Investing

Eve Picker: [00:00:10] Hi there. Thanks for joining me on Rethink Real Estate. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors. Those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:45] Samson Williams isn’t one to think small. He traded in working on a Ph.D. to build an enterprise incident management center out in the real world. And then he spent over five years at Fannie Mae developing strategies to prevent, well, emergencies and crises. I’ve come to know Samson as the very vocal advocate for regulation crowdfunding, in his role as president of the Crowdfunding Professional Association. However, his interest in the new doesn’t stop there. He also has a certificate in block chain and cryptocurrency law from UNH. And he worked in Dubai for two years on cutting edge financial technologies. This grew into Axes and Eggs. His international consulting firm. And, oh yeah, Samson has also written two books on the space economy.

Eve: [00:01:45] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or go to patreon.com/rethinkrealestate to support this podcast for the price of a cup of coffee.

Eve: [00:02:13] Hello Samson, I’m really happy to talk to you today.

Samson Williams: [00:02:17] Awesome Eve, I’m excited to be here too and we can have a real conversation. I’m excited about that as well.

Eve: [00:02:23] Yeah. So, you know, I’ve been watching you make your mark on the Crowdfunding Professional Association over the last year. You’re tackling what was rather, dare I say it, a lackluster organization that I was barely conscious of, into one really exploding with energy. And I’m wondering, you know, how and why you’re the president of the Crowdfunding Professional Association?

Samson: [00:02:50] I’m going to say why is because I missed the board meeting,s and I wasn’t there to vote against me being president. That’s the reason why.

Eve: [00:02:56] That’s always a reason.

Samson: [00:03:00] Yes. But most of my success is built on the shoulders of Scott McIntyre, Brian Belley and Devin, who were at the board, who were at the Crowdfunding Professional Association before me and the other board members, there’s about 11 or 12 of them. And so they really put in the legwork to get the organization up and running so that when I had the privilege of taking over the rounds in February of 2020, you know, most of the infrastructure was in place and we’re just now, so we just need to push down the pedal. And fortunately, or rather unfortunately, depending how you look at it, the pandemic hit and I was like, oh, I guess we should really push down this pedal fast.

Eve: [00:03:43] Oh, yeah. And I’ve been watching it go pretty fast. But what is the crowdfunding professional association? And, I mean, even if you didn’t agree, why are you president of it?

Samson: [00:03:56] Well, Crowdfunding Professional Association, it’s a trade association. It’s for crowdfunding portal owners. One of the big revelations is that if you’re a portal owner, you know, portals are what FINRA calls those platforms and entities that help entrepreneurs raise money. But portal owners themselves are small business owners. And so, on one hand, the portal owners, the platform owners, they’re busy trying to, you know, engage their customers, solicit new customers and help entrepreneurs and startups raise money on their platform. And because of that, they don’t always have the time or the bandwidth to go and advocate for certain policy changes that the Crowdfunding Professional Association does on behalf of all portal owners. So, it’s an important need. I came from the field of Fannie Mae. We’ll talk about real estate later, maybe. And so, when I was at Fannie Mae, we had the MBA, the Mortgage Bankers Association. We have the National Association of Realtors. You have these large associations that advocate on behalf of all realtors, all mortgage bankers, et cetera. And so, the crowdfunding field, let’s say it’s June 2021. In June of 2020 there were only, I’m going to go with 46 platforms, of which maybe there were only 15 that were actually active. Right now, fast forward to June 30th, 2021. I know I’m putting a time stamp to this, but that’s OK. It’s going to make a lot of sense. There’s about 67 right now. There’s 67 funding portals that are licensed by FINRA. Over half of those are currently active. When I say currently active…

Eve: [00:05:38] That’s a big change.

Samson: [00:05:39] Oh, it’s a monumental change. And because, by currently active meaning they have one or more deals on their platform at the moment.

Eve: [00:05:47] That’s a really big change, yeah.

Samson: [00:05:48] Yes. We have a friendly bet going on inside of the Crowdfunding Professional board whether we’ll have more than a hundred or less than 100 by the end of the year. When I say 100, I mean crowdfunding portals.

Eve: [00:06:01] Yeah, I think that’s possible. So, you know, I appreciate the advocacy because, you know, I have a crowdfunding portal, Small Change, and I’m a member of the association. And I really became aware of it when you guys drafted a letter to President Biden in January when his administration, let me see if I get this right, froze the regulations that were ready to be approved. And one of those, was pretty major changes to the crowdfunding rules, Regulation Crowdfunding, that really make it a lot better. And you guys stepped in with a letter that apparently President Biden read.

