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Jan. 7, 2023

Ep 321: Jared Lutz on the Future of Real Estate Investing- Tokenization and Syndication

Ep 321: Jared Lutz on the Future of Real Estate Investing- Tokenization and Syndication

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Transcript

0:00 And we are now live. So well, we're not live live recording for live. So how do you everybody, I'm bringing Spalding with the hive with us podcast. Daniel and Anthony are not here today, who is here today that I'm very happy to have met as Jared Lutz. He's the CEO, as you can see from decap. So I will let Jared say hello to you. And we'll go forward from there. 0:28 Hey, I'm exactly what Frank said, I was I'm the CEO of decap. We just released our album, plug our software real player, we just, we just released our MVP, which is the minimal viable product for for real estate tokenization. So it's a very exciting time for us. 0:50 Outstanding, and the URL will be put up. We'll add that to the bottom of this come recording time. So that everybody can see decap Digital assets.com. So you've been in syndication for a while, I'm assuming? 1:08 No, I'm a tech guy. So my, my business partner, it has been a real estate for over 10 years. And he's more on the operation side. And, and then you know, our team is, is very focused on their core competencies. So with the executive team, there's only one person that has that extensive real estate experience, but that's their job. That's their core core competency on the team. I focus more on the operations side of the business, as well as the tech is like where my core competency is. And then we've got marketing, graphics, coding. Everybody's got their their role on the team. 1:50 I can relate teamwork makes the dream work, as the saying goes. 1:54 No, absolutely. Your 1:57 firm setup similar. Everybody had their core focuses, and it worked well that way. 2:03 Yeah, no, I, I've always found that like, if everybody focuses on their core competencies, that's what makes a really good team, you know, that dream team. But I, what's been interesting for me, with this particular software building out has been that the learning of the the legal side. So I had to really understand all the complexities with regulation, and in compliance and due diligence, because that all has to be coded into the software to ensure that, you know, bad actors aren't in there that that if it's a 506 b deal, that only certain people are able to see that deal and that it's protected from the public, stuff like that, all has to go into it. So it's been a really cool learning exercise. For me, I had to do something similar with with a patient information software, I was building a number of years back where I had to dive into all those complexities of protecting patient information and HIPAA compliance, and I kind of dig it. So I was stoked about that on this side of it, because it really helps narrow the focus on how you're going to design the software. 3:19 Certainly does. And I've just realized I didn't actually, you know, I brought up your URL, and I mentioned syndication, but I didn't actually stop to ask you, what is decat? Digital assets.com? And what is its purpose? Why don't we kind of step back just a bit and start there that way? Our audience knows. Obviously, they're aware it has something to do with real estate and syndication now, but they and you know, a little bit of the tokenization. But what why don't you tell us what PCAP digital assets does? 3:54 Yeah, so decap digital assets is a syndication management platform like an investment management platform. And this is going to be similar to a lot of other software's that that people have seen in the past or use currently probably like syndication, pro, Juniper invest next, you know, cash flow portal, all all of these, all the software's are pretty much the same. It's got a different UI UX, it's all for managing for fun, like a fundraising portal or for managing your investors and where those investors are in in the deal cycle. And then once the deal closes, then managing the cap table and the distributions and and all that and that's that's what our software does but sets us apart from from the other players, or is that we are built on blockchain in we understand that blockchain is there's a big learning curve with that right now. And so we don't require everyone to to tokenize their assets, you don't have to tokenize your assets if you don't want to, if some of the people or investors want to tokenize their assets they can. There's a lot of complexities right now. And so we run dual custodians. And so you can so one syndication can run half of half of their investors through a traditional custodian, which was was how it's all run right now. And then the other half could do blockchain if they want. And so it's a we're just as we transition into, into this new technology. And as the SEC gets more involved in the IRS and FINRA, we're going to, it's going to create a much like stronger pathway for us to see exactly where investors want to fit in. So we're just kind of keeping it broad right now and letting people transition into it as they feel comfortable. 5:54 Okay. And what is if you'd explain to our audience, what is tokenization? And how will that interact with a syndication? 6:05 Yeah, so tokenization is really just a digital representation of your ownership in that company. So I see a lot of people they feel like, or I hear, you know, people talk about tokenization is, it's almost like this concept that, that you're fractionalize the the actual property. And that's not how it works. Usually, the property is actually in a completely separate LLC for asset protection reasons. But your fractionalized thing, again, just really how it is done right now. You're fractionalized ownership of the, of the SPV, or of the LLC, that's, that's holding the limited partners and general partners, if you know, they happen to be in the same LLC, the private securities, organizational structure is very complicated with the amount of LLCs that go into these deals. But basically, you're just you're doing the same thing that you're doing right now, like the it's just that your ownership in it is on blockchain. And is is viewed digitally, rather than having like a paper certificate for being a member of the LLC. 7:20 Okay. And now, does this adhere to the same strict standards as se? 506 B 506. C? Where would the be you've got X number of people who can be non accredited, and the others have to be accredited. And then you know, 506, C, everybody has to be accredited, obviously. But you're allowed to advertise? How is how is this different from that? Or is it strictly the same? And it's just the ownership structure and records for are handled differently. 