SPEAKER_00: Hey everybody hey everybody we got an amazing show for you today we're trying something very new we are going to do a round table today with three people in the alternative asset space as you know that exploded in 2020 with people being really interested in cryptocurrency real estate startups equity crowdfunding uh art maybe nfts baseball cards all these alternative assets have exploded and i thought we have a number of people in our orbit who are experts on this what if we put them all together in a round table not just similar to what i did with the all in podcast with my friends who i play poker with now these aren't my besties these are people i know from the industry

David Friedberg: including rally roads chris bruno now rally road as you know has been on the program before and mark souster their investor has been on the program very cool where you can buy fractional ownership in a lamborghini or a corvette or something some famous car and they've done other assets as well masterworks scott lynn is on the program he is now one of the largest art buyers in the world because he buys a picasso or a monet uh or a basquiat or a warhol and then he lets you buy in uh and buy shares of that artwork and then we have fund rises ben miller on and they've been doing massive amounts of real

SPEAKER_00: estate investing and the three of them are extremely smart and are at the forefront of this and it's an amazing discussion but before we get into that discussion i wanted to kick off with a new story and we've been waiting for what would cause the next bubble uh or this bubble to burst in other words what would be the next dot-com bubble uh or the real estate and the great recession and there and the real estate collapse of 2008 we all believe this happens every 7 to 15 years we get one

David Friedberg: of these and at least in our lifetime i've lived through three of them three major ones i should

SPEAKER_00: say and it feels very bubbly right now a lot of assets feel inflated and in fact we're doing an asset round table here and some of those assets feel inflated there is um something that everybody in the cryptocurrency community has been talking about for many years and it seems to be bubbling up again and sometimes when i feel this i decide to go all in on it and i did this with nicola uh the ev company

David Friedberg: that has lost a massive amount of value that felt like a scam and i had the founder of that company on the podcast and y'all were like wow jake how a great interview you kind of put all this rope out there and this guy just kept wrapping it around his neck and then we had uh john carrie on the program

SPEAKER_00: after his first story about theranos and that story created a bunch of interest uh or him being his appearance on the podcast he told us later when he came on after the book bad blood came out he told us that he had more sources come forward after they saw his interview with me uh of course before that we saw bernie manoff so i've watched different scams in our industry and i've seen them unfold and i'm starting to get that spidey sense with tether and the reason i'm getting this is because there's been a lot of great reporting on this stable coin so it's incredibly complex we're not going to be able to cover this in one episode so i'm announcing today this week in startups investigation that will be a crowdsource investigation we're going to have a number of guests on the program and we're going to get to the bottom of this i should have probably done this theranos which i knew was a scam it was just obvious to everybody that this was like some sort of scam so we're starting today and we'll cover tether every week on the pod until we figure out if this is a scam or this is not a scam scam not a scam tether is going to be our focus and i'm going to need your help as the audience to start researching this start finding information and we're going to see if this is the next bernie madoff if this is the next elizabeth holmes or if this is reality so today we're just going to explain what it is and basically what people what has people concerned what are the red flags and as i said tether super super super complex all right let's do the work let's get into it this week in startups is brought to you by

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SPEAKER_00: tether claims to be a stable coin a stable coin is a virtual currency aligned with another asset in this case the us dollar and tether claims to have a one to one ratio every tether equals a one us

David Friedberg: dollar that's the claim and tether currently has the third highest market cap in all of crypto at 63 billion dollars bitcoin is number one obviously at 750 billion and ethereum number two at 300 billion phil potter one of tether's founders owners called tether paypal for the blockchain in an interview with what bitcoin did in 2019 tether's virtual coins are supposed to represent actual money and

SPEAKER_00: that you can redeem them at any time and the idea is that stable coins would help build liquidity into

David Friedberg: crypto exchanges what's a crypto exchange that's a website where you can buy and trade crypto currencies like coinbase but there are many many more coin bases in the world and some of them are regulated in a very deep considered up and up fashion and some of them are the wild west basically no different than you know russian bit torrent sites or you know unknown gambling sites on the web so on the web you could have very uh well-known e-commerce stores like amazon and then you could have really fugazi ones that are selling uh you know counterfeit product you could have the dark web and you could have the light web you could have you know bank of america in the same place you have some of these crazy crypto exchanges and so

SPEAKER_00: simply put if a crypto exchange cannot work with a bank and many of these fugazi shady underground crypto exchanges which can be built with off-the-shelf software you can buy white label software from what

David Friedberg: i understand to just turn on your own exchange then you can pick your own rules and you can have no office and you could do this with a small number of people in fact one of the claims is that tether only has 13

SPEAKER_00: people so if you were one of those exchanges and you don't have access to bank accounts you can accept tether because you know every tether is going to be one dollar it is pinned and it doesn't change

David Friedberg: now bitcoin it changes radically you could have bought at 63 and then it went back down to 31 now it's up to 40 and it's going to go all over the place and that's a feature not a bug right people are

SPEAKER_00: buying bitcoin specifically because they want to see it appreciate and they want to take that risk stable

David Friedberg: coins the opposite so you have the fugazi exchanges in the world that are doing money laundering ransom

SPEAKER_00: dark pools of capital are trading with tether because they're stable coins and they don't have access to real banks they don't want to do things like know your customer kyc and of course all this pumping and leverage that's all done by the fugazi crazy exchanges if you want to buy the what they call

David Friedberg: alternative coins before those alternative coins get onto a coinbase which has a process for putting them on which we talked about in the xrp uh episode where xrp was supposedly the company ripple was trying to pay off exchanges to list them including coinbase and kind of trying to give them millions of dollars allegedly in the sec complaint to get them to put it on the exchange that's how valuable it is being on a real exchange and the ripple episode by the way is 11 56 so that's where these tethers come in all these underground casinos exchanges are using tether so people buy tether and then they make their trades so currently there are over 60 billion tethers in circulation according to you know our research on the web and this is a very opaque space and they should have 60 billion in usd to back it up and that is

SPEAKER_24: according to tether at the start of 2020 there are only 4.8 billion tethers in circulation and then from may 2020 to late may 2021 tether's year-on-year growth was 581 percent from 8.8 billion to 60

SPEAKER_26: billion eclipsing that of all the rival stable coins combined according to market intelligence from

David Friedberg: mondo vision uh whatever that is tether's daily trading volume exceeded 195 billion in late may according to coin gecko and all of this led to the new york attorney general saying what is going on here and they started investigating in april 2019 the new york attorney general's office sued ifinex i-f-i-n-e-x the parent company of bitfinex and tether which people didn't know were the same company

SPEAKER_00: they sued them in april 2019 for covering their losses so from 2014 to 2018 bitfinex allegedly placed over 1 billion with crypto capital because it was unable to find a reputable bank to work with

