S3E45 Mark Fidelman How to generate passive income with tokens

S3E45 – Mark Fidelman – How to generate passive income with tokens
Mark Fidelman – How to generate passive income with tokens. My next guest was a sales executive who made the transition to creating an agency that helps tokenize businesses. In this episode, we talk about the types of businesses they tokenize,  why a business might want to tokenize, and what kind of returns investors like you and I can expect. Please welcome Mark Fidelman.  Tokenization websites:

Payback Time Podcast

A Podcast on Financial Independence. Hosted by Sean Tepper. If you want to learn how to escape the rat race, create passive income, or achieve financial freedom, you came to the right place.

Key Timecodes

  • (00:36) – Show intro and background history
  • (01:39) – Deeper into his background history and business experience
  • (04:19) – Understanding his business model
  • (05:58) – How his business model works and can create passive income with tokens
  • (09:09) – How safe is that token model
  • (10:17) – How he makes money with this business
  • (12:04) – Deeper into her business architecture and strategies 
  • (13:40) – Few platforms retail investors can use to find tokenized companies
  • (16:07) – How the tokenized investments can create passive income
  • (20:20) – A bit about the risks and how to mitigate it
  • (23:03) – A few examples of companies in this model
  • (26:45) – Do the tokenized companies have their Financial Statements available?
  • (30:13) – A key takeaway from the guest
  • (35:23) – What is the worst advice he ever received
  • (35:44) – What is the best advice he ever received
  • (37:08) – Guest contacts


[00:00:04.730] – Intro
Hey, this is Sean Tepper, the host of Payback Time, an approachable and transparent podcast on financial independence. I like to bring on guests who hear authentic stories while giving you actionable takeaways you can use today. Let’s go. My next guest was a sales executive who made the transition to creating an agency that helps tokenize businesses. In this episode, we talk about the types of businesses they tokenize, why a business might want to tokenize, and what kind of returns investors like you and I can expect. Please welcome Mark Fidelman.
[00:00:37.150] – Sean
Mark, welcome to the show.
[00:00:38.600] – Mark
Great to be on. Thank you, Sean.
[00:00:40.260] – Sean
Yes, thank you for joining me. So why don’t you kick us off and tell us about your background.
[00:00:45.000] – Mark
Yeah, so I’ve been around for a while. So started in sales, worked all the way up to an executive position with a publicly traded company. A Section 16 officer in sales decided marketing was more my speed. I’ve spent some time in the marketing departments that kept throwing me out, throwing me out. They finally let me do a marketing campaign and we were very successful. I’m like, this isn’t that hard? It is hard, but I thought, what’s another challenge in my life? And so I pivoted to marketing about twelve years ago, and from there I’ve been in marketing most of the time, but most recently going into Tokenization. So we’re now a tokenization agency that includes marketing to bring companies, real estate projects, IP, whatever it is that’s of value, and Tokenize it and put it on the blockchain. It’s not crypto, it’s tokenized assets that trade like crypto.
[00:01:39.190] – Sean
Got it. And real quick here, what is the name of your business?
[00:01:42.660] – Mark
[00:01:43.800] – Sean
Smartblocks, got it. It’s smartblocks agency. Is that the URL?
[00:01:47.630] – Mark
That’s the URL? Yes.
[00:01:49.190] – Sean
Perfect. Anybody want to look it up? We’ll talk more about this as we go through. But while we’re listening and you’re at a computer, you could just type that in smartblocks Agency. Okay, so let’s just back up a second and talk about the transition point to what you were doing previously to what you’re doing now.
[00:02:05.300] – Mark
Yeah, I mean, the most recent transition is going from marketing to tokenization as a consultancy, because that’s what’s really needed in this. And so what I did roughly about nine months ago is I started positioning myself on social media, on my website, on my newsletter. I’ve got a newsletter, my YouTube channel. We put out a lot of content and I’m just positioning myself in these fields. And what that does is two things. One, people start to think of you more of, oh, what’s this tokenization of assets things, what’s this security token thing? And then two, it forces you to learn the industry. Now, this is a new industry, so there’s a lot to learn, and you’re learning every single day. Every single day you hear about an announcement about people or companies, large companies that are tokenizing some sort of asset. So that’s what got me there. I was early. I think I’ve positioned myself pretty well. I’m still an up and comer, but these people are tuning in. They’re giving me feedback, they’re hiring us. These are all good signs, but it was a lot of work. It’s a lot of, hey, you’re talking to the crickets for the first three months, but if you just stick it out and you’re putting out good content and you’re getting good feedback from other people, it’ll pay off roughly six to nine months from when you started.