Samson: [00:06:41] Yes. And so, so when the administration transitioned from POTUS 45, to POTUS 46, President Biden, in the last days of President Trump’s administration, he pushed through a variety of changes. And so when the new president took over, Biden, he was like, hey, we’re going to call time out on all of these changes. And one of those changes were the rule change, rule updates rather, to the Jobs Act, in regards to raising the limit from one million to five million for Reg CF and from 50 million to 75 million for Reg A+. Those are like the two big things that people tend to focus on. But the details, down further in the details were the other rule changes for testing the waters, blue sky rules, special purpose vehicles, SPVs and so,

Eve: [00:07:32] And self-verification of accredited investors. That’s one I really like.

Samson: [00:07:35] Yes.

Samson: [00:07:36] Yes. Because there’s a slew of rules.

Eve: [00:07:38] There’s a slew of rules, yeah.

Samson: [00:07:40] And so the Crowdfunding Professional Association, we’ve been advocating for those rule changes for quite some time. Again, just to make it, as, you as a small business owner, as a portal owner, your job, your business gets a little bit easier. If you have bright line rules you know how to operate in. And then it’s just easier, particularly for, if it’s easier for you to onboard investors, because it’s great to onboard issuers, but it’s even better to onboard investors. So, this is where the CfPA is always advocating to, how do we remove some of the speed bumps from that process?

Eve: [00:08:15] Yeah, that’s great. I certainly don’t have time for it, so it’s really fantastic. But I want to go back to you. I mean, Samson, what is it you actually do for a day job? I’ve read marine space economist, professor, crisis management expert and podcast host for the space economy. So tell us all.

Samson: [00:08:37] By training I’m an anthropologist. I’m a cultural anthropologist, which led me by a very roundabout, not linear, path into crisis management at a small startup called Fannie Mae. You may recall in 2008, Fannie Mae had a little, small, tiny crisis, and so I showed up as their crisis manager in 2008.

Eve: [00:09:02] Oh, wow!

Samson: [00:09:03] Fortunately, I mean, I didn’t know what they did at the time, but it turns out neither did they. So, we figured it out together. And that’s the benefit of having someone who’s not entrenched in your business. Meaning, I’m there to put out the fire. I don’t necessarily know how to your business works, but I do know how to put out a fire. And then how do we recover? And my first day was March 24th, 2008. It was a 90-day contract because is a little emergency. And so, eight years later, I left.

Eve: [00:09:32] Wow.

Samson: [00:09:34] I went to Ireland in 2016 to work for a peer-to-peer lending platform, which was super cool. And then I was the Irish ambassador for alternative finance for a year from 2017 and 2018. And I’m Blexican, from Texas, so I’m not very Irish but I had a phenomenal time being the Irish ambassador and traveling around the EU and giving the keynote in Athens, Greece, about the wild, wild west of cryptocurrencies. So, this was in 2017 where, when the ICOs, the initial coin offerings were taking off, and I was trying to explain to everyone that initial coin offerings are just unregulated crowdfunding.

Eve: [00:10:20] Yes.

Samson: [00:10:21] So, on one hand, it’s, hey, they’re unregulated, but on the other hand, it shows that there’s power in retail investor, that retail investors are hungry for investment opportunities. And so that led me back, there was there is a brief two-year stint in Dubai doing some fintech stuff, but that led me back to here, to America. And so when I came back in December of 2019, I was like I should probably figure out what I’m going to do here for the CfPA because in my head, the future of capital markets is, one, content driven, meaning if you’re listening to this podcast, that’s part of the content and, two, it’s also crowdfunded. And so, when we think about that, the reason so many people download your podcast, I think you’re up to eight thousand downloads now you said, is that…

Eve: [00:11:15] Per month.

Samson: [00:11:16] Yeah, per month. That’s how people consume their information. And so now if they’re listening to this, like, oh, yeah, crowdfunding is super interesting. What does that mean? And so, when issuers also come on your platform, you’ll see that in the future crowdfunding platforms, they’re going to be media companies first and then part of the entertainment being crowding the engagement of the audiences, now that you’ve listened to this great, wonderful issuer, click here to invest with your, you know, invest not only your time in listening, but also your dollars in the company itself.

Eve: [00:11:50] So, yeah, I wanted to explore that a bit, because recently you wrote a post which really caught my eye called Crowdfunding Isn’t Static. I’m going to post that on my website if anyone wants to find it. And I wanted to explore what that post is about. You said a whole bunch of things that I thought were fascinating. One was that no funding portals are profitable. What’s that about?

