How David Adelman turned a $2,000 Investment into a Billion-Dollar Empire

In this episode of Uncorked: Wine-Business-Life, we sit down with David J. Adelman, CEO of Campus Apartments and a prominent investor with stakes in the Philadelphia 76ers, New Jersey Devils, Washington Commanders, and more. David shares his journey from investing his Bar Mitzvah money at 13 to building a diverse portfolio spanning real estate, venture capital, and sports ownership.

Introduction to David Adelman

Welcome to Uncorked Wine Business and Life with Bill Green. I'm Jerrold Colton, the co-host, and we are in the beautiful Barrel Room at Saddle Hill Winery in Voorhees, New Jersey, with an extremely special guest. He is a very close friend of Bill’s. My good friend, David Adelman.

It is just awesome to have you. You and I have drank some wine together, but the story that I love to tell is how we met. You're 13 years younger than me. We met at Young Presidents Organization, which is a global organization where folks with nice-sized businesses get together. Nobody's trying to be in each other's pocket, and we just mentor each other, have fun, and learn from each other. For me, it was one of the greatest experiences and one of the best things I ever did in my life.

It is a great organization and a great way to network. Truly longtime friends have come out of that for me as well. It really is spectacular.

Early Mentorship and the Bar Mitzvah Story

Let's go to early in your career. I know you had issues in family life in the beginning, and you were able to get this amazing mentor in Alan Horwitz. For our listeners and viewers, the bar mitzvah story is a good one. Everyone has an uncle growing up that's not really their uncle or an aunt; they are your parents' friends. I had Uncle Alan. His mother and my grandmother were really close friends. He was an only child, my mother was an only child, and he was always around the house.

The story is I'm 11 years old and I'm playing basketball with Uncle Alan. You have known Alan for all these years, too. He's a really competitive guy, even at 83 years old today. When he was younger, it was always about winning. I was 11 and I guess as a kid I said, "I bet I can beat you."

Most people let the 11-year-old kid win, but not Alan. He roped me in a little bit and asked if I wanted to bet my football on it. I lost my football. I lost my baseball glove. Then, dating ourselves, but you remember when you had a bank book when you were a kid? I lost my bank book, too.

I literally had to go down to his office at Campus Apartments every Saturday to stack lumber and sweep sawdust. I'd get one of the items back. My parents said this was really good for me. I was 11. I did that, developed a great rapport and relationship with him, and two years later for my bar mitzvah, I had $2,000 of gift money.

My parents asked if I wanted to give it to my grandfather. My grandfather loved stocks and tried teaching me about that, but I said, "No, I want to give it to Uncle Alan. I want to buy real estate." I was 13, but he had taught me the business a little bit. I asked if I could buy real estate with him.

He loved it. He asked which building I wanted to invest in and told me to get in the car. I'll never forget he had a Corvette, which I thought was really cool as a 13-year-old kid. He drove me around and I pointed and said, "That building." He asked why that building, and I said, "Because it's the biggest one."

I didn't know how to value real estate as a kid. Like a drug deal, I handed him a paper bag with $2,000 of cash in it, and that was my baptism into real estate. That money came from my bar mitzvah. Back then, it was still a good-sized business with a couple hundred apartments around Penn. They were singles, walk-ups, and a couple of small multifamily buildings. It was a good portfolio because he controlled a lot of land that I've since redeveloped into larger-scale projects.

Scaling Campus Apartments Nationally

Fast forward to when you were 25 and running the company. We had done a deal with Pennsylvania that kickstarted us to go national. I said to Alan, "I think I can turn this into a national business because no one's really doing this at a large scale." He gives you the credit. When I talk to him, he says the young David really taught him a lot.

Alan was that generation of real estate guy who did one thing, did it really well, and always made money. Those guys were very smart about how to use debt. He still teaches people today that real estate is good debt because your tenants are paying your debt service. Today, we are at about 25,000 apartments in about 20 states.

Investment Philosophy and Darco Capital

It's an amazing story. I've watched your career over the last 15 years and you just keep doing new things. We sat on a board together on a business that unfortunately didn't work out and we both lost a bunch of money. There's nobody that I would rather be in a situation like that with. We were in the same foxhole trying to save a business and save investor money as well as ourselves.

Not every business wins. Darco Capital, my family office, is at about 94 direct investments all over the place, from consumer businesses to financial services to spirits to sports. Generally, we're making a bet on the jockey and not the horse. In this case, we had a bad jockey. We threw that guy out and tried to salvage as much value as we could in the business.

Things happen. I've learned that how you handle yourself on the wins and the losses is what matter. Being on an advisory board, we tried to step in, not just on our behalf. I don't want to speak for Bill, but every deal I go into, I know there's a chance I lose my money. I certainly don't like to see other people lose their money, and hopefully, you have more winners than losses. That's what you hope for in the deal business.

