Alex Plesakov of Social Discovery Ventures On The 5 Essentials for Smart Investing
An Interview With Jason Hartman
Lack of Education: Financial literacy is not a standard part of the curriculum in many schools. This means that unless individuals seek out this knowledge independently or receive education from their parents or other sources, they may not learn the basics of managing money, calculating interest, or understanding financial risks.
As a part of my series about The 5 Essentials of Smart Investing, I had the pleasure of interviewing Alex Plesakov.
Alex Plesakov is a highly qualified asset-management and investments executive, contributing to SDV (Social Discovery Ventures) for more than a decade. As CEO, he expertly navigates investments in various asset classes, including public and private equity, venture capital, real estate, fixed income, commodities, and more. A mix of experience in legal litigations, international tax structuring, and wealth management allows him to have a broad balanced strategic vision and consistent execution. Alexey has a prominent educational background encompassing institutions such as Harvard Business School, Schack Institute of Real Estate at New York University, and Berkeley, University of California.
Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
My journey into the finance industry is a combination of diverse experiences and a passion for understanding how money flows and grows. Initially, I graduated from law school and worked as an attorney, where I managed complex international legal litigations. This experience honed my analytical skills and taught me the importance of diligence and strategic thinking.
However, it was my foray into real estate investments in the US that truly ignited my interest in finance. Over the span of five years, I built a portfolio of several dozen properties across the country. This hands-on experience allowed me to understand the intricacies of real estate markets, risk management, and the power of diversification.
As I delved deeper into investments, I diversified my portfolio into various asset classes, including venture capital, tech public companies, and even cryptocurrencies. Each new venture presented its own set of challenges and learning opportunities, allowing me to expand my knowledge base and refine my investment strategies.
Ultimately, my transition into the finance industry was a natural evolution driven by my curiosity, diversification requirement, entrepreneurial spirit, and desire to maximize returns while managing risk. This multifaceted background has equipped me with a unique perspective and skill set to navigate the complexities of the financial world and effectively manage diverse investment portfolios.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
One of the most remarkable experiences in my career occurred during my tenure as an attorney, representing a dolphinarium with dozens of endangered species in its care. The management of the dolphinarium was centralized around one individual who had entered into an unwise agreement that jeopardized the future of both the facility and the rare animals it housed.
When I took on the case, my client had already faced several legal defeats, been forcibly removed from the dolphinarium premises, and witnessed the tragic loss of three of the endangered animals. The situation seemed dire, with the odds of success estimated at less than 10%. However, I was compelled by a deep sense of responsibility to help those involved and decided to take on the challenge.
Immediately upon accepting the case, we initiated a flurry of legal actions, filing numerous claims across various authorities and challenging every adverse decision made against our client. Simultaneously, we strategically engaged journalists, politicians, and environmental organizations like Greenpeace to amplify our cause and garner public support.
Despite the overwhelming obstacles and the precarious nature of our case, I remained steadfast in my conviction that fighting for the rights of these rare animals was the right thing to do. The stakes were incredibly high, and every argument I crafted or presented could make or break the outcome, potentially affecting the lives of more endangered animals.
Throughout the process, I had to act swiftly yet thoughtfully, constantly assessing risks and anticipating the moves of the opposing party. The weight of responsibility was immense, particularly compounded by the fact that the CEO of the company who had retained me suffered a heart attack due to the stress of the situation.
In the end, our relentless efforts paid off. Through strategic maneuvering, unwavering determination, and a commitment to justice, we managed to secure the return of the dolphinarium, its team, and the majority of the endangered animals. While some losses were unavoidable, our collective dedication to the cause ensured that the remaining animals were spared from further harm.
This experience taught me invaluable lessons about the power of perseverance, strategic thinking, and moral conviction in the face of seemingly insurmountable odds. It reinforced the importance of acting with integrity and compassion, even in the most challenging circumstances, and underscored the profound impact that individual actions can have on protecting our planet’s most vulnerable creatures.
Are you working on any exciting new projects now? How do you think that will help people?
