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Mailbox Money: Diversify Your Portfolio By Investing In Software With Jason Criddle

Episode 381: Mailbox Money: Diversify Your Portfolio By Investing In Software With Jason Criddle

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REIS 381 | Passive Income

 

It used to be the adage that real estate is the best way to make passive income. Jason Criddle, who joins Mitch Stephen on the show, emphatically disagrees. He thinks that right now, the best way to make mailbox money is to invest in software companies. As the market becomes more uncertain with the ongoing pandemic, Jason believes that investing in software companies is the only way to make money out of something that doesn’t have to be considered essential to be in business. Jason is the CEO of SmartrHoldings, a company that allows investors to create passive income through software.

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I am here with Jason Criddle. He thinks that real estate investing is way too much work and too labor-intensive. He has an idea on how to invest that’s way more passive. He suggests that we invest in software companies and make our life easier. While I am involved in the real estate business, it doesn’t offend me. I’m always open to new ideas. I know there’s always a better way to do things. Before we get started, I want to pay homage to our sponsor, TaxFreeFuture.com. Take a look at TaxFreeFuture.com, watch the 37 little video vignettes on how to grow a little bit of money into a lot of money. It’s one of the services that a lot of the self-directed IRA firms don’t do. Also, we have a very low annual fee of $175. Learn how to self-direct your IRAs, 401(k)s or whatever. We’ve got a 24-year-plus experienced attorney who specializes only on retirement plans. You have no idea what your financial advisers are not telling you. We’re going to tell you what they’re not telling you and we’re going to tell you why they’re not telling you, then we’re going to let you make the logical decisions. Thank you very much.

The last time I interviewed you, you had an offer for me to buy a startup at a young company at $1 a share. I didn’t do it. It’s already $6 a share and that’s the way my Wall Street investments usually go. When I don’t invest, they skyrocket. When I do invest, they crater and tank. You might be glad I didn’t. I was going to make my way, but I got busy. If I invested, maybe it would be cratered by now because that’s how it works for me.

We would either be cratered, or you would have made six times your money. Who knows?

That’s how it’s normally gone for me, but there’s bound to be a better way. Tell us a little bit about this idea of investing in software. Everything’s good if you know how to do it. Explain to us where you’re from and then where we’re going with it.

You called it mailbox money and that’s one of the things that I’ve always thought about as far as software goes. Granted, it does take a little bit of work and a little bit of effort to build the infrastructure to get it up and running, just like it would take to build a house. Once you get that house built, then you can rent it out, lease it, sell it, earn equity on it and do all kinds of things. The difference with software though is we only have to build our house once. Once we build our house at one time, we can take that thing, turn around and lease it out over and over again for pennies on the dollar.

You can also improve it. I would imagine you can keep adding on to this house.

We can add bedrooms or entire floors. Not only that, but we’re not limited to who we are giving that software to. I want to read an article that I’ve been working on. It’s a couple of paragraphs and it goes right into what we’re talking about. It says, “You’ve always invested in real estate. I get it but the problem with real estate is it drastically limits your flow of income. You are limited by a specific demographic of people that have to be in one specific place during a limited amount of time and you can only provide your product to a limited number of people at any given time. Let’s not forget the fact that building infrastructure in new locations has substantial costs associated with bar none. Franchising was a safe bet in a pre-COVID world. One thing we learned is if you are not an essential business, your entire business and business model can be uprooted and taken away from you.

The stock market is a much more volatile investment. It gives you the chance to gain or lose more at any given time, and invest on a national and global scale. The steady winners in that market are software companies. Brands that started out as software projects built by Angel investors and entrepreneurs. While you may be seeing great returns, the real money was made before those companies went public. For the last few years, that market has grown, giving investors the ability to pour more money into digital and content-based investments than ever before. This is exactly why investors need to not only be investing in the emerging software market but also looking at private secondary market software and software holding companies and digital investment.

One of the most beautiful things about software is that infrastructure needs to be built only once. Click To Tweet

That’s what I got. Whenever I look at all the different investment models out there, and the ones that your mainstream audience is looking at, you would have real estate, stock and franchising. Some people are looking at MLM. You have people that are starting up their own business. One of the things that COVID showed us is, even though all these so-called essential businesses shut down, all of that traffic ran to the internet. Everybody running online, and whenever I see this bill for the Rent and Mortgage Cancellation Act, who knows if it’s going to pass? All the fluff that went into it, it made me think about who is or who can be in control of real estate out there.