Venturing into the Spirits Industry

You're a rock star in that. I've done seven or eight venture deals, but most of mine were strict growth equity. On my venture deals, I have zero winners. It’s the worst batting average. But what I really love to talk about is how you are an investor in a few alcohol businesses. This one is super cool: American Harvest.

I'm in a tequila with LeBron called Lobos—but then I had an opportunity to take over a spirits company that I was already an investor in. A new CEO had come in and the old board was ready to sell, but the deal fell through. I had lent the company some money, so I was in the prime position to buy it. I have this saying: "Why not me and why not now?" Why can't I figure out the alcohol business?

It is a really difficult business. The way you make a small fortune in this business is to start with a large fortune. I got into it with two products. One is American Harvest Vodka. I couldn't understand why, in the most drank spirit space, there hasn't been a lot of innovation.

On the American-made vodka side, you have one large company that does 12 million cases a year. The next biggest company maybe does 700,000. This makes no sense to me. In any other business, whether it's cars or golf clubs like Titleist and Callaway, there's always a one, two, and three. In American-made vodka, there is one.

I wanted to make a premium American-made vodka. Why do people have to believe that it should be colorless, odorless, and tasteless? Bad vodkas taste like medicine or rubbing alcohol. Ours is organic, made with red winter wheat in Idaho. The water comes from the Snake River. I know the farmer, Tim Cornie, and his family. We're buying American.

I was ahead of the curve on this American thing. It's a hard business. Distribution is hard. You have to get people to try it. How do they tell in a bottle how it's going to taste? I redesigned the label and the bottle. I asked our CEO, who has 35 years in the business, if there was a rule that vodka labels have to be white. Every vodka label in the store has a white label. She said there was no rule. I wanted mine to pop on the back of a bar so people ask, "What's that? I want that."

I'm coming at this as a total layman who doesn't know anything about that business, but I know a lot about business. I actually do drink vodka from time to time, but my model is about being a premium option. Fortunately, now we're in the espresso martini at Capital Grille across the country and Eddie V's. We are on the cocktail menu at Del Frisco's. Darden and Landry's have been really good to us. Down the shore, Steve & Cookie's and Tomatoes have us.

It's fun to get out there and for people to try it. You can't fake vodka. If someone orders a martini, you're just drinking vodka. That is the test of how good your liquid is.

A Comparison of Fine Wines

Speaking of that, it's time to talk about the premium Saddle Hill Reserve blend wine. This is the 2022 Vintners Reserve. It's a Bordeaux blend with all the classics: Cabernet Sauvignon, Merlot, Cab Franc, and Petit Verdot. For New Jersey wine, it's really nice. This has gotten better since the last time a couple of years ago.

We were nervous when we came out with it because I keep calling this a 20-year wine. I still think it needs to sit down for a couple more years, but it's bulky enough that it could last. It has body to it.

The next one is a straight Cabernet Sauvignon from a brand called Screaming Eagle. This is a 2004. This bottle is worth $6,400. Our other friends are going to be so jealous. It is better than the Saddle Hill, but you have to consider the price difference. Bill is changing the stereotype against Jersey wines.

The Saddle Hill is a little earthier and bolder. The Screaming Eagle is smooth and light on top. In 20 years, Saddle Hill will be just as good, but the Screaming Eagle is 100 times more expensive.

Marketing is a piece of it, but people don't know what they like until they try it. Why can't New Jersey make good wine? Who says you can't do something good outside of Napa? If you get a 25-dollar bottle of wine from Napa and one from New Jersey, New York, or Pennsylvania, they're probably going to be about the same. We just can't make a hundred-dollar bottle yet, or a $6,000 bottle. That comes in time.

FS Investments and Access to Alternatives

As we go back to your incredible journey, FS Investments was a big part of it. It came about from the real estate business. I got approached by a group looking to offer us capital that was raising money through the independent broker-dealer channel. Middle America was not being serviced properly when it came to financial services.

Traditionally, if you're not an accredited investor, you get stocks and bonds—the 60/40 split. But if you're a wealthy person, you have access to alternative investments like hedge funds, private equity, and venture capital. There's some notion that because you're rich, you can take more risk. My personal view is that illiquid investments sometimes perform much better because when the markets go down, people sell at the wrong time. When they're booming, they buy at the height.

Because you're going into a fund that has a lockup for a period of time, you generally get through a bad time to the other side where there is appreciation. Our funds are predominantly credit and income-oriented. That has grown into a great business. We now manage $84 billion. That allowed me to start getting involved in other things as well.

Entrepreneurial Drive and Personal Discipline

Michael Forman has been my partner since 2007. I almost went to law school myself, but I realized I have bad ADD and really bad OCD. It's a weird combination, but it works for me because I micro-focus and micromanage for short periods of time. I'm good on the build and the ideas, but if you wanted me to just do one thing for the rest of my life, I wouldn't be able to do it. Most successful entrepreneurial people I find have ADD.

