kind of not ever do anything that really matters in the grand scheme of things.
Ethan Penner
We're likely to, well, we're very fragile, we're very insignificant in the annals of history, and we won't be remembered for anything, probably. And that's okay. It's just the way human life is right? And that is good in the sense that we allow ourselves to not take ourselves too seriously. And I think that brings joy and benefit. But at the same time, all we have is the hours and minutes of our lives. And so by definition, that's extremely precious because it's all we have and we can't make more of it. And to accomplish anything with the hours and minutes that we've been given on this earth, we have to take our life extremely seriously, and we have to be very dedicated and committed to whatever it is we're doing. Otherwise, we won't really have anything here. This journey that we're on will have no meaning, even for us. And so finding this balance of opposites or opposing ideas, which are both true. Right. On the one hand, you're not going to do anything that matters, so don't take yourself too seriously. On the other hand, everything you do matters because it's all you actually have. Somehow you got to find a balance there.
Ethan Penner
And there are so many examples of this duality that I see in the world, and it's almost endless, actually.
Kirby Rosplock
Well, I love this idea of the tension, that they're both right and yet you're in the middle of trying to also reconcile what's your priority and where do you want to place your energy. And also, I love this idea, too, of that time is so precious. Right. Some people don't even value their time. Right. They don't even see it as an asset. They just see it as part of this bigger continuum. And I think even just you taking the time and space to put these ideas down is such a gift because I love how you're unlocking little messages, little things that you've sort of discovered about your own journey. And just getting to the title, greatness is a choice. That is such an empowering title. Right. It is a choice to fulfill your full potential. It's not a right, like not everybody has that so... I mean, I love that as just also a call to want to read your book.
Ethan Penner
I think, Kirby, that the title is extremely powerful, and I actually can't take credit for it. Some of the folks at Wiley picked it up after reading my book, I had a different title, and they searched for a title they liked out of the chapters in my book, and they came up with it, and I liked it very much. And of course, I've come to really like it a lot. And the idea of greatness is such a misunderstood concept anyway. And I think in today's world, so many people just don't put out the effort, don't take pride in their work, and I think that in my childhood, I saw much more pride in effort than I see in the world today. And it makes me sad because I think it's only through pride in work and bringing some degree of greatness, your best greatness, to every endeavor that brings personal fulfillment to you. And when people think of greatness today, they think of basketball or sports stars or movie stars, or whatever it is they think of. But they don't necessarily think of what I'll call the average person. And that's really what I want to dispossess people of that notion.
Ethan Penner
I think that greatness exists potentially in every person and in every single endeavor. Right. And I think, for example, when two people meet just for a cup of coffee, you can choose to sit there and be fully engaged with the person and really listen and really be present. And that's bringing your greatness. Or you could be distracted by your phone or looking over the shoulder of that person to see who else is in the coffee shop or walking in and not be attentive and giving your full self to that moment and that interaction. And that's just a simple example. And then in the coffee shop, you could have the barista make you the best coffee that you've ever had, or a memorable coffee. And that person has contributed mightily to your moment by investing his or her greatness in that coffee, as opposed to mailing it in and just doing an average job. And one of the observations I have is that greatness elevates when we encounter greatness. We walk away from that encounter elevated. And that elevated spirit that we now have. The moment after we've encountered greatness then reverberates in all of our interactions for a while.
Ethan Penner
And so the ripple effect of someone making a great coffee or a great hamburger or bringing their attentive self to a meeting, the ripple effect is pretty powerful. And I think we underestimate how big of a reach and an influence we can have in a positive way by just trying our best and bringing our best selves.
Kirby Rosplock
Yeah. And I think we are in a very noisy environment today. Right. We have phones and devices. We have news, we have media, we have political discord. We have geopolitical discord. And so to find the quietness, to be attentive, to really hone in and figure out, what do I need to bring to this meeting? This experience, this level-up opportunity, is not something that just happens. It's intentional. And I love that you bring this out in your book, because I think it's a message that, quite honestly, kind of got lost.
