Dashboard: Why Gene Marks Thinks Blockchain is the Story of the Year

[Music] welcome to another 21 hats dashboard every Monday Gene marks and I talk about the issues we think business owners should be following welcome Jean happy New Year Lauren happy New Year Jean great to be back here with you I want to start with a story you wrote this week about a topic that everybody's thinking about and that's inflation um you were to piece with some suggestions for what business owners can do to try to protect their business from inflation right now talk us through that a little bit let me rattle up a few ideas first of all we all know it's going to be an inflationary year uh it is uh we know that we also know if you ask any business owner Lauren whether or not they expect interest rates to go up this year you won't find anybody who doesn't think interest rates are going up this year particularly because the FED has already announced that they're going to be raising interest rates this year so we know there's going to be higher prices in 2022 we know there's going to be higher interest rates in 2022 I'm telling you this now so we should be doing stuff right and and my smartest clients are doing stuff so let me let me let me tell you what what my clients are doing I mean number one is whereas it made no difference whether or not we kept our money and an interest bearing checking account or not in the past who cared because interest rates were at 0% um they're going to be going up this year so now it makes sense to to 1% 1% 2% whatever it might be 3% is is actually the fed's targeting 3% it's something it's now time to have that money market account certificate deposit interest bearing account sweep it in there and um you will um you to start gaining a few dollars on it it'll start making more sense than it ever has you want to pay down your debt right I mean if you know interest rates are going up credit card rates will certainly go up along with that and in addition um you will also see interest rates business loan rates right now are anywhere from 3 to 7% um you want to fix that so a good option that I see a lot of clients turning to is the small business administrations the uh you go to an SBA lender and the SBA section 7A loans you can actually refinance your existing debt and have you the ability to um fix a rate for a number of years that will protect you against interest rate increases um I got a bunch of clients Lauren that are buying inventory buying property buying equipment because uh that makes sense in an inflationary you know period uh I've got clients of course that are investing in technology the only final thing I'll mention on you're saying it makes sense Jean because you want to buy it now before the prices go up exactly right you know I mean there you know you know property and and assets themselves tend to you know keep up with inflation uh buying inventory if you're an inventory driven business you know what to do with it you know so buy it now my clients are scrapping up whatever they can scoop up inventory because they know the pric are going to go up in 2022 and buy low and sell High you know um the final thing is there's something called um tips if you're looking for Investments um they're called treasury inflation protected security you can ask your financial adviser about it but they're kind of like uh you typical treasury bonds they're issued by backed by the US government but they come with certain protections against inflation so um talk to a financial adviser about tips uh move money into you know equities uh because again the big companies themselves will they know what to do to manage their profits and keep up even in an inflationary world and that should hopefully keep your pace as well those are all just different things actually Jean you had one other in there that I thought was was smart uh and noteworthy which is you talked about why this is a good time to look at your own prices and think about raising them where appropriate but you you advised against just a um you know knee-jerk across the board price rise and suggested that people focus on places where their margins are thinnest yeah that's correct I mean you know you can increase prices but you know don't be lazy about it because you're going to lose customers you're just going to oh we're going to have a 10% price increase you know most of my clients are you know they're looking at their customer bases they're looking at the margins of the products they're selling their biggest customers um and you know they're they're selectively choosing where they're raising prices uh because why raise prices on something that is just going to upset a customer if your margins are already acceptable so you know so focus on just the margins and the customers where you think that it's really important to do from a profitability standpoint um and be careful you know when you're raising your prices but by all means raise them if you need to because that's what everybody is doing all right second I wanted to ask you about a story that the New York Times ran this week uh about the qualified small business stock or qsbs exemption um it's a tax break that's designed to uh help small businesses to help entrepreneurs to give them a way to raise money more easily there is uh widespread concern that this is being uh taken advantage of being exploited um and that it's not uh serving its main purpose of helping uh business owners and entrepreneurs I want to call upon your CPA expertise what do you think I could not disagree more and I'll tell you the reason why um this is called section 122 stock it's been around for a while and you and I Lauren we can invest in a in a startup business they need to be a C corporation they have to have less than 50 million in assets they need to be in like manufacturing retail wholesale they can't be a service business you know they can be technology business you and I can invest in a company like that be like the First Investors if we hold on to the stock for more than five years and the stock gains whatever the gain in value is when we EV eventually sell it we won't have to pay any taxes it's pretty big incentive to a large extent I I think it allows early investors to uh avoid taxes on at least $10 million in profits yeah it it does so what it does now you know I know you've got this concern that like oh well this could be passed on to Future relatives or Generations or assigns other people well explain that you you can give this tax break to your uncle and your aunt and your kid you can you can transfer over this stock and then they get that same they get that same tax break even though they didn't put any money in I didn't put any money in but you put the money