00:17:48 · Israel Slodowitz
So it's it's it's and and and also, JetCard is typically like where you'll first maybe get a taste of a NetJets or a Flexjet type of experience because they offer JetCard services as well. So that's typically where you'll maybe first enter into the bigger leagues of flying private. And then where does fractional come in? So fractional comes in really at the next step. Fractional, so maybe you flew some charters and didn't like that you kept getting different airplanes and different prices. You got a jack card and and you just gave them a massive deposit and you realized it wasn't that much better than Charter. So you decide, okay, now I wanna like maybe move to the ownership side of the aisle. And fractional is really on the ownership side of the aisle. So the main difference in the two is that on the fractional, you know, you're you are carrying the residual risk of the plane. So if the airplane depreciates, that the cost of the depreciation, the cost of capital is essentially on your dime, not on the charter company's dime. So you're getting a more consistent experience. You're getting an ownership type of experience. So you're getting a a premium sort of product, but you're also paying a premium for it because you hold the, essentially, the residual risk of the aircraft. So fractional and the two largest providers is NetJets, and then second largest is Flexjet do a phenomenal job, and you can essentially buy a one eighth or a one sixteenth of a plane. They'll manage all the operations, the pilots. You'll never have to worry about maintenance. Plane will be there at hours or twenty four hours notice, and you're sort of
00:19:28 · Molly O'Shea, Israel Slodowitz
[00:19:28] S1: getting a a taste of of ownership. You run a charter business. How is it different? [00:19:33] S0: Basically, there's two sides to craft. There's our operating business, which is somewhere in between the fractional and the JetCard. We're mostly a B2B company. We sell to all these other larger companies, which are brokers on these platforms. But what makes it interesting is that we actually because it's an operating business and we generate cash, we are able to run this exchange fund, which is a completely separate financial product that's designed for people that have low basis stock. Exchange fund are you familiar with exchange funds at all? Yeah. Yeah, yeah. So exchange funds, a simple way to explain it is 10 people come together with 10 different stocks, and they all contribute a stock into a fund, and they all get the benefit of owning. What people don't realize is that unless you have an operating business to run it through, like you have a business, You have income, you have cash flow, right? So you have a business you're running everything through. Unless you have an operating business to run it through, there aren't really any tax benefits. If you're like a SpaceX employee and you have a lot of stock, you don't have a business to run this airplane through. So not only are you paying sticker price for the flights, but you're actually paying almost double that because you have to sell stock to fund it. So this is, I think, one of the problems with this new massive wealth creation.
00:19:33 · Israel Slodowitz, Molly O'Shea
[00:19:33] S0: Basically, there's two sides to craft. There's our operating business, which is somewhere in between the fractional and the JetCard. We're mostly a B2B company. We sell to all these other larger companies, which are brokers on these platforms. But what makes it interesting is that we actually because it's an operating business and we generate cash, we are able to run this exchange fund, which is a completely separate financial product that's designed for people that have low basis stock. Exchange fund are you familiar with exchange funds at all? Yeah. Yeah, yeah. So exchange funds, a simple way to explain it is 10 people come together with 10 different stocks, and they all contribute a stock into a fund, and they all get the benefit of owning. What people don't realize is that unless you have an operating business to run it through, like you have a business, You have income, you have cash flow, right? So you have a business you're running everything through. Unless you have an operating business to run it through, there aren't really any tax benefits. If you're like a SpaceX employee and you have a lot of stock, you don't have a business to run this airplane through. So not only are you paying sticker price for the flights, but you're actually paying almost double that because you have to sell stock to fund it. So this is, I think, one of the problems with this new massive wealth creation. [00:20:54] S1: And just the onslaught of Silicon Valley becoming so big and all these with huge equity values.
00:20:54 · Molly O'Shea, Israel Slodowitz
[00:20:54] S1: And just the onslaught of Silicon Valley becoming so big and all these with huge equity values. [00:21:00] S0: Yeah, it's insane. The legacy models of buying an airplane, running it through your business, and taking tax write off, it doesn't quite work for these people. Their net worth is in capital gains, not an ordinary income. So we actually built an exchange fund, which is a very old financial product or financial structure where people can diversify. A bunch of people can contribute their stock into a fund pool together, kind of like a potluck, right, where everybody comes with a dish and they walk away with a meal. And and one of the rules for these funds to exist is that there needs to be an operating business in the fund as well. And historically exchange funds have used real estate and public storage units in Albuquerque and self storage, things that people don't care about. What we did was we took an already existing thriving operating cash flow business. And we basically layered an exchange fund on top of that. And what that allows us to do is it allows us to offer the members in the fund access, premium access to these plans they wouldn't be [00:22:07] S1: able to get otherwise. Wow. You have VCs on your website. Did you raise venture capital? Like, how did this start? Well, it actually just started by understanding that
00:22:21 · Israel Slodowitz
[00:22:21] S0: my problem was their problem. My problem was that I realized that when I had a single airplane, I had a very volatile P and L profit and loss statement. So one month we had very profitable, the next month it was very unprofitable because there was some sort of maintenance issue or a pilot left. And what I realized is as I started adding more airplanes to my fleet, I realized that the volatility started to come down and then while one airplane was down, four airplanes were flying and one airplane was down, six airplanes were flying. And I realized that the customers that I was flying had the exact same issue. They didn't really have a private aviation issue. There are many options when it comes to private aviation, all very good ones. But what did have was a stock problem. A big part of their net worth was concentrated in a single company. They were one article, one news report away from losing 13%, 14% of their net worth in a day. IBM lost 13% of its value in a single day. I think Broadcom just now, just this past week, lost like 10% in one day on a single earnings call or a single article that Anthropic is building some sort of software. So people who have now built this generational wealth for the first time also had a volatility issue. And I realized that I had the same problem my customers had. And that's when I started to learn about exchange funds and understand how they work and their mechanics and do a deep dive and ultimately came to my customers and said, hey, this is what I'm building. They were immediately very interested. And that's kind of how we we pivoted into this exchange fund model.
00:24:03 · Molly O'Shea, Molly O'Shea, Israel Slodowitz
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