Investment managers are fond of saying wealth is made through specialization and preserved through diversification. Evan Turner gets it.
The Portland Trail Blazers wing, who signed a four-year $70 million contract in 2016, recently sat down with the Business Journal at the team's practice facility to talk about his investment philosophy. While Turner has a reputation for being one of the most fun-loving and improvisational players in the NBA, his investment philosophy — an enviable mix of safe real estate investments, a medium-risk startup investment and a longshot "passion project" — is more deliberate and disciplined than carefree.
Questions and answers have been edited for brevity and clarity.
You recently invested in a ISlide, a footwear company in Boston that makes custom slides, or shower shoes. How did that come about? I played with the Celtics from 2014-16. I found out about ISlide through my teammate at the time, Kelly Olynyk. He would bring in custom slides. I always hit him up for custom slides. I thought they were super cool. And then an opportunity opened up to invest.
You knew the product that well before investing? Yes. I probably got my first pair in 2014-15. The investment went through three or four months ago.
What do you do before you make an investment? First, I need to like it and trust it. No. 2, how sustainable will it be? Is it something that won't be a wave-type situation? Who would use it? Would it be only for one group of people? Or could it expand? When it comes down to it with customization of slides, a ton of people wear slides. And I found out they had a lot of licensing deals with colleges and bookstores. They had Ohio State, North Carolina, Texas. I was comparing that to the investment that I was willing to put up. I thought it was a relatively safe bet.
How much due diligence did you do? We looked at their numbers. That was important. When people ask for your money, you need to be sure what they're talking about is real. Warren Buffet says the No. 1 thing is not to lose money. On top of not losing money, you need to deal with people of high integrity. They need to be willing to open up up their books and allow my financial team and me to do fact checks. I thought (ISlide) was doing a tremendous job and they didn't have much advertising. You get a little push with the right connections and I think it's on the up.
I understand the founder — Justin Kittredge — invested $400,000 of his own money before you invested a dime. He took everything he had and invested in himself. Justin has skin in the game. They money I put in isn't my life savings. This dude put his life into it.
Justin worked in footwear for Reebok before starting ISlide. How important was that background? He understood the process. It wasn't like he was coming from footwear and trying to make mens' ties. He comprehended the product and he opened up a different lane. Customization is the next wave among kids. In basketball, 350,000 people play every day. And if you play competitively you ain't supposed to wear your court shoes outside. I took that into consideration. I believe in the upside. The risk wasn't too much.
How do you find time to monitor your investments? I have a financial adviser and one of my best friends is my business manager. He went to Brown University. With your business partners, you always want to be open. I'm up to date and I comprehend where the money is going. It's not like, "Take my money and I'll see you in two months."
As an NBA player you must get a lot of investment opportunities. What’s your first screen? It's all about the blueprint, the business plan. That's the biggest deal. What are we talking about? Show me. Show me the research. I'm into real estate. It's a safe deal. Show me why a brand new condominium is going to be worth it even though there's nothing down here. Is the city going to build a museum? You have to do research on demographics.
What’s your financial advice to guys coming into the NBA? Keep saving. I didn't spend anything my first four years in the league. I was always weary of losing it. When I met my financial adviser we devised a plan and goals. At one point it was to save enough so I could live off $250,000 a year for the rest of my life. I took that relatively seriously. As I had enough wiggle room I started having fun and buying certain things. But even before buying material things I tried to invest. Before you buy the nice jewelry or cars or whatever else, go get a foreclosed portfolio of real estate or go invest in something that can flip in six to eight months and you play with the profit. I played with profit. I didn't want to walk around with a $300,000 car or whatever and not have some real estate or something coming in that equaled that.
How'd you learn about investing? My financial adviser and some of my mentors. I started reading the WSJ a little bit. When I first walked into money, I remember reading, around 2010-2011, Warren Buffet said if he was a guy starting off that he would buy 200 single-family homes. People have to live somewhere.
Real estate was your first investment class? Yes. In Columbus, I hung out with Scott and Mike Schiff, who used to work for the Schottenstein family (one of city's most prominent families). I own two houses on Lane and Indianaola (an up-and-coming part of Columbus). I own a five-unit on Star Avenue (another up-and-coming part of the city). We have, right near (Ohio State's) campus a nice apartment and condominium that I put in with Schiff. Columbus is on the up-and-up. We're also in talks to build a hotel.
In Columbus? Yes. I saw the opportunity. You gotta get in where you can fit in. You can't miss that window of opportunity. If I was going to sit back and worry about something as dumb as buying cars or chains I would have missed out on a five-unit for $350,000 right on Star Avenue two years before they were about to rebuild the whole damn town.
It sounds like you surround yourself with good people. I try to. I keep my ear to the streets. I’ve done stuff where I’ve bought a used apartment building, got it up to code and sold it in a month. Just get maybe a month’s work of work and you get $60,000-70,000, that can be $2,000 a day for nothing.
You still read the Wall Street Journal? I read a decent amount. I’ve almost been fortunate to surround myself with people where the natural thing is to talk business. One of my closest friends just passed the bar. (Golden State Warrior) Andre Iguodala is one of the smartest people I've ever met. He and Rudy Cline-Thomas were on the cover of Bloomberg. There's a lot of diversity in their portfolios as well.
Tell me about Madison-USA, your clothing store in Columbus. We just celebrated our one-year anniversary in September. It's a passion project.
Margins are low in the retail business. We've been doing a lot of big numbers. It's at least a five-year, 10-year thing. If it gets hot we can sell or take on partners. I'm not saying it's (New York-based streetwear company) Supreme, which was just sold (a 50 percent stake to The Carlyle Group for a reported $500 million), but when it comes down to it, it's a home-run play.
Do you see yourself moving back to Columbus when you're done playing? For sure. I live there during the offseason. (A lot of former Buckeyes) move back to Columbus after they're done (playing professionally).