Michael Schwartz: That's a good spot. That's a good company.

Brian Dally: People who grew up there. And we're the beneficiaries. So thank you for that. And CompuCredit. Which have all focused on scaling innovative financial platforms. Michael, great to have you on the show.

Michael Schwartz: Great. Thanks so much for having me.

Brian Dally: I'd love to start with the basics. For listeners who may not be familiar, what is Hive Financial Assets, and what role do you play in the broader credit ecosystem?

Michael Schwartz: Yeah. Great question. So, we founded Hive Financial Assets in 2017, and we are a direct lending or private credit fund. And so, what does that mean? There's a lot of private credit funds out there. Private credit is as broad as saying I [00:02:00] like stocks, right? It can be big stocks, small stocks, international, small cap, large cap. What we do is very niche focused. So given my background in consumer lending and my two partners' background in consumer lending and technology, we've raised a $160 million fund and we use that to finance non-bank lenders. Our edge is that unlike any other fund that I know of out there, we actually are able to control the unit level risk. So rather than working with a lender and saying, Here's our covenants and send us a statement every month and we'll do just a borrowing basis, we're actually giving the lenders the ability to use our algorithm to make the lending decisions at the unit level, which I'm not sure that any other fund does that.

Brian Dally: So you're kind of distributing the underwriting.

Michael Schwartz: That's right.

Brian Dally: In a way, so that you're more deeply embedded with them.

Michael Schwartz: That's right.

Brian Dally: That's pretty interesting. Now, when people hear that term private credit, which a lot of people who are not [00:03:00] familiar with private credit before are hearing about it in the financial press a lot now, when they think about that, they often think of the big Wall Street names, the big institutional funds. Those are the ones that are in the headlines right now, because they can't meet redemptions.

Michael Schwartz: That's right.

Brian Dally: Like people want their money back and here are these behemoths of Wall Street, who will not give them their money back, and they point to the fine print and said, well, we told you that was a risk. So that's been interesting. But where does Hive fit into that landscape? So you're not that. So how do you fit into the landscape?

Michael Schwartz: So it's interesting. We're not not that. Right? So, think about it as, like those Venn diagrams we did in seventh grade math where you've got a circle here and a circle here and a circle, like we cross over. We intersect on some level with traditional private credit. But, I tell anyone who will listen that we were private credit before it was sexy. We were private credit, unfortunately during sexy. And we're going to be private credit after the headlines blow up, right?

Brian Dally: Yes.

Michael Schwartz: And a lot of those [00:04:00] are blowing up largely to the structure of their fund, where they have a mismatch between liquidity and asset duration. It's not necessarily an issue with the fund, but it's an issue with their structure. We are within that world, but as I said before, we're direct lending. So, it is just a way for companies to get access to capital that, for a variety of reasons, may not feel comfortable going to Wall Street to get it, or may not be able to go to a bank. And for us, the reason why they come to us, is, again, that edge. Right? They can ultimately perform better with us using our capital because of how we have deployed the capital.

Brian Dally: A lot of how this started in the current media frenzy around this was because of AI, and the risk to software companies. SaaS, which was the darling here in Atlanta, it's all investors. When I was trying to raise money for Groundfloor, investors just wanted to hear how this is or could become a SaaS company. I'm like, it's not a SaaS company. And it was pretty clear to me that at some point, the other shoe was going to drop. And it [00:05:00] has, right? Because now people realize that recurring revenue isn't permanently recurring revenue. And something like AI can threaten it, and people are debating how overblown that may or may not be on a unit basis. But you guys are doing something quite different from that. Can you describe the part of private credit that you're in, and do you think you're subject to some of those same issues in some way? I know you guys are using AI in really interesting ways in the company to your advantage.

Michael Schwartz: Yes, exactly.

Brian Dally: But can you talk about that a little bit? Sort of what your edge is?

Michael Schwartz: Yeah, so I'll take a step back. The companies that we finance are lending to Middle America, right? So they're lending to folks who, and we all read the articles of people living paycheck to paycheck. It's hard to, if you don't live paycheck to paycheck, you can hear the words, but it's hard to imagine what that really is. So the use case for one of our lender's borrowers is, you make [00:06:00] $75,000 a year, which is a nice income.