7:51 It's all just records it honestly, I don't really see it being handled differently. There's this concept or notion that I, one of the biggest battles that we have going forward is going to be education. And it's because a lot of people feel like blockchain and crypto are the same thing. And so like, there's all this negative sentiment around crypto, and that sort of bleeds into blockchain, when in reality, they're two completely separate things. Crypto is an application that uses blockchain technology, right? So this has nothing like tokenization has nothing to do with crypto blockchain itself is just a newer way of databasing entries. So like, you're already doing this right now. We're all you're already databasing through centralized services, it's really just that exact same thing just on a more transparent, more secure database. So it has nothing to do with like, there is no pathway right now for like for, for how tokenization works that has not already already perfectly designed and placed in front of us by the SEC. As you're talking about regular regulatory like compliance and stuff, and it actually for us, so it's identical, everything is absolutely identical. It's just how the information is stored. So we still have to go through those same complexities with the SEC and the exemptions that you're you're filing for and and we find that blockchain actually helps helps assist that process. Right. So blockchain allows us to create smart contracts that will not allow people to enter into deals unless they've already been qualified and gone through the accreditation process or or whatever that due diligence processes depending on the exemption that they're coming in from right so if they're coming in from a reg A, and they're not an accredited investor, well then part of that due diligence process is going to be pulling in their W two to figure out exactly how much money they have made, because that's going to be like 10% of that's going to be the cap for what they can invest annually, right versus a 506. B, this is going to require people to, to have a prior relationship with, you know, with some someone in the organizational structure of that 506 B to be able to even see the deal, right, and then a 506 C can be open to everyone. So blockchain really helps us control permissions on, on what information people can see what deals they can invest in, depending on their personal due diligence. 10:35 Sounds quite impressive. For sure. 10:38 That sounded complicated in my head, as I was saying. 10:42 Well, yeah, as you said, you know, but you know, part of it, you know, anything tech related, you know, over the years is obviously been largely education based. Yes, we've tried to make things easier for people. Sometimes they have to understand Yeah, what what is the what's easier about it? What's different about it? And how will they be interacting with it? 11:02 Yeah, it's one of the things that we really hide, like, really push and highlight is that and I want to reiterate, is that is that is that it's, it's the same feel same look like when you operate our software, it's really no different than operating any other syndications offer you bet on. You don't see blockchain, you don't feel blockchain. You don't have to learn about web three, with a core principle for us has been a, you know, if, if our users or anyone has to learn web three, or has to see or feel blockchain outside of what they want to, then we've completely failed that our job. This isn't, this isn't some crazy new tech it is. But it's really just leveling up what we already have, right? It's just a better way of databasing, which you people don't see databasing. You know, the only way you see and feel blockchain is like where you're you're, you're starting to deal with the anonymous characters of the finance world. And that's not what we're about. You can't you can't be a part of any deal anonymously. I guess you could, LLC but the LLC would have to know you're correct. 12:22 Now, you say you're using Blockchain, you know, how is this being stored on blockchain? Are these NF T's? And do they associate to any other given token? Is crypto involved? Can crypto be used as a form of payment? Or is this still traditional banking? And it's just a matter of where the record is held? 12:46 Yeah, we've been very focused on on allowing everyone to come in how they want to come in, you know, if you want to use blockchain, you can if you don't, you don't have to. And if you want to use crypto you can we partnered with circle. So you can come in with BTC Aetherium, or USDC, which is circle. We don't anticipate a lot of that, especially with everything going on right now. And in quite frankly, it's not it's not really the best way to invest with a volatile asset. You know, when you if you were to invest with let's say, Bitcoin, it would be converted right away. But you know, so it's like, our, our custodians would never be holding on to the Bitcoin and we would never advise that they do that. They really can come in to deal however they however they want. So we have plaid, integrated into the system. So they can just they can integrate their, their banking straight in, you can use our our banking with circle where you can accept Ach, and this is the crypto side, you can accept Ach, we pay out near ACH. Same with wire in and out a theory of Bitcoin USDC in and out. We don't we don't see a lot of that happening now on the on the crypto side. So there can be a crypto element if you want it to be as as far as how the assets are structured, again, that's going to be pretty unique to every single fund and how they want it structured and how complex it is how many different asset classes do they have? Because each asset class would have to be a separate token. In you know, if we're using NF T's or not, NF T's are used throughout the system in various different ways. They're used for access points. They're used for identity credentials. Like for instance, when you go through parallel markets, you're issued an entity that you would never see, right, it's just used, it's attached to your identity and, and gives you access to different parts of the software where you're allowed in. But it's not NF T's are not what people think they