AI is REVOLUTIONIZING Financial Services Forever w/ Pavan Agarwal 🤖 EP103

0:00And Angel AI, she will talk to you like a friend. and you ask her financial questions you can ask her can you get me qualified for a mortgage can you one of the things that does is repair your credit it's so accurate right whatever it tells you i put my money behind it so if it says says dan you approved to buy this ranch for 10 million dollars and if it if it did the calculations wrong or if it messed up and it wasn't supposed to say it guess what i would write to you a check i would i would anyways give you that long for million dollars all right so there's a warranty that comes with it so we're the only financial services company that can issue a warranty like that ladies and gentlemen welcome to the money mondays and happy new year this episode is coming out right around the first week or second week of january so i'm very excited to be here with you guys in 2025 this should be episode i think 103 three or one oh four which is very exciting that we're over a hundred episodes and you guys have been there every step of the way out of those weeks out of those hundred two hundred three weeks we've been top 10 for 95 of those weeks and top 100 of all podcasts on the planet every single week after the third week because of you guys for liking commenting subscribing etc it's really important to us when you can do those things because as you notice we've been running this for ad free for over 100 episodes now so on the money mondays as you guys know we cover three core topics, how to make money and invest money, how to give it away to charity.

1:28You might hear noise in the background because we are inside of an RV motorhome right this second at Black Sight Ranch or better known as the Wild Jungle. This podcast will be under 40 minutes, between 33 and 38 minutes for your listening pleasure because the average workout is 45 minutes. The average commute to work is 45 minutes. So we're going to keep this episode under 40 minutes. So you listen to the whole thing because part of the reason on our rankings is because we have a 93 % listen through rate for you guys. That's why I like to tell people what you're in for, how long is it's going to be so you can make decisions on your timing and travel schedule.

2:01All right, without further ado, our guest today has built major companies in very, very different categories from the mortgage industry to AI. So we're going to have a lot of fun here today going through, asking very specific questions about investing, building businesses, philanthropy, et cetera. So without further ado, Pavon, if you can give your quick two-minute bio so we can get straight to the money? Immigrant. Came here when I was little and my father was in real estate. So we bought and sold real estate. I cleaned the toilets, painted the house, mowed the lawn, did everything back when we were kids.

2:38And then we started a mortgage company and I started building technology. And I was, he commissioned me at 11 to build all the technology for the mortgage company. That's what I did. I was good at math. I was good at algorithms and seeing patterns where there aren't many patterns and um and that kind of leads right into ai because that's what you know machine learning is all about is is patterns pattern recognition um and so it's really you know it's mortgage and the ai as you said it was two different companies in a way in my perspective is the mortgage company is a subset of the ai company right it's it's it's it's a byproduct of good AI.

3:17And so we formally incorporated the AI company in 2012, 2013. Oh, wow. People couldn't even spell AI back then. Well, you know, AI has been around since the 50s. And I can make the argument that the Enigma machine used in World War II is AI. But we digress. Rabbit hole. We digress, yes. so yeah no so in in 2013 we moved to Puerto Rico from California I grew up in SoCal went to UC Irvine and we moved to Puerto Rico and we incorporated the AI company in Puerto Rico because it's just an incredible tax structuring and the best place in the world to start a tech company because as you know tech companies are all about capital gains and when you incorporate in Puerto Rico, there's no capital gains.

4:10So definitely think about that. You guys listening and starting a tech company and so forth, amazing talent in Puerto Rico, and the tax structure is incredible. And here's an amazing, a lot of people don't realize this, but the Puerto Rico government will give you 50 % back. So every dollar you spent in R &D in Puerto Rico, you get 50 cents back from the Puerto Rico government. 50? 5-0? 5-0. Whoa. Right. All right, so that's... All right, guys, I got to go. Right? So literally, you don't have to go, you know, half your capital raise problem is solved simply by being in Puerto Rico. It's fascinating.

4:47Because, you know, just imagine if you need$10 million,$5 million is coming from the government. It's like, you know, do it. It's there. Most people don't know about it. So I'm glad we're getting that message out. And second, so when we moved to Puerto Rico, amazing tax advantage all around. but the most important thing the biggest reason is like hey we're going to build this tech company we're going to build it in puerto rico and we hired you know local puerto rico talent um and most of that the the real engineering behind uh angel ai is built uh by the talent that we hired hired in puerto rico and it's been a you know long process i mean decades of data science of building the knowledge base to drive the AI, followed by the engineering to get it to run.