David Friedberg: crypto capital was a panama-based fiat banking platform that allowed users to deposit and withdraw funds to fund cryptocurrencies if this sounds familiar this is a lot of what happened in poker there were all these pop-up exchanges and ways to get money into bank accounts crypto capital was uh then either lost all or uh fled with 850 million of bitfinex's money this led the new york attorney general to sue iphonex the parent company of bitfinex and tether in april 2019 and they basically alleged that iphonex had been co-mingling basically blending client and corporate funds between bitfinex and tether to cover up the missing 850. this is exactly what happened with full tail poker uh according to different lawsuits um that they were co-mingling the customer accounts with the corporate account so in other words they were allegedly dipping into tether reserves to keep the crypto exchange bitfinex solvent without alerting investors to the issues this is classic classic fraud um signaling a lot of times you'll have people who manage other people's money and they are then gambling or you know buying stocks or doing other kind of behaviors with their clients accounts which are not supposed to touch so bitfinex and tether recklessly uh this is the quote bitfinex and tether recklessly and unlawfully covered up massive financial losses to keep their scheme going and protect their bottom lines said new york attorney general uh latisha james in february tether's claims that it's a virtual currency was fully that was fully backed by us

SPEAKER_26: dollars at all times was a lie said new york attorney general uh latisha james in february so uh bitfinex and tether group said they admit no wrongdoing and uh they settled this claim and agreed to not do business in new york so this is the red flag of red flags you already have one

David Friedberg: major jurisdiction not allowing them uh to participate in may 2021 tether provided a breakdown and part of that settlement was also to um produce some transparency which the transparency does not feel very transparent and that's what's causing the latest round of is this actually a scam is this

SPEAKER_00: some sort of ponzi scheme is there something fugazi going on here and in because if you're sure if tethers are used for nefarious uses in part like these crazy exchanges that can't get banked that

David Friedberg: means tether is kind of like poker chips from a casino that has loose ethics or morals and they're being used you know to buy and trade and other services and or uh you know uh items so there's something weird going on here these quarterly reports were a term of their penalty with the new york attorney general so it's super unclear um to people what's going on in these reports and that's what's causing the latest uh brouhaha if you will today many small business owners are busier than ever

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David Friedberg: episode so in may 2021 tether provided a breakdown of their reserves uh from march of 2021 which included just under 30 billion or 50 of reserves in what's called commercial paper now commercial paper is a very another opaque pool of capital so now we've got like all these different weird opaque pools of capital we have a settlement with the new york attorney general and uh commercial paper are basically short dated investments similar to cash uh so this would make tether with 30 billion in this commercial paper the seventh largest holder of short-term debt in the world let's let that sink in so tether is suddenly the seventh largest this is according to the financial times which has now got their teeth into this um and another 18 percent is held in fiduciary deposits and more than 12 percent is in secure loans and nearly 10 is in corporate bonds funds and precious metals cash made up only 2.9 percent according to the company's disclosures jp morgan analyst said that tether's large commercial paper holdings may suggest they're struggling to find a bank willing to take its cash as a deposit due to

SPEAKER_00: reputational risk concerns so nobody knows what's going on here and then in the commercial space people don't in the commercial paper space the financial time stories was saying hey nobody knows who these people are nobody sees them and that's kind of weird too and this relates to bernie madoff where you had years years of people shedding a spotlight on bernie madoff and it took maybe seven eight years for the bernie main off fraud to unravel and one of the reasons it unravels people are saying he's getting all these like really consistent one to two percent returns a month

SPEAKER_24: and it was too good to be true and nobody sees any trades so if he's got this much money and it's the largest hedge fund and we're one of the largest where are all the trades and now we're having a

SPEAKER_00: similar moment here now again we don't know that's why we're calling this a this week in startups investigation so their alleged crypto market manipulation has been covered for years including

David Friedberg: financial time cnbc coindesk um and individual citizen journalists like bitfinexed which is a twitter user and amy castor which we'll probably have them on the podcast soon maybe do a little in depth with some of the people who are obsessing over this and typically whistleblowers are weird people uh there were weird people like john carrie rue who just fought and fought you know i don't want to say weird like as in not uh sincere in any way but they're unique individuals who when they see a fraud wanna just dig in dig in dig in and we'll get into that part of this archetype because there is a pattern here with scams and that's a big part of what this investigation will be about for us here on this week in startups i did a tweet about the issue and about bernie madoff specifically and i basically quoted from the wikipedia page in 2000 2001 and 2005 markopolis alerted the sec of his views but each time the sec ignored him or gave his evidence only a cursory investigation madoff was finally revealed to be a fraud in december of 2008 when the market collapsed

SPEAKER_55: and people tried to withdraw their money and couldn't so is this going to be another pattern

David Friedberg: where tether uh hits some sort of moment where everybody wants to redeem let's say there was a really massive uh collapse in you know uh the stock market and then it had a ripple effect to the crypto market or vice versa the crypto market went down who knows any black swan event creates a contagion and then there's a run on tether could that be the moment we find out tether is a total fraud scam or shady in some way we know it's shady already but is it a fraud and is it a black swan is the question we're going to try to answer here i need your help with that obviously so you can uh just add twi startups and at jason on twitter as part of this investigation and use the hashtag tether investigation we'll just make that the official uh hashtag and we'll all just talk about this because if it is isn't a fraud we should know but i also tweeted about the fraud playbook and in the case of a fraud whether it's madoff or it's theranos there's a classic playbook attack the critics obscure any inquiry and claim you're being persecuted so uh we see a lot of the tether army attacking critics we see a lot of uh obscurification of the inquiries going on um and i'm not sure if we've seen evidence of you know the claims you're being persecuted like elizabeth holmes bernie madoff and

SPEAKER_26: even uh the founder of nicola trevor milton was our uh was our guest and uh you know he he was claiming he was you know like jesus christ being uh persecuted by people unfairly so uh in june 2018

David Friedberg: tether hired a law firm not an accounting one called free sporkin and sullivan which attested they had 2.5 billion reserves to cover all the outside tethers but this was not off audited and the bottom line is an audit cannot be obtained uh stuart hogner said tethers general counsel the big four firms are anathema to that level of risk we've gone where we think is the next best thing in march 2021 tether released a report done by moore cayman an accounting firm from the cayman islands okay

SPEAKER_26: no red flags there started stating that tether had 35 billion in assets backing up 35 billion in

David Friedberg: tethers and this was not a full audit either it didn't say what the assets were that covered this different folks on twitter have already um come back to me there's a lot of theories here we don't know which theory is true we don't know what reality is so this is a process but jacob king said

SPEAKER_00: uh how the scam works tethers can be printed can print infinite amounts of worthless usdt they can then inject this into bitcoin ethereum litecoin and others to cost prices to pump notice how during the months they stop printing tether the market moves sideways or drop significantly

