Episode 16: Liquidizing Real Estate Through the Blockchain

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John Bradley co-founded RETTEX with a simple purpose:

To provide access to real estate investments.
RETTEX is fueled by a simple belief: real estate investment opportunities should be accessible and available to anyone.

Investment opportunities posted and accessible through the site will be of four types:

1. Regulation A
2. Regulation D

3. Regulation S
4. Regulation Crowdfunding

RETTEX uses a 3-part proprietary system to offer its securities in a truly secure manner:

1. A permission blockchain Investor/Investment database
2. Digital stock certificates
3. ERC-20 compliant tokens on public blockchain.

RETTEX uses no cryptocurrency, coins, or non-asset backed tokens — just digital securities protected by blockchain technology.

At the core of RETTEX is a ‘Smart Offering Builder’ that will allow companies to:

1. Initiate a new offering on the platform.
2. Submit the offering to RETTEX once it has been certified and approved by an attorney, at which time RETTEX will write the blockchain digital securities.

John is humbled to work alongside my talented co-founder Koushik Gavini, a industry leading blockchain developer and educator, and alongside RETTEX Chief Counsel Dr. Douglas Park J.D, a world-class expert on blockchain law, as well as with their partner and RETTEX Board Member Navneet Aron, and his company Aron Developers.

RETTEX’s promise is to combine exceptional design and user experience with financial and regulatory depth and rigor, while maintaining a developer 1st mentality driven by a team of full-stack and permission blockchain developers.

John informed by my experience as a U.S. Army Ranger Captain and combat engineer, a social entrepreneur, a software engineer, and a graduate of MIT Sloans Blockchain Executive Program. His work today is not unlike leading Army Rangers — maneuvering a skilled and disciplined team in a complex and rapidly evolving environment, to complete a difficult and important mission.

(Shawn Flynn) On today's show, we have the founder and CEO of RETTEX, John Bradley.  They are making the real estate market liquid. John can you tell the audience what you're doing and your startup journey?


(John Bradley) We're a week from launching our demo. We're deploying our platform the first of January 2019 and we have a solid team of 11 people right now.


(Shawn Flynn) What is your platform going to do?


(John Bradley) We're a basically a command center for real estate investing and we're creating liquidity in the real estate market using blockchain.


(Shawn Flynn) So how are you creating liquidity using blockchain and can you describe blockchain?


(John Bradley) Blockchain is pretty simple.  Fairly recently in history, digital assets could be copied infinitely. That's what makes Silicon Valley so powerful, the infinite reproducibility of digital assets. And blockchain creates assets that can't be reproduced. So digital things that are non-reproducible.


(Shawn Flynn) So if I have something you can't just cut and paste or copy it?


(John Bradley) No. Blockchain uses public private key cryptography.  It's based on the same thing that email works on and now we don't think twice about email. At this point in history, we've basically just created digital assets randomly, you know, big Bitcoin Ethereum.


(Shawn Flynn) So Bitcoin and Ethereum blockchain are the same?


(John Bradley) Well, no, it's not blockchain. Bitcoin is based on blockchain, but it's a cryptocurrency so that's when you create something that's an asset as well. But our Bitcoin has had no real connection to the tangible world, to real objects in our day to day lives. But this is the year of the security token. And so now we're connecting tangible ownership and tangible objects to the blockchain.


(Shawn Flynn) The security token, what is it?


(John Bradley) A security token represents ownership in something. So, it's a contract and it represents debt or equity generally. And so, if you can securitize one thing, you can really securitize anything. There are about eight companies, we might be the ninth company, in the world that can securitize any assets. What we're focusing on is using that for real estate.  Generally, when you buy real estate it's a great investment, but as a rule you're stuck there for long periods of time.


(Shawn Flynn) So you're taking this technology blockchain and security tokens, which are contracts, and using that in a hard asset like real estate. And then people are able to trade those just like stocks. Absolutely not easy.


(John Bradley) The word is a security, like a stock or bond is a security. And so, in the United States, these tokens are regulated by the Securities and Exchange Commission, the same way that anything that's trading on the stock market is, so they're fundamentally the same.


(Shawn Flynn) So using your technology, if I own a huge apartment complex, I'd be able to, instead of selling the whole building, I could sell security tokens to people, and they could buy percentages of this apartment complex. And then based on the value of the apartment complex the security tokens value would also change.