are like people think of entities as like board IPs, or artwork or whatever, is. That's that's not how NF T's are really going to be utilized by the business world at all. You know, they're going to be used as access points, mainly and I identity credentials. Yeah, they 15:23 have so much more functionality. Way more. Yeah. Crazy. Yep, as a result of COVID, I've already researched a lot of companies. And there are a lot of artists out there music artists Wise, who used them. And you know, they did get some actual artwork as a result of it. But they're also being used specifically for that, you know, Gateway access, concert access specific limited live events, you know, as they were first starting to get back out, and it gave the artist a way to be able to make some money in that process. But as a result of getting that now, those who took advantage of some of those deals and opportunities, have access to concerts, specific specialized seating at some concert, you know, some of the events that they're doing over the years, you know, backstage access, access to occasional discord events, where they're interacting with them in ways that most fans have never had access to. And it makes the people feel that much more in ownership and part of that band, they've made those people so much more loyal as a result of that. So I mean, you know, do you see something like that being able to be used in a situation like this where, you know, as a result of that, investors can make people more loyal to them or to their brand, or to their investments as a result of that? Yeah, kind of simplifies the process. 16:53 It absolutely simplifies, it makes it a lot easier to manage credentials, in a very decentralized way, as well. So I don't know how far down the rabbit hole you want to go out. But like, you know that in in syndications, the model that that we built out with how we like to see assets structured is where the the actual LLC is the NF T, right? So an NF t is just a smart contract. And so it that lays out all the different rules, and so you can make a Dow and NFT. And then within that entity, you can fractionalize it. So this is using an NF t that it's the ERC 1155 which no one's probably going to know that. But basically, what it allows you to do is it allows you to store NF Ts and semi fungible. This is kind of like a name we use, but also semi fungible tokens. It allows you to structure those within an NF t. So you can have an LLC, that is the NF t. And then you could have class A share Class B share, and then you could run your own internal currency, if you want to do like a stable coin, all within a single NFT. It gets crazy complex. I don't think the world's ready for that yet. But nor will they even see it right. So like on our software, you select, you know, your different investment classes that you're bringing in, in in, you don't know that when you're doing that you're actually creating, you know, an NFT for that, or you're creating a fungible token for that. You don't you don't see that, nor do we really believe that you need to, because it's just technology. It's not like when I get an iPhone update, I'm like diving deep in that thing. Like, what are all the updates? Like, what's going on? I know, I just want to know, is it better than the last version? Yeah. Right. And that's how we see blockchain. They don't. We are focused on education, for sure. But a big, but that's largely because of like, just the miscommunication. that's out there right now about blockchain. I think if when we get to adoption, which I think we're gonna start seeing that kind of move through in four to five years. Like everything we're building right now is really for like four to five years from now. It I don't think it's going to be this whole thing of learning about this new technology. I think it's just going to be leveling up, right. Like this is the new standard. Right that we we moved from local servers to cloud and now we're moving on to blockchain. Yep. 19:42 Definitely. So, you know, I look forward to I've not dove very deeply into the ERP 1155 standard. So I'll be diving into that and just looking at that versus, you know, 721 and some of the others, just as I've looked at some of the those and how they can allow the Creator. You know, even as you know, the NFT is based off of that are sold and moved on down the line, the Creator can still take a piece of that action as a result all the way through continually create your own storefront or the creator of it can have their own platform where, you know, they've got their own resale network and stuff like that. Yeah, this is a completely different beast, in and of itself also. 20:28 Yeah, the the ERC 1155 is really just the 721 on steroids. Like, yeah, intensively. Yeah, 20:38 that seems like the comparison that keeps seeing. Yeah, 20:41 but but the, to my knowledge, we are the only ones using 1155. When we're talking about security, usually 1155 is used for gaming. But the most are going to be done through the ERC 1400 3643 which is tracks telephony, these are going to be secure. These are going to be smart contracts that are very specifically designed for securities. And we just took that framework in and worked in the 1135. 21:25 And I'm assuming SEC obviously has to sign off on every bit of this before you're able to take it live. 21:33 No, the SEC, does it really. They have no real like that would be like the SEC saying that we have to sign off on like AWS or on Microsoft. The way that the SEC views it is that it's the same thing as long as you're following the exemptions as long as you're following the guidelines that they set forth, how we store that information, obviously, like consumer protection, sock to there, these standard things that need to be implemented to protect user identity. But there's zero guidance on from the SEC on how or what smart contracts should be used for tokenizing assets. 22:19 Okay. Now, do you feel that y'all have or let me ask you this, who do you see as your competitors in the investment tokenization. realm. 