[00:03:24.900] – Mark
So you just got to have that discipline to keep doing it and doing it and doing it. Probably what you do with your podcast.
[00:03:30.070] – Sean
Indeed. Like, you can’t put out one episode and, hey, you got a bunch of leads. It takes time. Yeah. Got to be repetitive. I want to drill into your previous agency. So it was focused on marketing. So were you doing like, Facebook campaigns, YouTube campaigns, maybe websites, stuff like that?
[00:03:46.090] – Mark
Yeah, it was mostly ecommerce. I still have it. Oh, you do focus on ecommerce. So any kind of an ecommerce store or anything that you wanted to sell online, that’s what we are focused on.
[00:03:58.840] – Sean
Got it. And why did you make the transition to Tokenization?
[00:04:03.320] – Mark
Well, I mean, tokenization is the future. Most things of value will be Tokenized by 2030. So we’re about seven years early. But the rewards for somebody that gets in early into a market like that are massive. Imagine getting into crypto in 2014. Right. That’s where we are with security. Tokens.
[00:04:20.470] – Sean
Sure. Okay, so it sounds like you still have your agency focused on the ecommerce that’s running. That’s a monetized business model. And you haven’t shut that down. Right. That’s still going.
[00:04:31.800] – Mark
Actually, our business with Tokenization has surpassed the ecommerce company. So I’m mainly 80% focused on tokenization. The numbers are so much bigger and there’s way less competition. There’s not a lot of competition. What I do?
[00:04:45.960] – Sean
Sure. That kind of ties back to as investors, we teach the four Ms focused on I’ll kind of break them down for you real quick and kind of connect the dots here between your model and ours. So with the four Ms, we’ve got the margin of safety, which really encompasses the math part of investing. But we always tell people, don’t stop at the numbers. You want to start there, but you want to look past the numbers and look at the meaning moat and management. Meaning is the business model. How many revenue streams does it have? Are these well diversified revenue streams? Moat is related to you. That’s the competition. Business with a lower number of competitors is a great place to be, and the management is a CEO. We like to invest in businesses with a good quarterback. But tying back to you, thank you for giving the percentages. I was going to ask you what’s your percentage split on the time investment? So it sounds like 80% focused on tokenization, 20% still in your agency. And with that in mind, how big is the agency? How many employees?
[00:05:47.590] – Mark
The agency has eight employees. Okay. Smart Blocks. And there’s crossover because we use both people, so there’s probably twelve in Smart Blocks.
[00:05:57.030] – Sean
Got you. Okay. What I’d like to do next is talk about how your business makes money. And then we want to kind of steer the conversation towards the listeners on how they can create passive income with tokens. So with your model, who are your customers? What are they looking for?
[00:06:17.260] – Mark
Okay, and I’ll stick with Smartblux for this one. So our customers are one of two types of individuals or businesses. They’re mostly all businesses, but people that want to take out existing equity in their mid sized company, 5 million to 50 million that can’t go public. They’re just too small to go public and it’s too expensive to go public. So they’re like, well, why don’t we tokenize the equity in our company and then issue tokens that represent that equity and they’re instantly tradable on a secondary market. So that would be one example. If you own a real estate project, same thing tokenize the real estate. You don’t have to wait for an exit that could be 510, 15 years from now. You could use that money from tokenizing the real estate to buy another piece of real estate. That’s another use case. Same use case. It’s just taking money out of an existing asset. The second one, the second use case that we do is raising money. So if you need to raise money for something, instead of taking your company public or doing a private public memorandum to raise money amongst your friends and family, well, you can tokenize that as well.
[00:07:28.050] – Mark
And depending on what you choose, a Reg, a Reg D, you could even do a Reg S, which is international. You can raise money from unaccredited and accredited investors depending on what you choose. There’s also something called a CF, a Reg CF, which is a crowdfunding initiative that was passed a few years ago. But all of that can be tokenized, and people are more interested in that because they’re like, okay, if your company doesn’t perform, I can get out instantly by trading it on a Uniswap or some sort of a security token market.