in so you you yes I mean I you I realize that that's sort of gaming the system because you're you're you're taking this tax break and moving it on to other people I couldn't give a I mean if they have already invested money in my company if I'm a startup and they invested $110 million then the startup benefits from that whatever you're doing with your stock and you go ahead and do with your stock in your tax situation the whole point of this legislation uh is is to is to give some type of incentive for investors to invest in small businesses and startups that's exactly what it does it's just that the New York Times wants to politicize it into like oh it's the rich versus the poor and look how they take advantage well I will say you know this this maneuver has been given a nickname they call it peanut buttering and the times didn't come up with that name they reported it they didn't come up with it and it's a reference to how easy it is to spread the tax break around you can peanut butter to a bunch of other people good for them good for them I mean again you as you asked when you introduced this this topic is like is this good for small business right so I'll get back and answer your question yeah because the original business got their $10 million or whatever the investment was whatever these guys are doing with peanut butter jelly bananas bread I I couldn't care less it's going into the business and that's uh I think that's it's serving the purpose of it now they want to tighten up that the government wants to tighten up the rules about transferring the money and transferring the assets to family and friends or whatever fine go ahead and knock yourself out um but as far as a small business is concerned I would not want to see uh this section 122 stock break go away and in fact um I would hope that more awareness is created because the New York Times article that could attract more investors for small businesses fair enough last story I want to discuss with you it it's one that I find a little scary I must admit the headline on it is the biggest small business story of 2021 it is uh you wrote it and what you're talking about uh are nfts and cryptocurrency and the blockchain and it scares me because it makes me think I might actually have to figure out what this stuff is so so it all starts with the blockchain and the block just to give it a very easy explanation of the blockchain because I'm an accountant the blockchain is is is a parallel universe next to the internet that considered to be a ledger and in this Ledger is every transaction that's ever made uh that has got to be verified by a bunch of different sources and once that's done that transaction is locked in can't change because to change it would you would have to get the Buy in from a bunch of different places uh to change this transaction that's the blockchain once it's in there it's in there it's like the perfect audit TR trail of transaction permanent record the permanent record okay now there has been this explosion uh this year it's really come to Market I mean the crypto business digital currency $3 trillion Market The Venture funding is now at 30 billion dollars into blockchainbased companies and organizations this year which is like quadruple the amount from 2018 which was the biggest year of Investments is it's taken off and the the best example that I gave da was um and and if you're listening to this think of this opportunity for yourself um go on Google and Google bard ape Yacht Club and if you go to the board ape Yacht Club you you'll find like a bunch of of graphic cartoons and and artwork drawings done basically a board apes and you can buy one of those drawings and each one of those drawings because they're on the blockchain they've been connected to the blockchain by a token which is a unique identifier for that drawing you can't be broken it is it is uniquely with that drawing it's like an artist signing the drawing you can buy one of those Bor ape drawings from anywhere from $400 to millions of dollars that's how much things why do I want a drawing of a board ape why do you want any kind of an art right I mean who what is I don't have any art in my I have a picture in my office of of Tony Soprano with that horse do you remember that Paulie Walnut gave him in one of the later Seas I actually my daughter gave me that that was killed was killed that's right there's a picture of Tony brought wear wearing a Napoleon hat I have that that painting in my office of course inition that's my you know that's my understanding of art however think about it this way there is a obviously a multi-billion dollar industry worldwide for artwork right you are you are an artist you're a crafts person you design you do a video you do a photo you do uh you you any kind of painting or drawing that kind of thing you're starving instead you go to any one of the online marketplaces like board ape and you put your digital art up for sale and somebody buys it now why would somebody buy your digital art when you can just you know make a copy of it or or click on it or whatever because it's the same thing with any art people look for original art I mean you can you can make a c you can have a copy of the Mona Lisa hanging in your office but it's not the original Mona Lisa your copy is worth nothing but the original has the value it's the same thing with any kind of digital art so now you've got thousands tens of thousands of new entrepreneurs that are going and creating their own artwork their own products you've got Quenton Tarantino that is taking you know images from Pulp Fiction and digitizing them and then selling them as a unique thing that you can own and people that buy Collectibles that's what they buy let me ask you this isn't there a bigger difference between a copy of the mono Lisa and the Mona Lisa than there is between a um you know a regular link to a piece of art and the digital original you and I are such Lites I mean have you when was the last time you were in an art gallery never right wait I not it was before covid yes I've been in art galleries I mean in an art gallery and you're like what the hell this pting is selling for $5,000 who is going at right but you're not answering my question isn't there a bigger difference between the copy of the Mona Lisa and the Mona Lisa than there is between two digital representations of a work of art um no I mean I think if you have a digital representation that's a unique a unique piece of art that will have more value to a buyer a collector then a copy of it a screen grab of it or a link to it do you follow all right maybe all right let me ask you this then I'll I'll give you that one I have another example and I just want to make sure that