David Friedberg: and this is you know and he put a chart there where it shows when tethers are printed you have this big spike now i've heard a bunch of different theories here that when there's a dip the tether folks want to buy and that causes the market to go up because they're buying right um and so there's demand or that when it dips they're doing this to pump this you know to the value of bitcoin ethereum and other things and so uh this is going to be uh part of the investigation it was originally when you look at the background sometimes that tells you everything you need to know that this is not rocket science tether was originally called real coin and was started around 2012 and launched in 2014 by brock pierce who i know who is an eccentric individual i would call us friendly uh we've known each other for 20 years but he has a bunch of strange things in his past i'll leave it at that and shortly after the launch real coin rebranded as tether and partnered with the crypto exchange bitfinex and to understand tether you need to understand the bitfinex relationship bitfinex and tether are both owned by a parent company called iphonex okay now this is you know usually when you there's a shell game going on uh that's another red flag might not be but the red flags are piling up here and that is run by three characters that i think the consensus is that they are shady at best is kind of the vibe i'm getting from twitter i'm not sure if that's how i feel i've never met them but they've all been mia for about two years and this reminds me of elizabeth holmes just being unwilling to show the technology the ceo jl vander veld is a very secretive person no interviews no public appearances the chief strategy officer phil potter uh he worked at morgan stanley 90s lost his job about bragging about his lifestyle uh according to this new york uh to a new york times reporter and the cfo giancaro devazini um he was caught pirating and selling microsoft software in italy uh in 1996 uh and it wasn't like um a small amount of pirating and so it's a super complex org from the new york attorney general when you see these super complex organizations again a red flag uh but the chart shows that iphonex tether and bitfinex all have some group of shareholders in common

SPEAKER_26: and uh bifinex itself has been hacked at least three times and in 2016 claimed uh they were the victim of the second largest hack in the bitcoin in bitcoin history so uh at the time bitcoin was at

David Friedberg: five hundred eighty dollars and the stolen bitcoins worth 70 million um and that would make them worth almost five billion today bitfinex never reveals the full details of that breach and they were unable to absorb the losses of the hack and announces all the customers will lose 36 of their assets to cover the losses across the board in return customers receive an iou in the form of bfx tokens valued at

SPEAKER_26: one dollar each according to the new york times nathaniel popper coinbase got a better deal after threatening to sue uh bitfinex so it's all super complicated we're going to need your help to unravel this it's going to take time just like you know the elizabeth holmes nicolas saga theranos all of

David Friedberg: these things enron they took years to sort themselves out sometimes decades who knows if this is a fraud or not who knows if this is a black swan or not but let's try to figure it out together use the hashtag tether investigation and make sure you at mention twi startups or at jason let's do a little investigation here make it a public investigation and we'll open source this if coffeezilla uh told me he's reporting on this in a recent episode uh or he's going to report on this a lot of people financial terms is obviously on it a lot of people are talking about it let's just try to be a center of excellence to figure this out and let's hope it's not a fraud or that if there

SPEAKER_26: are misbehaviors here that it doesn't result in a contagion and a black swan like event okay on to the

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SPEAKER_69: i wanted to try something new because i like to do innovative stuff on the podcast and one of the most innovative things going on in the world today is alternative assets what are alternative assets well they're assets that maybe aren't traditional like the stock market bonds and the home you live in when people talk about your assets and asset classes they're typically talking about those three things

David Friedberg: maybe cash maybe gold or some other things in there but i think even gold might be considered an alternative asset well one of the things we've all learned is that there are classes of

SPEAKER_69: investments that are much different than stocks and stocks might be overheated there's only 4 000 or so public companies we have half the number of private companies than we had just i think two decades ago what does that mean for investors looking for a return on their investment it means they might need to look other places because those assets like buying amazon or buying disney at this point they might they might be fully valued or some might argue overvalued also alternative assets bring with them

SPEAKER_70: rewards that uh may be non-financial if you like to collect baseball cards comic books cars invest in real estate uh art or startups you might get an absolute joy out of selecting what car classic car you're going to buy or which piece of art you're going to invest in or what startup founder you're going to get to meet next or which real estate you're going to get to own a piece of and be able to look at it and just enjoy architecture or maybe renovating it or being a landlord etc so i thought we'd do an

SPEAKER_69: alternative asset roundtable because i run something called the syndicate.com which allows 8 000 people who are accredited investors to ingress in startups with me and every month i share six deals and we get a ton of joy out of it but a group of people have been doing something similar and we have this parallel existence and i've had them all on the podcast you know you've seen them before but we've never had a round table so we're trying something new today just a little round table and with me today is chris bruno chris of course is the founder and president of rally road he previously ran spotter uh from 2013 to 2018 and if you don't know about rally road they sell shares in collectible

SPEAKER_26: assets such as cars trading cards memorabilia whiskeys wines watches and more and you can watch my interview with him on episode 920 a couple years back and they do this for any investor both retail and accredited welcome back to the pod chris bruno thank you jason uh am i accurate in terms of my

SPEAKER_73: description of rally road i thought it was fantastic just as good as it was a few years ago perfect so

SPEAKER_57: we understand what we're talking about here how many offerings have you done on rally road and i think you've been around for three years now or four we've been live for about three a little over three years

SPEAKER_76: now we've done uh upwards of 300 uh initial offerings at this point across about 15 asset classes

SPEAKER_26: love it so 300 three years in 30 months it means you're doing about 10 a month fantastic means you're doing two or three a week also with me a really fascinating guy i got to have a drink with when

SPEAKER_71: i was in new york uh right before the pandemic scott lynn he is the founder and ceo of masterworks

David Friedberg: which sells shares in blue chip artwork from people like banksy picasso warhol

SPEAKER_26: and again uh retail and accredited investors he was on this week in startups on episode 2087 scott how are

SPEAKER_57: you doing i'm doing great and you're still in your beautiful is that your loft or your office

SPEAKER_41: this is my this is my home i mean my lord that looks like something out of like a brad easton

SPEAKER_69: ellis novel or something look at how gorgeous those windows are you're downtown looking uptown is that what i'm saying downtown looking downtown oh downtown oh yeah okay i said well is that the woolworth

SPEAKER_57: building behind you i think yeah what was going on um now how many you launched uh or started selling art i think it was between two and three years ago am i right on the platform yeah i mean i think when

SPEAKER_88: when i was last on the podcast i feel like we'd only done a couple of paintings at that time i think it

Chamath Palihapitiya: was one or two so how many yeah yeah i think we're i think we're up to 60 something now 60 paintings these are all one to 20 million paintings amazing the combined value of those 60 is getting close to

SPEAKER_93: a billion dollars over half a billion no no no i think it's i think it's like i think a um right now is around 175 you know this year we buy 400 million in art wow so you're at 175 but you're going

SPEAKER_26: at a breakneck speed if you can hit 400 million under management means you're adding 10 20 30 million dollars worth of art a month yeah we're about 30 million months now that is extraordinary in terms of collectors how many collectors in the world are adding 400 million a year to their collections i

SPEAKER_100: mean we you know we don't know in the in the art market there's there's different types of buyers

