He Left Goldman. Then He Built a $40 Million Real Estate Platform | Ep. 330 with Alex Blackwood Co-founder of mogul

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1:53Daniel Robbins:Something that I've been signed up for recently has been Mogul. and a friend of mine told me, you got to get this app. You got to sign up for this club because it is the future of investing. So I've been signed up for a few months and that's always excited to have the co-founder and CEO, Alex and Alex Blackwood. I mean, you're changing the game when it comes to investing and investing in a real estate. And we are in a really fascinating world right now. I mean, there's so many ups, downs. It seems like everyone is searching for what is the next best thing and how to do it. So from your perspective, how is AI changing real estate investing?

2:36Yeah. So I mean, the way that we look at real estate investing in relation to AI, and of course, thank you for having me too, is you can bifurcate it into two buckets, right? The idea being that number one, how is it actually helping on the real estate operations front and the investing front. And then number two, why in this kind of AI doom loop society are people basically exiting the market and going into these hard assets? So if we focus on number one, really, whenever anyone talks about AI and real estate, their first immediate thought is, I'm going to use AI to help me find real estate investment opportunities.

3:14However, AI models are only as good as the data you feed into it. And with real estate data, being fraught with error and behind massive amounts of paywalls and pay gates, largely in place because of the realtors associations. The idea that you could use AI to train on that data and get you acquisition opportunities is kind of a farce at this current state. Now, how you can use AI is in the agentic workflows. If you think about real estate transactions as a whole and everything that occurs after the fact, after you put down purchase agreement on an asset itself, you think about the fact that there are countless vendors that are coming out of the woodwork, so to speak, to help you with the transaction.

3:59However, it becomes really a too many cooks in the kitchen situation whereby they're all trying to extract information, whether it be the lender, they need underwriting requirements, the inspector, they need us to actually pay them, us to order the inspection, all these different things. And so if you think about that, it's really just data transfer between different vendors. And so what is the best way to do that? Egentic workflows. And so for us at Mogul, we've really been pioneering a few different methods so that it's really low touch from purchase agreement all the way to close. The idea being that we cut down from 20 hours per person on a close, we actually cut it down from that to about 30 minutes now.

4:44And so that's the first thing is it really can help on the agentic workflows because there are a lot of manual tasks that are inherent with the arcade processes of real estate. I mean, everything is done in PDFs. Everything is done over phone and over email. Nothing is really done in a streamlined fashion. So you can create your own streamlined fashion behind the scenes using agentic workflows. Now, the other thing is obviously, as you're looking at the market, you're seeing incredible volatility, especially if you look at things like the Citrinia Research Report. Whether or not you believe that that was incredibly far-fetched, and keep in mind they even said that a lot of it is hyperbole, and it's meant to over-exaggerate to drive home the point that AI is basically coming for the entire workforce.

5:28And the idea being that basically AI enters in this kind of doom loop, where as AI startups and businesses become more profitable. They then create more tools that then reduce the workforce, which then makes the AI startups more profitable. And it kind of enters in this cycle. And so if you look at all the equities out there, a few that were named in that research report, whether it be the DoorDashes of the world, and I believe Zillow was actually mentioned it as well. A lot of these different equity stories are becoming too frothy and very, very hard to put your life savings into. And so when you look at things that aren't really going to be impacted by AI, it's the fact that we all need somewhere to live, right?

6:13It's one of the three main necessities of life, right? You need the actual shelter in place along with food and water. And so investing in real estate has become now more than ever the single greatest way to generate wealth in the U.S.

6:27Daniel Robbins:I mean, so many things to touch on there, but I don't see a world where real estate agents are really needed. Maybe if you're buying like a$30 million home and I understand like, you know, the 1 % or 2 % of homes sold maybe need a real estate agent. Why do most real estate agents really even exist anymore? Yeah. So I mean, real estate agents exist because they almost have a monopoly over the real estate market as a whole. People don't really understand this, but Zillow, for instance, when Zillow pulls in information, it's pulling it in from something called the MLS, the Multiple Listing Service.

7:04That MLS is controlled by the Realtors Association. Not only that, if you are a realtor and you wanted to look, and let's say you're situated in Arlington, Virginia, you couldn't look at the MLS of say Dallas, Texas, because every single local real estate organization under the National Association of Realtors owns its MLS within its specific jurisdiction. And so the idea being that they're not going away right now because they honestly are the gatekeepers for a lot of this. You see a lot of landmark things passing in, obviously, the Supreme Court, whether the transparency around different fees when it comes to the buying and selling broker and actually listing that out.