At SDV, we are currently involved in several exciting projects that we believe have the potential to make a meaningful impact in various domains.
For instance, one of our investments is in Flo, one of the most popular apps for women’s health. Initially starting as a simple period tracker, Flo has evolved into a comprehensive platform that provides valuable insights and support to millions of women worldwide. By empowering women to take control of their health and well-being, Flo is helping to address important healthcare needs and improve the overall quality of life for its users.
Another project we’re enthusiastic about is our investment in Woebot, an AI psychological assistant designed to enhance the effectiveness of therapy and reduce the need for frequent doctor appointments. By leveraging technology to provide accessible mental health support, Woebot is breaking down barriers to mental healthcare and improving outcomes for patients worldwide.
Furthermore, we recognize the challenges faced by businesses transitioning to remote work and the importance of supporting a return to office spaces for those who need it. That’s why we’ve invested in a trophy tower in Houston, aiming to make it more attractive to tenants and contribute to the normalization of office environments, which play a crucial role in fostering collaboration, innovation, and productivity.
Additionally, we’re exploring investment opportunities in companies that specialize in drones for industrial security. By deploying drones to monitor and safeguard industrial buildings, these companies are enhancing security measures while also increasing operational efficiency and productivity. This technology enables workers to focus on their core responsibilities without worrying about mundane tasks, ultimately leading to faster production, reduced costs, and improved competitiveness for businesses.
In summary, each of these projects reflects our commitment to investing in ventures that have the potential to create positive change and benefit society. Whether it’s advancing women’s health, improving mental healthcare accessibility, supporting the return to office spaces, or enhancing industrial security, we are dedicated to making meaningful contributions to the well-being and prosperity of individuals and communities around the world.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers?
Lack of Education: Financial literacy is not a standard part of the curriculum in many schools. This means that unless individuals seek out this knowledge independently or receive education from their parents or other sources, they may not learn the basics of managing money, calculating interest, or understanding financial risks.
Also the evolution of technology, particularly in the financial sector, has indeed changed the landscape of financial literacy — if technology can simplify complex financial tasks why we need to understand the process, we just need to have a final result from machine.
If you had the power to make a change, what 3 things would you recommend to improve these numbers?
- Enhance Financial Education in Schools: Incorporating financial literacy into the school curriculum can equip students with the knowledge they need to make sound financial decisions. This includes understanding basic concepts such as budgeting, investing, and debt management. Schools can also encourage participation in financial education programs beyond the classroom, providing students with additional resources to navigate the complex financial landscape.
- Leverage Technology: Technology can play a significant role in improving financial literacy. Online platforms, mobile applications, and AI can deliver comprehensive financial education in an engaging and interactive manner. Fintech companies, with their wide reach and tech-driven solutions, are uniquely positioned to deliver financial education at scale. They can help individuals grasp complex financial concepts, from investing and saving to taxes and retirement planning.
- Implement Policy Changes: The U.S. Treasury has identified best practices for effective financial literacy and education. These practices can be used to inform financial education policy at the national level. A clear strategy for financial education can support economic participation by all Americans, especially those outside the financial mainstream. Financial education providers should also evaluate their programs for impact and develop a culture of continuous improvement.
Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing, what would you say? Can you please give a story or an example for each?
1 . Diversification Beyond Traditional Asset Classes
Story: While traditional asset classes like stocks and bonds are important components of a diversified portfolio, I’ve also found value in exploring alternative investments. For example, investing in private equity, venture capital, real estate, and even cryptocurrencies can provide additional diversification and potential for higher returns. By allocating a portion of your portfolio to non-traditional assets, you can reduce overall risk and capture opportunities for growth in different market environments.