SPEAKER_102: i mean we we think we're the largest buyer but there's you know there's this community of people that buy 100 million dollar paintings who you've probably heard of so they may spend more

SPEAKER_104: um but we're probably a top buyer at this point remind me to ask you when we get into the round

SPEAKER_107: table about that um picasso or maybe picasso of like uh the da vinci one or whatever it is that

SPEAKER_110: billion dollars yeah you can tell you're clearly not an art guy whatever that one was i saw it in

David Friedberg: person it looked terrible uh it was like muddy and what is it what which one was that what painting was

SPEAKER_26: that the the the da vinci uh salvador bundi the salvador yeah and yeah um not a fan saw it in person but somebody paid a billion dollars for it or mbs maybe paid 500 but i want to know all about

SPEAKER_69: that um and how that happened and then for the first time in this week in startups ben miller who is the co-founder and ceo of fund rise which has been around for a decade doing private real estate

SPEAKER_26: investing again both retail and accredited retail means uh you make under 200 000 a year have under a million dollars in net worth in the united states or thereabouts you can look up the accreditation laws

SPEAKER_71: which are changing which will be one of the topics we'll discuss today ben welcome to the pod

SPEAKER_115: hey hey nice to have me uh it is nice to have you yes i agree so tell me uh how much real estate

SPEAKER_26: you bought in the first half of this year in 2021 what was the first six months like how many offerings do you do and what's the total value of the assets under management what did you do this

SPEAKER_119: year just give people a ballpark uh we're probably buying about a hundred million dollars of real estate

SPEAKER_120: almost a week what wow something like that is truly significant yeah i think we're the 20th largest

SPEAKER_04: real estate investor in the world back to this point okay so something is happening here in terms of

David Friedberg: the scale of this let's start with scale just going around the horn here uh we had the pandemic which meant people were staying home we had the stock market becoming overvalued we had stimulus and we had people's appreciation in the stock market maybe making them look to make other bets how is the

SPEAKER_26: pandemic uh you know impacted everybody's business i'll start with you chris then go to scott and ben

SPEAKER_76: chris how has the pandemic changed things for you if at all i mean it's been a dramatic change truthfully um you know i think one all of the trends that you're talking about are exactly right so putting a focus on alternatives um i think that uh younger people becoming more self-directed and being excited about investments that resonate with them on a personal level has become more important and then i just think attention right so there's uh you know there's such a there was there was such a lack of other things to do that uh focusing on a lot of the old hobbies a lot of the things that people are

SPEAKER_126: excited about a lot of nostalgia doing things with the family um i think that became a learning opportunity as well as one for uh you know deploying capital in different ways uh maybe if it's not in on experiences it's on things that you know resonate and or feel experiential but are uh you know net positive in terms of your you know your portfolio and your uh investing sort of you know competence so they put a lot of attention on us and it's been uh it's been you know triple digit quarter over quarter growth uh since sort of the beginning of the pandemic wow so doubling

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SPEAKER_69: episode are the assets themselves becoming more expensive much more expensive let's talk a little bit about inflation there because we have fears of inflation we have money printing going on and is that also hitting the asset classes in other words things that you maybe syndicated to use a word in 2019

SPEAKER_23: did they see massive appreciation by 2021 yeah a little bit different we're in a lot of different

SPEAKER_76: categories so different you know categories have sort of scaled at different rates which one the most uh you know i'd say over the last year uh sports cards and trading cards sports collectibles

SPEAKER_126: has just been an insane you know place of growth um so that really has seen probably the largest uh sort of uptick over that period of time uh you know comic books actually just an incredible category rare books also that goes with it in the last week we've exited i think uh four individual comic books off the platform um you know returns that sort of range from you know 10 on the low end to 40 on the high end in you know carrying times of three to nine months uh so how do you make that

SPEAKER_57: decision to sell after just three to nine months or is that you're saying people partially selling

SPEAKER_76: and it's still staying on the platform no no these are these are full exits off the platform we integrate that decision making with the syndicate you know you to use your terms so uh we pull our entire syndicate and get a taste for how they're feeling at any point in time and you know leverage that

SPEAKER_139: information very heavily in our decision to to liquidate an asset so um you know ultimately make

SPEAKER_26: the decision and everybody in the syndicates along for the ride correct trust you to make the great decision so if they wanted to stay in it and you force them to take a 40 profit for some using air

SPEAKER_143: quotes here because they agreed to do this but to trust your decision making um they just have to live with that they're going to get the 40 that's right you know not just our decision making right we

SPEAKER_76: have an incredible advisory board people in that given you know in each given vertical so there's a lot of thought that goes into it a lot of data that goes into it instead of selling out one of

SPEAKER_47: those comic books that went up 40 why not put those shares up for sale to the rest of the

SPEAKER_55: rally road audience as opposed to clearing them completely that that's a that's a lot of what's

SPEAKER_76: happening so our secondary market is pretty robust at this point in terms of transacting in the securities good price discovery etc um i think that's an interesting feature you know it's one that's funny that we were talking about last week is you know in the case of an exit perhaps there's a way to uh keep the people who who want the asset in the asset um and keep the people who don't want the you know don't want the who want the liquidation event to get that as well so it's a really cool feature that we're actually kind of whiteboarding as we speak it's an interesting

SPEAKER_57: feature because you as the platform could charge a fee for you would get carry on the 20 you would

SPEAKER_151: get i'm assuming 20 carry when they sold their shares we don't charge any carry uh or any or any

SPEAKER_76: management fees on on money under management so uh so you just get money from when you originate the deal we get money when you originate the deal and we also invest in every one of our deals to be aligned with our community so uh we're happy you know to see positive returns when they come across

SPEAKER_24: the the interesting thing in the venture business is if i was to sell some shares um to other syndicate

SPEAKER_26: members so if i had late stage syndicate members and the early stage ones wanted to sell their position in calm let's say i would get the 20 carry on that and then when the late stage folks sold again i would get carried twice so it would be a way to get the twice and i would have earned that because

SPEAKER_57: of uh having set that up scott what are you seeing in terms of appreciation from the 2019 class to 2021 obviously it's been bonkers and then people seem to be understanding art as a class more is that correct

SPEAKER_102: yeah i mean i think it's still very early days um for for understanding art i mean we have the leading research team in the art market to understand returns correlation etc we published the first report with city in 2019 on on correlation between art and other asset classes you know concluding it's effectively an uncorrelated asset class um but but most people's understanding is very very early if you look at art overall and we specifically focus on what's called contemporary art which is our created after world war ii that segment has appreciated a 14 year for the last 25 years um and it has a you know it has a relatively low amount of uh of volatility overall so you know it pretty much appreciated at that during um uh during last year as well so we haven't you know as a business we've obviously seen the same thing that i think other platforms have which is kind of a surging demand from from retail investors to get to know the asset class or the asset class invest in specific offerings um but you know the asset class at least from our perspective continues to be pretty steady and perform pretty pretty consistently