7:47Now, I do think we're moving towards more of a trend towards a free market. However, there still are the natural gatekeepers in place, and they're going to be incredibly hard to pull away. Not to mention all the different vendors that I mentioned from purchase agreement to close. They're not necessarily colluding, but they all are working together. And so if one were to kind of break, then the others would kind of break. And then the chain link, so to speak, would almost fold in and of itself. But because they all agree that they're necessary in a real estate transaction, it's pretty tough to just overhaul it overnight, right?

8:26And so I do think realtors are necessary today because of what they hold, the information they hold. And ultimately, it'll come down to relationship level businesses that'll separate them from like a complete AI impact because they'll have relationships with potential buyers. I also think the knowledge barrier to enter, not to touch too much on the data itself, but the knowledge barrier to enter. I mean, when you were buying your first home, right, it was near impossible to gather any sort of information. I actually got my realtor's license because I was like, I want the kickback as being my own buying broker, but also I want to understand the full transaction lifecycle from this perspective.

9:04Now, it was crazy hard to get any sort of information to actually feel comfortable and confident throughout the entire lifecycle. Luckily, I got through it and it went incredibly well. And the asset appreciated tremendous amount, yielded a tremendous amount. However, at the end of the day, it's really the fact that we don't need to do it every single day that you need someone almost as like a, I don't want to say guru leading you through, but you need someone leading you through the transaction.

9:33Daniel Robbins:I've seen some countries that do flat fees, like low flat fees, where it's like $500 versus a 1 % to whatever the percentage is. I had an agent one time, I didn't know he couldn't smell like legit. This is a true story. I bought a home. I only went in at one time. I liked the home. I didn't really like pay too much attention. It was pretty quick. I bought the home because the agent he had gone back many times because it was kind of far away from where I lived at that time. And I couldn't go back there again. When I moved into the home, it smelled so bad. It was disgusting because they had dogs and they were urinating everywhere.

10:08Daniel Robbins:But because my agent couldn't smell, like he legit couldn't smell. So he didn't know. So like, I, it kind of got me thinking at that moment, like how much value are these agents when I was the one that actually found the home. And then he's the one that did like some of the processes, but I lost so much money on that house because I had to like, take every, I had to do so much work, which they should have done, not me. But anyways, you said before about investing. When I talked to someone in their 20s, 30s, they're like, look, price of homes, I can't even afford to buy a home in many states. I'm in California.

10:43Daniel Robbins:Prices are, you know, a million dollars is like an average home. Do you think that what you're doing where it's these fractionalized investments, do you think this is going to be even more popular with these age demographics because it gives them a chance to invest versus like how many of them can buy a one or two million dollar home? Yeah, I mean, I think it's exactly right. We are the solution for that, right? Our fractional investing platform is really think of it as almost buying shares in a home, almost like a Robin Hood for real estate. The idea being that you can come in and we've done all the diligence work leading up to it, meaning if an asset's on our platform, we fully believe in it.

11:22Hell, I'm usually the first check in and it's either myself or my co-founder. or we kind of jockey for pole position on that one. And so the idea being that you can pick and choose assets that we've already offered on our platform. You go over to mogul.club and then you can buy into an asset. You choose the assets you want to invest in. And as a result, you'll get monthly dividends, appreciation, and tax benefits at year end. So 10 % yield might stay 10 % might be passive loss for income reporting purposes. Now, I say all that and I do think that the younger demographic are very attractive to our product.

11:58However, when we started out and we were going after that kind of Robin Hood for real estate nomenclature, we thought that we would cater more towards the mass public where people would come in and invest a couple thousand if that. However, as our returns have really increased over time, people are coming in and we've attracted an older audience that invests 15, 25K per property. So they might be investing hundreds of thousands of dollars with us across multiple properties because we've been generating that incredible risk-adjusted return. So people go to our website at mobile.club and come in and basically can actually experience the generational wealth building that real estate affords you the ability

12:44Daniel Robbins:to do. Well, I've heard there's like, it's like somewhere around like$30 trillion of real estate is about to be moved over from people 70, 80s and above as they're passing away to younger generations. And I had somebody from a head of Raymond James on, and she says they're looking at $80 trillion of wealth transfer that's going to happen within the next 10 years, just in the US. And a lot of that obviously is real estate. What do you think this will do to markets and changes? Have you thought about this yet? Oh, yeah. I mean, it's what we think about on a daily basis. And not to mention, we typically look at things when you're looking at a$40 trillion marketplace.