2 . Embrace Contrarian Thinking
Story: One of the most valuable lessons I’ve learned as an investor is the importance of contrarian thinking. It’s easy to follow the crowd and invest in popular trends, but often the best opportunities lie in going against the grain. For instance, during times of market downturns or economic uncertainty, it can be tempting to panic and sell off investments. However, history has shown that some of the most lucrative investments are made when others are fearful. By maintaining a contrarian mindset and having the courage to buy when others are selling, you can capitalize on undervalued assets and position yourself for long-term success. The most obvious example was cruise companies during the pandemic. It was clear that those companies would financially overcome the pandemic. They have so much value invested when everybody was selling and were nicely rewarded.
3 . Conducting your own assessment of a deal and performing extensive due diligence are essential practices in smart investing even if there is time pressure or other pressures.
Story: The recent Theranos case serves as a cautionary tale about the importance of thorough due diligence and critical assessment, especially in high-profile and potentially risky investment opportunities. Despite intense hype surrounding Theranos, Google Ventures declined to invest after conducting extensive due diligence. GV’s investment team physically visited one of Theranos’ locations and tested the product, a step that few others took at the time. This hands-on approach allowed them to recognize inconsistencies and red flags that led them to conclude that the investment opportunity was not suitable for their portfolio. Similarly, when SDV was approached for investment, we declined due to our focus on other verticals.
4 . Consider the Tax Implications of Investments
Explanation: Taxes can have a substantial impact on investment returns, yet many investors fail to consider tax implications. A few years ago we nearly invested in a bond portfolio but when our tax advisor informed us of the nearly 30% withholding tax, this opportunity became less attractive than it was in Europe, so we ultimately decided to skip it.
5 . Ensuring that your partners and counterparties have aligned interests with you is paramount.
Story: A clear example emerged during my initial litigation experience in the US. Typically, attorneys charge clients on an hourly basis, which can incentivize them to prolong the case unnecessarily. In our situation, even before the official litigation began (a significant case involving a competitor), we had already accrued charges totaling hundreds of thousands of USD. Though we managed to negotiate the fees down by half, the expense remained substantial. To mitigate this issue from the outset, a more effective approach would have been to transition the attorney fees structure from purely hourly billing to a hybrid model, incorporating elements of both hourly rates and contingency fees. This adjustment would have better aligned the interests of all parties involved and minimized the risk of excessive billing. This is also applicable to fund managers or asset managers — always count their incentives. If the management fee is higher or equal to expected carried interest, don`t invest into this opportunity — or at least make sure that you have enough leverage to understand what is going on inside there and to change the situation if things go south.
What are your thoughts about investing in cryptocurrency? Can you explain what you mean?
Investing in cryptocurrency presents a compelling opportunity within the realm of alternative asset classes. Unlike traditional investments, cryptocurrencies offer unique characteristics that set them apart from conventional markets.
First and foremost, cryptocurrencies such as Bitcoin and Ethereum are less correlated to traditional public markets, providing diversification benefits to investment portfolios. This low correlation helps mitigate risk and can enhance overall portfolio performance, especially during periods of market volatility.
Furthermore, cryptocurrencies possess intrinsic value derived from their utility as alternative currencies and innovative technological platforms. For instance, blockchain technology facilitates secure and transparent transactions, eliminating the need for intermediaries and reducing transaction costs. Additionally, smart contracts enable automated and trustless agreements, streamlining processes and enhancing efficiency across various industries.
Moreover, cryptocurrencies serve as vehicles for technological innovation, empowering developers to create innovative solutions that address real-world challenges. From decentralized finance (DeFi) platforms to non-fungible tokens (NFTs), cryptocurrencies are driving transformative changes in finance, digital ownership, and data management.
The limited supply of cryptocurrencies, coupled with increasing institutional interest and adoption, contributes to their growing demand and overall value proposition. As investors seek alternatives to traditional fiat currencies amidst concerns of inflation and currency devaluation, cryptocurrencies emerge as viable stores of value and inflation hedges.
What are your thoughts about daytrading, using apps like Robinhood? Can you explain what you mean?
As investors, we’ve never engaged in day trading or super short term speculative investments. We believe such activities carry significant risks and can be detrimental to long-term financial goals. Our investment philosophy aligns with Graham’s value investment approach, emphasizing prudent decision-making, long-term perspective, and avoiding time pressure. We prioritize building well-diversified portfolios based on fundamental analysis and disciplined investing principles, rather than chasing short-term gains or engaging in high-risk trading strategies.