Samson: [00:12:14] Oh, that’s just a recognition of the state of the business at the moment. I think I said, in my next bullet point, that some will be profitable by the end of 2021. So, when you look at the legacy platforms, those who came out in 2012, when the Jobs Act first got signed into law, even before the Reg CF portion got signed in 2016, those platforms, they paid the iron price to gain that market share. But, just based upon their deal flow, again, this is all you pull it out of Edgar, off the SEC, It’s all public information, based upon their overhead and their deal flow, you can like, oh, you actually have not made a dollar. Then fast forward. You have the innovations that are occurring in the crowdfunding space and those innovations, I love small change, not just because Eve is the founder and CEO, but because you have a specific vertical, you’ve got great content, your messaging is crystal clear, your on-boarding process is very streamlined. And so, there’s a lot of operational efficiencies that go into that in addition to what is the user experience. So, I like to tell people that, particularly on the Reg CF side, Reg CF just turned five on May 16th of 2021. It’s now old enough to go to kindergarten. And this kindergartner that is Reg CF, by the time it hits third grade it’s going to look completely different. And so, part of it is, for the legacy platforms that came out early on in 2012, 2014, they paid the iron price to gain that market share. They’re currently not profitable, but neither is Uber, by the way. So just take that with a grain of salt.

Eve: [00:13:56] Oh, yeah. Do I know it.

Samson: [00:13:58] Now, again, last year there was only about 40 platforms, now there’s about 65. By the end of the year, we might have another 35 platforms that are FINRA licensed. There’s just a level of innovation that comes from different entrepreneurs seeing the market, seeing the industry, and saying, that’s a pain point, that’s a pain point, that’s a pain point, let’s improve the process. And I’m really excited about some of the mobile applications, the mobile apps that are coming out for crowdfunding because they’re working a level of widgetry that is stellar.

Eve: [00:14:33] So lots of change going on. It’s an innovative space. You know, some of the non-regulation crowdfunding platforms, I think about this a lot, that are legacy platforms, like Fundrise, just have done really well not in that space. I wonder why. And I think probably it’s because they’re, how can I say this, I don’t want to say they’re more traditional, but they but they do reach a more traditional educated audience. I’m really thinking about the real estate platforms like Fundrise and RealtyMogul and Patch of Land. All of those came out really early on, before Reg CF was finalized and they’ve done very, very well. But they don’t have the burden of FINRA and the SEC looking over their shoulders, which is really pretty expensive for funding portals, tiny little businesses that almost have to run a compliance shop as well, right?

Samson: [00:15:29] No, you’re 100 percent correct. And so part of it is that investing, rather investing as a learned behavior, as is wealth management. And so if you’re engaging retail investors, rather, if you’re engaging customers, they might not know that they can be investors. So while they’re accustomed to buying a good product or service, they don’t know that they can invest in that. And in the real estate game, renters understand renting. And at some point, everyone is a renter. But it’s hard to explain to someone, oh, you cannot only rent this place, but you can also purchase this equity or contribute to the construction of this building. And so that’s a different level of education and just awareness that people that are already accredited, it’s not that they’re sophisticated, they just have been taught. It’s been passed down. You know, investing is a learned behavior. They’ve learned how to become investors. And so, when you’re looking at Fundrise and Patch of Land and RealtyMogul, they’re crowdfunding in the sense of their community are creating investors. And so, they’re going out to their community, having creating investors, and then using their platforms as a very smooth Excel spreadsheet to say we have this building. Here are the number of people who invested in this building, here’s their names, here’s the amount of money that they invested. Here’s the cap rate or the imputa for this building. Here’s the dividend or share we’re going to pay for that. So crowdfunding platforms in the Reg A+ plus world, they’re really just used as a tool. They’re a shovel. They help organize who’s on your, who’s in the deal?

Eve: [00:17:14] Mm hmm. You know, the other thing I’ve struggled with a lot is insurance. And I don’t know if the Crowdfunding Professional Association’s ever going to tackle that, but insurance for funding portals is really expensive. Have you come across that?

Samson: [00:17:30] No., tell me more so I can take this up. We love having new issues.

Eve: [00:17:35] Oh, forty thousand a year. To get decent insurance coverage. My suspicion is that there are quite a few funding portals that don’t have insurance because they can’t afford it. But, you know, insurance against, liability insurance in case you’re dragged into a lawsuit by an investor, even if they don’t understand and it’s a wrongful lawsuit you still have to pay the legal fees. Insurance is very expensive. It’s a brand new industry and we’re all paying the price for that. So, yeah, I’d love to take it up.