Brian Dally: That's above the US minimum.

Michael Schwartz: Well above, right? I think it's double the poverty rate, right? Yeah. So it's not destitute, right?

Brian Dally: Correct.

Michael Schwartz: You fill up your tank of gas, now it's even more expensive than ever. It's $85, $90 to fill up a 12-gallon tank. You go to Atlanta, you go to Publix, where else you go to your regional grocery store. Maybe you're buying, Publix brand cola instead of Coca-Cola, but you're fine. You're making ends meet. And then a week later, you take your kid to urgent care, for a broken wrist, you have a $500 deductible, and if you have a credit card, it's maxed out. And you're not going to go to a bank for a $500 loan, especially one that's fast. So they find one of our lenders, and our lenders can underwrite the loan very quickly and fund that consumer, oftentimes same day. And so how do we play in that space? One, we're providing the capital to the lender. And two, it's our system. It's our algorithm that is allowing that lender to sift through hundreds of thousands of applications a day. I think today our lenders are seeing about [00:07:00] 200,000 applications a day.

Brian Dally: Wow.

Michael Schwartz: In 6 to 12 seconds, make the right credit decision and then deploy the capital to that consumer who really is in a time of need and needs that capital fairly quickly. So that's how we, and you can't sift through that many applications, I know you have went through it fast, but you can't sift through that many applications in six seconds without using AI. We never really talked about AI and machine learning automation because we're just focused on, let's just make a lot of money and have a good product for investors. And now it's interesting because nothing's really changed on our side. But we end up talking about it a lot more because that's kind of what people feel like they have to talk about. You read about these mass layoffs on Wall Street, and I'm not at those companies, I don't know for sure, but the CEOs always point to, we're letting go of 20% of our staff because of AI investments. I think it's BS. I think they're letting go of 20% of their staff because they overhired in 2021, post-COVID, and now realize [00:08:00] that they've got to trim the fat. And they're pointing to AI because Wall Street has an expectation. They're talking about AI or they're investing in AI.

Brian Dally: It looks like a win. Because look how we're harnessing your new thing. That's always interesting to watch. So, you sort of got to this about what your edge is and how you have this unique model of distributing underwriting to the lenders that are doing the lending. So they have the customer relationship, they have the pipeline to the customer. But you get to amortize the cost of all of this underwriting know-how and tech across all of these lenders and they like it, too. Because it lets them focus on bringing in the business.

Michael Schwartz: That's right.

Brian Dally: And they're not also conflicted by underwriting. You're providing them the capability. So why haven't others figured this out, what you're doing? I think this is smart. You've been at it for a while. So what do you think it is that led you guys down this path to figure out, [00:09:00] this is the way to do it? Whereas I think your typical private credit fund, the one we read about, is operating in a more traditional way where they're a counterparty to somebody who is then a lender to companies or something. What led you to this insight and what is it about this market that helped you build the model?

Michael Schwartz: So, a couple things, right? One is dumb luck, right? I'm an operator at heart. I'm not like, this is my first time truly raising capital from LPs. I've done M&A work and raised capital from private equity funds. But not from Groundfloor or from high net worth individuals or family offices. And so, I know the business. I understand the end consumer asset. When I was at CompuCredit, when I was at GreenSky, and to some extent at Cardlytics, I understand consumer lending, right? When you think about Wall Street, you get very, very, very smart [00:10:00] people. But they know the warehouse line lending side of business, not the lending. So, there's this expertise.

Brian Dally: There is a difference between the unit lending. In our space, the analog or the example of that was PeerStreet, which Andreessen Horowitz invested in. Everybody was excited because there was this marketplace and they could... I don't think they did it the right way because they didn't distribute the underwriting the way that you are. But people get excited about these ideas when you can be an aggregator and then pump it out. The problem is you never get the unit experience.

Michael Schwartz: That's right. That's exactly right.