5:40And then we did our first transaction through it in 2018. So, you know, nothing worthwhile is built overnight, right? And it takes a lot of patience. And you got to fight through everyone who's telling you you're crazy. Everyone's telling you you can't do it. and you know and my personally my in my life it's kind of like you know it's the experience i had was like every you know i'm always like thinking big i'm always thinking you know i remember my dad used to call me a dreamer when i was a kid and i always just think like you know we can do really big things um and the the challenge is most people don't think big and they're going to turn around and they're going to tell you that you're crazy or you're foolish and why do you think you can do it and so forth.

6:31And the ultimate reality is that as long as you don't fall into that trap, you can do it. Everyone can do it. And most people fall into the trap of the naysayers. And I think it's a shame. And I think the current pop culture education system doubles down on it. And most kids are discouraged. You know, it's like Guardians of the Galaxy. Not Guardians of the Galaxy, the other one. Avengers? No, no, Hitchhiker's Guide to the Galaxy. That's the one I was thinking about, where if you have an original thought, it slaps you, right? And that's the system. Kids are slapped for having original thoughts.

7:13Kids are slapped for thinking they can do anything. and if we just think out of the box and say no you you can do anything and just pursue it right most of the time you'll actually succeed if you actually you know just stick with it so let's first start on the mortgage side of things so i just got the mortgage space this year with our mutual friend joseph shallaby talk us through i just started this year you've been doing it for decades yeah why is the mortgage space important what how do loan officers are Are they making money out there? Like, tell us about loan officers. Because a lot of people have been messaging us about working in the loan offer space.

7:47And I want to be able to explain to them, is it good? Is it exciting? Is it worth it? It's hard work. Yeah. Right. Now, the thing is, like, for a couple of years, you know, especially, I mean, most of 2020, right, since 2010 to 2020 was a good time for loan officers because interest rates were low. The real estate market was booming. And then in the COVID period, it was amazing. I mean, I think we did$5 trillion in one year of business. So literally, if you had a license, you were made hundreds of thousands of dollars. I mean, you had no, without any effort. You didn't have no anything. You just, because there was this money.

8:25You just picking up the phone and everyone was calling you. Right, right. And so that spoiled the industry. People thought, you know. It's easy. I'm supposed to make$200 ,000 a year. Yeah, exactly. Well, people were making a million dollars a year. Without very little training and experience and ability, they were just making a lot of money. And then, of course, everything suddenly, as quickly as it turned on, it turned off just as fast. And now we're back to a real-world mortgage industry, which is a lot of hard work, right, which is consistency, following up with your clients, staying in, you know, making yourself relevant, marketing yourself, differentiating yourself, right?

9:02the basics of any business, right? It's what made you successful and makes all the businesses you own successful is because they spend so much time defining who they are and communicating that. And that's the key for a loan officer. You have to define who you are. You have to communicate that. You have to have continuous, clear communication with your clients, pick up the phone, answer those emails, read every email, understand it, pay attention, be a professional, right? It's hard work. And it's, you know, 12, 18 hours a day of non-stop work and and that's how you become a top producer um and and in this market there's there's there's top producers and there's no producers there's nothing in between right um and so you know just you gotta get out of the delusion that there's easy money anywhere there's no such thing as easy money right once in a while you get lucky like loan off a bunch of loan officers got lucky in you know 2020 2021 but but but that you know some people just got in the business that time just timed it right got in and made a lot of money and got out okay that's uh that's like winning the lottery right but in life most of the money is made by just staying consistent sure and just keep doing it and keep doing the hard work and then just wait for the uh you know when it rains just wait for it to rain and then you catch catch all you can at that point like bitcoin waiting for a decade and finally hits it.

10:27Exactly. Okay, on the AI space, as you mentioned, AI has been around for decades and decades and decades. Why do you think that now, this last two years in particular, that it became all the rage? Everyone's talking about it. Everyone's thinking about it. Hundreds and hundreds and hundreds and hundreds of billions of dollars a month is being invested into the category from venture capital, Silicon Valley, and Wall Street. Why do you think so much money, time, and energy is finally going to AI this year? Yeah, that's a great question. um so you know like i said the first ai uh you know fully driven ai loan product that we did was in 2018 um and in 2018 you know my concept well my concept for for what we're doing has always been like you know since like mid-2000 um i saw that the only real future is chat and because I looked at my kids.