22:32 So our main competitors are going to be at edX and securitize are going to be two of the big ones polymath is going to be another big one, those are gonna be our three competitors in the tokenization space. Where we differ from them is that they don't provide a real estate syndication specific experience, their general general equity or general private securities. So they're in there is like a very specific flow or customer journey that you go through with with real estate. And that's what we're focused on with this software. So what would, I would say, like three years from now, it depends on how long it takes us to get it to like true commercial level. But once we, we get it to like, alpha, alpha out of beta, and real, really into commercial, then we'll take the software, we will repackage it, like restyle it, so that it fits a different securities market. Like it could be like wine, or could be trading cards, artwork is a big one, where you see a lot of private investments go there. And we just take the same underlying technology and codebase we reskin it so that we're creating a very specific customer experience for art collectors, right? There's like we're dealing with with real estate. And that's the difference between us and like add X or securitize, where they just have one platform where they don't really care if it's real estate, or if it's art, or if you're investing in a startup. It's the same UI, we we think that will have far greater retention by creating a user experience that's dedicated to our user and what their asset classes and 24:27 definitely in the process of researching d cap, I came across and actually come across this company before. Not sure if you've heard of them or looked into them lofty.ai They're also tokenization for real estate investments. But it looks like I think they're honestly operating more so on the sorry, my phone's vibrating here on the the crowd Funding standard because, you know, they've got much lower limits as to what people, you know, for what people have to invest, you know, per token, I think it's usually an average of around $50. And token. Yeah. But you know, they seem to still have the same overall goal. You know, is that something that y'all ever planned to go in that direction? Or stay strictly? A 506? B, 506. C, in more traditional platforms? 25:32 No, no, we're definitely moving into reggae. In fact, we potentially I have a pretty good deal coming forward here with a reggae client. So, reggae is where you can bring in non accredited investors in and they're capped to how much money they make. They make per year is 10%, of whatever they make per year, right? There's that? Yes, 10% is, so it's like, alright, so if I make 100k, then the most I'm personally allowed to invest is going to be 10k. And so that's what how most of these deals are set up in. And I love it, because it brings in, it brings in a lot of people into real estate that, that were never really afforded that opportunity. Whereas you can get into it as a non accredited investor through 506. B, it's a lot more difficult. I look at our software, when we're launching deals, like so lofty is all focused around those types of deals. And they're kind of curating, controlling that we're agnostic to that. It's our client, right? What is our what is our, what does the syndicator that's using our platform want to do? Do they want to do care? Right? Do they want to do reggae? Sure, I don't like what do I care, my software can facilitate that for them. And their user. And that's all I care about is that, that we're providing them the services that they want. The on the reggae side, where I really do like that is that it provides them a pathway for 506 B deals, right. So when they use our software, we have a relationship with them now. And so if if the syndicator wants to allow us to, to move some of those non accredited investors into a 506 b deal, right, because it's the, the syndicators own the investor the investor data when they're on our platform, right. So like, just because you're on our platform doesn't mean that we can like contact your investors. So if the syndicator wants to work with us on a five or six B deal, we can now bring in 35 non accredited investors from these reggae deals, because we have a pre existing relationship with them. We know how they invest, they use our platform, we communicate with them regularly. And so I do see it more as a pathway in so we I love reggae, it's more complicated. And but for us, for the software side, like the more complicated a deal is, the better it is for us because we can code in all those complexities. Right. So like, the the financial filings that you have to do with reggae. You know, same thing with with REG D, that you you have to have financial file, like you have to file with the with the SEC, but you have to show those financials to your non accredited won't really to anyone in the deal. You know, so anywhere where there's more complexities, that's kind of where we shine. 28:38 Sounds nice. Sounds very nice. What do your services cost? What would typical? And I'm assuming it's per type of fund? 28:51 No, no, it's really isn't that? No, it's really the same across the board. So the software was designed to accommodate all different types of funds. In the the more again, complexities like the the different types of funds that come in, the more of them that that that do that it gives us just more experience with that type of asset or that type of structure. And so we definitely welcome it, we're we're looking at starting a starting foot around $500 per fund that you manage on platform per month, and then a discount on the annual but for so we just dropped our MVP a couple of weeks ago. And our priority right now is to onboard the pilot group. And so this is this is where we're not charging. So we don't think we'll charge for the first 10 to 15 funds on platform. It'll just be it'll just be kind of like, hey, you know, thanks for using our platform and giving us all this data, right because right now it's very bare bones in it. It's because it's the MVP, we didn't want I don't like making assumptions. Okay? So like when we're building out the code, we're looking at securities laws. And we're looking at the regular the regulatory framework. And there's no assumptions being made here, we know how to write the code for this. We don't want to make assumptions on this is how a syndicator wants to use the platform. This is how they want to do waterfall distributions. This is how they want to onboard investors, there are certain things that that we have to have like that they have to go through a certain process, but the look and feel how they're engaging with the software. This we want straight from our users. So we're aiming at the first 100 million assets on platform, which could be one deal, it could be 20, that we're going to use that initial group as our test case, to get information from them. How do you want this information presented? Right? How do you? How do you want the deal flow to go? And then we'll start making UI changes and UX changes and and then we'll level up from there. But to answer your question, it's $500 per font per month. 