Brian Dally: Like your customers. But you're so deeply embedded in the customers, you're getting the benefit of that network. But it sounds to me like you're also getting unit level insight.

Michael Schwartz: That's exactly right.

Brian Dally: And it's like, it's easy to lend the money out. How do you get it back? And in real estate in particular, that's a big deal. We went through many trials and tribulations. We're pretty good at getting it back now. But in the early days, [00:11:00] as some of our early investors will attest, they had to exercise some patience with us. And still do from some of those older vintages. It sounds to me like you guys really have a handle on the unit level. Is that accurate?

Michael Schwartz: That's right. And so that goes back to, we think about everything in unit margin. At the lender level. Because if the lender is healthy at the unit margin, then everybody wins. I want the lender to make a lot of money. If the lender makes a lot of money, they're going to have a healthy portfolio. They're going to be able to service our debt to them, and I'm going to be able to...

Brian Dally: And the lenders actually retain an interest as well. They have an incentive to make sure it's good credit too.

Michael Schwartz: That's exactly right. It's the lender's portfolio. They say, I'm the dumb capital. Not really the dumb capital, I'm the intelligent capital. Easy way to describe it. And so think of it as just a cost of funds. And so if the lender makes... let's say a lender lends a dollar and they make a quarter, after all defaults and after all expenses. The [00:12:00] lender is limited in how much money they're allowed to take out contractually by us, right? But then out of that quarter, they give us our cost of funds, and then they keep the remainder of that as their equity. And they're allowed to take out a little bit, but they've got that. So when you think about the business, the more equity that lender has built up, if for some reason there was a hiccup in performance or an issue with cash flow, they just come out of their pocket. And pay us, because that money's trapped in the company.

Brian Dally: That gives you some cushion. And protects them.

Michael Schwartz: That's exactly right.

Brian Dally: So you don't have the conflict between counterparties that could come up if it were down to the iron.

Michael Schwartz: What I like to say is, it goes along the line of trust, but verify. I'd like to help people be honest. So you put the right handcuffs on people and it's sort of like, locks on bikes, right? You can probably break a lock on a bike, but it keeps an honest person honest.

Brian Dally: More than one banker patiently put his arm around me in the early days of Groundfloor and said, Brian you seem like a nice guy. You don't want [00:13:00] to go into this lending business, do you? Because there are people who find ways of defrauding lenders, right? And there are bad actors out there.

Michael Schwartz: No, there is. And so, you can have the contractual covenants, but at the end of the day, you still have to have the views into their business. Right? Because there's still ways to be shady, if you want to.

Brian Dally: So, you described a use case that I think was pretty clear around a borrower who is living paycheck to paycheck. That's not a pejorative, that's just the reality for a lot of people. And faces a financial exigency and comes to one of your lenders in order to make ends meet in that timeframe. Is that a typical use case? Is that the typical customer, or are there some other segments or use cases that fit within this?

Michael Schwartz: Great questions. Historically there's been four big use cases. They're all [00:14:00] almost all event driven. So it's, auto emergency and need new tires. It's a medical emergency. My kid went to urgent care, broken wrist, I need to have copay. There's appliance repair, dishwasher breaks, or air conditioner breaks. And then there's kind of like this other bucket. And what is growing, not exponentially, but very, very fast is the living expenses of it. And so, it's funny, it depends on how you bucket it, right? Because maybe you're spending more money on living expenses, you end up needing it for an auto loan. But that's becoming the category that people are using. Because it's all a little bit of self-selection.

Brian Dally: So your lenders, how many lenders are there?

Michael Schwartz: There's six lenders on the platform today.

Brian Dally: And they can all use all four of those.

Michael Schwartz: So we're not allocating the people. So the lenders have their own marketing departments. And so a consumer, think about like LendingTree back in the day, where you apply for a loan and you see a bunch of different lenders and you choose the one you want. They may [00:15:00] apply for a loan and see all six of our lenders on there. But it's really the customer choosing where they want to get a loan.

Brian Dally: Oh, so they'll come to you.