[00:07:55.530] – Sean
I was going to ask you, what kind of markets can people like ourselves, retail investors, come in and just buy a certain amount of token? Like you could say, I’m just going to walk through a real life situation. Let’s say there’s some tech company that’s maybe valued at 50 million, it’s not going public, but they’re like, hey, we want to take 10%, so 5 million and we want to make it available through these tokens. And I could say, hey, I just want to invest like $5,000, and now I own a piece of this private company that’s on some kind of marketplace. Or site. That all is correct.
[00:08:36.360] – Mark
That’s all correct. Yeah, it’s like an equity Zen, if you’ve heard of them, but equity Zen, there’s no secondary market to trade those offerings and there’s nobody tracking the price as it goes up and down, as this $50 million company turns into 100 million dollar company. All these things aren’t being tracked in real time. Whereas if you have a market, it is. And there’s also lots of benefits in terms of distributing information on the blockchain and transparency I’m not even getting into because I don’t think that’s the purpose of this.
[00:09:07.790] – Sean
Sure, yeah. A question customers are definitely going to ask me. How safe is this? Is this like FDIC insured or like FINRA, anything like that?
[00:09:19.560] – Mark
It’s all exemptions to SEC and FINRA. It’s all done exactly the same way that you do privately. When these companies are raising angel rounds or they’re raising their first round, second round, whatever, it’s exactly the same process, except for now. You’ve added a tokenization layer which allows these things to be liquid and much more transparent. Talk about a transparent cap table. You know, every wallet address and all these addresses are white labeled. It’s not like crypto where it’s all hidden. Everything’s white labeled. So if somebody hacks your wallet or somebody does something nefarious, the company just reissues it to you just like that and cancels out the old one. It operates different than crypto, but it uses the same tools as crypto.
[00:10:02.930] – Sean
Sure. I like the liquidity. So you could, let’s say, invest today on a Monday and then tomorrow I’ll be like, you know what, I need that capital back because I have to make a home improvement or whatever. You could pull that money right back out.
[00:10:15.560] – Mark
Yeah, exactly.
[00:10:16.470] – Sean
Got you. Okay, let’s just back up a second here and not talk about the investment side. From the investor standpoint of the retail investor on your side, do you make money providing the service to get them set up as a token, or are you making some kind of or generating revenue ongoing by providing an ongoing service?
[00:10:35.660] – Mark
So there’s three ways we make money. One is, of course, we’re walking them through the process. We’re also marketing the token to potential investors, usually secondary investors. Two, we help them raise money. We’re not a broker dealer, but we work with a network of broker dealers that help them raise money. So we actually raise the money for these companies. And then three, we take an allocation of the offering and if that goes up in value, it’s kind of like stock options to us.
[00:11:02.160] – Sean
[00:11:02.580] – Mark
If that goes up in value, then we could sell the tokens at some point in time and make money off of that. So there’s three different ways we make money on this.
[00:11:09.320] – Sean
It’s a smart model. And on that third way, is that something like you do right away you would raise that money? Or is that like down the road. If something happens to the business they sell for a bigger dollar. You would take a windfall number at that point.
[00:11:21.930] – Mark
Well, it’s even better than that. What we do is we like to align our interests with our clients interest. So let’s say it goes out at a dollar per token, and anytime the market gets above a dollar, we can sell and make money from it’s like an option. So our agreement is we can sell our allocation of tokens when they get above a certain strike price or a certain option. So we like to align that with them. Because if we can get it to $2 in a year from a dollar, well, that’s a big windfill for us and a big windfill for them. And so everyone wins. Yeah, that’s how we like to do it. It’s not the only way we do it, but that’s the way we like to do it. Align our interests.
[00:12:03.150] – Sean
Sure. Double your money. Let’s talk about the retail investor then. I want to talk about the types of companies you kind of work with. We’ll drill into that a little bit. So from a retail investor standpoint, if I’m interested, is this as simple as going to a certain website, filling out a form, then connecting my bank account, and you can do this same day? Or is there a longer process?
[00:12:25.820] – Mark
Are we talking about how retail investors invest?
[00:12:28.180] – Sean
[00:12:28.960] – Mark
Okay, so if it’s uniswap, nothing is done. You just go to Uniswap and you buy these security tokens and it’s decentralized. There is no what’s called a KYC process or AML, although there is behind the scenes some AML and KYC happening. You’re not signing up for anything. You’re just using your wallet, whether it’s MetaMask or something else to connect to it. And then you can buy it. Our companies first get listed on a recognized SEC approved and FINRA approved security token exchange, like an INX or T zero. So they start there and that’s where my legal obligation ends is okay. I’ve listed them on a registered legal place that they can list their tokens and you could buy them from them. You have to be accredited to buy that first round for the second and third rounds as they’re being traded all over the world. Because remember, with security tokens, they can be traded anywhere in the world. People can buy or sell anywhere in the world. Then the laws are country specific. But if you use something like Uniswap, there are no laws. It’s totally decentralized and nobody really controls it yet it’s providing a fair market.