Ethan Penner
Yeah, well, you mentioned a little bit about my background, and I guess my fame, if you will, so far comes from having created the commercial mortgage-backed securities market. And I did it in the early 1990s when commercial real estate was abandoned entirely by all previous lenders. And so it was an industry dependent upon debt financing and debt refinancing because all the loans mature every three to five years. And without debt capital, the industry, no matter how successful and wealthy or powerful an owner of the property might be, if they can't refinance their loan, no matter how conservatively underwritten the loan was, they're going to lose the property. And so it was an industry facing widespread foreclosure and bankruptcy with no hope in sight. And I guess I'm still famous, not only because I created some really interesting creative financial structuring, and I brought markets together that had never been before, brought together the capital markets and the bond market and real estate, but really because I saved a lot of people and I did it with a happy face, right. And I didn't gouge people. I treated people really respectfully and I aim for win wins.
Ethan Penner
And so here I am, and I was a very young man at the time. I was only in my 30s, early 30s, actually. And here I am, roughly 30 years later, still have the halo effect of having done what I did back 30 years ago, 25, 30 years ago. And I'm proud of the fact that I am still well-regarded and well-known for something for so long. And I think part of it is because I did it the right way. And part of it was because I did something very special, which was I filled a void. I learned from that experience that in the worlds I come from, and I suspect it's true for most worlds, but in the world I come from, the financial world primarily, there's so much. Me too. Right? There's so much capacity in the system, right? And there's very little differentiation. There is very little effort to bring unique value or to fill voids. And I think that filling voids is really the highest level of contribution. I was fortunate in the early ninety s to operate in a moment when there was a historic void in the real estate world in the US, and fortunate to have had the exact right background and pedigree to be the person who with a lot of hard work, could fill that void.
Ethan Penner
And so I did. I think you mentioned this, and it's why I kind of went down this rabbit hole. My book is aiming to fill voids again. Right. I think that's really what it's about. It's about looking at the world and saying, well, what messages need to be heard and are not being heard, what messages that were perhaps commonplace in my earlier life have been lost by the world in the last 20 or 30 years and need to be reheard and retold. And so my book is as much about filling voids as it is about anything else.
Kirby Rosplock
Well, it's been a true delight and pleasure to talk to you today. It's so inspiring, and I love that you shared your sort of early success and how you made that success happen. Honestly, it was probably the pre-chapter, the prequel right to this book, because we all have choices that we can make about how we want to show up, how we want to be great, and what we want to do in this world. And God knows we need a lot of greatness today to inspire folks to make a difference, to be champions, for positive change, to start stemming the hate and the violence that has really become quite endemic. And I think your book really is a call to action for those looking for something to inspire them, something to bring conversations around the table, something to lighten people's hearts and minds, to say that there's possibly some fresh thinking here that can help inspire me to be the best that we can be. Ethan, tell us a little bit more about the best ways to find your book. Find where you're speaking. I know you're doing a tremendous amount of speaking all around the world. So tell us more about readers and listeners.
Ethan Penner
Well, the book is available where books are available, so online. Most people today buy their books online. Amazon, of course, and Borders and Walmart. It's available online and where people buy books online. It'll be available selectively in bookstores starting this month. I think Barnes and Noble, I know will carry it, and I'm not sure where else. I don't know who goes to bookstores. I actually like the bookstores, but I'm not sure everybody does. The audio version of the book I just taped yesterday. And so today I'm going to do the final edit of it. I'm going into the studio after this, and it'll be available pretty soon. I'm going to say weeks, certainly by the end of the month. And then there's the ebook version, which is also available online right now. As far as I'm very passionate, and this book really is a passion play for me. And so I'm doing a lot of speaking around the book. I really love to speak to people and bring people as you say together because I think that's what's needed in the world today. I think it's fun for me, it's enjoyable for me, and it counteracts a lot of the doom and gloom that we're overwhelmed within today's world.