SPEAKER_158: how do you get paid as a platform uh our management fees are like yours which is which

SPEAKER_102: is a one and a half percent uh per year management fee and then 20 carry when the painting sells

SPEAKER_26: got it so if you were to buy this 10 million dollar painting uh one and a half percent 150k a year over 10 years 1.5 million

SPEAKER_71: and does it cap out at a certain point or is it all for every year it doesn't i mean the you know

SPEAKER_102: stating maybe stating the obvious but but art doesn't produce income right so the way that we earn that one and a half percent fee is by issuing ourselves equity in the painting oh god um so we

SPEAKER_104: get shares in the painting for our management fee and then we get 20 of the profit when the painting sells

SPEAKER_26: so if you hold on to it you would own 10 then you sell it you get 20 of the 90 if it doubled in value and was a 10 million dollar painting you would get to 20 of 9 million you would get that 1.8 million

SPEAKER_143: and the and the investors would get the other seven six point two or whatever it is for seven six point twenty eight i think seven two yeah yeah i'm doing math quickly here but um yeah so that's a

SPEAKER_26: really great business for you because that one and a half gets you more ownership and then that keeps you aligned and you'll make a great decision if you own 10 percent the painting 10 years from now are you seeing people um trade shares yet do you allow people to trade shares on the platform

SPEAKER_172: yeah we launched trading markets actually during covet so we now have um i think it's still relatively

SPEAKER_102: small about 20 of our our investors uh with trading accounts so something like i think 12 or 15 000 investors have trading accounts now so we're seeing you know we're seeing good liquidity in the trading market um slowly slowly growing over time uh we always tell people to think of these still as three to ten year illiquid holds um but you know now there is

SPEAKER_104: there is there is real activity on the secondary market so people can't get out get out early if

SPEAKER_26: they want has anybody asked you hey you're going to do 400 million this year can i give you four million dollars and be one percent of that i'm thinking like an institutional investor a family office have you had those folks come in and say listen we trust your judgment you pick what 40 pieces you're doing at a million dollars on average each or 20 pieces at 2 million whatever or 10 million

SPEAKER_151: whatever your number is that you're doing uh we just want to have a percentage of what you buy this

SPEAKER_102: year or just put 10 million into it yeah so so we um so like i mentioned we have the leading research team in the our market we've we've been working with firms like goldman morgan stanley bank of america separately mayoral separately us trust hsbc just a long list of private wealth firms as well as institutions to understand the asset class most research teams within these firms have have no idea how to think about art at this point so we we've been doing that for a couple years now and i think a lot of those conversations are are starting to lead to um maybe conversations around around

SPEAKER_104: you know some sort of white label product to those firms but i think we're i think we're still a ways out from institutions in particular really recognizing artists is a strategic asset class

SPEAKER_26: got it okay and then ben i assume in the real estate market coming around the horn here if you were in 2019 commercial real estate at the peak you got slaughtered because of the pandemic and then if

SPEAKER_71: you were in residential you got absolutely you know incredible 30 40 50 returns over that two-year

SPEAKER_181: period what's it look like in the real estate space right so we were in residential we have something

SPEAKER_182: like 18 000 apartments on our platform across the sun belt so we we got ahead of that wave and we're also now in single family rental and so um it's actually the the pandemic whiplash that we're seeing so we we did pretty well during the pandemic there was a lot of um sort of normal it was almost normal growth across the portfolio despite the pandemic in the sunbelt for residential and then at the end of it it just has gone crazy and you're seeing like whether it's homes or apartments rent growth rent growth organic rent growth 10 to double digit uh year over year or over the two years no i mean

SPEAKER_187: literally like in the last 60 days wow what do we attribute that to is it because i've read this

SPEAKER_70: wall street journal story that a lot of private residences were getting bought by investment firms

SPEAKER_26: who are over bidding is it that there's just a crazy housing shortage or is it that rich people are buying two or three homes during this madness and um we're seeing inventory shrink even more what's

SPEAKER_182: happening it seems to be a confluence of factors so so um we we're most focused on rental rental residential so that can be apartment buildings or can be single-family housing that we rent and um i think it's a combination of inflation real inflation is actually happening everywhere i mean we you know we have like thousands of homes we're buying and there's all a supply chain failure and there's you can't get a refrigerator in texas i mean just absolute so prices are are up i think that there are a lot of people who decided to move back to the cities ah all of a sudden all but once in austin austin rent growth 14 percent right in the last 60 days 60 days wow yeah so yeah it's crazy so it's um so yeah the key this is like i think all of us you have to buy the right stuff so if you are in your room if you're a multi-family if you're in residential in like uh the high growth places like austin and nashville and and uh dallas like

SPEAKER_151: there's just been and you just happen to not be in san francisco in new york or did you have holdings

SPEAKER_194: there an accident yeah no no we got out of new york and san francisco we have with housing in san

SPEAKER_182: francisco we have we have in dale city we had like 150 home development but um it's just too expensive we always just we felt like it had gotten crazy and we just got out and sold everything back in like 16 17. so i mean prices matter yeah entry price certainly matters and this is something we've

SPEAKER_71: been talking a lot about with our syndicate we've seen startups you know we invested in calm thumbtack and uber for 15 million dollar valuations combined 5 million 4 million 5 million i think and now we're seeing people with less traction than any of those three startups have asking for 20 and 25

SPEAKER_70: million caps now the exits are much larger but you know if you look at the entry price it actually makes more sense for us to wait until they get to product market fit and then pay you know 40 million then

SPEAKER_26: pay 25 million when they haven't even launched the product yet or they're just in beta so i do think entry price matters and i think looking at uh comic books cards uh that have appreciated massively how do you start thinking about this inflation is it scary now to you know christopher be buying cards or comic books at this time and and then how do you deal with that disconnect where you're selling in one case because you had this massive appreciation but you still want to build your collections and

SPEAKER_75: have offerings how do you how do you snipe those yeah and i think it's a great question i mean we've um we've been very data driven about it and very deliberate about it and i think we've also been

SPEAKER_76: uh way ahead of the curve in a few of these different asset classes in 2017 we were building an inventory of sports collectibles and sports cards um so a full you know year to two years before

SPEAKER_126: it really started to have its run up we're doing that currently in some new classes that we think are going to be exciting for people and sort of have the next places where attention starts to go and then i think the other part is uh is when you buy quality um you know i think in general across a lot of these different collectible uh you know asset classes you see these periods of hyper sort of growth um and then you know maybe it gets a little bit too far but the good stuff uh is really hard to replicate and once it gets to a certain level it doesn't tend to to fall too far so when we focus on the high quality assets we focus on the top of the market um is less scary because uh you know there's there's one of few in many of these cases and those one of few continue to have sort of perpetual um interest from multi-generations across a lot of different periods of time and that's held

SPEAKER_26: pretty consistently uh you know today and uh today i asked if anybody wanted to debut something and you were you actually had something you wanted to announce today so what a perfect time tell us what