(John Bradley) Yes, absolutely. So now, your apartment building operates the same way that some factory owned by a company operates. So, your asset is held within a legal entity, just the way any company operates here in the valley. And the same way that a company does an IPO, initial public offering, and begins to trade on the stock market at some point in its development. When it reaches a certain size, you can do the same thing with real estate of a certain size.


(Shawn Flynn) That sounds amazing!  But let's go back what brought you to this point. What were you doing before?


(John Bradley) I was a US Army officer, I was an Army Ranger and a sniper and explosives expert. And there's some parallels. It's fundamentally team leadership, under severe stress in an uncertain operating environment, which is now what you see a lot. The operating in an uncertain environment is really, in my mind, what the valley is all about.  It's the sort of the ethos that is probably written about most notably about the lean startup.  The principle that in order to find something out, sometimes we have to do it.  You see a lot of that going on in the valley when you're breaking new ground. And the same thing goes in the military. So, there are some parallels here.

(Shawn Flynn) In the military, in the Army Rangers dealing with explosives, you were dealing with a deadly high stress environment. After that you decided to start RETTEX or was there something in between?


(John Bradley) Yes. I started an impact investment company while I lived in Africa which was another high stress environment. Helping small businesses grow, sort of challenged myself to get into programming, become a good quantitative problem solver, and in the process become a big believer that you can learn anything if you are not willing to give up.


 (Shawn Flynn) What was the company before your current one?


(John Bradley) This was Sapper Coding.  I was doing mobile app development in the valley.


(Shawn Flynn) So you worked with a lot of startups?


(John Bradley) I did. One day they would call me looking for somebody to build their product after their software engineer left.


(Shawn Flynn) What were the most common problems you saw startups facing?


(John Bradley) I think working with software companies, one of the big problems was that they had built their products in a poor way.  I didn't understand what their engineers were doing and so one of the reasons I wanted to become a software engineer myself, was to be able to better understand the product and what was going on behind the scenes. You always have to understand all aspects of your company as much as you can.


(Shawn Flynn) So would you say, to have a technology startup, the founders one, two, or if there's three, they should all know a little bit about coding?


(John Bradley) Yes.  I think you want to understand some of the inner workings of your product as much as possible. Also, you definitely want to have someone that you can trust, that you don't always have to keep an eye on. People will take advantage of you. Blockchain is a prime example. So, few people understand the technology and if you don't understand the technology you will get in trouble pretty quickly.


(Shawn Flynn) Set up a scary scenario there.


(John Bradley) You just have to understand what you're doing. I would also say one of the things that has made this valley so powerful is that you just do a lot of intensive problem solving as a software engineer. And being good at solving problems will help you in all aspects of business.


(Shawn Flynn) For your company right now, the blockchain company that you're creating, how did you go about building your team?


(John Bradley) I started with some computer scientists.


(Shawn Flynn) What was the vetting process for them?  How did you recruit these guys when you haven't raised funding yet? And I'm guessing you don't have millions and millions in the bank to recruit these people away from Google and Facebook? How do you attract them?


(John Bradley) My co-founder turned down his dream job at Google to do this with me. He called me up and said, “As a Blockchain developer I go around to all the Blockchain companies and I believe that vision is something you need in order to have a successful startup. And I think you also have a vision, and I'm going to leave my opportunities at Google, I'm going to go work with you”. So that meant a lot to me. That's exactly what you want to hear, somebody who's going to turn all else away and go to bat for you and work for free.   I was lucky enough that he believed in me and my vision, and he believed that it was something needed.


(Shawn Flynn) What about the rest of the team? Is everyone on the team believing the vision in the same way?   Or did you have previous relationships with them?


(John Bradley) Sometimes it requires money to try selling your vision and for recruiting your team.


(Shawn Flynn) Do you have to pay them market price? Or, if you have that dream, that vision, and they see an upside in the future can you give them less than market rate?


(John Bradley) Yes, I think that can be an important tool for startups.  A lot depends on who you are and who you talk to. Being a mobile app developer, working with lots of other development companies, I was able to get a team offshore and a team on shore and save some money. For others, when you're at a very, very early stage, you want somebody who says,” I believe that you're going to make it, so I'm going to put some of my costs on the back end”.   Then, they are really invested, they need you to succeed or else they don't get paid.


