Michael Carpentier Podcast Transcript
Michael Carpentier joins host Brian Thomas on The Digital Executive Podcast.
Brian Thomas: Welcome to Coruzant Technologies, home of the Digital Executive Podcast.
Welcome to the Digital Executive. Today’s guest is Michael Carpentier. Michael Carpentier is an entrepreneurial business leader with 25 years of experience building innovative, digitally focused companies. He has worked with Canadian, US, and European enterprises, providing him with a global perspective.
His skillset includes product development, high yield revenue management, digital marketing and acquisition, branding, sales management, customer success, fundraising, investor relations, P& L, team building, and partnerships. He is now focused on the intersection of business strategy and blockchain technology and is a CIO certified blockchain professional.
He is the co-founder and CEO of Vesta Equity, and they are building the home equity ecosystem for the Web 3. 0 economy and beyond. He is also an amateur competitive OCR and ultra marathon racer.
Brian Thomas: Well, good afternoon, Michael. Welcome to the show.
Michael Carpentier: Thank you for having me.
Brian Thomas: Absolutely. This is great. I appreciate you making the time hailing out of the great country of Canada. You’re in Toronto. As you know, this time of year, it’s nice and frigid. So, my heart goes out to you at this time we’re starting to get cold here, but I appreciate you jumping on during a cold blistery day. So, Michael jumping in here, let’s, let’s ask got a couple of questions here of you today.
And you’ve got quite the career in marketing. Yeah. General manager, your senior executive, you’re an entrepreneur. Now you’re the co-founder and CEO of Vesta Equity. Could you share with our audience the secret to your career growth and what inspires you?
Michael Carpentier: The secret to career growth? Well, I guess persistence and getting up and dusting yourself off when you make mistakes.
I think a successful career is one that where you will make mistakes and you got to learn from those mistakes and move forward. But I think the persistence part is, is really what makes someone successful. You’ve got a lot of smart people out there, but if they’re not determined, if they don’t have fortitude, they won’t be successful.
It takes a lot of effort. And you can’t stop when you hit an obstacle, which is ties and dovetails into what inspires me. What inspires me is innovation and persistence on that same, same level, because building a successful business is not an easy task. Success is not easy. People look at people often who are successful and think, wow, they’re so lucky.
I can tell you luck has nothing to do with it. It’s about hard work. It’s, you know, if you look at a celebrity, if you look at an entrepreneur, if you look at a politician, and they’re all successful, it’s because they put a lot of hard work into it. And that inspires me. So, I mean, when I see a company that has As has been successful, I really like to look at the hard work that’s gone into it.
And if, you know, if you look at a company like Airbnb, they started off very, very rudimentary concept, throwing mattresses on people’s floors and renting space out, which when you think about it, it’s a crazy idea. I mean, how would that possibly work? Right? Who wants mattresses on their floor? Look what it’s evolved into.
It’s evolved into a multi-billion dollar business and it’s because these founders were persistent. And if you ever pick up Ben Horowitz’s book, the hard things by hard things, you have a lot of great stories in there about businesses that have gone through very difficult times and succeeded. Doesn’t mean you doesn’t mean a great idea will be successful.
A great idea needs the application of smarts, but persistence as well. So those are the things that inspire me. And those are the things you need to have to have a successful career. If you decide you’re going to be an executive and company, you got to work hard to get there, get to the top, be smart and be persistent and you’ll be successful.
Brian Thomas: Thank you. I appreciate that. And you’re absolutely right. You know, I can relate to that as being a technology executive as well. But yes, persistence persistency is key foundationally to succeeding at anything. So I appreciate the share and Michael, let’s talk about your company. Vesta equity connects investors to homeowners that want to access the cash in their home to pursue their financial dreams without those encumbrances, hassles, and costs of institutional loans.
Right. Yeah this is really unique because your property investors are looking to add residential property investments to their portfolio. I’m sorry, their portfolio without the risks or complications and the expenses of that full property ownership. Can you briefly walk through this process for us?
Michael Carpentier: Yeah, sure. So, so the idea for this business. Originated about two and a half, three years ago, and I had been interested in blockchain for quite a bit of period of time. At that point, I wasn’t so much interested in the use case of cryptocurrency. So, although they have their place in the space and they’re important in a space at that time, I found a very speculative and I really wasn’t interested in launching my own cryptocurrency.
And I thought blockchain is such a great technology to be applied into verticals or spaces where there hasn’t been much in a way of innovation. And if you look at home equity, that really fundamentally I use 150 years, but it’s probably been longer. Fundamentally hasn’t changed 150 years. If I’m a homeowner and I want to access the equity in my home, I either go back into debt or I sell that home.