SPEAKER_71: is the latest vertical you're going to go after you see an opportunity yeah and so i mean for us uh

SPEAKER_76: you know intangible uh collectibles is something that i think is getting pretty exciting and one of the first ones that uh that i'm excited about is actually domain names oh yeah so that's a you know an asset class that you know has a lot of history of appreciation um our cash flow producing assets which i think is really sort of you know a particularly fun super comprehensible and definitely you know have some of those emotional sort of returns where you know it's really a way to sort of invest behind

SPEAKER_126: brands companies etc um and do so in a way that's uh correlated with the growth of that sort of category or with the you know underlying um you know uh company that owns the url uh very much like the real estate

SPEAKER_146: business and i think that's something uh that's going to be a lot of fun for us i love the domain name space i i still

SPEAKER_128: own mahalo.com and uh a day.com a d a y.com well if you're looking for some liquidity you know we've

SPEAKER_206: got some other things that's right you and i are working on another deal i wanted to announce that

SPEAKER_26: today i guess i can say it right that i'm considering putting my uh 16th roadster ever made uh the tesla 16th roadster with the new 300 mile battery pack in it on the platform uh and selling

SPEAKER_71: half of it and then you would take custodia of it mainly because i'm looking at it as a collector i

David Friedberg: still want to have upside in it but i'd love to have another 50 of people have upside in i'd love to get it out of my garage and just have you take care of it not me uh and then do you do the same thing where you get a little bit of a management fee and get shares in the in the product as time

SPEAKER_76: goes on we we don't we would uh you know we would purchase our shares alongside the community in the deal so uh that's how we would have exposure to it um and you know we've been doing a really i think great job monetizing our collection um through the sale of merchandise uh and other sort of i would say like second order collectibles behind the investing um and so that's been a great revenue stream what's an example of that uh you know so we did the last um the last floor uh that kobe played on right as a as a section of the floor he signed it um was the last floor he played on and that was

SPEAKER_126: something where uh we did sort of a miniaturized version of that where uh where investors as they went through the process could uh purchase that if they got into the ipo and so you know we sold i think uh you know three or four hundred of those on the back end of it and that's a great revenue stream that actually first goes towards um you know all the things that that it costs you know the insurance the maintenance the storage um it offsets all of those costs and you know at some point i'm hopeful um and and i think we've got a real line towards uh driving dividends from that business line for our investors so the collection as a whole starts to become you know revenue generating it already is

SPEAKER_51: and then it will become hopefully profitable at some point amazing and uh i think scott you can't

SPEAKER_26: talk about specific offerings at masterworks but you did want to uh or agreed to tease maybe a little

SPEAKER_214: bit of categories that you're looking at yeah i mean i'm happy to talk about uh i guess artist markets

SPEAKER_102: and how those have performed over the past the past year so i think the most interesting artist market uh from our perspective has been the banksy market so the banksy market is is more than doubled uh over the past year and and we find his market really um really fascinating because you know banksy doesn't have what we consider we define as cultural significance meaning there aren't really institutions that collect banksys work there isn't an a dealer really represents his market but yeah he's so

SPEAKER_217: disproportionately culturally relevant correct yeah so it's so interesting so he's a he's a pop culture

SPEAKER_102: icon right but the the art market uh machinery doesn't doesn't really support him because is

SPEAKER_219: that because they don't have he doesn't do galleries and he's kind of outside the system and he's an

SPEAKER_104: outsider well he's anonymous right like nobody even knows his name so it it's difficult for the art world to uh to to really support him but you know is that because of providence uh they don't know that

SPEAKER_70: it's actually real or not and that that's a challenge you know it's not it's interesting there's a

SPEAKER_104: there's a um a gallery i guess called pest control which is which is really uh operated by um by people that know him and are affiliated with them to authenticate all his work um so there's a good

SPEAKER_220: way to authenticate the work but you know he he's just never really been part of part of the art world

SPEAKER_102: um but nonetheless we've seen a lot of people who are not what we would consider traditional

SPEAKER_104: collectors come to the art market and buy banks his work uh in a big way a lot of them frankly today are our crypto people um and we've never you know never seen that before like when when 10 million paintings sell or 20 million paintings sell they typically send to tend to sell to people who are already known entities or known known collectors got it um so we think that's a really

SPEAKER_151: interesting market yeah it seems fascinating if you could start rounding up banksies and selling those

SPEAKER_228: or just anybody in that in that area it would be amazing people are people are cutting them off walls

SPEAKER_03: at this point you know well that's another thing is if you if you did cut a banksy off of a wall

SPEAKER_69: and then tried to sell it the person who owned the wall owns the wall so you just stole the wall but who owns the banksy painted on the wall i mean it would be it would argue that the person who owned

SPEAKER_112: the wall would own the banksy then yeah the person in that example the person who owns the wall

SPEAKER_234: owns owns the banksy is that right oh my god how crazy is that yeah it's uh it's it's crazy right

SPEAKER_219: now yeah the banksy is fascinating how long has he been operating and then are there risks with these

SPEAKER_102: anonymous artists well so so we would say yes right we would say that if institutions don't collect

SPEAKER_104: artists if galleries don't represent artists they're kind of the market makers in the art world right they determine what's important they determine what's culturally significant they they build deep collector bases so people um you know people can can there's depth in the market there's liquidity in the market um he doesn't have any of that and frankly banks he also doesn't produce that much work um which is also why you know if you see things that are you know cut out of fences or walls selling for

SPEAKER_220: for millions of dollars um but yeah i mean we we think that's the opportunity if it if it is

SPEAKER_241: anonymous if it is hard to understand that's literally my thesis for investing in startups is

SPEAKER_69: i wouldn't i want to invest in a contrarian way when other people don't understand it and when it has slim chances of success that means if it does succeed it would be an extraordinary win if banksy is not um part of the establishment and he does succeed the establishment then has to catch up and buy his work and let's face it this new group of nft buyers and your platform is the new art market you're creating you know a subculture within the art market are you not yeah i mean we we we're creating a you

SPEAKER_102: know whole new community of people who have never invested in our investing for the first time um so you

SPEAKER_104: know if we spend 400 million dollars in art this year the the really interesting thing from an art market perspective is that's all new capital going into the art market um which is which is interesting and it's in itself but you know going back to banksy when we first looked at his market our research team i think had his market this is maybe a little bit over a year ago at a 13 historical return you know fast forward to today it's it's been over 100 so we saw signs of momentum but we had no idea it was

SPEAKER_26: it was going to explode like it did one of the great things about what you're doing at masterworks is

David Friedberg: you could actually tell people this is these are the risk factors if you're buying a monet or a picasso this is how it's done over this period of time if you're buying i don't know a warhol here's that shorter period of time and now if you want to be part of this avant-garde outsider art movement or less established well you can take that risk and might be more risk more upside it might be more risk more risk and less upside right you can actually define that for people can't you yeah we can and i'll