Samson: [00:18:06] That’s a super good point that you bring up. We haven’t had anyone discuss it. And now that you bring it up, I’m like, hmm, how many of them don’t have, you know, areas and emission insurance and liability insurance? So I’m going to definitely follow up on you, because some of them, as they operate as broker dealers, rather part of the innovation in the crowdfunding space is a number of broker dealers or BDs who, they sometimes they take offense when I call it poaching. It’s not that they’re poaching Reg CF deals, but they see the opportunity of engaging startups, early on in the process, so that when they’re at a level where they need to raise more than five million dollars now, it’s like, OK, now they’re already in that sales funnel for the BD, and BDs they have better insurance.

Eve: [00:18:54] It’s deal flow for them. Funding platforms are deal flow for them.

Samson: [00:18:59] 100 percent deal flow.

Eve: [00:19:01] It’s interesting. It’s like the McDonald’s and Burger King story. I’ve always wondered if it’s true that McDonald’s does all the market research about where they should be located. And Burger just tries to locate next to McDonald’s.

Samson: [00:19:17] I mean, I’m assuming, I sometimes live in Fort Lauderdale, and so there is a Chick-fil-A and directly next to the Chick-fil-A is a Sonic and I’m assuming Sonic’s like, yeah, we’re just going to put our place next to Chick-fil-A.

Eve: [00:19:31] You can save a lot of money doing that, right? It’s pretty smart, actually.

Samson: [00:19:36] That is pretty smart. And so, what broker dealers are doing in the Reg CF space, it’s a f0rm system. You know, it’s like if you’re following a sports team, they have the G League or the forum system so that it develops a talent, so that they can go to the pros. And so, in the broker dealer world, they didn’t have that before. It was just, you know, just a hot mess of startups and entrepreneurs were like, yeah, we’re worth a trillion dollars on our Excel spreadsheet. And you’re like, really? And so now, this is where, sometimes I’ll give it a little bit of shade to the VCs and the sharks, but at the end of the day, Reg CF crowdfunding, it makes for a healthier ecosystem, because issuer’s, startups, entrepreneurs and founders, they have greater awareness of here’s what’s required by the SEC, by the funding portal, these objective criteria to be business ready. So now that a startup is business ready, then depending on the platform they select, they go to Small Change. Small change says here’s our process to be platform ready. And then they can go on to test to see, whether or not they’re investor ready. And of course, the only people who can really define if you’re, really tell you if you’re investor ready are the investors who write checks.

Eve: [00:20:55] Right. Yeah, well in real estate, it’s a little bit different because eventually they won’t go on to broker dealers, but they’ll get bigger and bigger bank loans, and they’ll start to interest bigger and bigger investors. So I think we’re trying to give a leg up in the real estate industry. It’s slightly different, but same idea, right? So what do you think the potential is that Reg CF holds?

Samson: [00:21:21] So one of the reasons I left Fannie Mae was actually to explore the mortgage market for Reg CF, because, you know, if you’re a school teacher or a firefighter, you should be able to crowdfund a mortgage. That should be technically possible. Right now for a variety of reasons we’re not there yet, but, you know, again, Reg CF is only in kindergarten. Wait till it hits middle school. And so, where I see there’s a whole new class of investor called an ‘investermer’, meaning a customer that’s now an investor. And it’s creating a generation, particularly of digital natives who have the expectation that if they are a customer, or a client of a business, they should also be an investor in that business. And that’s where we’re going to be in 2030. And sometimes people say, Samson we’re not there. I’m like, yes, when I’m talking about this, I’m talking about the future state of regulation crowdfunding, where you get on your phone, you’re able to … during the pandemic I bought a house in Texas for my mom, sight unseen, because they give you a great virtual tour. You can look at it. You can look all throughout the house. And so, we clicked buy, went to, oh it’s called Rocket Mortgages by Quicken Loans. Everything was online. Signing was online and it’s like, oh, why haven’t we been doing this the whole time?

Eve: [00:22:46] Yeah, it’s only about, ten years ago we didn’t have any of this, right?

Samson: [00:22:49] Correct.

Eve: [00:22:50] We barely had our iPhones.

Samson: [00:22:53] And so now when you’re asking about the future, it’s, and sometimes reporter owners they hate to hear this, the future of crowdfunding is there’s going to be three different levels of crowdfunding. On the one hand, you’re going to have the media companies, you know, when your podcast is downloaded, 80,000 times a month I’m like, Eve runs a media company who also happens to offer real estate crowdfunding as a service on the side. Where you’ll have the media companies who attract the eyeballs, who attract the interest. And once they get those eyeballs and interest, then it’s like, hey, if you want to invest in this deal we just talked about here, you know, click here. And so now it becomes less about a Small Change or the platform per se, and more about the content that you push out. That’s the future. We see this with Dan Marvel over with going public, where he took the premise of Shark Tank but now through going public, everyone will be able to invest. And so that’s where one hand will be, where, hey, they’re real media companies. They have a funding portal on the back end of it. That way they can give their audience clear, specific direction. At the end of the, either the podcast or the video, to click here to invest now. And then on the bottom end, you’re going to have the invest now button, meaning you’re going to have many platforms who, they’re a utility. So, to make this a little bit simpler to understand, Eve has someone ever asked you who your ISP is?