31:12 Quite impressive. And are there setup fees to get started or just you know, what is your plan down the road, or no, always be just that set monthly, 31:23 no setup fees to get started, the more funds you run the on it, the the cheaper it will be also, we are incentivizing funds to collaborate with us to launch new deals or to go into our global fund. So our software has a global fund that has two purposes. It's an evergreen fund that, so for anyone who doesn't know what evergreen fund never closes, it has no end date. And it operates kind of like an index, but it has two main functions, it's to supply liquidity to the secondary market, this is going to be mostly like distressed capital. So, which we do see coming in being on the rise for the next 18 months, two years, where you, you have syndicators that need cash, right. And, and they're locked in these deals that they were thinking might have been selling right now or like where they might, but they just lost 30% on the valuation of the property, or 20%, or whatever it is. And so the I think we're going to start seeing deals kind of push out further than they're expected timelines, just with everything that's going on right now. Is for investors that need cash flow, will buy those assets from them, it's a very easy transaction for us to do because those assets are on our platform. So we know the cash flow, like we know how that's being operated. So that's a very, very easy asset for us to do our due diligence on like, it's, it's almost instantaneous, it's not because we're not pulling in the project management, or sorry, the property management, stats and details or data. But But once we have that information, it's very quickly to evaluate the asset value with the value with the purchase price, and to make an offer, and then that's one side of it. The other side is to provide liquidity and be a BGP ot on deals with these other with our, with our fund managers that are on so like when they start a new deal, they can come to us either on the debt side, and or, or will come in on on the equity. So that's, that's up to them. And it's all it's all negotiation, they like to look at the liquidity is meant to be is meant to, for the users on platform. 33:55 Okay, now, will you also have secondary liquidity pool or a marketplace for people who've got tokenized assets on your platform? If they want to be able to sell to other people on your platform? Or will there be a marketplace for that? Or is that something you're looking to strictly keep to yourselves? 34:15 No, not at all. So that to answer your question, yes, our that's phase three for us. And that is our partnership with temple markets. So temple markets is our broker dealer partner. They are our ATS for the secondary. So we don't use their we don't use their platform we API with it. So so everything is still the look and feel that the secondary exchange in marketplace is still on our on our site. But if we silo and this is what I think is a huge problem with what we see right now. Like if we silo everything to just like our secondary marketplace As to adjust our platform that kills liquidity. So liquidity comes from people comes from users. And for us to really solve the liquidity issue, like everybody talks about how like tokenization is going to solve the liquidity issue. It doesn't, if we stay siloed, in our own individual platforms, we have to integrate with other platforms, we have to get past this fact that like, I own this investor, and I want this investor stay with me, and I don't want to share this information at all. And I don't want to share them, I don't want to share their money. It's very selfish, and it creates the stagnation, like, we're never going to solve the liquidity crisis, if we won't call it a crisis, unless we integrate with other people and with other platforms and say, hey, if my investor wants to buy your asset, because it's a great assets on your platform, cool, let me send you that information, let me help facilitate that transaction. Yeah, and that's how we're gonna solve liquidity. And that's how you're gonna see private securities turn into operating like the public market, which is a dream. But you know, it's really the only way it's gonna go down. 36:12 Time to time, I have a feeling I will definitely get there at some 36:16 point in time, though. Yeah, we will. I think, 36:19 just like the technology, that seems commonplace now seemed impossible, you know, 20 years ago, that I was dealing with as a sysadmin. You know, back with my back, I think early, Oh, 50304. Actually, even some of the stuff that we were doing, setting up multiple racks setups for customers with 40 5060, or hundreds plus servers, to be able to handle live real time auctions. Nowadays, you know, the cloud just, you know, makes that so much simpler and so much easier. And just, the whole process is simple. And back, then it's like, okay, we need x number of servers, we need X amount of bandwidth, we need not net iron routers to handle this stuff. And it's just, you know, now it's, you know, go to a website, you know, select, I want this many CPUs, you know, this many cores, this amount of RAM, and just X amount of bandwidth available, you know, combination of Microsoft, providing an Amazon Web Service and a few others. And now you've got it there. And it's just, you know, and grow at a moment's notice. 37:27 Exactly. I mean, like, when you're having to buy all the hardware and store it locally, you would you run out of resources, you're screwed, like, this could be, yeah, this could be a weeks weeks turnaround for you to like, go and get more hardware, or whatever it is. Whereas like, now, it's, you build in triggers where like, if my GPU gets to a certain level, we're gonna go ahead and expand resources. It's a this is where AWS, which is Amazon, like, just totally, totally crushed it in the cloud world. 38:03 Yeah, there are several companies doing that now that just, you know, back in the day, if you got too busy, you know, crap, just slow down. You know? Now, it's nothing. Just yeah, it can be built in back end automatically. Okay. It'll just automatically start cloning that instance, spin up more, more, more solid state drives, and more RAM and more CPUs, you're not going to slow down? No. So what else? Would you like to tell us about your service? I apologize. You've done a phenomenal job of answering questions that I was thinking of before, even as asked the questions. 