Sometimes, coming in fresh and unjaded, free of the deadweight of chronic, seemingly implacable challenges, might be at least part of what it may take to hack housing's affordability, attainability, and access crisis in America.

For Tamara Knox and Josh Morrison, a not-so-chance encounter, hours into their first day as grad students at Cambridge, MA-based MIT, kindled in each of them the spark of why they've gone on to devote themselves – together – to solving for part of housing's access, attainment, and affordability axis.

The what of it was – back then – a blank canvas. And that was okay, and in fact, for Tamara and Josh, co-founders of Seattle-based Frolic, a co-operative homeownership platform, it was critical.

One of the things we learned was the importance of going through it and the importance of constantly going through it," says Tamara Knox, who serves as CEO of Frolic. "That's something that we find deeply important to this work: Not coming up with an answer that stays the same. The research meant talking to people and listening, different types of people, and different types of stakeholders who all come from different industries, different neighborhoods, come with different versions of power, and, honestly, just dreaming with them and having big open brainstorms around, ‘What would you love if anything could be possible? What would it be? And then, what do you see from your position that would stop that from happening?’ Cultivating that open exploration, we started to see similar patterns coming out among people: We're talking about lawyers, banks, developers, neighborhood community groups, neighborhood associations, architects, and a huge variety of different types of thinking that touch neighborhoods and lives and the real estate process."

Now, of course, the what of their housing access, attainment, and affordability hack – a reframing of a straightforward system of property ownership, development, zoning, and investment into a model that gives communities and residents agency to solve high shelter costs – is now far along from that blank canvas.

A top 10 finalist among 2023 Ivory Prize entrants in the Finance category, Ivory Innovations notes:

Frolic is paving the way for thousands of new, multi-family housing cooperatives to be built on lots with single-family homes in cities across the U.S. Their homes require down payments of $10-$30k, creating opportunities for low-wealth and BIPOC families that have generationally rented to enter into homeownership."

We wrote earlier about Frolic:

Frolic uses equity from a homeowner’s land combined with community-raised capital to fund the construction of new units. Frolic’s use of co-op financing – rather than condo financing, for example – enables two forms of debt, a shared AND blanket mortgage. The blanket mortgage allows Frolic to borrow against the land value for construction funding without requiring any individual, or future co-op residents to put in money. This allows Frolic developments to offer extremely low down payments to future residents. Eventually, Frolic will make money by establishing a fund and licensing this model to other developers.

Through a lens of strict first principles thinking, Frolic might focus on solving for bending property zoning, investment, and property ownership and development in the direction of creating more revenue for the lot owner. 

The origin story of Tamara Knox and Josh Morrison, Frolic's chief operating officer – curated thoughtfully by Ivory Innovations director of Strategy and Operations Hannah Gable in Episode 4, Season 2 of Ivory Innovations' House Party podcast – zeroes in on a "how might we?" challenge.

What if we re-imagined real estate development and put communities in the driver’s seat? Frolic, a new kind of developer, takes the cooperative housing model and adds an innovative twist. Learn about how Frolic started, its impact so far, and where it’s going next."

What makes this particular genesis fascinating is its roots in the opposite of knowing, the inverse of having a solution, the willingness – and deep moral humility and equally deep empathy – of acknowledging not only how much where would be to learn, but how many people would need to be an ongoing source of that learning.

A mentor of Tamara gave us this image that stuck with us and made so much sense in our process, where we started having the early ideas for Frolic," says Josh Morrison. "He shared, ‘For you to do what you're trying to do, you're going to have to create a three-dimensional object for people to understand. For instance, when I look at it from this angle, it looks like an A, but if I look at it from the other side, it may look like a C, and if I look at it from here, it looks like an E. It's like a very complex object, but when I look at it from my view, I see something I recognize, and feels familiar. And for what you're hoping to do to work, you will have to make something that lenders see as safe, feels familiar to them, and that cities see from their angle as something recognizable."