Eve: [00:24:33] No.

Samson: [00:24:34] No one cares who your internet service provider is, right? You have Comcast or Verizon, no-one, like, cares.

Eve: [00:24:40] Right, right.

Eve: [00:24:40] Because that’s not your business. You’re not in the quote unquote Internet business and so on the other end of the spectrum is, you have an, maybe John Long Lasalle, CBRE, or other small real estate developers who want to keep all the traffic on their website. And so, you’re going to have, right now we’re calling them private labels or black labels, so you have white label crowdfunding platforms, black label crowdfunding platforms or private label crowdfunding platforms is, they go to rethinkrealestateforgood.co and she’s like, hey, rethinkrealestateforgood.co, here’s the deal we’re offering. And it looks from the user’s experience, they never leave that website. However, on the back end is Small Change, is one of the platform providers where they just provide a button so that you get all of, the issuer gets all of the benefit of the organic traffic, the potential customers and investors stay on the issuer’s website. And what this will enable is so that, one, during your crowdfunding campaign, it’s really just a marketing campaign for your good product or service. Let’s just, I’m drinking tea this morning so I’m just going to use this. You know, I’m selling this tea on my tea website. And so, you have the opportunity to either purchase my tea product or invest x into this business all on the same site. Where those are private label. And at that juncture, the platforms, they’re charging very nominal fees. They’re going to be charging somewhere between one to three percent to do that. Because it’s a utility at that at that juncture. Not too unlike Square, which does credit card processing. So, it’s like on one end you have media companies. On the other end you have, we’re just going to call them the credit card process platforms, meaning they’re a utility on the back end. You never, you won’t even know their name. Because in that instance, it’s all about the founder, it’s all about the founder’s business. But there is a button there. And then it’s, well, no-one cares who actually provides that button. And this is part of the innovation because, right now, the emphasis is on, hey, we’re Wefunder, hey, we’re StartEngine, hey we’re Fundrise. It’s the brand. The platform is selling you the brand. But the future, it’s not brand based. Because that brand base of, hey, we’re this fancy brand, that’s going, that market is going to shrink a little bit, because…

Eve: [00:27:28] Interesting. That’s a really interesting way to think about it.

Samson: [00:27:31] Well, yeah, when you think of crowdfunding as a shovel, as they say, a utility, a tool, because you have to look at it, we were talking about compliance earlier, particularly for portals, portals can’t do marketing, direct marketing for issuers. They can’t provide a lot of services that broker dealers can provide. But broker dealers have different insurance requirements.

Eve: [00:27:57] You mean they can’t, they can’t do, they have limited marketing. We can certainly do marketing, but it’s pretty constrained.

Samson: [00:28:04] Yes, it is very, and so that’s one of the things we’re trying to work out with the SEC. It is super constrained to the point, it’s like, oh, my goodness.

Eve: [00:28:13] Yes, let’s say nothing.

Samson: [00:28:15] Yeah, and so right now when you go on a brand name funding portal, the funding portal is telling you this is the brand. They’re saying we have thousands of investors who come to this portal. But the data is telling us that when issuers go to raise money, they’re raising money from, they’re using portals as a way to organize their friends and family round, number one, which is why last year the average raise was $266,000. That’s friends and family. RC round. I’m sorry, you have a question?

Eve: [00:28:52] And that was the average for successful offerings, right?

Samson: [00:28:55] Correct.

Eve: [00:28:57] Yeah, I think the average I read on the SEC was 100,000 if you include the unsuccessful offerings.

Samson: [00:29:05] 100 percent correct. And this is where you have to have that moment of, oh, Reg CF portals? They’re a utility. But there’s ways to make money off of utilities, off of being utility servers, but you have to really be thinking what does the next, you know, what does 2030 to look like? And so, there’s going to be some folks, some portals, who have a brand, like Small Change, because you provide a very distinct service in a specific niche. So, part of the reason that George Pullen and I, we focus on the space economy is that, there are issuers, there are founders, who want to raise money, who are in the space economy, who don’t want to run and don’t want to go through the process of, you know, having a invest now button on their button. They want to come to someone who they can trust and be like, hey, we have a satellite company, we have this data company, we’re a materials manufacturer, we’re trying to get Nasa, we’re trying to get our product on the moon, help us. So, there’ll be a couple of brand names that people turn to because they offer a specific specialization.