38:47 So I don't know. You know, I'm really a big fan of. I'm actually a really big fan of not preparing. I know the future, I prepare for everything. Right, except for conversations. Because it just leads to such a more genuine conversation. So like I didn't personally prepare for like, I don't know, it's like, whatever you want to ask. I have an answer, because I was the one that built it built this with the team. Yeah, I've been involved in every aspect of it. So it's a no, I don't know, I think if I want to get a point across and I think I've tried to make this point several times is, is really educate yourself on what blockchain is because blockchain is not crypto is with all this negative sentiment that is out there about crypto and what's happening with FTX and, and Ponzi schemes and, or scams and all this kind of stuff. They're a couple different things. So Larry Fink, CEO of Blackrock, the largest real estate owner in the US, they run nearly an $11 trillion fund. They he's he's cool. I'm paraphrasing and so I don't want to say he's quoted as saying this exactly. Because I pull in quotes from color and people but he believes that blockchain is the future and BlackRock is very invested into, into blockchain. One of the biggest critics of of crypto is Jamie Dimon who's the CEO of JP Morgan is which is the largest bank in the United States. They have their they've been building their own blockchain for two years. They have their own crypto J. J. jpm. Coin. And, and yet, he has been a huge critic of crypto a calls and pet rocks and stuff. Yet he's building it, right? He's building on blockchain, not crypto, it because I will really consider JP Morgan coin, a guess it's a coin not a token. So coin is going to be like Aetherium decap will be a coin or or Bitcoin it's the it's the native token that operates on the blockchain. So that's a that's a coin. It's a commodity I look at as a commodity tokens, which is what caught where all these these crypto scans are, are coming from, or from these these tokens. These are digital assets that live on a blockchain. And that's what what he was when he's talking about crypto being pet rocks. He's talking about all these, these tokens. And I think he's right, I do think that well over 90% of tokens out there are I will say 99.9% of tokens that are out there are either straight up scams, or they're illegal securities. They're they're not filing with the SEC with it, the SEC, they're not doing anything with regulations. And that's going to be this big. I think transition with crypto on the crypto side is that they're going to force those people to either be banned in the US, or they're going to force them to, to file with the SEC. So So yeah, but my point is to you know, educate yourself on blockchain technology, because it's not cryptocurrency and the biggest companies in the world are transitioning on to it right now. This is not a fad. We are really leveling up the technology. It's nothing to be scared of. And it's really nothing to to be worried about. be worried about your investments, make sure you do your due diligence, it doesn't matter if they're into crypto doesn't matter if they use blockchain doesn't matter if they're doing land deals, or mobile homes or single properties or multifamily properties, do your due diligence, know your operators know your GPS, and know that you're making smart savvy, wise decisions on where you're putting your money. 43:08 There's something that's triggered a trigger to question. Thank you for saying what you just said. Are there limits, minimums that y'all are willing to work with? Obviously, I'm sure certain you can't have a maximum. Unless it's, you know, a limitation, you know, by the SEC itself, you know, like in crowdfunding, you know, per company per year. But, you know, do you have minimums for someone to use your service at that 500 a month? 43:37 No, I mean, we've actually turned away people that would have been like, our, our first clients, because I think they were being more supportive. And in saying, hey, you know, I have I have real estate property, like, Can I use your software selection? I mean, sure, you could, but it's just not. It's you're not managing investors, right? Like, you're the only investor. So there's like, no real reason to use it, because our software is for investor management. And so no, we don't have minimums that, like, we're totally agnostic to, to what the, the, the we have no agenda that we're trying to push on people in saying, hey, like, you're not going to be qualified for our software, unless your deal is like a minimum of 10 million because what do I care what the value of the deal is? My pricing isn't dependent on that. Yeah, so if you find value in the software and you want to pay 500 bucks a month, and you're only managing three investors, then go for it, but I'll sit down and personally tell you how to do it cheaper, like because, you know, take that don't waste your money on software, you don't need like have need for it. Otherwise, my retention is just gonna go down and I don't want that. Like I'd rather I'd Are they have higher retention in lose deals, like before they come on board, then, you know, try to talk people into using our software just so that they can stop paying in three months 45:13 and potentially end up giving you negative reviews. And exactly what's that platform and I didn't like it, you know, just you know, it was any list of laundry list of reasons why. And it comes down to they weren't meant to be on the platform in the first place. 