For Frolic, that means making the co-op model feel familiar, recognizable, and safe, from whatever angle it's being looked at.

Co-ops are something that existed a while ago. There's a lot in New York. There's some on the West Coast, but not so many.

The ownership system predated condo law. So once the condo law came about, people stopped building co-ops. We haven't seen many new co-ops built in the last several decades. But there are a lot of legacy products that exist back from when co-ops were more common in the country and for the co-ops that do exist.

What is incredible about a co-op structure is that it allows for an entire project," Morrison explains. "So you think of an example project with 10 units. The project cost $4 million dollars. If it was a condo, you'd have to sell each of those homes for $400,000. But as a co -op, you can take blanket debt. So the co-op as a whole can take a mortgage and can take debt that's secured by the entire project. It doesn't look at any individual owner; rather, it’s a loan to the project as a whole. And that can be half of the total value ($2 million). So you have a $4 million project; $ 2 million in debt that the co-op is taking. The other $2 million is resident shares, so a resident share in a co-op is a proxy for homeownership. You buy a co-op share, giving you the sole right to live in your home. And you can get a loan to buy a co-op share. Those loan products have existed for a long time. We've done a lot of work to bring those into new markets. But basically, that allows you to get a mortgage on your share. And those all add up, you know, 10 homes. Now each home is $200,000 instead of $400,000 because it just needs to add up to $2 million. The other $2 million is debt that the Co-op takes. The $2 million is all the mortgages added up, and each resident shares loans. And you only have to put 10% down on that. So that's how you get to an average of $20,000."

Here's Josh Morrison on what Frolic's trajectory looks like:

Our vision is that in these first few years, the next few years, a lot of our work is on demonstrating our model, creating projects in new geographies, and showing how it can work. We think of this as our sort of development lab within Frolic, where we showcase the projects we co-develop with partners that, you know, we already have relationships, and we're building relationships. You mentioned the grant where we've gotten in California due to the Chan Zuckerberg Initiative to expand, and that we're, you know, working with wonderful organizations that we hope to build deeper ties with, that we believe can be building the future generations of Frolic projects. So our development lab is working closely with our co-development partners to build these next generation of projects, but we see in five or 10 years from now that we have this larger network of organizations and individuals and developers that we've vetted and that are licensed to use our model.

We provide them with the entire ownership structure, the legal documents, the financial models, the wait list of homeowners, and our buyer pool. We reduce a lot of the friction and the difficulty of doing development and allow all of our partner organizations, all of the developers, and people we work with to build out future Frolic projects where our role becomes more and more over time, providing support to those organizations and providing the tools, but not doing all the development ourselves. So, it is an emergent process of scale, which is also defined by the dreams, ambitions, and needs of the communities where these projects are emerging and coming to being.

One metaphor that we like is the idea of making a meal. And you think of the current real estate industry, which is maybe cooking the same meal that we're all sick of. And a lot of our work is creating some different ingredients, some different recipes for those ingredients and allowing other people to, you know, use the recipes, riff off the recipes, but have this new set of ingredients to make meals that are delicious and represent, you know, a local area, what makes sense in a specific place. Not all Frolic projects will look the same around the country, but there are these new tools that haven't existed before that communities can now start to own. So that's our vision for how we grow."

That's the what, but what Morrison and Knox never want to lose sight of is the why.

Here's Tamara Knox on never forgetting the why.

It's essential to have a vulnerable space to be yourself and understand, ‘what am I trying to gain out of this? How do I let my experience, beliefs, and knowledge match these systems that might feel antagonistic towards them and create those bridges?’ What's important is creating a strong ecosystem within each region, each neighborhood, and community. What that takes is helping organizations and a different type of developer to start to emerge, and someone who knows their community well and knows their needs to look out for them and see a future for themselves and work within this realm of creating homes and neighborhoods."

Not knowing fully what they're up against may be crucial to how they overcome the chronic, seemingly implacable obstacles in their way.