If things got tough, and the government decided to step in and call the shots on who can or who cannot invest, how much they can invest or how many properties they can own, then that’s going to change the game for real estate investors. All that traffic went online. We have 35 million to 40 million unemployed people. What they’re all doing is running to places like Shopify, Smartr or Amazon. They’re all trying to sell everything that they can in their house. Sell some product or service or do whatever it is that they can to make money. If investors positioned themselves with the right software companies, then all of a sudden, they don’t have to worry about essential businesses closing down and bills being passed that would negate their ability to invest in real estate.

I’m not going to ever believe that they won’t invade your section of the industry too eventually, but they’re putting more pressure on our side of the industry and they’re not even trying to conquer the internet. I agree with you on that. It has been scary. To tell you the truth, if you think you own a property, you’re not the owner, you’re just leasing it from the government. If you don’t pay your property taxes, you’re going to find out who really owns it. You’re going to get foreclosed on by the county and then you’ll understand who owns this.

Real estate is owned by the government, and we’re all leasing it for a small fee every year. Some of it is getting out of hand even in houses. They appear and triple my taxes in one year. Did I like it? No. Was there much I could do about it? I went down and fought and I got it from tripled down to a 40% increase. Still, it reminds me that I don’t own anything. I lease it from the government. You made me think what a good diversification bucket to have some other source of income that comes from something that doesn’t have to be deemed essential to stay in business.

One of the things that I do is put together a note product. We were thinking about real estate investors in mind. We have a lot of software companies out there that are selling equity. They make promises, but there are investors that make 100 times, 500 times or 1,000 times their returns. For the average person, it’s scary to say that you could gain this much money by investing in this. That’s why your average person tends to stay away from software companies. We put together something where an investor can earn 10% to 20%, depending on how much they put in and how long they let it sit there. The reason why that is easy is because we earn $5 for every dollar we invest in customer acquisition.

In a lot of the cases, we earn up to 600 times monthly recurring revenue for every single dollar that we invest in customer acquisition. To put something in a place where an investor can park some money, and not have to worry about it, it’s being backed by the success of companies. It’s being backed by the success of other people’s transactions. To me, that’s real mailbox money. I don’t have to worry about taxes going up, at least not yet. There is going to be regulation coming in the next 4 or 5 years, because of all the traffic that’s flocking online, but I don’t have to chase down contractors. I don’t have to know anything about drywall. One of the things that you said about the stock market, which I agreed with, the stock market is volatile. It’s based on emotion, speculation and everything that goes on in the news as well.

I raised $24 million in private money because many people agree with me. It’s a rigged game. The higher-ups are getting notified or getting a hat tip when they need to get out or get in. Also, when something is about to happen, a law is about to pass or someone’s about to get a grant. They’re not calling me. I’m not high enough on the rung, except most of America. What you’re saying is, “Why don’t you get in with some individual companies or concepts that you believe in with some people that you trust and be part of that team that’s all trying to go somewhere? Instead of a conglomerate like any stock, any Nasdaq or your 0.0000 something number.” I get it, and like the people that invested with me, I have $24 million on the street. They didn’t come and hand me millions of dollars at one time. They started with me slowly. I proved myself to them, and then I grew with them as they proved themselves. I’m going to assume people do that with you too. They put in a little bit at a time and then they get confidence, get paid, then they put in some more, or do people come and drop millions on you?

We’ve never had anybody drop millions, but they could if they wanted to. Usually, whenever you’re talking about TaxFreeFuture.com, it made me go, “I need to call these guys because most of the people that are investing not just in Smartr, but in this field, people that are getting into software companies, they’re using self-directed IRA.” One of the things that I’m learning about this whole self-directed IRA thing is like what we’re talking about, you have many companies out there that have many fees. It’s still a new thing for a lot of people. Whenever they’re trying to figure out how it is that they can invest money or how much they can invest money within a PPM like ours, that’s one of the things that we need to cover which is self-directed IRAs. How much is their fee per year?

REIS 381 | Passive Income

Passive Income: The steady winners in the volatile stock market are software companies, brands that started out as software projects built by angel investors and entrepreneurs.

 

It is $175 a year, flat fee. For the 401(k) or something, there’s some extra stuff, maybe $225 but compared to the thousands I was having to pay. I had four accounts, and it cost me $12,000 to go for another year. I thought, “For $12,000, in 4 or 5 years that’s $60,000. I could have bought a whole house free and clear.”

That’s money you could have invested.