45:29 Yeah, yeah. And they shouldn't have been so. And for, I would say, I was at least the first 100 deals, these are all gonna be, we're not automating, like we can, we're not automating anything with the onboard process. We're doing this all, personally. So where like, I'm not having you sign up and say, Hey, start importing Excel spreadsheets to import your cap table, your investors. You know, we were, that's more I guess, it's like a concierge service. But having these calls, like we're onboarding these assets together, we're working together, while we're onboarding your investors, this is giving us very, very valuable insight into your organization, and how you operate. And that's, that's big, that's big data for us personally. So plus, it ensures that, you know, no mistakes are being made while we're launching the MVP. And that we can, you know, by personally onboarding, the first 100 assets, we're gonna get a very good feel on how people want this process to go. And and so then we can open up the door to automating that process. Really well we want to see in this is gonna be difficult, it would be an API into into like, syndication Pro, or, or Juniper square, where where they want to transition over the data just feeds right into us. 47:13 That would certainly make life easier. So and you keep saying us, and we something that's probably should have asked earlier, how many people are there on your team? 47:23 So I say, are we including, like board members and stuff? My internal team is, is eight people. But three of those are part time. And so full time, we have a staff of five. And and these are it's it's me, the real estate side, which is Jay, our creative director, which is Matt, our lead software engineer, which is Jonathan and Ben, who is on marketing and growth. That's really kind of all you need in a team. So that's, that's for our tech side. On the Real Estate fun side, we are looking for partners on four operations, acquisitions and equity. Or capital. 48:25 Okay. Yeah. Sounds good. Sounds good. Yeah. 48:30 Because we have two, we have two funds that we're launching this year. The first fund, the first fund is a $3 million raise for the prop tech. So that's for the actual software. In the second Fund is a $10 million raise, it's actually a little bit less than that. For that's the Evergreen fund. So provide liquidity to the marketplace. 48:58 Outstanding and legal. Do you have attorneys that you prefer to work with, that you'll recommend to customers as they come to you or just anybody, whoever they were already working with? And do you find you have to provide a greater deal of education? If they don't come in with a fair amount of Tech experience? Or specifically from the tokenization? Yes, 49:23 but No, you don't see the tokenization aspect, right. So like, again, this is just how we're databasing. On the lawyer side, this is all that's a personal thing. If I were to recommend any lawyer, and I think you already probably know this answer because I think this is where we met. But But Mauricio he, I don't know the name is Lara is Premier. Premiere law. They're in Laguna, but Mauricio. He runs a community the real estate syndication community on Facebook and he is the Probably the greatest resource for legal I can think of in this area. We personally the only law firm that we've worked with is MoPhO. Morrison Forrester in. They are. I mean, this is more on the tech side in security is not for like real estate syndications. They are just a top notch law firm. I mean, they're apples. I mean, I'm sure Apple has like a ton, but they're one of Apple's main, I think Facebook like they're one of the largest in the world. But I wouldn't recommend them necessarily. They're like $1,000 an hour is just like, you get three these guys on one call for an hour. It's a $3,000 call. Yeah, but we just like at that time when we were structuring and using them. We just really felt because of everything was blockchain if we don't have a global recognized, like attorney. You we just had felt that that investment was worth it because of how well established they are in the in the world. Because we're dealing with such a new technology, but for real estate syndications. I would go to Mauricio no question. 51:19 Yeah. And there's a few others that I've worked with and a few friends have worked with. So I just didn't know if you had specific ones that were more preferably associated, you know, beyond just your personal preference. 51:33 No, no, that's something that we will be building out though in which is like the the vendor side where you can go to preferred vendors of the platform. These are all going to be trusted vendors that work with that work in real estate syndications. Because again, the entire experience is around syndications. Right. So speaking of your CRM, right, so this was actually kind of funny that when we started talking, you told me about you told me about hive and the CRM and I literally I've had multiple meetings with CRM companies that specialize in syndications because we're starting to look at building out these relationships, so that we are providing resources that are not native to our platform. Because although we do operate a CRM, like we'd have CRM components, we're not dedicating all of our development resources to a very feature rich CRM, like our CRM is very basic. It's like, Can you email out can you do newsletters? Can you like to, to your investment group or your syndication? Can you track where they are in the deal? Flow? That's it? Yeah. We're not integrating into Facebook and into into doing drip campaigns and like, where you go to a proper CRM, and they're the very feature rich on on that customer? management relationship? Relationship Management? 53:13 Yeah. Pretty much everything in CRM does. Yeah, I would love to talk with you, and see what we can do to help or you know, enable that level of integration. Yeah, customers? 53:27 Yeah, we've been looking at, I would, I would love to check it out. We've been looking at a couple different ways to do this. One of the ways is, is operating more like a like where it's just a frame, but in it, so like in our software, you could click on LaunchPad, right. And then in Launchpad is a bunch of different apps. It one could be hive, and you click on it, and it actually launches hive, like in its UI, like its native platform, right? In our framework. It kind of works like an iframe, but not traditionally, because iframes can get very distorted, depending on on the aspect ratio of the viewers have, how big the screen it is. It's, it's a cleaner, it actually operates more like a browser. Pretty much. So we're looking into that, right after this. Actually, when we're done with the Scott, I have my dev meeting for 2023. When we're going through, I think we have 93 features that are highlighted on there to build out this next year. 54:41 I gotta say I'm looking forward to being if not an alpha client, or alpha tester for il definitely a beta tester. Now I've done that with several software services and I like to get in there and break stuff. So 54:56 we used to have a when I had an office to our staff and stuff, we'd have, like break the app challenges like where we would take a Friday off, and nobody would do client work. And although this is and we'd get like pizza and whatever else, and everybody would just do whatever they can to break the app or break the website, whatever it is, those are my favorite is a great? 