11:17My kids don't want to be on the phone. They don't want to do anything. They communicate everything through chat. And I said, whatever the kids are doing, that's what's... That's the reality. That's the reality. That's what it's going to be, right? And so my whole vision of this was I want a consumer to go in and talk to my system through chat and get everything done on a chat interface. So we've been building that out and it's complicated. To do something as data intensive as a mortgage and as complex and so many things can go wrong in that process, to do it entirely by chat is very hard and very complicated.

11:56So we rolled this out in 2018 and then we were laughed at because that was back when Facebook's metaverse was going to take over. Everyone's like, what are you doing? chat is is old stuff old technology what are you guys doing investing so much money in chat when everyone thinks everyone's headed to 3d virtual reality and i'm like no like no one's that's not gonna you know my vision was that's not gonna take off because the no kids don't want to wear goggles around the whole day long right right kids like get quick and fast so so you know so while we're doing that then then all of a sudden chat gpt came out and it was like what three years ago now where it hit the scene with 3.0 and it's suddenly now chat and the whole idea of talking to an AI got into people's consciousness so I thought it was tremendously helpful so let's talk about what makes chat GPT possible, why did chat GPT suddenly come to the scene and other similar and I noticed he had some llamas out there and that was llama 3.3 I think so why did chat gbt becomes why was it even possible and a lot of people don't realize that that the real breakthrough didn't come from open ai the real breakthrough came from a paper that google published in i think 2015 and it's called attention is all you need okay and that was a breakthrough in how to do um how to do language processing specifically but i think in general applies to most complex problems that an AI would have to deal with.

13:39And it cut out most of the overhead of processing a large amount of data. And so with that breakthrough paper and then OpenAI applied it extensively and then created a chat GPT-1, 2, and then 3. And 3 was actually good enough to capture the imagination of the larger market. And so it took that final packaging of this science that's been developing for so many years. I mean, if you think about 2015, the paper comes out, and it was like 2020, 2021, when Chachi PD30 came to the scene, right? Look how long it takes. Technology doesn't happen overnight. It feels when you're the consumer of it, you suddenly see, oh, there's a new thing called Chachi PD30.

14:24No, it took a long process. Before, it's actually relatable. when you can take science and make it relatable where people can can um understand it in an everyday way it takes it's a big investment just like just like with bitcoin yeah you know i mean uh that's the paper original satoshi before satoshi paper was another paper that defined the whole idea of decentralized ledgers and and and then that one failed there was another coin that came out it failed then and then bitcoin came out right i mean this is 20 plus years in the making right hey it doesn't happen overnight nope i remember i was installing the very first bitcoin atms in the casinos back in 2014 it was 340 bucks for bitcoin at the time and trying to explain to the governor the mayor casino owners why they should have a bitcoin atm they thought i had three heads right trying to explain it back then it was a company called robocoin but it ended up selling yeah those atms are now everywhere right then gas stations liquor stores malls etc Okay, so on the investing side of life, you have a lot of options.

15:26Why spend so much time investing into the AI space? Why do you invest your money, your time, and your energy into the AI category? Well, actually, I invest a lot of my money in real estate. I love real estate. Because remember what I said in the beginning, we grew up as kids cleaning houses and buying. Mostly buying and sometimes selling, but mostly buying and holding. nice and you know there's a few times where I looked at where you own the property I said this property is too much trouble and I sold it and I went back and I said I never should have sold it never should have sold it funny before you go on so the one thing the recurring theme here every time I interview someone in the real estate category their only regret in life is selling yeah no matter what commercial residential Airbnb rental blah blah blah blah blah selling right because they bought it for 400 grand it went up to 600 grand woohoo they crushed it 50 percent that 600 grams worth a million now yeah i bought this building for six million i sold it for eight million i'm a genius it's worth 11 million now yeah their only regret ever every single time it's selling sorry go ahead yeah i mean you know we were in the mortgage business in 2008 when when home prices in california fell 50 60 right and i remember you go through laguna laguna hill right and those million dollar two million dollar homes were selling for 600 000 wow you know and people were walking away from their mortgages another 8 million exactly and and and i was and my i was advising those homeowners like if you can if you can bear through it i mean it's like don't get caught up in the momentary oh i can rent for less right now it's like you live on the side of a mountain over the ocean that and then and look at the overall macroeconomics there's a fixed amount of land right right and population keeps rising right you know and and then and you have to understand why it crashed right it crashed because of a sudden dry up of credit there was no buyers because they don't want to borrow money right credit disappeared overnight i said you know that's going to get fixed the government is pouring so much money at it it's going to get fixed i said you should go out and buy they want to loan you expensive money i promise and and that's what you know that's what my family did we went and bought a lot of real estate from 2008 to about 2012.