Michael Schwartz: They'll come to the lender. Not to Hive.

Brian Dally: Not to Hive. Right, that's what I thought. But they're sort of choosing what the use case is.

Michael Schwartz: Yes. Yeah. So, you would apply for a loan, a $500 loan, and you'd select, there's a dropdown box, right? And you'd select, automotive repair. We then, because we, on behalf of our lenders, have real time access into the bank account to verify and to make sure everything's going on. We can then see, what are they using it for? And so we have a little bit of a hedge on what they say. But it's interesting because the use, and this ends up in, I don't think I'm giving you any secret sauce, intent for what you're using a loan for does impact your ability to repay, or is a signal for your ability to repay.

Brian Dally: What people say their intent is.

Michael Schwartz: Yeah. Or, what they, yes.

Brian Dally: So you're looking to make sure their intent is what actually happens.

Michael Schwartz: That's right. [00:16:00]

Brian Dally: And then, the intent, once verified, actually has a lot to do with, can they and will they repay?

Michael Schwartz: That's exactly right. So, I'm not making any judgements at all.

Brian Dally: I want to spend on some luxury item or experience or whatever, concert tickets.

Michael Schwartz: That's right.

Brian Dally: Maybe not as good a risk as tires.

Michael Schwartz: All things equal. Let's say you have two identical people. Same exact credit score, same income, same neighborhood they live. All things equal. One person wants to get $3,000, and $3,000 is more than we'll do for our lenders, but having kids, I know what braces cost. $3,000 for braces. And the other one wants $3,000 to go on a trip to Vegas. 11 out of 10 times, I'm going to give the money out. I'm going to give that guy money to bet with, but I'm going to give to the braces person every time. So there is a little bit of that intent.

Brian Dally: Yeah. Okay. And, when you're lending this money out, can you give me a feeling for the, what is the fund expecting in terms of, what's the [00:17:00] rate on these loans, how long are they outstanding? What's the repayment like, and what's your sort of collection experience?

Michael Schwartz: Those are great questions. So, these are all lending to portfolios that focus on people who are paycheck to paycheck and have challenge credit. And so all of a sudden, a lot of people hear that and warning signs go off, right? It's interesting because we do play in this, I would say, dirty industry, right? But we are very, very focused on making sure that we work only with the nice guys in a dirty industry. And how do we do this?

Brian Dally: Meaning the lenders.

Michael Schwartz: The lenders. Yes. Good operators. So number one, and not just good operators run a business, but like ethical. There's a lot of guys that aren't.

Brian Dally: Well, there's an opportunity to take advantage of people.

Michael Schwartz: 100%. So, I'll give an example, and I'm painting with a broad brush here. Not everybody paid is a bad actor. Not everybody, non isn't. But the idea of a payday loan, you're going to borrow a thousand dollars from me and you're going to agree to pay me back. [00:18:00] I don't know, making on that $1,200 in two weeks, right? Well, the odds of you being able to pay back $1,200 in two weeks having just borrowed a thousand dollars from me, probably pretty low, right? So, I as the lender would say, that's okay, Brian. I'll give you a $1,200 loan now, we'll just roll it into a new loan. And now you're earning interest on $1,200. And that's how you get to this predatory lending cycle of debt where a thousand dollars turns into like $6,000. We'll never be in that business.

Brian Dally: Yeah.

Michael Schwartz: There are great people in that business. I'm sure there are ethical people in that business. That's not for us.

Brian Dally: Yeah.

Michael Schwartz: Our business is simple interest installment loans. So it is, you borrow $500 and, again, making up numbers, you agree to pay back $750 over the course of 12 months, paying every two weeks.

Brian Dally: Okay.