And when you look at the demographics right now, specifically in North America, there’s a lot of people sitting on their homes right now who are getting ready to retirement. And that’s really their single source of wealth. They may have a pension fund that pension fund may not be indexed. They may not have a lot in a way of savings, but it’s a well-known fact that 95 percent of people have the majority of their wealth in their homes.
And there’s about 4 trillion dollars in values sitting right now in the US market alone, where. People are 55 and plus 1 agent place. Where are they going to go to access some cash in their retirement years? They’re home. So, their options are sell a house, which a lot of people don’t want to do, or go back to the bank and go back into debt.
And when you reach that age, it’s often a reverse mortgage. And I thought, wow, what an inequitable and unfair use for your equity that you’ve worked hard on for your entire life. And then, if you look at the other side of the equation investors, it’s not easy for an investor to actually go in and start adding real estate to their portfolio you can go buy a whole home. That means putting all the risk into 1 house. You can go to ETFs, real estate ETFs. You can go to mortgage-backed securities. And when you think about it, mortgage-backed securities are probably 1 of the, you know, least transparent investments out there. If you want to get into real estate, very simple reason that they’re pulled together.
So, you don’t know what’s good. What’s not good. And they’re based on debt. And when there’s debt, there’s always a risk of default. What we do is we have fundamentally shifted the paradigm and said, there’s something of value here to the owner. It’s the equity in his home. And there’s something of value here to a potential investor.
And what we’ve done is we’ve made it really easy. For the 2 of them to be able to meet up and what we refer to as the best equity marketplace. And that’s where a lot of the action takes place. So, what we do is we enable a homeowner to tokenize their home and go through all the process. They would have to do through a click and point environment to be able to onboard that home.
That means. Titling is set up of an LLC and equity shared agreement. All those things are inspections photographs of the home. Everything are all in a point and click environment to be able to take a homeowner through the process very simply. They don’t have to have any understanding of blockchain very simply get their home on the marketplace tokenized with a value that they have agreed to based on an appraisal of the asset.
So that goes on the marketplace and everyone’s an agreement from that perspective. There’s no 1 else on title titles, clean all the other parameters you’d have to have under any normal circumstance. Like, home insurance are all checked to make sure they’re all up to date. Taxes are paid, et cetera, et cetera.
They decide, okay, I’ve got a 350,000-dollar home. I want to put 100,000 dollars on the marketplace. I’m going to sell off 100, 000 dollars of my home to an investor. That investor goes through a similar process. They have to go through K. Y. C. A. M. L. or regulatory compliant in that regard. And in other areas as well to make sure that they’re clean and they’re legitimate investors.
They come on board onto the platform, they open up a wallet, the deposit funds in the wallet. And then they’re what we call transaction ready. They can start perusing through the list and they can make an offer to a homeowner and say, hey, I’m going to buy of that 100, 000 dollars of equity put up there.
I’m going to buy, let’s say, 1000 dollars and that homeowner will now sell that 1000 dollars in in equity. And tokens to that new potential perspective investor in the home. Now, the investors participating in the appreciation of that asset over time, and we also build in additional features like equity dividends and equity premiums that the homeowner can also offer up as a sort of an incentive for his asset to be bought by investors, giving the investor additional ROI.
On that investment over time now, what the homeowner ends up being able to do is easily access the cash in our home with no debt and the investor now participates in the appreciation of that asset. And it’s 100 percent transparent. They know where the home is, they know the inspection report, they’ve seen photographs of the home, you know, it’s legitimate, you know, titles clean and now they own 1000 dollars of that home.
And they can go out and buy a 1000 dollars in another home and or another home or 500 dollars, and they can start building their own portfolio of these assets and participate in the appreciation of these properties over time. That way, we’ve cut out the middleman, cut out the whole concept of mortgage-backed securities, because if you have a paradigm like this, you don’t need mortgage backed securities.
You don’t need the bank taking a mortgage, selling it off to institutional and individual investors to make even more money on your mortgage unbeknownst to you. Technically, you’re not benefiting from it. And we’ve eliminated that process. So we’re eliminating intermediaries out of the process and allowing yeah.
The 2 real at the end of the day, it’s 2 real stakeholders in this whole process to simply get together and transact on a marketplace. Now, from an investor’s perspective liquidity is always an issue. When can I sell these assets? These assets will you can sell them back on our marketplace as an investor to other investors.
And over time. As the sort of the blockchain market evolves and the decentralization of the financial structure involves, we’re going to be able to enable those assets to be sold in other exchanges globally, much the same way stocks are traded on, you know, NASDAQ Dubai exchange on NASDAQ and why and be able to exchange your shares and sell your shares and other locations globally.
The market will move there eventually as well. Now, the other liquidity event that can happen. For an investors, the homeowners typically sell the cycle is usually every 8 years. And in that 8-year timeframe, that home can be sold and the investor will be able to exit that investment at that point in time.