17:35it was the best buys ever right we we're getting you know like at land cost i mean zero value given to the improvement right like this is like no brainers buy as much as you can all right so um no and recently we just bought a bunch of uh um property in texas um you know a lot of low-income housing by some in oklahoma this is it's just amazing it's great returns uh it's a lot of work sure yeah i spend you know i spent a month in texas driving around looking at real estate and talking to the neighbors and doing the math. But it's fun. It's fun work. It's a game. It's like real life monopoly. So what Pavan just mentioned about the supply and demand was really interesting.

18:15There literally is no more beachfront property, if you think about it. There's no more beaches being made, just the way it is. And so beachfront property in this example, the reason it's going to keep going up is the supply does not grow, but the demand does. What's also interesting is, and especially somewhere like California or New York, certain areas that we are a couple million units behind from apartments, houses, etc. And people are living a lot longer. And people don't talk about this part. Before, when we grew up, parents lived to around 73 to 75 years old. 75 for women, 73 for men. Now it's a lot higher at 81 and 83.

18:51But your children, if you're listening to this, are probably going to live to over 100. Some of them 105, 110, 120, God bless them. Because when we grew up, every corner was 7-Eleven, Burger King, and McDonald's. now there's whole foods, Air One, smoothies, cold plunges, saunas, mental health awareness. We didn't have any of that stuff growing up. We had burgers and smoothies and 64-ounce Slurpees. Plus now we got RFK running the FDA, which is going to make America healthy again. And we didn't have an Equinox on every corner and 24-hour fitness. It didn't exist as kids. We had one gym that you might have to drive 15 miles to and no one would carry because there was no cell phones.

19:29Now everyone's obsessed with working out. So I say that because if your kid lives to 106, that's probably why this podcast exists. They have to invest. They have to own real estate. They have to have way more capital because if they want to retire at 65 to 75, but they lived 106, they need 30 or 40 years of money saved up. Where before, sad to say, you only needed like five or 10 years because people mostly passed away. Let's call it 73 to 83 years old. And so on the real estate side, if there's millions of units behind, and there's no chance of catching up, by the way, because there's not enough wood, not enough labor, not enough metal, not enough refrigerators and air conditioning units and little pieces of metal.

20:07There's so many things that are behind schedule or not coming for a lot of construction companies. A lot of construction companies went bankrupt during the shutdown as well. When you just compound all this together, there's no catching up for California and a lot of other cities of actually having enough units. Why does that matter to you? Well, supply is not growing fast enough. While the demand keeps growing, what happens to the price? You've seen it happen with Bitcoin. You've seen it happen with real estate. And you're going to see it continue to happen with real estate simply because of supply and demand.

20:37Okay. When you decide, when people are approaching you for investing in real estate, investing in AI, investing in yourself and your businesses, how do you make a determination if someone wants to pitch you on a startup company or a business? Like, hey, we're doing$4 million in revenue. Would you invest$100K into our company? When someone's pitching you as an investor, what do you look for in an entrepreneur or in their business? Well, real estate is really simple. Just look at the cap rate. And it's a simple math and you know whether it's a good trade or not. I don't ever invest in real estate with the hope that this is going to appreciate by 20 % in the next so many years.