I’m going to throw this out here because I don’t want to forget. I would like for you to be an affiliate for TaxFreeFuture.com. Put a tag at the beginning and the end of your podcast or whatever if you have anything like that, so that you can be approved and help people learn how to self-direct so they can invest with you.

I started that as a service because everybody that had money to invest, a lot of their wealth was tied up in 401(k)s, self-directed traditional IRAs or Roth IRAs that they had no say-so over. I said, “There’s a way you can get to that money by self-directing it.” Rolling it over to a self-directed account, and then you choose what you want to do. You can invest in me if that’s what you want, or give a little bit to me and give a little bit to Jason. You can do whatever you want. I was doing it so often. I went and teamed up with an attorney and made my own company, TaxFreeFuture.com, which also gave me a direct into everyone who signed up. They were already my customer. It was very easy for me to call them up and say, “I don’t know what you want to do with that money you rolled over, but may I throw my hat in the ring and give you a suggestion?” That’s how you raise $24 million.

I get it. I’m going to become an affiliate for it because it makes sense. We’ve been working with two different firms and I believe both of those firms charge anywhere between $2,400 and $3,500 per year. That’s just they’re starting and of course, the bigger amount that you have invested in your account then the more their fees are, but when you said that $175. I was like, “Wow.”

Here’s the catch. I want to make sure you understand. Those people are free to sign up. We cost $1,500 to $1,800 depending on if you need an LLC or whatever, in addition to. It’s a one-time upfront fee, then all you ever pay is $175. Eventually very quickly, the one-time becomes attractive, especially if you’re growing, moving and getting big fast because they do have a, “What is your overall investment portfolio worth?” After that, you’ve got to pay a fee based on that worth it. The more you’re worth, the more you pay. The difference is, we have a small upfront fee and low for the rest of your life. They have no fee, but they’re going to kill you by the end of your life.

Mitch, whenever I saw this little bill come across the desk, this Rent and Mortgage Cancellation Act, and we were talking about the stock market. It made me realize that I’ve been standing up on my little soapbox for years talking to investors about how they should be looking at investing in private software companies and private secondary markets. It took a crisis like this for my voice to start being heard. Now, a lot of investors get it. Our phones have been ringing with a lot of people that have turned us down or turned us away over the years because they were so involved with real estate or they were involved with stock. Whenever I look at where we’ve gone from the inception of our company years ago to where we are, we’ve done nothing but grow. We can do nothing but grow. That might sound a little egotistical, but our infrastructure is already built. That’s one of the beautiful things about software, its infrastructure needs to be built once. We might upgrade and update. We might make changes here and there but it costs us pennies to bring on a customer.

The amount of income that we make whenever we do spend those pennies to bring in that customer is enough to make real estate and stock investors go, “No, that’s too good to be true.” What we want to do is to put together something that allowed someone to earn as much as they would in a real estate investment but not having to deal with all the backend and all the work that goes along with it. Like you said, mailbox money. Let somebody take a small amount. Let them invest wherever they want to, but throw $10,000, $20,000 or $50,000 into a software company where you’re earning 10% or 20% per year, let it ride, and always have that as part of your portfolio. A lot of investors are looking for 10% to 20% per year of return. It depends on what amount of work do you have to put in, in order to make that return back.

Investing in software is the only way to make money out of something that doesn’t have to be considered essential to be in business. Click To Tweet

It’s more than that. It’s also how much risk is there and what if it fails? Loan out money at 10%. I’ve got a hard piece of collateral, a tangible piece of real estate that we’ll get if they don’t get paid as agreed. That requires work if you’ve got the property back. The chance of them making 20% or 25%, I can’t offer that. You have a different risk/reward quotient. They don’t have a tangible piece of real estate. What do they have as collateral? They have a stock certificate.

I’m not talking down or up on either one of these. I’m trying to note the differences in why they may be able to take 20% or 25%. It’s a different risk/reward quotient which you can somewhat make a calculated decision based on the track record of this company or your track record. There’s a history for years and you can look at that. I believe diversification is key. I’ve tried to diversify myself, mostly within the real estate business. I even have more excess money. You’ve got me thinking about, “I should diversify into some other businesses that don’t need to be deemed essential or non-essential.” They’re online.

One of the things that you like about this is the tangible item that we give, and it’s in all of our documents, everything that we provide to investors. The tangibility that comes along with investing with us is we don’t use your money. Unless somebody’s money is used in order for us to make income, unless we are investing in the couple of processes that we do over and over again that produce income, then the money is not touched. Absolute worst-case scenario? Somebody gets all of their return back. That’s the absolute worst case, they would always get their principal.