SPEAKER_104: use an interesting example so monet is probably the example that i that i like the most so monet's market is a is a top three market in the art market picasso is typically the largest and then monet and warhol are typically second or third um so monet's market actually appreciates at around six or seven percent per year at this point um but his his his volatility or standard deviation returns is quite low so if you look at his market on a sharp ratio perspective it's about 1.1 1.2 which was very good um so monet's returns are incredibly predictable over decades which we find we find very very interesting most of our investors are looking for much higher appreciating artists um you know double digit returns but nonetheless we think this market is interesting just because it's so large and so so predictable

SPEAKER_57: well i i talked to you about this before i don't know if i talked to this about you with you privately when we had drinks when i was in new york at the beakman hotel or if i talked to you about this on the pod but since you have access to this and people have an appetite i would be much more interested in you saying we're going to find 20 new artists and buy two pieces of each we're going to buy 40 pieces at

SPEAKER_69: 50 000 each and i would rather be part of that than any of this so have you thought about doing a mutual fund type approach to new artists and giving us a collection of them yeah so we have a

SPEAKER_102: fun product coming out uh over the next quarter that will do exactly that it's basically an auto

SPEAKER_104: diversified product across a number of our our single asset offerings and you're right there's definitely

SPEAKER_258: i want the new ones give me the the highly speculative yeah it's more fun too right we

SPEAKER_102: we it it it's very hard for us i mean the amount of work that we we spend on selecting paintings is

SPEAKER_104: is pretty high so you know done with the hundred thousand dollars what's called primary market it's

SPEAKER_26: just it's see but that's what i do for a living as a startup with startups i tell people hey listen we're putting 500 to 3 million dollars these are this is a very small amount of money putting to very young startups with a 80 chance that it goes to zero so we we kind of just tell people that and then they can kind of uh work from that point uh forward but okay i get it it's easier to just say hey warhol is warhol um yeah uh ben i i guess similar question uh for you about new projects

SPEAKER_71: uh have you thought about any type of new assets i don't know if you had one to debut today but um have you thought about new assets uh there are things like mobile home parks or uh i'm on the board of an major investor in blockable which is creating their own new projects have you thought about buying dirt or starting projects or do you only have an appetite

SPEAKER_107: right now for you know established revenue generating uh you know apartments etc and homes

SPEAKER_182: and we we go where the bottleneck is i mean that's how you typically money in real estate you find where the shortage is and so the shortage right now is supply of homes so we have um like partner

SPEAKER_194: with six home builders and we are way up the supply chain like three to five years out financing land buying land building homes so we have like like 2500 homes in our pipeline under construction

SPEAKER_106: wow so we launched so you do that already and then how do you offer that as an offering

SPEAKER_182: yeah it's it's it's part of essentially a single family rental strategy we launched just recently when we had goldman sachs give us a 300 million dollar credit facility to sort of expand that that just it just happened and um so like the the capital markets are very inefficient around around this part of the of the market as he said like the institutional player likes uh things that are known and and the core asset classes are very expensive so the ones that are sort of like office and and core residential in san francisco new york were pricing like two thousand dollars a square foot right and so so where's the upside right yeah i just well there wasn't right it turned out there was more downsides in retrospect so um so we didn't so i mean if you think about real estate real estate's about huge macro trends and so it even though people what are those huge macro trends that you look at i'm curious yeah i mean they're they're gonna seem really familiar to you because they're they're actually not that far from technology so we remote remote work i think is going to be a huge driver real estate driverless can be huge driver real estate if you can live in raleigh and buy a palatial home for 400 grand and and leave new york that's happening and so it's driving it's driving the sunbelt like um because i need to get the affordability we also get the quality of life the weather so that's huge one we just launched and this is like isn't which is why nashville atlanta and some of those places

SPEAKER_26: are just booming uh people can basically go to nashville and or atlanta and live like a king or queen and if you're doing remote work and you've got a high speed connection you're good that's the macro trend to end all macro trends forget about self-driving who knows people people don't have to drive my god that's just huge um so does that mean the developers are racing to those areas or do the developers need somebody like you to say hey we have an appetite for you to build in this area what

SPEAKER_71: drives it the developers are the sophisticated ones or the money is a sophisticated one the money is

SPEAKER_184: usually the follower for for sure i mean money and the money even the more institution will get the

SPEAKER_182: more the money wants to actually see full life cycle full trades it's sort of like why big institutions don't usually go into early stage they want to be in the later stage in in tech same thing so um but no the people lead it that's the thing it's not developers follow people there's very few developers who sort of go there and say like if they build it they will come there some have done that and usually they get hosed like what you know and yeah the the sort of pita famous stories that like usually a person who buys it from them after they've hit the skids it makes the money ah got it

SPEAKER_26: so austin nashville these kind of places you you have this revolving line of credit goldman gave you you can work with a developer and say yeah let's make a hundred homes or a hundred doors or whatever it is in one of those areas and then i as an individual could buy into that specific location or am i buying into a portfolio what are you selling to individual investors yeah we're buying oh you're we're we're

SPEAKER_182: selling diversified pool i mean we're like like you you just said you don't know which one to pick and you know and reality is if we if we make 10 you know 3x in austin but only you know one and a half x in nashville what you want is a just a stable result a good outcome so it's it's about i mean it's about making it like stocks right most people aren't stock pickers most people just invest into a diversified pool of of tech or of the whole s p 500 if you can do that for real estate basically which wasn't really investable before we started fundrise then you can get people into the alternative your low cost simple and and just easily so scott you had mentioned there's no way to make the money

SPEAKER_26: money off the art and then christopher you said there's actually tons of ways to make money off of some of the alternative assets you're working on let's talk about that for a second um scott could you not take this you know salvador mundi by leonardo da vinci that sold for 450 million i know there's a bunch of lawsuits or whatever around it would that not drive massive amounts of interest and people paying to go to a museum to see it uh and if but you know a million people paid 20 a year you know over 20 years it would pay for the cost of the painting you make 20 million dollars a

SPEAKER_102: year i mean look at you know personally i've i've lent paintings to museums for 15 years i know my most

SPEAKER_104: major museum director and like one thing i can say is i don't see museums at any point in time in the future paying to um to rent paintings it's just not how they think about the world um you know nonprofits in general are very very hard to deal with um you know there may be opportunities to kind

SPEAKER_220: of rent them to commercial uh spaces uh i guess lobby of a building maybe or something i mean there's

SPEAKER_104: been a handful of these startups in the art market that have tried it you know nobody's been successful nobody nobody's really around today so i think there's i think there's limited opportunities

SPEAKER_228: but but we tell investors to assume that there's there's not at this point well why wouldn't but you

SPEAKER_26: have 400 million dollars in art a year why wouldn't you create the masterworks warehouse on the west side of manhattan or in brooklyn and allow people to come for 25 and have lunch and coffee and go see all

SPEAKER_102: these masterworks yeah i mean in new york it's just you know you can go to the whitney for free you can you know i just think it's a uh it's hard to cover operating expense um with that business model