Eve: [00:30:21] And what’s in the middle?

Samson: [00:30:23] That is the middle. That is the middle.

Eve: [00:30:25] That is the middle, OK.

Samson: [00:30:26] The specialization where, so, for instance, for Small Change, what kind of offerings does Small Change offer?

Eve: [00:30:35] Are you asking me?

Samson: [00:30:36] I am asking you.

Eve: [00:30:37] Ok, well, we have real estate offerings, but we actually don’t raise money unless a real estate project scores at least 60 percent on our Change Index. And that means that they must be making some sort of impact, whether it’s job creation, an incubator, filling a vacant site, energy issues, it could be a whole variety of things, it’s not all of them. Affordable housing, obviously, but, you know, a fix and flip in the middle of a Texas suburb or a Dunkin Donuts is not the sort of real estate that we’re going to raise money for. So, we’re trying to, with our platform, provide not only a financial return, but a triple bottom line return to anyone who wants to invest. That’s very specific.

Samson: [00:31:29] And you’re super specific because you’re very clear to your, to the potential issuers. That, one, needs to be a real estate deal, first and foremost. It needs to have some kind of change index or social impact that aligns to your ethos. So, you’re already, you’ve got two inches wide and you’re about to go a mile deep. That’s the middle. At the top, you have the media companies who have crowdfunding portals attached to them. At the bottom, you have just the utilities who, there’s a button that says invest now, no one actually knows who owns that button. In the middle, it’s, hey, we want to raise money for a real estate project that has a social impact that hits these 60 percent of this change index? Oh, that’s a Small Change deal, because you’re building up that ecosystem. It’s a niche. Niche isn’t the right word, you’re specialized. And so, this is where, for us, why we focus on space and the space economy. There’s a Southern gentleman named Aaron. He’s from Spaced Ventures, S.P.A.C.E.D. Ventures. They’re technically our competitors and I love the fact that they exist, because when it’s just me and George talking about, hey, we’re trying to raise money for space businesses, they’re like, you two are lunatics, but when there’s Spaced Ventures out there, who’s right now going through the process, they just got their FINRA license in May, I want to say like May 20th of 2021.

Speaker2: [00:33:03] And they’re going through their BD process, because now I tell people absolutely, this is Aaron, he’s in Spaced Ventures. You should check them out if you’re looking to raise money for your space-based business, because it’s the specialization where the future is. So, it’s at three parts. Media companies at the top. They’re doing the big 50 to 75 million-dollar Reg As, baby IPOs. Then you have this specialization, meaning, if you want to do real estate with social impact in it, that hits this change index, you’re going to Small Change, it’s not a discussion. And then it’s, if you want to do space, it’s, you know, Spaced Ventures, Brite.us, and then it’s the utility guys who are, they’re just the ISP providers, no one knows who they are.

Eve: [00:33:48] Interesting. I’m going to have another conversation with you about this offline. There’s one more topic to cover and that’s blockchain. You teach blockchain, FinTech and more as a professor, and I want to know why and how you became a blockchain expert.

Samson: [00:34:08] So in 2014, was that Fanny, I was talking to, it was like eight or nine o’clock at night, I was talking to our, the chief information security officer, a guy by the name of Anthony Johnson, he’s wicked smart. So, he’s like, hey, you should buy some Bitcoin. I don’t know what that is, Anthony. So, he explained it to me and I was like, OK. And then I was sitting in a meeting for operations and technology. My last two years, I was the deputy chief of staff for the Operation Technology Executive Office. And so, I was sitting in a meeting and we do this thing called the now, the new and the next. So, now is what technology are we currently dealing with? New is what technology will be new in 24 months, 24 to 36 months, and then the next is five years over the horizon. What is the technology that we’ll be engaging? So, in 2014, the next technology was blockchain. So, I was like, I don’t know what that is. And so, when we talk about blockchain or distributed ledger technology, there’s going to be a tipping point in the mortgage industry where you, right now, you can sort of fractionalize, or tokenize, deals but the real game changer will be when we finally get rid of title companies. Because it’s like, why am I paying this stupid title fee for every transaction?

Eve: [00:35:33] And why are these transactions so complicated? That’s the other one, right?