This money doesn’t go to salaries, vacations or bonuses for anybody. It’s used for advertising, programming or whatever.

It’s used for customer acquisition. That’s it. We call it our monster. Our customer acquisition monster has been running so well for so long that we know exactly how much money we’re going to make any time we put any money in that bucket. The more investment dollars that we put in there, the more everybody gets, the bigger the payoff for everybody. The biggest thing that we can guarantee our people is we don’t use any investment dollars for salaries or for upgrading our software. Profits are used for that.

Whenever somebody invests with us, it sits in an account and escrow. Until we take a chunk of that money and specifically use it for customer acquisition, it’s not touched. The moment we do take that money and use it for customer acquisition, then we put your investment back usually within days. Even though somebody could be investing for many months or many years, their investments are put back in the bank and everything within a couple of days of using that investment.

It’s completely different than what we were talking about. When you’re dealing with real estate and you have the chance of taxes going up, you have the chance of expenditures going up. When you’re dealing with the stock market, you’re dealing with emotion, speculation. You’re dealing with the global emotion, the behavior of the herd at the time. With us, it’s a little bit different. We’re a merchant company like Amazon, Groupon and all these big companies out here that are processing transactions. That’s why they’re in the game, all they want to do is process more and more transactions.

We have a cool software that people pay for. We want people to build your business. Every single time a transaction is made through some company you’ve never heard of, then that’s securing your investment. Every single time a newly single mom signs up for another piece of our software and she starts paying her monthly service fee, that secures your investment and all of these things are pennies. All of these things are such small amounts of money. Our investors are put into a pool of one huge company. Essentially, every single customer, every single user, everybody that comes into the Smartr System and uses any piece of it is securing someone’s investment.

REIS 381 | Passive Income

Passive Income: Real mailbox money is where an investor can park money and not worry about it because it is backed by the success of other people’s transactions.

 

I want everyone to go to REInvestorSummit.com/MailBoxMoney. There will be a contact information over there if you want to talk to him or his company personally about investing or what they’re all about. Get more details, go to REInvestorSummit.com/MailBoxMoney and learn how you might invest in young startup software companies or even established software companies at this point.

It’s pretty established.

You’re in Dallas. I’m sure you have references. If someone wants to check you out, you’ve got some people they can call?

Yes. Not only am I google-able like you, anybody can google me. They can see all kinds of businesses that I’ve worked with, all kinds of references. We’re more than happy to put anybody in touch with any of our investments, any of our investment partners, anybody that they would want to talk to.

Have you ever whitewashed your name? Do you pay those companies to clean up your ugliness?

Luckily, I haven’t had that much ugliness. One thing that I do pride myself in, especially whenever it comes to Smartr, whenever it comes to this company, it goes a little beyond following the rules. What I mean by that is we’re trying to make the new rules. That was one of the reasons why we put Smartr Holdings together, to begin with. We built the company as an investment vehicle. I’ve been following behavioral economics for a long time.

Years ago, when I created Smartr, I thought it was going to be the technology that changed the world the way it changed now. I always thought that by 2020, we would be looking at 20 million to 50 million people unemployed. I thought we would be looking at more of a universal basic wage being paid out, but it was a virus. This virus is here and one of the major things that it has shown us is commerce can go online. It might be another few years before things start being regulated. Regulation might come because of COVID.

In the meantime, there’s a whole lot of eCommerce companies that are out there that are going to be making a whole lot of money. Regardless of an investor gets in contact with me about Smartr, about our convertible note product, about anything, then what they should do is use Google and start figuring this stuff out on their own. Start figuring out if there are places that they can put money where they can start seeing better and easier returns than dealing with real estate and the stock market.

Every single time a transaction is made through some company you’ve never heard of, it’s securing your investment. Click To Tweet

That’s why I asked you that question because people would say, “I’ve researched one into the other on Google, but we can’t find anything bad on you. Have you whitewashed your name?” I say, “No, I never needed to,” because I did exactly what you said. I policed myself. I never borrowed on properties. I know their worth. I never wanted to borrow more than 65%. If I needed more than 65%, I would put whatever I needed over 65% out of my own pocket. For many years, I watched over my investors to make sure that nothing could ever happen to them. On rare occasions, when things went to crap in a handbasket, I write the check myself. On a few occasions, a once in a blue moon deal and someone deceived me, or something out of the blue ruined something. My investors never knew. I wrote a check. Instead of making $1 million that year, I made $950,000. It was still a good day, still a good year.