13:27You've got to understand that each individual micro location is what you've got to concern yourself with, especially in the five to seven years. You've got to look at the macro economy to say, OK, is the economy heading towards more profitable times? But on top of that, is a micro location going to sustain any sort of volatility in the next five to seven years as a real estate investor? And so I do think there is going to be a tremendous amount of volatility. One of the things that we've kind of explored is there's this guy, Henry George. He was a political philosopher or economist in the 1800s.

14:02And basically, he came up with a theory that said as supply becomes more constrained due to regulation on the government front, then basically because real estate's an inelastic good, meaning the demand basically stays constant regardless of the price shift because it is a utility necessary for living. then the idea being that let's say supply constraints mean that supply is not growing if demand even increases by a percentage point it'll lead to price increases of 20 % plus but with wage gaps and or with wage increases only increasing the same pace of inflation around two to three percent then the idea being that a large majority of the population will not be able to afford homes in the future and so wealth will be concentrated in a select few of landlords and the wealth gap would widen to an inexacerable margin.

14:50And so the idea being our platform is combating that, offering up ways for anyone to invest in this incredibly high quality, high risk adjusted return.

15:01Daniel Robbins:Is that wild that something from the 1800s could, it's almost more true now than ever. That always fascinated. When I read a book from like 200 years ago. I'm like, or whatever it is like, wow, how is it that this humans don't change? That's my perspective. Technology changes and things change. But I do hope that the people that are receiving this money, they will be investing it, like you said, generational wealth. Because I guess there's what is the law of two or law of three? It's like the second generation will normally squander whatever wealth has been transferred down. I guess that's what I was told.

15:38Daniel Robbins:So let's go back to when you were at Goldman Sachs and you're sitting in this chair or wherever you were. And then you think about this idea of mogul or I don't know if it was there or whenever the beginning ideas phase came and then it obviously launched. The Bleacher Report app is your destination for sports. Right now, the NBA is heating up, March Madness is here and MLB is almost back. Every day there's a new headline, a new highlight, a new moment you've got to see for yourself. That's why I stay locked in with the Bleacher Report app. For me, it's about staying connected to my sports. I can follow the teams I care about, get real-time scores, breaking news, and highlights all in one place.

16:21Daniel Robbins:Download the Bleacher Report app today so you never miss a moment. Hey, I'm Josh Spiegel, host of the podcast Lunatic in the Newsroom. If you enjoy journalism that drifts into mild panic, wild overthinking, and a guaranteed nervous breakdown, Lunatic in the Newsroom is for you. It's news like you've never heard before. The only newsroom with a panic button. You'll laugh, you'll cry, and gasp in horror as the show spirals completely out of control. It's not just news, it's emotionally unstable. Lunatic in the newsroom. Listen today. Ellie's Eden was created from the same belief that started as your standard.

16:58Daniel Robbins:Families should have access to good food and healthy living. Named after the founder's granddaughter, Ellie's Eden reflects commitment to strong, healthy plant starts. grown with care in Oregon. These are carefully selected varieties chosen for gardeners who value quality, vitality, and dependable growth. From trusted seeds to thriving plant starts, Ellie's Eden helps you plant with confidence and grow something meaningful. Explore Ellie's Eden at azurestandard.com. Take me through that time. Yeah, of course. And so are you familiar with the term garden leave by any chance? I like gardens, no.

17:33And I like to leave. So garden leave is a pretty unique opportunity where it's throughout the entire financial industry, but especially from investment banking, when you go from the quote unquote sell side with more private level knowledge, you take a month off in between that and go into the buy side in real estate, private equity as I did. And so I actually had a unique opportunity and it was meant as a period to rest, relax, recuperate, but also to let MNPI basically fade away. However, I use that as a time to form a thesis behind the fractional investing platform as a means to scale up in a completely capital efficient manner.

18:13You flip on liquidity in a secondary exchange. And the idea being that once an asset enters your platform, it'll scale up incredibly fast and you won't actually have to have it exit because you'll have secondary liquidity on the market or you could technically exit it outside the platform. And then once that happens, you start deploying products up and down the supply chain of real estate. Now, this came about because as I mentioned earlier, I got my realtor's license. I did my first real estate transaction and I realized just how manual, archaic the process was. I grew incredibly frustrated with it.