When I drove in this driveway at Saddle Hill, people asked what I was going to do. I said we're going to have horses, other animals, wine, an experiential venue, and great farm-to-table food. That's the entrepreneurial spirit. We take risks. It's obviously easier today for you and me to take a risk because we can afford to lose a little money. But the real balls are when you don't have it.

Philanthropic Interests and Sports Ownership

You start as a Philadelphia suburban kid and you're a sports fan. Did you ever think someday you'd be in a situation to be an owner of the Philadelphia teams? If you're a really bad athlete, you only have one way to be involved in sports: own the team. In 2011, when the team came for sale, me and some of my best friends looked at it, but we were building our businesses and didn't have the money. It's been a dream come true to be involved in your hometown team.

My partner Josh Harris owns the Commanders, and I'm a supportive partner. Owning sports teams is not easy. They want to win. They are competitive. The best part about sports is very few owners aren't also fans. That passion and energy you bring from making your money elsewhere is a healthy thing.

I'm wearing my uncle's 1983 NBA championship ring that he won as the equipment manager of the Sixers. Hopefully, you'll have one of your own soon. In a sports organization, you have two different bottom lines, and the interests aren't always compatible. Everybody wants to win, but you also have a business side.

We want to win. We've never been afraid to go into the tax or spend money. We have a world-class practice facility. We want to do whatever we can to empower the organization to put the best product on the court.

You bought the team from Comcast in 2011 during the lockout. My partners paid a little under $300 million back then. When you value a business, you look at sources of revenue and appreciation. Now you look at TV revenue and it's a whole different game. At that point, they were burning $22 million a year with a losing record.

One of my oldest, closest friends is Michael Rubin. When the team was first for sale, Michael and I took a look. He was building Fanatics and I was building FS and Campus Apartments. We were heads down and didn't have enough money. Michael wound up going in with those guys. As Michael grew Fanatics and started sports betting, the leagues said he couldn't own teams and the sportsbook. He knew I wanted a piece and we came up with a price in two minutes.

Mentorship and Advice for Entrepreneurs

There are going to be a lot of young, aspiring entrepreneurs watching this. What advice do you have for someone who doesn't have unlimited money? Not everyone needs to be an entrepreneur who owns their own business. You can be an intrapreneur in someone else's business and become incredibly valuable without taking the risk of a startup.

This generation feels they have to be a millionaire overnight. They lack patience. I constantly tell them to slow down and stop picking a number for what they need to be worth by age 32. That is not how it works. Work hard and be honest. You get one reputation. Your reputation is your promise in business.

While luck is a part of success, you put yourself in a position to create luck. Ask questions. So many young people sit in a room and don't understand what I'm talking about, but they are embarrassed to say they don't know. To me, I love saying I don't understand. It’s authentic. And lastly, get your ass to the office. You are not going to create opportunity sitting behind your computer on Zoom.

I love mentoring and speaking to people. I find success in helping people be better. I also focus on philanthropy. You can't solve everyone's problems, but you can be targeted. For us, it's medical and health, education, and Jewish philanthropy.

Family Remorse and Work-Life Balance

I have two beautiful girls. Balancing all this was hard. If I'm being totally honest, I missed a lot of my daughters' early years and I have deep remorse over that. There was a moment in their early teens where I realized I needed to put my phone down and engage. They told me they remember the dad who is here now more than the dad who was not there. You need a good partnership to raise great kids. My wife Haley is a role model for them.

The Future of the 76ers Arena

Looking forward, the Sixers have been such a big part of the Philadelphia community. We reached a great outcome with Comcast. Collectively, we're going to do some development downtown on Market East, near where we were going to do the arena, to fulfill our commitment to the city. I get up every day thinking about building the best live entertainment venue in the world in Philadelphia.

The next arena is going to be smaller than the Wells Fargo Center to create a more intimate fan experience. We're looking at the high 18,000s for seat count, not 21,000. We want to create a home court advantage where fans are on top of each other in a loud, energetic building.

The experience of going to a sporting event starts the moment you leave your home. We want to provide what people want, which has changed. It used to be only in a suite that you could have a premium experience, but we want to create loge boxes for people who want to bring four, six, or eight people.

It’s going to be the best hockey and basketball venue in the country. We are hoping to do it sooner than 2031. I love the variety of what I do. Sometimes you find the opportunity, and sometimes the problems just find you. I wouldn't have it any other way.

Final Thoughts and a Closing Toast

We are finishing with a 1990 Chateau Latour that I bought in 1996. It's totally different—more earthy with gravel and rock. David, we would love to have you back. Whatever Bill is serving, I'm in. On behalf of my partner, Bill Green, thank you, David Adelman, and Tyler Costantino back there doing all his great stuff. Cheers!