Michael Schwartz: So it comes out every paycheck, but you're limited. The amortization schedule looks like a car payment. It's this much principle, this much interest. And then beyond that, and what I'm about to say is normal. The second part is not industry standard. So, if a customer pays off [00:19:00] a loan early, it's like a credit card. They're paying off daily average balance on their loan. So they can pay it off in a month, they're paying significantly less than the $750 they agreed to pay. If they struggle and they have the loan out for let's say 18 months, even though it's a 12-month term and they're supposed to pay $750, the lender has their legal right to continue to charge interest. So instead of $750, maybe you owe $1,000 or $1,200. In our agreements with our lenders, we forbid them from collecting more than what the customer contractually agreed to pay. There are probably customers, if there's no customers watching that who can get in the system. Keep a loan out and effectively you reduce their APR in half. We're not a nonprofit. We want to make money. But we think that we are in a business to meet people where they are and help them get through a hard time.

Brian Dally: Do you see a lot of repeat business? Because of that?

Michael Schwartz: So there's two reasons why we do this. One is I think it's just the right thing to do. The second is, when this customer [00:20:00] needs another loan, not if, but when. Because if they have bad credit, it's going to take a while to build up new credit.

Brian Dally: For sure.

Michael Schwartz: So when they need another loan, if they had a good experience, they said, Hey, and one of my lenders is called Explore Credit. When they need $500 again, they say, you know what, I had a great experience with Explore Credit. They're going to go to Explore Credit's website. So there's no marketing dollars in that customer. You've got great data on them already, so you can give them more money at a better term. And it's just a win-win for everybody. So that is the, beyond ethical, moral, that's the business reason to do it.

Brian Dally: Yeah. I mean, repeat borrowers who've repaid you before are likely to repay you again. And they build up track record.

Michael Schwartz: That's exactly right. Exactly.

Brian Dally: That's interesting. So, you mentioned this issue about rising gas prices. I can imagine for people living paycheck to paycheck, that's a very real problem. People have to drive to work and drive their kids around and I can see that that could be a really tough challenge [00:21:00] for a lot of people. And this inflation that's been around since COVID is maybe coming back. How are you positioning the portfolio to weather these macroeconomic challenges? What do you see out there and how are you guys thinking about that?

Michael Schwartz: That's the ongoing thing. Part of the reason why I like this asset class so much is because the velocity of cash is so high. So I mentioned that a customer generally pays back every two weeks. So if I make a loan, we're in April now, if I made it loan in February. My lender made a loan, they used our algorithm to underwrite in February. We're in mid-April. I have a good sense of, was that a good bet or a bad bet? I don't know how good a bet or how bad a bet. But I'm getting signal already. So, going back to the AI. The system is already adjusting for macroeconomic events, gasoline prices, [00:22:00] microeconomic events. Amazon makes a layoff, the customer is working at Amazon, or where are they? And so it's already making those adjustments in real time so that it is, the lending decisions that our lenders are making today are different than the lending decisions that were made in February. Now, maybe only at the margins. But they have new information and new data. So they're continually looking at, how does it optimize? How does it get better?

Brian Dally: Is that the machine learning?

Michael Schwartz: That's the machine learning. That's right. Now, obviously there's human oversight, the lenders own it, but that's how generally it works. And then you think about a longer tail. These aren't 30-year mortgages. It's not even a 5-year loan, these are 3, 6, 9, 12 month loans. So the tail is very short. So even if we made a bad decision or made a decision that maybe in light of future unemployment...

Brian Dally: You've got offside zone rates somehow or something.

Michael Schwartz: But you're only stuck with that loan for a short period of time.

Brian Dally: I've always liked that about our market, too. As I [00:23:00] got to know you guys, and we're going to talk about our partnership in a minute, as we got to know each other, I saw some similarities that I really liked. One is the repeat borrower aspect of it, which we enjoy as well. It turns out the good real estate investors need to borrow regularly. That's who you want. Awesome, repeat business, but then also this same sort of short duration is, going back to the private credit funds that are lending to software businesses that are threatened by AI. Some of those are 7 or 10 year loans. I don't know, man, 7 or 10 years in software companies is a really long time.

Michael Schwartz: It's an eternity.

Brian Dally: Interesting. So let's talk about our partnership. I'm excited about this, like I said. Can you walk us through, from your perspective, how our partnership came together and what made it a good fit for you guys?