21:16I look at appreciation as a bonus. okay the cap rate you know i look at minimum cap rate of 10 percent if i don't get 10 cap rate i'm not touching it right because a million things can go wrong right for every prop if you buy 10 properties one of them could be a total write-off because of you know some insurance problem lawsuit whatever right so so you got to always have that cap rate so that's simple thing on real estate on on investing outside of real estate i like to invest things i control so that's basically boils down to my own companies and and put i put the money in in you know and i put it on you yeah well well i mean and and if i look at it you know a good trader should always look at the situation you know impartially dispassionately right so even when i was trading my own assets i'm looking at the asset my company or or whatever the business model is i have to look at there's a how does the business model stand on its own right and so like with with my ai company i'm looking at the business model is hey we're gonna lift two billion people across the world out of uh you know that are unbanked today into the forget banking or straight into the decentralized uh economy and get them get them financially fluent and financially educated right i'm looking at this huge potential and i look at the tech, I look at the tech, you know, I look at my engineering team's capability, look at the tech, look at the vision, I say, hey, this is going to work.

22:48And it is working. And it's like, it's not like, you know, pie in the sky, right? I see a lot of mistakes and very smart people, very capable executives have made big, big mistakes in buying companies, because they get enamored by the excitement right they get enamored by the potential what can be and without taking a hard look at what it what it is right so it if it so like the famous example is like quick or oats buying snapple for a billion dollars which was a 900 million dollar write-off right because they got so excited about i want to be in the beverage industry and i think snapple's you know is the next coca-cola killer and they overpaid for it.

23:32And so you got to always keep your emotion in check. That's why you got to look at your trade ideas, what you're investing, what you're buying in completely without emotion and just look at the deal as is. So on your hat and on your shirt, it says Angel AI. Please explain what is that company? Why is it important? Why are you branded head to toe with Angel AI? Well, first of all, if you believe in your brand, you better wear it all the time. I love it. That's number one. I mean, you got to be all about your brand. So I wear it all the time. My kids wear it. He saw my son. My wife wears it. Everyone in my family wears it.

24:11And, you know, people like passion. If you're not passionate about your brand, right? And sometimes, you know, some people even still will mock me like, you know, come on, guy. Give it up once in a while, you know. I'm like, I love what I do, right? I wear it because I just love it. And I think the brand is cool. I truly believe the brand is super, super cool. So be proud of it. And again, that goes back to what I said in the beginning. There's too many people that's going to say you're being whatever. You're overthinking stuff. So anyway. So what is it? What does it do? Oh, yeah. I forgot the question.

24:49You love it. Tell us how we can love it too. See how much we love it. Yeah. So it's very simple. like you simply chat with it okay and it's just like chatting on whatsapp with your with your best friend except you chat to angel through the angel ai app and and angel ai she will talk to you like a friend and you ask her financial questions you can ask her can you get me qualified for a mortgage can you one of the things that does is repair your credit which is an amazing story of people, many people have used it. And credit repair isn't just for low income people. It isn't just for people who don't know how to manage the credit, but everyone can use it because it's a personal assistant.

25:36My own story is like, you know, years ago, before I had angel AI, one of my properties had a cable box and that, you know, canceled in this, they don't return the cable box. The next thing I know, I got a collection of my credit report. Of course. right and 184 bucks right so credit goes down yeah exactly so then i gave to gave it to him to my accounting department and a human being dealt with the cable company went back and forth hours and hours and hours right right now if i if that happened to me today i would just tell angel take care of that and the ai will go non-stop relentlessly after the the um uh the creditor and that case was the cable company until it was resolved.

26:19So another example is Sugar Shane Mosley and I know you know him well as well. He was on a flight with me before we released it to the general public. We were on a flight together and I was telling him, hey, we've got this great new product coming out. It's credit repair and so forth and I told him how it worked. And this guy's made hundreds of millions of dollars. I mean, he's a very wealthy man. He pays everything cash because he doesn't like to deal with creditors. And the reason is because they messed around with him in the past and then they messed up his credit. So when he heard about this, he on his own went into Angel AI and told Angel what the problem was.

26:58And she repaired his credit. His credit score went up to like, you know, whatever, 700 now. And so he told me, and I met him a few months later, and he said, it worked. I said, what worked? I said, what are you talking about? He's like, yeah. and he's like i went into angel ai and it and it fixed my credit and it was so easy wow right so i mean that's a true story i mean it's not he's he's a true customer i didn't pay him to do that it's just like it it does it so people going in you know getting the credit repaired they ask for a mortgage approval it gives you it gives you mortgage approval on the spot right and and whatever it tells you like it's so accurate right whatever it tells you i put my money behind it so So if it says, Dan, you approved to buy this ranch for$10 million, I don't know how much you paid for it, probably more than$10 million.