Apps like Robinhood have made trading more accessible to retail investors by offering commission-free trades and user-friendly interfaces.
However, day trading is inherently risky and can be highly speculative. It requires significant time, skill, and discipline to consistently generate profits, and many day traders incur losses instead. The fast-paced nature of day trading can also lead to impulsive decision-making, emotional trading, and excessive risk-taking, which can amplify losses and erode capital over time.
Furthermore, the gamified nature of apps like Robinhood, with features like flashy graphics, notifications, and social media integration, can encourage behavior that is detrimental to long-term financial health. The ease of access and instant gratification provided by these apps may lead to overtrading, chasing hot stocks, and neglecting fundamental investment principles such as diversification and risk management.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
I am deeply grateful for the support and contributions of my entire team, whose dedication and hard work have been instrumental in achieving our investment success. However, if I were to single out one individual, it would be our anchor investor and serial tech entrepreneur, Dmitry Volkov, CEO of Social Discovery Group.
Dmitry recognized my managerial and entrepreneurial skills early on and took it upon himself to invest time and resources into my professional development. Our partnership began 15 years ago when I was still an attorney with limited knowledge and experience in finance and investments. Dmitry’s mentorship and guidance have been invaluable in shaping my career trajectory and expanding my expertise across various asset classes.
What sets Dmitry apart is his visionary outlook and long-term perspective, coupled with a grounded and pragmatic approach to decision-making. He instilled in me the importance of setting ambitious goals while remaining firmly rooted in reality. His mentorship has not only helped me grow as an investor but has also influenced my leadership style and strategic thinking.
I am profoundly grateful for Dmitry’s belief in me and his unwavering support throughout the years. His mentorship has been a driving force behind my professional growth and achievements, and I am honored to continue our partnership as we pursue our shared goals in the world of investments.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
One of my favorite life lesson quotes is: “Success is not final, failure is not fatal: It is the courage to continue that counts.” — Winston Churchill.
This quote has been profoundly relevant to me throughout my life and career. It reminds me that success is not a destination but rather a journey, and that even in moments of triumph, there is always more to achieve and strive for. Similarly, failure is not the end of the road but rather an opportunity to learn, grow, and persevere.
In my career, I’ve encountered numerous challenges, setbacks, and failures along the way. Whether it was navigating complex legal litigations, weathering market downturns, or facing unexpected obstacles in investment ventures, there have been moments where success seemed elusive and failure imminent.
However, it’s during these moments of adversity that Churchill’s words resonate the most. They remind me to remain resilient, determined, and courageous in the face of challenges. Instead of being discouraged by setbacks, I’ve learned to embrace them as opportunities for personal and professional growth.
Moreover, the quote underscores the importance of perseverance and resilience in achieving long-term success. It reminds me to stay focused on my goals, maintain a positive mindset, and keep moving forward, even when the path ahead seems daunting.
Ultimately, Churchill’s quote serves as a powerful reminder that success and failure are not endpoints but rather part of the journey of life. It encourages me to embrace the ups and downs, celebrate victories, learn from failures, and continue to pursue my aspirations with courage and determination.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)
In the midst of what I believe to be the most revolutionary era in human history, the inevitability of the AI revolution looms large. This impending transformation has the potential to reshape countless aspects of our lives, and I am sure that this change will ultimately be for the better. Therefore, I would inspire people to not only understand and accept this thesis but also to embrace it. Rather than resisting or fearing the AI revolution, we should proactively seek out synergies with it, both in our businesses and personal lives. By developing strategies that align with the evolving landscape of AI technology, we can not only adapt but also influence the direction of this revolution. Instead of being passive observers, we have the opportunity to be proactive participants, ensuring that the AI revolution leads to positive outcomes for humanity as a whole.
Thank you for the interview. We wish you continued success!
About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.
Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.
While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.