Samson: [00:35:37] Correct. Correct. It’s like, we should know who owns this piece of paper. We learned this in 2008. And so with distributed ledger technology, it’s a great way of tracking records. And so we should be able to track title, who owns the commercial paper, who owns the mortgage backed security, who has the right to foreclose, our redemption on this piece of paper. There are a lot of really smart people working on that. It’s not quite yet there. There’s some infrastructure changes that have to take place. But again, put on your time travel hat. I can see in the future where you walk up to a house and you just scan the little QR code, the house of lets you and by yourself, you walk around, you make an offer and you hit buy now. Amazon could probably roll this out today if they wanted to.

[00:36:32] That would be great.

[00:36:33] Yeah. So this is where I came into contact with blockchain. And what’s very important for people to understand is, you know, blockchain is not going to save the world. The easiest application of blockchain are cryptocurrencies. Right now you can make a cryptocurrency in about six minutes. Cryptocurrencies are really just a marketing campaign. And so, if you ignore the ‘we’re going to overthrow the government and get rid of the banks’, blockchain is just a really good way of encrypting records of data. And so…

Eve: [00:37:07] That was always my thought. I’ve always thought blockchain holds really serious possibilities because I’ve done plenty of real estate transactions, which have really looked ridiculous in the paperwork and the data and how to store it. But I’m not convinced about cryptocurrency. And I want someone to convince me.

Samson: [00:37:30] That’s not going to happen here because the challenge is money, and this is the anthropologist in me, is you have a social contract and so the social contract is we’re going to follow these sets of rules, and that’s what sets governments up. And so, right now the biggest thing that I caution people with cryptocurrencies, is so long as you have to work to earn said cryptocurrency, it doesn’t matter if you get paid in pesos, rubles, dollars, bitcoin or doge, you still have to work for it. And so, in which case, now we have to have a larger conversation about what is a living wage, because I don’t care what your wage is denominated in, you still have to work for it. Does your wage include health insurance, childcare, affordable housing? What is affordable housing? And then, when you have that conversation with crypto, with bitcoin maxis, bitcoin maximalists, or cryptocurrency enthusiasts, they’re like, oh, I’m like, yes, that digital thingamajiggy you’re referring to as currency, it doesn’t actually solve any of the social issues with, you know, our modern society and how a largely unchecked capitalism has shaped our world around us.

Eve: [00:38:48] Well, said, Samson. Yeah.

Samson: [00:38:49] This is why that doesn’t work out so well, at least in my opinion.

Eve: [00:38:53] And in fact, it’s creating a problem because we have an energy crisis and bitcoin consumes a huge amount of energy. And I’m sort of really stunned that people don’t pay more attention to that. Where is that going?

Samson: [00:39:11] Part of it is we never had a, this isn’t in defense of Bitcoin, but we never looked at the carbon footprint of our banking infrastructure or our credit card processing.

Eve: [00:39:21] Oh, that’s an interesting thought.

Samson: [00:39:23] Because we just never, was like, oh, yeah, it’s a point-of-sale machine. Like, I have no idea what the carbon footprint of all the point-of-sale machines are. But now there’s that conversation. And so it’s not that cryptocurrencies don’t have a role because we have so much money going … if you, quote unquote, invested in an ICO between 2016 and 2018, you really funded 26.2 billion dollars of research and design. That’s what you did, because that money that flooded into the cryptocurrency market, it went for faster processing, for chips, for Nvidia. And when you got people interested in cryptology and math, people who had to actually learn about what is money. And so this is where the benefit of Bitcoin and cryptocurrency is. It’s brought a whole new class of education, a whole new interest for people to figure out. This system, I call Bitcoin a flashlight. This system, does it work? Now, we have highlighted, pointed out, its inefficient, it doesn’t work. What’s the solution? Ninety nine percent of the time, the solution is not Bitcoin or blockchain. But now that we know it’s broke, or now that we can publicly acknowledge it doesn’t work as it should, how can we fix this? And so, this is where blockchain and Bitcoin, it’s not all bad because it has spurred some innovation, and I will put an asterisk into this to say that when we talk about the space economy, when we talk about machine to machine payments, micro payments, we are talking about some type of digital currency. It won’t be bitcoin. It won’t be a cryptocurrency. It will be a government issued. But then we have to have a larger conversation about, oh man, Eve, you’ve got me on this rant, because it ends up with when we have to talk about the universal basic income and privacy rights. In the sense that, if you have a central banked, issued, digital currency, the challenge with programmable money is, I can say that any product that has more than x percent of sugar or fructose in it, you can’t purchase it with this product. So that creates an immediate black market. You might not care about that until you think about, hey, if we have these digital currencies that are issued by the Fed, or it might be that the currencies pay themselves, pay taxes automatically. It might be that you can’t make end-of-life decisions because you can’t pay for your particular medical procedures because that’s not authorized. Because, again, this is programmable money. So, it opens up an ethical debate, not necessarily a technological one, because if you ask me, right, yeah, we can build it for you, you know, it might take about 20 minutes to do. But just because you can do it, it doesn’t mean that you should do it.