[00:13:39.960] – Sean
Sure. Yeah. I was going to ask the names of platforms people can go to to find companies. So I’m at looks like INX co is one. You can find different companies, probably. Is it more than companies? Like, is there real estate, is there art?
[00:13:58.250] – Mark
Everything is on there’s. Red Swan is a real estate focused one, which I’m a big fan of. Okay. Invest in real estate. There’s NFTs backed by real estate in Europe that you could buy everyone’s very small, but there’ll be some consolidation, and these things will get bigger and bigger and bigger. And why it’s important, I think, to your listeners to understand this is these things aren’t just like buying crypto that goes up and down. These tokens are giving out dividends. And I know we’ll get into that, but that’s the important yeah.
[00:14:30.470] – Sean
Creating passive income. Okay, let’s get one more here for the audience. I’ve got INX Co, which looks like businesses, and then you’ve got Redswan IO, which you said is real estate. I’m on their site right now. Give us a third here.
[00:14:46.220] – Mark
T zero. T zero is another big one.
[00:14:49.000] – Sean
So you’re helping these companies get listed on these sites. Is that part of your service?
[00:14:53.310] – Mark
Yeah, it’s the whole thing. It’s the legal. If a smart contract needs to be programmed I don’t know if you want me to define what a smart contract is, but please do.
[00:15:01.950] – Sean
[00:15:02.580] – Mark
So smart contract is essentially, I look at the blockchain as an Excel spreadsheet that’s just ongoing. And if anyone’s familiar with those spreadsheets, they have something called macros. And so when something happens that macro kicks off and it runs a bunch of formulas or numbers or whatever it is, well, that’s what a smart contract is. It’s simply a macro that when an event or a trigger happens, then something else happens. I’ll give you an easy example. Let’s say Justin Bieber had tokenized his earnings. And if you own five A, you get a free Justin Bieber ticket every time a new concert is announced. Right. It’s in your city. Well, Justin doesn’t have to go through, and his team doesn’t have to go through and send out those tickets. It’s all done automatically on a blockchain. An NFT appears in your wallet. You just use that NFT to get into the stadium. That would be a simple example, but the sky’s the limit. Anything could program. You can create a smart contract for tie it to the token, and it runs endlessly. Twenty four seven. You don’t have to have any input whatsoever.
[00:16:06.300] – Sean
Sure. All right, let’s talk about the passive income, because that’s a big part of payback time. We want to teach people how do they create passive income. So talk about that a little bit.
[00:16:16.840] – Mark
Yeah, I mean, there are a number of projects that have kicked off that are ongoing, that are giving off passive income. We’ve talked about the exchanges already red swan INX, and these things typically give off dividends. So let’s say there’s an airbnb I can’t remember the Tykr symbol, but there’s one that’s doing airbnbs around the world, and they give out 20% of their profits to their token holders. And it’s typically a lot higher than stocks because the cost of maintaining a security token with the compliance and all the regulations, although far, far less than going public, like ten x lower in fees, so they’re able to give away more profits. And so if you accumulate I did an analysis that if you spent, I think $1,000 a month for ten years, you’d have a $30 to $35,000 monthly income just from those security tokens that you’ve invested in. I know $1,000 a month to a lot of people is a lot of money, but if you are able to afford it and you get in with the right tokens that are paying things off like this, you’d have a killer income in ten years. You imagine making $35,000 a month in ten years.
[00:17:28.910] – Mark
And then don’t forget that when these properties, if it’s real estate, liquidate, then you get another big bump. Companies bought or sold or goes public on a New York Stock Exchange, you probably get another bump there. So very lucrative just to be disciplined about doing something like this.
[00:17:45.920] – Sean
Yeah, I was going to ask if you went in saying, okay, I’m going to invest $1,000 a month over ten years. But then after five years, let’s say that which you’re investing in, whether it’s a business that’s tokenized or real estate, if it sells, in that case, your revenue stream is cut off. But you would take a liquidity event, you would get a payout. Right?
[00:18:06.920] – Mark
[00:18:07.850] – Sean
Got it.