It takes leaders like you and me. I was having a conversation and we were talking about how much Smartr has grown. It was one of my investors specifically. He said as cool as our software is, this company would not be where it is if I were not CEO. It made me feel exactly what you said. I manage money like nobody’s business. Anytime any investor puts even $1 into this company, the way I see it is that’s their baby. That’s the investment that you are trusting in me and my company to look over.

I treat every single investment dollar like it is my own. There have been plenty of times where we weren’t going after investors. There are times where iOS made regulation changes or rule changes. There have been times where we’ve had to completely rewrite 20,000 lines of code, and I’m the one that fronts the bill every single time it happens. I make sure that our investors are never put on the line. Not only that, but we stick by what we have in our PPM, which is, “We only use your money for income-producing processes. We don’t use it for anything else. We’re not making money, we give back your principal.”

Tell everybody what a PPM is?

PPM is a Private Placement Memorandum. They’re used by private companies, you can see people that are using them for insurance products, note products or any kind of security that they’re selling that is not being currently regulated by the SEC.

Let’s be clear, it’s against the law to guarantee anything. Jason is not guaranteeing anything. There’s a risk associated with every financial move you’ll ever make in your life. With no exception, this one over there or this one here, for that matter. What both of us are always trying to convey is, “We’ll be dead before it doesn’t get paid.” It will probably even get paid when we’re dead because the culture that we built all this time knows what to do when I’m not here. It knows exactly how we’ve been running for years or how you’ve been able to be successful in years. They know exactly what it is. That’s the point. God bless you for policing yourself and having that attitude. I honestly want to put a couple of people in my car and drive to Dallas and talk to you about a few things.

I’m looking forward to it. The last time we connected, you and me were going to jump on the phone with a couple of people. We never did, I’m ready whenever you are.

I had a lot of things happen. We’re pretty busy, to begin with, they were normal life events, people passing away and things. It happens to everybody but they take a certain amount of recovery time, but maybe it’s better if you come to the ranch.

REIS 381 | Passive Income

Passive Income: Start looking for places where you can put your money to see better and easier returns than just dealing with real estate and the stock market.

 

I’m down. Let me know when to go.

We’ll talk soon. To the readers, I want you to go to REInvestorSummit.com/MailBoxMoney. Did you have a giveaway? I didn’t think there was a giveaway for this because there’s not anything to give away about it.

No giveaway but what I will be happy to do is if any of your clients, anybody that calls, anybody that wants to talk, I’ll be more than happy to jump on the phone with them myself. I’ve written a couple of books about this. I write on Forbes about this. I’m a little bit of a recognized expert in software investing. If anybody has any questions that would go above and beyond a 1 or 2-minute inquiry that they could put online, I’ll be more than happy to spend some time with them and educate them. Even if they’re not interested in investing in Smartr, if they just want to learn a little bit more about the private software market, I’m more than happy to jump on the phone with them and teach them.

We’ll have all that information over there so you can get in touch with him. I appreciate you. Anything else you want to say before we wrap it up, Jason?

Smartr has some pretty cool pieces of software out there. Our affiliate software is still blowing and going. We came out with a new Smartr Marketing app. If anybody needs an affiliate app for their business, all they’ve got to do is go to the iOS or Android App Store, download Smartr Marketing. Whenever you register and you jump in the app, you’re going to be prompted to enter a referral code. Enter the referral code, MITCH.

I’ll be over there as well. You don’t have to have that memorized. If you get over there, you’ll learn about that. I appreciate it. Thanks for taking the time, Jason.

Thanks for having me on again, Mitch.

To all you readers out there, I would like to say thank you for stopping by to get you some Jason Criddle and learn. Get that little seed planted in maybe some diversification investing in software companies. They have a different value, especially during times like this pandemic. They have a different whole new light put shut on it with the current events. I’d like to thank you all for stopping in. Thank you for TaxFreeFuture.com for sponsoring this episode. Please check out TaxFreeFuture.com. You won’t believe what your financial advisers are not telling you. We’re out of here.

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About Jason Criddle

REIS 381 | Passive IncomeMr. Criddle is a millennial business leader with a passion for helping entrepreneurs and individuals succeed while focusing on the spiritual aspects of what it takes to achieve one’s goals.

 

 

 

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