18:46And when I moved out to Dallas, my role was I want to invest in properties outside of my day job. But I really couldn't find a way to do that in a completely headache-free manner, meaning everything would take 40 hours plus in a week. And I just couldn't do that with a job that demanded 70, 80, 90 hours per week. And so when I crafted the thesis, I thought, okay, great. That's something I'll come back to way later on in life. However, when I met my co-founder out of Dallas, I was just blown away by his background. I joked he was the residential boonderkind, so to speak, having grown Goldman single family runs a platform from zero to a billion in under 12 months with three to four individuals.

19:26And I basically said, listen, any chance you can meet me in a diner? And I pitched him on this idea. And thank God he did not call me crazy because here we are. And so it's been about four or five years since that diner meetup. And it's been a crazy journey ever since.

19:39Daniel Robbins:I hope you got the breakfast, but not at breakfast, because that's my favorite thing about diners. Breakfast all day long. Like it should just be called something else other than breakfast because Eggs and bacon for dinner is incredible. So you start the company, you have your co-founder, who's obviously done a tremendous amount. Now, how did you go about getting your first 100, 500 ,000 people? What did you have to do? And did you continue as a side? Was this like a side hustle or side company while you were still working? So it was kind of outside of Goldman entirely. And the idea being that we actually quit our jobs in August of 2022 to jump into it full time saying, all right, we're going to just raise some capital and it'll be incredibly easy to raise capital.

20:29However, it was definitely not at all. And it was a very hard time, especially given their tremendous amounts of Black Swan events, especially in the blockchain space because we are based on blockchain. And so we struggled quite a bit. We were fortunate enough to have backing by Tim Draper at Draper Associates, legendary VC, who was the first check into Robinhood, one of the first checks into Coinbase as well. And he backed us initially, and we weren't taking a salary or anything like that. And we really launched the platform, I would say, beginning of 2023. We sold out our first asset. When that happens, we were able to raise a seed round, and then it kind of snowballed from there.

21:08But I would say, while on the surface, it looks entirely successful. It couldn't have been a rockier journey, right? The idea being that you're like a swan. You've always got to present yourself incredibly well, but below the surface, you're churning the entire time. And so in the initial few years, you're constantly, constantly grinding at this opportunity. And you're basically, I would get on calls with people for like six hours on a Saturday just to walk them through an underwriting for an asset we had on our platform, hoping they'd invest maybe like 2K. Now, since we've gotten on this call, we've had multiple 20K checks because we're launching a property this morning.

21:47And I haven't talked to that person at all. We just present the analysis. It's a crazy thing. Things just keep snowballing, right? You just got to keep pulling at the thread. And we first started out as just let's just reach out to anyone that would listen. And now we've gotten to a point where we actually have a growth engine in place and things are constantly moving and we're growing at almost hockey stick like momentum, adding at least three to four assets per week. We've nearly doubled in size since November of this past year. And this quarter, for instance, we've done this quarter is our technically our best quarter yet.

22:24It's not even done yet. And we surpassed last quarter's revenue in the first five weeks of this quarter. So it's just a crazy journey that we're on right now. It's really just pulling the thread along. I can go more in depth on how we got that first customer, but it was a lot of willing to talk to whoever about whatever, hopping on phone calls with them on Saturdays to go through a model only to have them back out at the last second because they didn't like it. And so, yeah, it was a it was a trying time for sure.

22:52Daniel Robbins:Yeah, let's go to the switch that flipped recently, because I think this is always a big thing, right? Like you have a product or service, and you've got to go to anybody. I mean, like you're saying, if I look at my price sheet of what I charged six years ago, I would laugh like I can't even believe I even charged that low for me. I'm like, Oh, my gosh, like I was looking at something from 2022 yesterday. And I was like, Oh, I can't believe I sent this to somebody. First, it was ugly as heck. and then two the pricing was horrible like i don't think i made any money on that sale but like you're saying i just needed to get customers i need to get clients i need to prove the model what was the switch though that happened the last maybe year or less than a year where it just like catapulted yeah i mean i think it comes down to almost two prong right the first prong being on the supply side our assets or actually three prong i would break it down to on the asset front We've only listed assets that we firmly believe in, which has led to a product that are actually achieving the returns similar to what we were getting at Goldman.

23:59And so we're the highest performing single family rental investing platform out there right now. We're nearly double, if not triple, of our next best competitor in terms of average return. Our yields are strong. Our appreciation dynamic is strong. And so when it comes to the product itself, our team is the New York Yankees. And I'm a New York Yankees fan, so this is a compliment to our team. Our team is the New York Yankees of single family rental investing. And so the quality is incredibly strong. As a power user myself, having invested in every single asset, I can speak exactly to that quality, which has led to the next part, which is on the demand front.