Michael Schwartz: Yeah, and it was very fortuitous, right? I don't know if we're saying names, but there's someone at the company who I've known from a prior life.

Brian Dally: One of our first guests on the [00:24:00] podcast, I think our first guest, Robert Varghese.

Michael Schwartz: So, Robert and I go back at least five years. And just a great guy, right? And he reached out to me and said, Hey, I'm with this firm. I had never heard of you guys. Sorry. But we're looking to diversify into private credit and consumer private credit. Can we talk more about what you do? He knew what I did, but, wanted to get more detail. And then you fast forward a little more and, just the way our product is structured, right? There's a finite term. There's a fixed return. So it functions like a bond, effectively, a very, very high yield bond, right? We're paying a nice rate and we're giving quarterly liquidity, which is also very nice. It was attractive to the product I think, and I'm speaking for you guys a little bit, but the product was what you wanted. And then you get to, I think this is the first time I met you. Me and Robert, and you and my partner JP went to lunch together and it turned out you and JP have a history, a good history together. [00:25:00] And so, I have always said, it's just like, our lenders, I want them to be good actors. Just because you can operate. Whenever I'm looking at any sort of partnership, it's like, does the deal work? Does the economic terms, do they make sense? And then it's like, who are the people that I'm going to be living with? Are these people that have the same moral and ethical values that I have? Are they people that, if shit goes sideways, we're going to figure out how to work it out? As opposed to running the other way as quickly as possible. And you just kind of have all that with this partnership, which is why I'm so excited about it.

Brian Dally: We feel it, too. That all checks out for us as well. And we're excited to be, when we first started the company, we didn't know what categories of private market investing we'd go into. Nick and I had 26 different potential substrates, if you will, for building the company. We found our way into real estate and then residential real estate, and [00:26:00] then this investment, debt for real estate loans, business purpose loans. But on the list was a whole bunch of categories within consumer and small business and the like. And so it's exciting for us to be at the stage now where we get to go back, to the original mission and say, okay, what are the next verticals where we can play a role and open up these markets. Because now retail investors really want into these markets. I don't think they want into it the way that Wall Street has in mind for them. And when we met you guys we're like, wait a minute, this is something that fits really, really well with what worked in our original core product that we grew to $300 million in assets under management. I'm really excited about it. And we did our first offering and sold out. I think it was oversubscribed in 12 days or something. So that was pretty good.

Michael Schwartz: One of the cool things, and also just from a [00:27:00] size standpoint, that works is that, and I don't think we've talked about the number of, 7% of America needs loans. We're at $160 million AUM, which is a nice sized fund. It's small and big. We're very small given Wall Street comparisons. We're big compared to a lot of Atlanta firms, I would say. But we never have to grow. So we want to grow because there's a ton of missed opportunities. So we find partners like you guys that say, Hey, we can give you X or we can give you Y, and it just depends on what the timing is. And so that also works really well.

Brian Dally: That's good alignment. Okay. So as we've done with a bunch of these episodes now, we're ending with a round of rapid fire questions. I'm pretty sure you had these before, but if not, I apologize. Answer each of these questions, if you would, with the first thing that comes to mind. You can expound if you want to, but you don't have to. And there are seven or eight [00:28:00] of these. Okay. Number one, one word to describe today's credit environment.

Michael Schwartz: I'd say opportunistic. And only because, I think it's also crazy, but if I had a ton of cash, just personal, and a lot of free time, I would create a distressed private credit asset buyer, because all these companies have to unload assets that are perfectly fine assets. But they've got a mismatch. They buy something on 60, 65, 70 cents on the dollar and crush it.

Brian Dally: I'm very interested as an investor in, I don't want to say exploiting, that's not the right word. Utilizing the liquidity discount that's out.

Michael Schwartz: A hundred percent.

Brian Dally: It's very interesting. Okay, so what's the biggest opportunity in private credit right now?

Michael Schwartz: I think that's it. I think it is the liquidity discount.

Brian Dally: Yeah, I think so too. The biggest risk investors should be [00:29:00] paying attention to?

Michael Schwartz: It is... investors in general, or investors from my fund?