[00:18:08.600] – Mark
And real estate, you’re typically getting a sale every eight years, so you could reinvest it. Or by the time when eight years rolls around, there’s going to be an endless amount of things that you can get into that you couldn’t get into. Mean, you’re not able to get into these major projects now because there’s no way in. It’s too expensive for a big real estate developer like BlackRock to say, hey, Joe Blow, invest your $5,000. But with tokenization, it’s simple, it’s not hard at all.
[00:18:38.840] – Sean
What types of companies do you typically work with?
[00:18:42.540] – Mark
Right now it’s mid sized companies, so five to 50 million. We haven’t done any artwork, although Masterworks is out there tokenizing artwork. So they fractionalize. Somebody owns a Picasso and they want to fractionalize it. And the whole point is they think Picasso is going to go up in value. And they’ve been pretty successful at that model. I think they’re 20% annual returns doing that. We’re not doing that, but we’ll do equity debt. The big one right now are like bonds, like taking and tokenizing bonds. This is what BlackRock is doing and others JPMorgan are doing. They’re tokenizing billions of dollars worth of bonds and then they’re able to use as collateral for loans or just sell it overseas. Because right now, unless you’re a US. Investor, you can’t participate in any of this. But with tokenization you can anywhere in the world instantly.
[00:19:33.170] – Sean
Yeah, that’s that’s the difference. I see. You reduce the barriers between countries because everybody’s on the same playing field when you’re buying these tokens and essentially your wallet, whatever you use based in whatever country you connect that with. As mentioned the sites earlier, you’ve got INX Red Swan and T Zero. It’s as simple as that.
[00:19:55.550] – Mark
Just connect or uniswap, which is no barriers anywhere.
[00:19:58.770] – Sean
Right. I’m actually going to because I always like to give actions for the audience they can check out. I see that. Uniswap.org, is that correct?
[00:20:07.640] – Mark
Yeah, it’s app. Uniswap.org is the actual place where you trade.
[00:20:12.210] – Sean
[00:20:12.930] – Mark
There is no sign up process. You just get in there and trade. It’s just your wallet. So it’s totally anonymous, too.
[00:20:19.420] – Sean
Wow. Okay, let’s talk about some of the risks here. Do you have any risks upfront with the retail investors?
[00:20:28.380] – Mark
But the beauty of security tokens is not like crypto. These crypto companies, anyone could launch a token as long as they’re willing to pay the listing fee or go on uniswap and provide liquidity. We actually do the due diligence, and I have insurance around this. So we make sure these companies are legit. We look at their financial statements. They go through a legal process very similar to what you would do with a venture capitalist. It’s almost identical. So the risks are lower. The scrutiny is not at the level publicly traded company is, but it’s still pretty dang high. It’s as high as if you invest publicly in these companies or these debt instruments. Everything’s verified. There’s somebody like me that’s legally on the line for some of the things that we do. If we do the legal, then yes, if we check out the company, then yes. Typically, I have a third party. That’s all they do, is make sure that everything’s legit. So it’s far safer than crypto. Had somebody done that with FTX, I’m sure a lot of people would have saved some money. They would have gone through hell. That’s the safer route.
[00:21:35.540] – Mark
But ultimately, even with publicly traded companies, I know you remember Enron. You never know if there’s crooks that are doing criminal activity. It’s just like anything.
[00:21:45.160] – Sean
Yeah, you do the best you can. We use the word rigor with Tykr, and Tykr has a lot of rigor. It looks at that. And you mentioned financial statements. So to the listeners, we look at that income statement, cash flow statement, and balance sheet. We’re looking at five years historical data. We want to see all the right numbers, like your revenue, your net income, your free cash flow moving up year over year, quarter over quarter. Not just one year, but five years. And that gives us confidence to invest. So it sounds like you guys, you have some kind of rigorous process. You want to qualify the right businesses that you’re essentially helping be listed on the platforms you mentioned earlier. Correct.
[00:22:28.770] – Mark
That in real estate, make sure the property is in a good location. If they’re saying we’re going to give you a 12% annual rate of return, that they’ve actually done the analysis correctly. So that’s the level we get in at that level at Play Analyst and say, yeah, this seems like this is legit based on all the other research that we’ve done. So there’s many layers of protection, but you have another layer of protection there. You also have the title company that’s giving you title. You know, you have equity in this. It’s all done legitimately.