(Shawn Flynn) So some will actually waiver their fee and help you out in anticipation of you raising money later on?


(John Bradley) Yes. I'm working with a Stanford PhD securities attorney, and he's $700 an hour and most of his fees are back ended quarter, second quarter of 2019, or when I take in $500,000 of funding. That makes a big difference.


(Shawn Flynn) When you sat down with this lawyer what was that conversation? Did you ask if he had any standard discounts or fee structures for someone in your situation or did you negotiate with him?


(John Bradley) You start out by telling about the product. And one thing I've read before and I think it's probably true, is that someone's opinion of an idea is almost exactly equal to the enthusiasm of the person who's telling them about it. And it's because as a people, we don't hide how we actually think about things that well.  I told him about my idea and then he's like, wow, yeah, I get this. And then it was can you do all this for me? And again, by the way, can you pick up my pay after I get things like, …. that’s how the conversation went.


(Shawn Flynn) Who else did you add to your team?  So, you said a lawyer, an engineer. Who else creates the key team?


(John Bradley) One of the real key players was a realtor. She'd been a top Silicon Valley realtor for 20 years, knew everyone in the valley because she'd been selling them their homes, and a 15-minute meeting turned into a three-hour meeting.  And she said,” I feel like I've been looking for this for 20 years.” She has a computer science background and now she wants to invest in the company and also wants to work for the company.


(Shawn Flynn) So you found your first investor at the same time as finding another key member.


(John Bradley) Yes absolutely. And, you know, you get that occasionally where at these short meetings suddenly someone gets it. The other day with a real estate developer with a Stanford computer science background, a short meeting turned into a long meeting and he said, why don't you move into our offices and securitize my commercial real estate assets. And wow, it's a good deal, for a startup,


(Shawn Flynn) Did you expect things to move this quickly? And do you think it would move this quickly if you were any place else?


(John Bradley) I wouldn't say the rest of the world isn't as good as the valley necessarily. But it does open up a lot of opportunities, the people who are here, the things they're doing, I had no idea. And I couldn't possibly have predicted the series of events that would take me to where I am. But, it's uncertainty.


(Shawn Flynn) What would you recommend for other startup founders who are just arriving here in the valley? How can they build out their network quickly, or get the resources they need for their startup?


(John Bradley) I think you go, and you talk to people, and you accrue as much knowledge as you can as quickly as possible. I probably spent the first eight months in the valley programming 15 hours a day, seven days a week, and just learning as rapidly as possible, and meeting people as rapidly as possible. And, you know, continually seeking out the most interesting things I could find, until I made my way here over the course of a couple of companies.


(Shawn Flynn) How many years have you been in the valley?


(John Bradley) Almost exactly one year.


(Shawn Flynn) So what does the next year look like for you?


(John Bradley) Another uncertain thing. You can't possibly know what's exactly going to happen. But you sort of know that you're going to roll with the punches. I think that's sort of key.  In Valley life things are going to happen, and you just know that you're going to respond as quickly as you can to them and do absolutely the best thing you can because you don't know exactly what that thing is that will take you over the edge to success. You won't know when you cross the line, but you're going to move as fast as you can in hopes that you will have crossed the line. Things are always moving that quickly.


(Shawn Flynn) How do you project plan anything?


(John Bradley) It's just like running a military operation, be as diligent as you can, and set the plan as well as you can. At the same time, recognize and be okay with the unknown, and the uncertainty of it.  Problems crop up, you don't know how you're going to solve the problem, but you sort of have this belief that you're going to find a way because you have to.


(Shawn Flynn) To find out more information on how you can solve problems, visit Silicon Valley Successes. com or visit us on Facebook or LinkedIn. Don't forget to subscribe to our YouTube channel. Back to, John.  With all this changing all the time, does that take a toll on your nerves at all?


(John Bradley) Yes. I definitely feel the stress. But going through military Army Ranger School prepared me well for this.   For example, they're deliberately starving you and you're getting two hours of sleep at night. They're creating combat conditions artificially. You go through that and you realize you can handle an immense amount of stress. And it's not pleasant. But you know, you're not going to die.


(Shawn Flynn) So what's easier Army Ranger School or being a startup founder?