55:23 Most definitely. So one of the things we'd like to ask, as we get near the end of each episode, Daniel started this and recommended it to me. What are you reading right now? 55:38 Oh, the every web page on the SE C's website? Probably? I would say 55:46 also book wise. Yeah, definitely got. Definitely got to know the SEC website. 55:53 Yeah, that's the number one thing I'm reading. But this all the other plug for? Measure what matters. 56:05 What matters? 56:06 Yeah. So this is, this is all about OKRs. So OKRs, kind of like a KPI. But it really focuses more on inspirational goals, that that help you get to the finish line. Right. So. So what is your true objective? Right? And it shouldn't really be something minor, like for us it our top OKRs market share? Right? So, so it's getting to 9% market share. And that's a truly for us, we it's an attainable goal. We can't get there. There aren't a lot of people in tokenization right now. There aren't a lot of people and and even real estate syndication software, right? There's not a terrible amount of players, comparative to other industries. And so it's it's an awe inspiring goal. And then you step back from there and look at all the key results. And what is it going to take for you to get there? What are these benchmarks that you have to you have to go through? So it's a great book. It's mostly like use cases and like, how is it applied at Google or Microsoft or wherever? But yeah, measure what matters is uh, I think I think my list Oh, nice. Yeah. 57:36 So you have a podcast preferred podcast you listen to or what do you listen to? I'll say while you're driving, or while you're working in the background, is it music? Is it a podcast is 57:48 so for sure. I while I'm working, it's very difficult for me to listen to a podcast because they're gonna say something, it's gonna detract like, it's, it's gonna be a distraction. I listened to instrumentals a lot. I actually have like this kind of weird thing where I, even if it's not instrumentals, and it's just, you know, where they're singing or vocals to it. I have difficulty hearing words in songs like I have to, like very consciously, like, listen for lyrics. But mostly I listened to instrumentals. I like flamenco guitar. That if I'm doing any sort of programming, or diving deep into something for sure, I'm listening to, to something more like that. podcast is going to be on the car. I'm a big fan of talking while I drive, and doing calls while I drive, like more personal calls. It and I like podcasts while I drive. I'm saying Yep. I don't have any podcasts in. Like, like, specifically, I actually have a podcast that just popped up that I want to check out which is called or I can't think capital hackers. But I mean, I, I listen to a lot of crypto podcasts just to see where the news is that we're, we're gonna be launching a podcast eventually. I mean, we put all this money into building the studio in my garage so that we can eventually launch a podcast and and deliver content to to our base. We'll also use it for education. 59:40 Make sense? Yeah. I think that's part of why Daniel and Anthony started this up was just a way to be able to help people and talk to some of their customers. They find customers in the process, but it's also just educational as I'll get out, and it's a great way to make connections and network these days. 59:58 Yeah, absolutely. and it's great for search engines. 1:00:02 Definitely, most definitely. Anything else you'd like to say before we wrap it up? 1:00:08 No, I just, I was stoked to connect with you and get invited on to the show. It's I'm very appreciative. Thank you very much. 1:00:19 Definitely I appreciate appreciate you accepting friend requests, like, say, among the few you know, and this isn't stoke my own ego in any way. But 90% of my friends list on Facebook is people requesting me and the majority of them sit on answered for long periods of time. No clue who they are. So the fact that you took a chance and accepted me, I felt bad that I didn't have anything to sell, you immediately. Know? 1:00:47 Because like I did up for a podcast, so Well, yeah, but I liked that. That's great. I want yeah, like, we're looking for more of that. And yeah, not only. Okay, so I guess, if I'm gonna say a couple more things, it's, we want to be on podcasts, we want to start spreading our message, right, we want to start talking about this, we want to start educating people on blockchain and how it's going to be used in the future. We also are looking for beta testers, we're looking for people to use the software to have creative input to actually be a part of the process and, and have some of that, you know, that feeling of ownership like, I like I gave this suggestion and they used it, you know, that sort of thing? Because we're looking for that big time right now. 1:01:37 Yep. I think myself, I'll definitely be interested in using it and testing it. Like I said, I believe Daniel and Anthony will also reached out to them as soon as we got the scheduled and shared the link with them for your website, because it's something we've actually been looking into earlier this past year. And it's a matter of jumping through all the hoops and getting things there and this kind of boom, here it is. Yeah, we're definitely looking forward to that. 1:02:09 Yeah, well, let's, uh, I mean, we'll talk after this and, and say something. 1:02:17 Like, thank you for being here, Jared. Definitely appreciate it. Daniel, I know is lurking in the background and he'll shut things down here for us. And he'll probably count us out or whatever.

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Jared Lutz

CEO

CEO of DCAP Digital Assets, Jared is a blockchain and cryptocurrency expert. Starting his blockchain journey in 2017, Jared recognized the future and power behind blockchain technology. Jared co-founded Play2Earn NFT Game, StarShip, and within 6 months the company was trading at $100,000,000. With an intense focus on stable investments, long-term growth, and equity accumulation, Jared resigned from StarShip to launch DCAP. DCAP was designed to thrive and be supported by a growing portfolio of properties and cash flow assets. DCAP launched in February and within 9 months they released their MVP software which facilitates an all-in-one solution for the present and future of real estate investing, built on blockchain.