[00:23:04.030] – Sean
No, that’s good. And I want to kind of drill into the you mentioned the 5 million to 50 million size and revenue. Let’s dive into a little further. The types of businesses like my background is typically primarily tech businesses. So SaaS, I’ve worked for some larger organizations as well, like GE and Kohler. But I like scalable businesses that aren’t always selling a hardware component. If they do, that’s fine. But I also like a software component because you’re not selling something physical.
[00:23:33.430] – Mark
The cost of goods is pretty low.
[00:23:35.440] – Sean
Yes, exactly. You don’t have to manufacture like I’m holding my iPhone here. Or I tell people because EVs are so hot. But I always remind people that, sure, you can invest in a Tesla or a Ford or GM, but keep in mind, to sell one unit, the amount of plastic, metal, rubber, whatever has to be put into the vehicle, that is all sourced from somewhere. And that takes a lot of time and money. Whereas with software, you don’t have any of that. You can sell 100,000 licenses overnight, and you have to maybe increase your server space by a touch.
[00:24:08.110] – Mark
Yeah, well, if you don’t have barriers to entry, though, you could quickly have competitors.
[00:24:13.250] – Sean
Yeah, there’s a moat situation there. Yes, indeed. But yeah. Give us an idea that you don’t have to list names if you don’t want to, but tell us about some of these businesses that you’ve helped out.
[00:24:25.430] – Mark
Well, I mean, some of the businesses that have already gone through the entire process that are listed that I could talk about are companies that do mining for bitcoin. Very easy to see their revenue stream. It is a software company, so to really well, it’s got hardware, too, but they’re really good at mining Bitcoin, and so direct revenue. Bitcoin is still really hot. Will continue to be into the future. Companies like BlackRock are now setting up ETFs. Actually, a lot of them are around bitcoin. Another company is a software company, and they’re putting out it’s, of all things, project management software, but they’re using the blockchain to keep track of all of it. So it’s tied to the blockchain. It’s tied to crypto in a way. It’s not really crypto. It’s just using the blockchain or distributed ledger, depending on which direction they want to go. A lot of real estate, so real estate projects that maybe they’re having trouble raising money just because of the commercial real estate market that we’re in right now. Maybe your listeners know or don’t, but there’s kind of a liquidity crunch there because the interest rates have skyrocketed.
[00:25:39.630] – Mark
People have moved out of their office buildings, so the vacancy rates are high so they can’t service the debt. And so lenders don’t want to get into that situation. So now they’ve gone to tokenizing it, and a lot of them want tokenize in order to turn that office building into a residential building so they can flip it and sell it and get out that way. So that’s a big one that’s happening right now.
[00:26:01.120] – Sean
Sure. Let’s take a quick commercial break. Have you ever lost money in the stock market? Maybe you heard or saw a comment on YouTube, TikTok Reddit, or another social platform, or maybe you just received bad advice from a friend. Yeah, I think we’ve all been there. Most people lose money in the stock market because they make decisions based on emotions. What if you could remove emotions from investing? What if you could make consistent returns in the stock market based solely on logic? And what if there’s a software that could handle that logic for you? Introducing Tykr, a platform that helps you manage your investments with confidence. Get started today with a free trial. Visit Tykr.com. That’s t ykr.com. Again, Tykr.com. All right, back to the show. Let’s say I’m an investor and I want to invest in a business that you’re helping out or is on one of these platforms. Can you ask for the financial statements? I know we love investing in public companies with Tykr because we have the transparency. We can look at the statements. Of course you can use Tykr, which does a lot of heavy lifting for you, but can you or any of your I wouldn’t say your customers, but any retail investors go to you or go to those exchanges, be like, hey, before I invest, I really want to take a close look at their financial statements.
[00:27:18.500] – Sean
Is that possible?
[00:27:19.450] – Mark
Oh, yeah. Even though they’re under an exemption, depending on the path they choose, a Reg, a Reg, D. There are reporting requirements quarterly. I think the simplest one is annually. I think that’s a CF. But, yeah, there are reporting requirements, and they, for the most part, need to be done by somebody that’s certifying that these are indeed true and correct. So there’s another layer of safety there. It’s not as rigorous. And I don’t know if they have to follow Gap. I think they do follow Gap just by default, but it’s not as rigorous as a company that’s gone public.
[00:27:58.570] – Sean
[00:27:59.080] – Mark
And I know a lot of companies have gone public wish they hadn’t because of all these requirements that are in place, which was due to all the fraud.