Eve: [00:42:25] Sounds like you need a philosopher on your team, next.

Samson: [00:42:27] 100 percent. Yeah.

Eve: [00:42:29] I’ve got one of those in-house. Samson, I have one more question for you, and that is, what’s next for you?

Samson: [00:42:39] So I didn’t actually answer your question at the beginning of this podcast. You said, why are you president of the Crowdfunding Professional Association? So, one, I don’t mind being president. I actually love it because I have a bias for action coming from crisis management. We’re going to have a discussion, we’re going to make a decision then we’re going to execute. Often enough, people, they discuss something then they get stuck in analysis paralysis. And I’m like, we’re not doing that. And so, with the Crowdfunding Professional Association I liken it, very similar to when David Stern took over the NBA in the early 80s. The NBA was bankrupt, and it had no viewership. The games were rowdy. And he transitioned that league into the NBA we know now. And so, when I’m thinking about the Crowdfunding Professional Association, I’m really thinking about, we are going to have, by 2022, we’re going to have between 150 and 200 funding portals. We’re going to have between 150 and 200 small business owners who don’t have the bandwidth to advocate on the Hill, to advocate at the local level for intrastate crowdfunding. And they need a voice. And so, when I look at where the Crowdfunding Professional Association is going in the future, it’s on par with the National Association of Realtors. It’s on par with the Mortgage Bankers Association, because what we do, what the Crowdfunding Professional Association does, what Small Change does, you create jobs. When you have a real estate project that hits your social change index, you not only change society you also create hyper local jobs.

Samson: [00:44:27] And so, this is why I’m super passionate about crowdfunding, because I do want to live in a better society. I want to live in a better world. And we achieve that when we invest locally, when we invest in people who we know, when we invest in our community. And so last year, crowdfunding raised, Reg CF, raised 214 million, which is a lot, total, but it was 105 percent increase over 2019. This year, already in 2021, you have to double check this with Woody Neiss, we’re on track to do a little over 450 million dollars raised as an industry. Next year, we’re going to blow past a billion. And so, when you fast forward to 2030 and you say, alright Samson what’s a reasonable amount a number that the Reg CF industry raises every year by 2030? Conservatively, I’m putting that number around 12 and a half billion dollars a year. And it’s like, how is that possible, right? It’s a change, it’s a fundamental change and something I will fight on this field forever, customers have more money than VCs. And so, it’s like, VCs use entrepreneurs and founders to tap into customer pockets. And so, when we’re talking about crowdfunding, particularly the retail revolution, we’re saying technology is going to provide greater transparency and access to early stage investing that has traditionally been held by the one percent, by the elite. And so this is where I see crowdfunding going as a whole. And this is why I get so excited about it.

Eve: [00:46:07] Well, Samson, I really appreciate you taking the time to talk to me today. You are a great leader. And I’m going to be a forever member of the Crowdfunding Professional Association, at least as long as you’re leading it.

Samson: [00:46:20] No, no, there’s, trust me, I am just the loudest one. All the brain power, it comes from Sara Hanks, it comes Maureen Murat, it comes from Jenny Kassan, it comes from Devin Thorpe. I just happen to be the loud one because they’re out executing. They’re out building relationships. And so, I just happened to have the pom poms out. So, I encourage everyone, if you’re listening, join the CfPA, because part of it is, if you’re a small business owner who happens to run a funding portal, tell us what your pain points are. We’re that’s what we’re there for. We’re going to go try to figure them out. It can be like, hey, what’s up with the insurance? Is like, that’s a good point. Let’s go find that out. Or it could be like, hey, we want to change, right now, we’re working with the Florida Office of Financial Regulations to improve the intrastate rules for Florida. Again, for me, it’s how do we create local jobs? People need jobs. And so that’s what we’re doing.

Eve: [00:47:21] Thank you so much, Samson.

Samson: [00:47:23] Awesome. Thank you very much Eve.

Eve: [00:47:41] That was Samson Williams, an altogether energetic person. He’s watching the crowdfunding industry evolve from the front seat as president of the Crowdfunding Professional Association. And here’s what he’s seeing. Media companies will drive investment in the future. All eyes will be on crowdfunding platforms with a niche, like Small Change. And finally, content will be king.

Eve: [00:48:16] You can find out more about this episode or others you might have missed on the show notes page at rethinkrealestateforgood.co or you can support us at patreon.com/rethinkrealestate for the price of a cup of coffee. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.