Ethan Penner
So I rarely say no to an invitation to come speak to people. Sometimes it's a small group, sometimes it's a very large group. But I have fun doing it. And so I would invite your listeners to, if they are reading the book and hearing me speak and they're interested in having me come speak for their company or for something, I'm pretty open to that kind of stuff. I do travel a lot, and fortunately, my kids are grown and I have the ability to go with my wife and travel, and we enjoy it. So I do travel quite a bit, probably a solid 50% of the time. And I have upcoming engagements in the next weeks, for example, in Miami, in New York, in Washington, and in Baltimore before Thanksgiving. And so I'll be in those places if anybody. You know, there's public things going on in Baltimore and Washington. New York, too. The Miami ones are more closed, but I'm all over the place and available. So as I say, I enjoy this. It's fun for me.
Kirby Rosplock
Well, you got incredible folks to endorse your books. I don't know if you want to just drop a few names, but you obviously have a rich past with a lot of interesting people that you've worked with. So maybe share with the listeners a little bit about who's endorsing it.
Ethan Penner
Yeah, well, the foreword for my book was written by Dr. J. Julius Irving. Julius and I have been friends for 27 years, almost 28 years. And he's the godfather of my 20-year-old daughter. And we've been very close friends. I love him, and I think he loves me. And he was kind enough to write the foreword for the book and bring his renown to the book. Right. I'm a person who has some degree of renown in my field, but not in the public domain. So having Julius, kind of on the cover was a very kind gesture for him and very much appreciated. And I guess I'm proud of the diversity that I have in my life in this day and age. There are a lot of questions around and desires around diversity, and I love diversity. I have a very diverse family. My wife is from South America. I have two adopted kids, in addition to three biological, one is from Africa and one is from South America so our house is, our family is very diverse. And my friends, over the course of my life are also reflective of my enjoyment of a very diverse walkabout. I think that diversity and the perspectives gained from that diverse walkabout have been foundational to enabling me to write the book the way I wrote it and have the ideas and insights that I have.
Ethan Penner
I think that it's part of what's made perhaps my walkabout a little bit of a unique one. I also have Tony Robbins on the cover of the book, writing the kind of lead endorsement or testimonial. And I really admire Tony. He's a self-made man. He's probably the best teacher I've ever encountered in my life. I got to know him. He was a friend of my wife's, oddly enough, and we met and became very good friends, and he was the first investor in my last fund, actually. I have tremendous admiration for him, and his vote of confidence in this book, obviously, is extremely meaningful and powerful for me, given my high regard for his intellect and his understanding of how to communicate. And then on the back of the book, I have equally interesting, diverse people. Steve Cohen, who's a legendary figure on Wall Street and owns the New York Mets, despite his incredible success and wealth, is one of the sweetest and most downs of earth human beings I've ever met in my life. And just a lovable teddy bear, which is kind of not what people who don't know him might think about him, but just one of the world's great guys.
Ethan Penner
I love people who are successful but have not let it change who they are. And I always aspire to be that way myself with whatever success that I ever get. And he embodies that quite well. Ozzy Osbourne and Black Sabbath were my favorite bands and remain my favorite bands to this day. And Sharon Osborne, who I've come to know, and Ozzy. But Sharon wrote a testimonial for the book, which is particularly meaningful given know lifetime affection for the Osbornes and Black Sabbath.
Kirby Rosplock
Yeah.
Ethan Penner
And then the other band that was formative or important to me as a child was Twisted Sister. And I grew up going to see them live in clubs in New York when I was in my teens. And I became, oddly enough, friends with the lead guitarist and founder of Twisted Sister. And he wrote a nice testimonial for my book as well. So when I was on Wall Street, and there's a whole chapter on music in my book and how important music is to me. And I think in the world. Right. I love music. It's extremely important. And so the music connections for me are very valuable.
Kirby Rosplock
Well, thank you so much for being on the Tamarind Learning podcast today. You've been just a delight to speak with and so much sharing and such a great, wonderful resource and book that you've shared with us today. I hope everyone will go grab their copy, and give it to a loved one for an anniversary or birthday or a holiday. Like, now we have all these great holidays coming up with Christmas and so forth, so it's just delightful to have you, and congratulations to all your continued success. And thanks so much again for being here with me.
Ethan Penner
I really, really appreciate you having me. Thank you, Kirby. Have a great day.