[00:28:06.970] – Sean
Indeed. Yeah. Real quick here for the audience, gap being generally accepted accounting practices. It’s the method for analyzing the data, the financial statements. There’s like a certain standard there. Okay, so that’s really good to know. There’s transparency there. You can look, I know investors, the listeners are always looking for ways they can create passive income. But of know there’s risk aversion. They want to avoid losing their money or putting their money into an FTX like company. See their money, right.
[00:28:40.380] – Mark
Well, the FTX had no controls, essentially, and if you look at how they handled their back end with a spreadsheet, I mean, that was a joke. And that’s because they weren’t a security token. They weren’t regulated by anybody. They were in the Bahamas, just a bunch of kids essentially trading money around like monopoly money. It was yes, yes. I don’t blame people for being risk averse, but this isn’t crypto. I just want to let you this is on the level of a VC investment, which isn’t quite as much scrutiny as going public, but a lot of protections are in place with this type of investment that you don’t see in crypto. You don’t see anything crypto.
[00:29:22.630] – Sean
Sure. All right, I want to list the sites here real quick, just again for the audience, and then I’ll ask a question, then we’ll dive into that rapid fire round. So, real quick, your audience, you’ve got Uniswap.org INX Co Redswan, IO and T Zero.com are a few good options. I’m sure there’s even more sites out there where you can buy these assets, whether it’s a business or real estate. Another way to create some passive income. Of course, we always say, do your due diligence. If I were you, I would definitely go ask for financial statements on businesses before you make an investment. At least that’s what I would do.
[00:30:01.870] – Mark
Yeah. They should also look at tokenized debt, because that’s an easy one that’s just going to be serviced and a part of that debt servicing goes to the token holders. So that’s another good one to look at.
[00:30:13.100] – Sean
Sure. Nice. All right, before the rapid fire round, is there one key takeaway you can give our retail investors?
[00:30:21.590] – Mark
Find reputable companies that are giving away dividends tied to their business or tokenized debt or real estate that is paying off. They’re not hard to find. And just stay disciplined about putting $1,000 a month into each of these. Or 500 if you have 500. And I promise you, in ten years, if you’re 20 years old listening to this, you’re going to be 30 years old. And hopefully, with inflation tempers down with 30,000, $40,000 in monthly income, I mean, come on. It’s a no brainer to me. So if I could go back in time, that’s what I’d tell myself to find these. I don’t know if it’s true with the stocks as much, but with tokenization it is.
[00:31:05.110] – Sean
The returns there are quite impressive. With stocks, we look at the compound interest factor on building wealth. Of course, when you build up a large enough portfolio, you do need to sell some shares to have the liquidity to pay your mortgage if it’s not paid off, or go on trips or enjoy hobbies. But then there’s also dividend investing, which creates that passive income. What you’re talking about there. That’s pretty significant. Passive income, $500 a month, let’s say. Or let’s yeah, there you go. $1,000 a month over ten years, creating 30 grand a month. That’s not easy to do with stocks, but again, that’s a different strategy.
[00:31:48.370] – Mark
You’re not investing in stocks, you’re investing in projects, typically. And some of that includes estimated payoffs from real estate. But the point is, we did the analysis, and that’s what you’d be looking at, given what’s going on in today’s security token market.
[00:32:07.020] – Sean
Sure. This is just my opinion. I like the play towards real estate maybe a little more with the tokenization here, as opposed to businesses we like, and we warn people of this that get involved with stocks, is be careful with penny stocks and IPO stocks because they’re usually businesses that are very new to the market. They’re trying to raise capital, typically by this stage, venture capital, private equity, and banks are saying no. So where do you go? You go public. And most retail investors don’t know the difference between a good stock and a bad stock, so they take their money. So we do, in our education, teach people, try to wait a good four quarters to make sure the earnings reports are beating the estimates consistently. Whereas with you, it’s not you, it’s the business you kind of work with. Maybe I would be a little more hesitant there with the businesses because I want to see them public a little more established. With real estate we already know, like, the rate at which the world population is growing. And I’ve said this to other real estate investors on the podcast, but real estate is growing, or I should say, the population is growing so fast, we need homes in these large condo complexes are becoming more popular.
[00:33:21.480] – Sean
And in a safer play. And I think a tokenized option there might be a good way to create some passive income.
[00:33:28.070] – Mark
Yeah, usually higher risk, higher reward. But of course, if you look at it that way, there’s probably a middle ground in tokenization as well.