I also make this clear you and I talk about this before in previous conversations about the metaverse right which is also coming yes which is the Big World our whole world's turning into a video game so think about this you know as as companies right now are starting to buy real estate in this Digital Universe you and I will have this conversation some years from now in a in a virtual you know conference room that you know where we will be sitting across from each other our avatars we'll be doing our thing many Brands will be doing this as well that's how they'll be condu in business in this in the metaverse it's coming well say you Lauren say you did like you an art appreciator well in that virtual conference room don't you want you know your own artwork in your conference room I don't want a virtual con conference room people will dude many people will which brings me to my last yeah I heard that about Second Life about 15 or 20 years ago it brings me to my last point and the point is this you and I are too freaking old to get it I'll buy that yeah this is something now that younger Generations are doing there it is Gen X that are buying this stuff I I hear you I get it I I know I'm old I know that this is real I know that the the the money is real here's what surprised me about your story you call it the biggest small business story of the year what that suggests that it's more than just artists putting their work up for sale that there's something bigger going on here what's the something bigger it's not just the artist what it is is all of the indirect small businesses that are impacted by the explosion in this type of Technology you have all of the infrastructure firms that are building the infrastructure to support the metaverse Bitcoin digital currencies as well as nfts you've got marketplaces I mentioned board ape as a Marketplace there are hundreds of marketplaces open C who you probably have never heard of is an online nft Marketplace that just raised I I forget how many you know how much money just this past week in in in around of venture capital funding you have financial advisors you have Consultants you have software developers all of these people are involved in digital currency crypto blockchain nft all related together these are entrepreneurs Lauren these are all people that are either working independently or building companies around this whole new Title Wave of opportunities of products and services to sell that's why I think it's an enormous story because it just took off this year it's really coming into you know its own this year and we're going to see a lot more of it over the next few years let me ask you a question that I think makes an important distinction are you saying that it's time for somebody who owns a traditional business like like you and and your business do you have are you figuring this out because you see opportunities for you here or is is this still just for people who are diving in and doing something intrinsic to nft blockchain crypto if you're running an existing business unless you're considering accepting digital currency which I don't recommend right now because of its volatility it really has no impact on you but it is the same type of thing as um who knew I mean think about all the people that have made so much money off of YouTube when YouTube didn't exist 15 years ago whenever any new technology comes along any new platform that we've never heard of it spawns a new generation of entrepreneurs and wealth and that's exactly what blockchain is doing right now a whole new generation the kids right now that are geners and the generation before them they are going to be buying and selling digital stuff living in the metaverse they're going to be investing money and they're going to be looking at ads there as well and there is there is a whole new industry of companies that are going to be serving the that generation of consumers and that's what we could look forward to over the next 10 15 years did you buy Bitcoin early on no I'm not an investor in Bitcoin because I'm too conservative uh it's it's really volatile and I can't you know I I can't uh you the just so you know the the cryptocurrencies that are out there there's like Bitcoin ethereum there's uh Dogecoin there's a bunch of others uh they have technical issues that they have to resolve and they have volunt you know they have volatility issues that need to be resolved do you own an nft I do not own an NF as well but then again I own a a picture of Tony Soprano I don't own any art wasted on me so so it's not something I'm buying but it's so what I'm not a YouTube influencer either you know I'm not buying uh well the difference is you don't have to do anything you you can just buy it uh as opposed to you know making a living on it um interesting um you know one of the things that stops me with this is you probably know about this a reporter for the tech reporter for the New York Times I don't know 6 months ago something like that wrote a story explaining what nfts are and how they were becoming hot and then he turned his story into an nft and put it up for auction and it sold for $500,000 if I remember correctly are you telling me that price is going to hold up well he sold it so I don't know if that price going to hold up well think about it I mean it is it is I can't think it is from the original author certified tokenized uniquely identified as the article about nfts at the very cusp of the nfn you know nft Revolution as it is I don't know if Revolution but you know what collector W pay for that 20 years from now I don't know I mean collectors buy old newspapers uh on the day of Pearl Harbor or historical events so yeah I mean it could C can we turn this podcast into an nft frankly yes we could take this this recording of this podcast and tokenize it with a unique identifier and some lucky person can buy this from you uh you Lauren and they they own I'll split the half a million with you they own the conversation and doesn't mean somebody can't re-record it or listen to it and make another recording but there is value in you know having something that's unique and yeah so that's what it is as you can tell Gene marks is a CPA he writes weekly on small business for the guardian the hill the Philadelphia inquire the Wast Washington Times Forbes an entrepreneur you can also hear him on ABC radio's ey on the world with John Bachelor Jee hosts two popular small business podcast with paychecks Corporation and the Hartford thank you Jean Lauren thank you I hope I persuaded you I'm I'm about to go make some Investments yeah well take this stuff a little bit more seriously please anyway I look forward to talking with you next week have a great week everyone