But in the interim, they can sell to other investors and they go through the same process. They would post it up on our marketplace and say, I’m selling these tokens. Who’s interested and someone will come around and make an offer on those tokens to buy that asset.
Brian Thomas: That’s awesome. I appreciate you breaking that down for us.
That’s really cool which leads me into the next question, which I think we just love how people are leveraging blockchain like yourself here in this space. Could you maybe share with us why tokenization is the future of real estate investing?
Michael Carpentier: Yeah no, that’s a good, it’s a good question.
We did a podcast actually on our own with a group of experts in this field and it simply boils down to access and liquidity. Because right now, a home is generally an illiquid asset, right? It’s a physical asset that sits there. You sell it, people move in, you move out. It’s never been accessible on the scale where a homeowner can say, hey, this is my asset.
I have a right to do what I want with it. And I want to be able to sell a portion off to investors and that goes on access because how do you do that? Right? It’s complicated. If you look at it from an analog perspective, the amount of legal work and everything else, the homeowner, we need to do, you need to go out and solicit and find investors if it’s just a massive undertaking and very costly for a homeowner to do this on an individual basis.
So, tokenization. Allows that homeowner to go through this process that we’ve developed and be able to parse out his home into shares. Technically, we call them tokens, but technically into shares to allow investors to buy those assets. And then, once the investor is able to buy those assets, he wants liquidity.
He wants to be able to exit at some point in time. How does he do that? It’s much easier to be able to say, hey, I own 1000 dollars of this home. And 1000 dollars of tokens, and I want to sell this to another investor, or I just want to take half of that and sell it to another investor. Because I feel I’ve made some profit on this house because the house is appreciated.
And the equity premium I have that 7, 8 or 10 percent and I’m going to sell off half of that and hold on to the rest. You can’t do that right now. There’s simply no way and no mechanism. So, tokenization and blockchain enables that because 1st of all, blockchain transactions are secure. They’re verifiable.
They’re transparent there’s no things that can be going on. No things that can be going on the back end. That are unscrupulous from that perspective, because it’s transparent. So, we’re really trying to create a market and an opportunity for people through tokenization to be able to liberate a significant amount of cash technically sitting there.
And when you think of it, the sort of definition of capitalisms to create free flow capital yet there’s trillions of dollars globally locked up in residential equity. That is a liquid right now. So tokenization is really going to liberate all of that. And also, you know, a democratize the wealth making process wealth generation process, giving everyone access.
To this, and it’s not just going to be through intermediate reason anymore. You know, I always joke the biggest buildings in every city or the banks was a reason they make a lot of money and mortgages are 1 area. They make a significant amount of money on. And that’s money that really should be in the pockets of the investors and the homeowners, and we feel the tokenization enables all of that.
Brian Thomas: I really love that. And I love the same age where we’re disrupting just about every industry or service. And this is really again, power to the people love how you unpack that. Let us kind of understand what we can look forward to, even as an investor here.
So, I appreciate the share and Michael last question of the day, you’re obviously leveraging some of that new and emerging technologies in your business. Is there anything you might be able to share with us today?
Michael Carpentier: Yes. So, you know, part of what we’ve done so far thus far is just residential asset.
Someone who owns that asset that live in that home. The next market, we’re going to be moving into is income properties with a focus on vacation properties and that product will not only provide appreciation, but it will also provide an income stream in the form of a dividend to the investors. So, we really look at the market from 2 perspectives.
There’s the residential market, live in market, people who own it, stay in the home, and then there’s the income property market. That income property market ranges from long term leases to vacation rentals. We’re going to 1st, focus on the vacation rental market, because from our perspective, those assets appreciate faster than long term leased assets and they also provide that income to the investors.
And what we want to do is we want to create. A paradigm where the investors are not exposed to the operational risks that the. Owner operator will continue to maintain, but that also will define how the income stream is split. So the investors will get income, but less income because they’re not taking the operational risk, but will also benefit from the appreciation vacation properties tend to appreciate at a.
Greater rate, because they’re better maintained than long leased properties. So what we know we’re going to see here is a solid appreciation on these assets as well as an income stream for investors are looking for both that dividend payout as well as an appreciation on the asset.
Brian Thomas: Thank you. Really, really appreciate all the information today that you’ve shared with us.
That’s just so awesome. And Michael, it was certainly a pleasure having you on, and I really look forward to speaking with you real soon.
Michael Carpentier: Perfect. I really, really enjoyed being on and I hopefully we’ll come down to Kansas City in October, some point in the future, and we can get together and have that barbecue you talked about. It’d be fantastic.
Brian Thomas: Absolutely. Bye for now.
Michael Carpentier Podcast Transcript. Listen to the audio on the guest’s podcast page.