[00:33:36.790] – Sean
Right on. All right, next up, let’s transition to the rapid fire round. This is part of the episode where we get to find out who Mark really is. If you can, try to answer each question in 15 seconds or less. You ready?
[00:33:50.010] – Mark
I can do it. Yes. Let’s go.
[00:33:51.580] – Sean
All right, what is your favorite podcast?
[00:33:54.010] – Mark
My favorite podcast is probably the first thing that popped to mind was Joe Rogan, because he does and says whatever he wants to say. And I like that about him. He’s not fearful of anyone.
[00:34:03.140] – Sean
I like that. Right on. All right, what is a recent book you read and would recommend?
[00:34:08.300] – Mark
My son’s book the Teenage Guide to Success. It’s being published in October. And if you’re a kid that’s been bullied or needs direction in life on how to become successful, he interviewed 20 billionaires and lays it all out for you.
[00:34:21.250] – Sean
Good for him. How old is your son?
[00:34:23.460] – Mark
He was 17 when he wrote the book. He’s 18 now.
[00:34:26.390] – Sean
Wow. Congratulations. Props to him reaching out to 20 billionaires.
[00:34:31.490] – Mark
Probably reaching I reached out to 400.
[00:34:34.140] – Sean
Billionaires, but 20 answered, yeah, that’s a backtrack here. You probably get a lot of no’s before you get a yes.
[00:34:41.480] – Mark
A lot of nothings, right? It’s like they have layers of protection around Howard Marks, though. You probably know Howard Marks.
[00:34:48.630] – Sean
Yes, indeed. Well, good for him. That’s pretty cool. All right, next question. Here is a movie question. What is your favorite movie?
[00:34:56.150] – Mark
My favorite movie is really The Natural, which is about baseball, but I like all the symbolism in it. I like the comeback story. That’s probably my favorite movie of all time. Inception is kind of a movie I like just because of the weird twists and things that are going on in that movie. Would be kind of a second choice.
[00:35:16.160] – Sean
Inception is indeed probably, if not my favorite, pretty darn close. Great film. Christopher Nolan. Right on. All right, a few business questions here. What is the worst advice you ever received?
[00:35:30.050] – Mark
Wow. Worst advice I ever received was basically, don’t jump into social media. It’s a waste of time and it can be, but it wasn’t for me. I mean, it really built the businesses I have and my reputation in the businesses.
[00:35:45.630] – Sean
Nice. All right. Flip the equation here. What is the best advice you ever received?
[00:35:50.090] – Mark
The best advice I ever received was to really understand the strategy, probably a lot of what you just talked about, but before investing in a company, before investing in a career, before investing anything is go through some sort of a SWOT analysis. I’m just simplifying things and really understand it from a future point of view and a current point of view and whether you fit into that industry or not, if it’s a career, if it’s a business that you’re investing in, same thing is this business going to be? Do you want to invest in Blockbuster or Netflix?
[00:36:22.570] – Sean
Good example. Cool. All right. And last question. Here’s the time machine question. If you could go back in time to give your younger self advice, what age would you visit and what would you say?
[00:36:34.190] – Mark
I would visit right out of college and give myself better advice. I would have gone to a big company at first. Took me a while to go to a big company, learn everything I wanted to know, and then partner up with people to launch my own business in that same industry. So stay focused on an industry, become successful in an industry, develop a reputation, start a business. And then if I want to do something after I started the business and sold it, more power to you. I’m kind of a renaissance person, so I like to do different things. So that’s what I would have done.
[00:37:07.960] – Sean
Nice. All right. And where can the audience reach you.
[00:37:11.640] – Mark
Yeah, I mean, Twitter at Markfadelman on YouTube. My handle is at Kryptonized One, the number one. Those are the two best places. But probably Twitter or my website. Smartblocks Agency.
[00:37:25.460] – Sean
Awesome. All right, Mark, thank you so much for your time.
[00:37:27.860] – Mark
My pleasure. Thank you, Sean.
[00:37:29.110] – Sean
All right, we’ll see ya. Hey, I’d like to say thank you for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. Also, if you have a moment, could you please head over to Apple podcast and leave a review? The more reviews we get, the more Apple will share this podcast with the world. So thanks for doing that. And last thing, if you do hear any stocks mentioned on this podcast, please keep in mind this podcast is for entertainment purposes only. Please do not make a buy or sell decision based solely on what you hear. All right, thanks for your time. We’ll talk to you later. See ya.