27:44But if it says, Dan, I'll give you a loan for$10 million to buy this ranch. And if it did the calculations wrong or if it messed up and it wasn't supposed to say it, right, you've all heard about AI hallucinations, right? When AIs go off the rail and say silly things, right? This AI doesn't hallucinate. So if she did, if Angel AI hallucinated and says, Dan, here's$100 million. Here's$100 million loan. And if you did, guess what? I would write you a check. I would anyways give you that loan for$100 million. So there's a warranty that comes with it. So we're the only financial services company that can issue a warranty like that because every other bank or financial services company you use, mortgage company, whatever, you don't know whether the money will be there until the money is there.

28:35That's why any financial transaction is so stressful, right? Because if you go to buy a house, you put$10 ,000,$20 ,000 deposit, escrow deposit, and you don't know. Like, you know, if the loan doesn't come through, it's gone, right? So, or you write a purchase contract with a contingency, right? And now, if you're the seller of the property, one guy says, I'm going to pay all cash, no contingency. and another guy says, I'm going to pay you more, maybe I'm 10%, I'm going to pay you 10 % more than the guy with all cash, but I have a contingency for the loan, the seller is more likely going to go with the all cash offer because he knows it's going to close, right?

29:19And so what happens in the market is like lower income people, people who need government financing like FHA and VA loans, especially veterans, right? They get discriminated against because the cash buyer wins, right? And so low-income people get shut out of the housing market. Okay, however, if you went into Angel, if you went to Angel AI and asked for an approval, if she gives you an approval, that approval comes with a warranty. So now you can make that offer, right? You could have a 580 credit score, FHA borrower, right? Working two jobs, you know, just enough to make the mortgage payment, right?

29:59and you'll get that warranted approval so you can make that offer with no loan contingency okay so so now you're same as cash okay and so this this is like opens the door wide open for a lot of communities that have been left behind so as a result um we published our data for the last several years and we've dropped or actually we've doubled the approval rates effectively right so what we can demonstrate now we have the data that says our approval rates for black borrowers and veterans and Hispanic borrowers are almost the same and in some cases the same as the approval rates for white borrowers across the country right so we literally like I think black borrowers you know were like one out of three black borrowers were being declined and after and one out of like five white borrowers are being declined.

31:00Okay. And after applying Angel AI, it went from one out of three black borrowers to one out of five, just like white borrowers. Right. So the impact, the social impact is amazing. So are there companies that partner with it? Or is it tell me through the business side of it. Is it all consumer-based? Or should businesses be utilizing as well to offer a service? Or is it all consumers coming on and downloading the app? Well, it's consumer-based. And also, we work through other lenders. Got it. Okay. Okay. So, if you're a mortgage broker, you can, and I know Joe Shelby's company uses it a lot. Because they originate, they work for the consumer, and then they use Angel AI, and then you can broker it and it comes in through my finance company.

31:55Perfect, okay. Because anyone, here's the beauty of Angel Eye, anyone can use it. So any lender, any bank can use it. But if you want that 100 % trusted warranty, then you deliver it through Angel to my finance company because the warranty is only good if the loan comes here. Can back it up. Got it. All right, so let's talk about the philanthropy side. Why do you think that companies or even households should have a philanthropic, like a charity component to their lives? Well, I have a much broader view of philanthropy. I think philanthropy should be a part of everything we do every single day.

32:34So it is how we exist. And so you should start by, if you're going to be in business, your answer to why am I in business shouldn't be because I want to get rich and I want to ranch like that. I guarantee you if he's going to business with that mindset, you're going to fail. Well, there's some people who don't, but they usually don't do anything worthwhile. So if you need to go into business with who I'm going to help and how am I going to help them, right and and how can i give them the maximum value um the best economics to my customer because if you can deliver the best economics to your customer and give them a service and a product that that is not generally available in the market okay you you've achieved one of the major goals of philanthropy right and and business philanthropy i think is the best form because it's never ending circle.