Brian Dally: I think just investors in general.

Michael Schwartz: So, unemployment. If consumer spending drives our economy, if unemployment increases tremendously, I think we're in trouble.

Brian Dally: And we really haven't, I mean, COVID excepted for obvious reasons, but we really haven't, over the relevant term, since the GFC, seen very high unemployment. We've lived in a really nice place there, so I think that's an interesting one to watch. I agree. Any favorite books or podcasts you listen to?

Michael Schwartz: So, I'm a history guy. And so I just read a book. Have you ever heard of Eric Larson?

Brian Dally: I think I've heard.

Michael Schwartz: So he writes these books, they're history books, but he writes them, it's like a fiction, it's like a novel. So it's all primary sources and they are actually like, it's history, but it's like dialogue.

Brian Dally: Interesting.

Michael Schwartz: And it does not feel like you're in some boring history class, listening to it. And [00:30:00] so I just read one, he's got a couple books out. I just read one on the Blitz of London during World War II. And it's about that year and Churchill and what like he was going through and how he did it, and it reads like fiction and it's a hundred percent primary source.

Brian Dally: That's cool. I love that. Some of us have long drives that we've got to do this summer. So that's good to know for audiobook. And what advice would you give to someone who may be just starting out in the investing field?

Michael Schwartz: In terms of investing their own money or investing capital?

Brian Dally: Sure. Maybe they're thinking about doing this for their profession, as you've done for a couple decades now.

Michael Schwartz: So, two things, I'm going to cheat a little bit. One is patience. Be able to take the long view. But the most important thing to me is, Einstein described it as the eighth wonder of the world. It's the magic of compounding. Long view, reinvest the interest and earn interest on interest is the greatest thing there is.

Brian Dally: And that's tough. That's tough for young people right now, because they've been trained in reflexivity [00:31:00] and buying the dip and making a fast profit.

Michael Schwartz: We match, up to a certain percent, we match our team's 401k contribution. And there's about 50 people across the organization. I yell at people every quarter, it's free. We're giving you free money. Take it. And it just doesn't, people for whatever reason, don't do it.

Brian Dally: Wow. Well, someone will. I did when I was a kid. I was raised right, as an investor. What is an investing habit or process you always try to follow?

Michael Schwartz: So it's evolving over time with AI. I now have, with help, my partner showed me how to use it, my investing framework. So understand what your framework is. And then I put any deal I look at into that framework. Where does it fall within what I've... so that way you take your mind out of a sexy deal.[00:32:00] Is this the new AI company that everybody's talking about? Or is it tractors and trailers? It doesn't matter, I mean maybe there's some industry side of it, but you know your framework and does it fit that box? So, I've always had the framework and now AI has actually accelerated that and gives me cool reports about it.

Brian Dally: It's a stronger, more robust, interactive framework.

Michael Schwartz: That's right.

Brian Dally: That's cool. And then one more question. If you weren't in FinTech, what would you be doing?

Michael Schwartz: So we touched on this, I would be a high school history teacher.

Brian Dally: Yes.

Michael Schwartz: And I may get that back to that one day.

Brian Dally: Yes, that's fun. That's a good one. Well, Michael, this has been a great conversation. We're really excited about what you're doing at Hive. I'm excited we're working together. What it represents for us, as I said, is a partnership that helps us as Groundfloor deliver on the promise that we envisioned 13 years ago. I think retail investors are going to love your products and investing with you guys. I'm excited to have it on the platform. So, thank [00:33:00] you for engaging in it. For our audience, you can connect with Michael via his LinkedIn, which we'll include in the show notes. You can also learn more about Hive at hivefinancialassets.com. And please be on the lookout for new investment opportunities from Hive and Groundfloor that are coming soon. We've done one. There's another one coming. I know that, but I'm not at liberty to divulge when it is. But it's soon. Check out all episodes of the podcast and suggest a future guest for us at Groundfloor.com/podcast. And please don't forget to like and subscribe wherever you tune in. Thanks again for joining us on Beyond the Stock Market.