(John Bradley) It's a lot easier being a startup founder. it's California. The weather's beautiful every almost every single day. And when I think this is really, really stressful, I think I've got enough to eat. I can sleep. No one's yelling at me.  And I'm warm enough. It's not that bad.  So, I’m always happy.


(Shawn Flynn) Sounds good. Before you met your first investor, I'm guessing you had to get a pitch deck radius or presentation material, how did you go about doing that?  What information do investors want to hear from a startup founder?


(John Bradley) You're going to give them the relevant information.


(Shawn Flynn) In your presentation, how much do you sell the company, how much are you selling yourself?


(John Bradley) In the valley, they invest in people, not just ideas. And I think it's the combination, you have to have both.  You see people working on something that's maybe a great idea but if you can't sell it, it doesn't matter. Nine out of 10 products fail for lack of market. But I think you need to have a team that's going to be agile and competent and solve the problems that arise.  You have to have that team that's that good and will find a way.


(Shawn Flynn) Earlier when we were talking, you'd mentioned you had some of your team overseas and some here.  What are the difficulties or differences between having an Overseas Development team and a team here? Why did you do that? What are the benefits and disadvantages? Are you planning on using that method for your current startup?


(John Bradley) Yes. I think that offshore is an interesting topic because the value proposition is obvious. A software engineer in the valley makes $140,000, on average, and among specialized technology stacks with more experience, we're talking $200,000.  But, the concern with the overseas hire is that the code may be bad so by saving money you may end up with bad quality work.


(Shawn Flynn) So to recap everything we've talked about, we've talked about your past being an Army Ranger, and how that's a little bit more difficult than startups in California, we've talked about selling that vision when either recruiting or talking to investors, we've talked about how by coincidence your first investor might come just from a meeting, just from a conversation. We've also talked about the importance of being adaptable and being able to roll with the punches and how founders should know about their product. If it's a technological project, they should probably have some developing skills. What are we missing?


(John Bradley) I think that when I look for team members, I want somebody who's going to work 15 hours a day, who's going to work like I do, or at least something as close to that as I can get.  That's important for a startup team. I remember reading in Elon Musk's biography that he is a real workaholic engineer. And he can do the work of 11 people because he doesn't have to explain anything. He knows the product inside and out and it results in somebody who is equal to 11 guys.  You can have just a couple of people and communication among them is easier if they're totally dedicated. That's how you get off the ground. You can do the work of 30 people with just a couple of people.


(Shawn Flynn) I listened to the Elon Musk autobiography and heard him say he took a vacation and almost died from it, because he got, I think it was dysentery or malaria, or something like that. So that was his lesson learned. Never take a break.


(John Bradley) I know I don't believe in that.


(Shawn Flynn) So with that being said, if you were across the table from each other what would be the best advice you could give another startup founder with all your experience over this last year in Silicon Valley?


(John Bradley) A company, a human, is all those social contracts we have with other people. So, you the CEO, is a super person, because you're not just yourself, you're getting advice from (Shawn Flynn) and 10 other real experts. And so, you have to find the absolute best people you can and get them into the company, get them involved a couple hours a week because they might know the answer right away and this can save you months.


(Shawn Flynn) That's amazing advice.  What does your family think of you being this startup founder? Would they have preferred you work at, let's say, Chevron?


(John Bradley) My dad said, “Where are you applying to business school”? No, Forget about your parents. You're a man, it looks like you're starting a company. We have something here and sometimes you just have to go your own way because you're willing to bet that you're right. That's what it's all about. You know, I'm a rock climber. At some point you're above your last piece of protection. You have no choice. You either have to go back or you're going to bet that you're going to make it because you can't fail anymore.  I think real entrepreneurship is when you go past the point where you just have to succeed. That's when it gets really interesting. I love that.


(Shawn Flynn) We're going to put that on your media package.  Tell the audience again, what you're working on, tell them who you are, and tell them how they can reach you. And if there's any introductions, or anyone out there watching who you'd want to meet?


(John Bradley) We're creating a real estate investor. And a developer can go onto a platform and they can build a diversified portfolio from which they can-do high-risk stuff like house flips where they can make 20, 25% return with a risk of failure. And they can simultaneously buy into big commercial real estate projects that have been generally liquid and with a high buy in like, $50,000 but reliable and fairly safe. 

They can reach me at john @ RETTEX.com and they should check out RETTEX.com to get onto our platform.