SPEAKER_290: really i i don't know man it seems to me like some but some city who wanted to have more art in their

SPEAKER_26: city would just absolutely pay a ton of money to do this uh what what is uh your experience being uh christopher over at um rally road have you thought about you know i don't know how many cars you currently own but how many cars do you currently own and at some point can you make a museum of cars

SPEAKER_76: so we own about about 50 or 60 at this point got it um and they're like you know i think what scott said is right you know like the business model has to make sense we've seen the most um we've seen the most traction in sort of digital offerings and these sort of second order collectibles and you know i think with the type of investors we have the type of categories we're in um there's a tremendous amount of demand for that right so you know we've got the you know the the psa 10 uh wayne gretzky rookie card right and you know i think we uh i think we did our initial offering at around 800 000 a similar one just sold for three plus million dollars right and they're just so far out of reach for the ordinary person that um having something to go with that investment i think you know really resonates and and it's something that um uh that we've seen uh people actually building a secondary market for

SPEAKER_126: the merchandise that we do alongside uh some of these offerings could you make a t-shirt of that card

SPEAKER_26: and put similar logo on it or do you not have the right to do that because that was one of the

SPEAKER_69: questions i had about nfts people said you own this nft from people for whatever 50 60 million bucks but you can't monetize it in any way yeah that seems crazy to me what about baseball cards and

SPEAKER_26: you know cars and stuff like that if you own that asset you could charge people to come see it can

SPEAKER_301: you make a can you could you make a t-shirt or a mug out of it we we we don't charge people to come

SPEAKER_76: see it we actually do operate um we'll pre-covered and we'll be reopening soon a retail experience here in soho that we we get people to come in we do exhibits and openings around each of the assets but it's more about community than it is about monetizing that sort of uh you know that traffic in any way um and you know in terms of the uh monetizing the underlying assets things like cards are a little bit more challenging because there is uh you know somebody with rights to those images

SPEAKER_303: um so somebody who took the photo owns the right you don't own the right correct that a derivative

SPEAKER_76: work would derivative work would be a problem but we do we do uh things that that are original works of our own that are emblematic of it and they are uh you know very highly uh valued by the community so um i think that's something that that's just been a great part to build um you know the shareability of the platform something that's great about letting people feel um you know a bit of that emotional return that you were talking about earlier that goes along with the financial return um and i think that's a lot about what collecting is about and i think it's a lot about why we built this platform was to you know to open up those experiences to just such a broader

SPEAKER_304: group of people so this is where i think domain names will be great for you because there is a business in leasing domain names and lease to buy so if you buy a domain name for a million bucks you

SPEAKER_26: could lease it to somebody for 10k a month with them having the right to buy at any time in the next

SPEAKER_71: whatever four years for 1.5 million and you you basically get two swings at the bat in order to to make money uh from it i guess that's sort of what you're thinking yeah that's exactly exactly right yeah i'm super excited about that uh fascinating and so uh when the market corrects uh we could see people wanting to sell their shares or assets deflate maybe um how are we preparing people for that uh ben do you do any kind of you know sort of education for people of like how to look at the you know the ups and downs of real estate and and how prepared are they for a pullback

SPEAKER_184: i mean the the growth in sort of the monetary base rate the quantitative easing they're doing but i don't think they're going to take that money away out of the system and so the you know real

SPEAKER_182: estate is is a real asset and it typically tracks with um with inflation so it's a good inflation hedge so i i don't i would be surprised if there's a pullback in real estate prices i think actually it's more likely to see a momentum in inflation and we see like a uh a a new ambient higher inflation rate we're basically currently in negative real interest rates and you borrow

SPEAKER_184: we're borrowing we bought an 83 million dollar apartment building a couple days ago we borrow 1.75 percent what over 1.75 it's floating so it's a it's a so so and i know minus one

SPEAKER_182: yeah so see yeah cpi it was five percent this month explain the real interest rate oh so uh the consumer price index basically how what the feds what the government says the rate of inflation is i don't know i don't really believe it but it's uh at least what the what the report

SPEAKER_318: you think you don't believe it that it's it's probably higher i think it's i think it's been

SPEAKER_182: higher for at least the last 10 years i mean that basically there's just so many things i mean who who in their life has school nannies housing that's actually getting less expensive like not nobody so i i i'm a little bit skeptical of the sort of publicly uh published numbers but if you have a publicly published number of five percent inflation and you're borrowing at 1.75 right your negative your interest rate is actually negative like the bank's literally paying you to borrow in that case 50 million dollars so so that's like a really good way to make money is to as to borrow at negative rates and then and then have 10 uh rent growth yeah an absolute

SPEAKER_26: no-brainer as you guys get to scale i'm curious what are the opportunities if your business was doing 10 times uh the volume and 10 times the membership you had today this is something i've been thinking about because over the last six years the the syndicate.com has grown 10x and we've had to increase the number of offerings because they're filling up too quickly and we've had to ask for additional allocations i think we did six deals last month maybe this month we'll do eight deals we're trying to hit consistently 10 deals per month in order to service those 8 000 accredited investors so just going around the horn here scott if your business was 10 times bigger could you be buying 4 billion dollars in art what would the world look like then um and do you think that's the reality over the next 10 years that you'll be doing 10 times what you're doing now in terms of

SPEAKER_87: the footprint yeah so to us that that that seems possible right like it's very surprising that that

SPEAKER_104: we are still the the only player that that provides investment products in the art market right so we we tend to think about our website community is version 1.0 to helping investors gain access to the asset class but eventually as you mentioned fund products and other products sold to um to different types of distribution uh down the road to scale the business so i think you know i would think of art a

SPEAKER_102: lot of your listeners are very familiar with bitcoin right so i would think of art as somewhat similar in that a lot of these artists have passed away there's a finite supply of art left and you know four billion dollars out of 60 billion is maybe not hugely significant to the art market i mean it's very material but to individual artist markets um it could be very very meaningful so you could see

SPEAKER_104: prices rise depending on individual artists markets that we back um as more capital comes in and you know it's i mean a lot of these paintings that are buying today for one or two million dollars like we can definitely see those artists being 10 million dollar plus artists in the future um so i think that's i think that's just the reality of it is is more and more capital

SPEAKER_324: comes into the asset class uh and uh same question for you christopher if this goes 10x from here what

SPEAKER_26: would the do you think the business can go 10x from here and then what would that enable you to do what would what would the world look like for you most definitely i mean you know we're in a lot of

SPEAKER_76: different asset classes and collectively there there's a tremendous amount of market cap there to be uh you know to be acquired um i think the other piece that's interesting is the exit market right so i you know we're not only acquirers of things we're also exiters of things so at a certain point that may start to balance itself out where things go back to private owners and you know uh at the same rate almost as things are coming onto platform um but you know in terms of us we're super focused on secondary market as well and so uh you know the the model is is really uh is really predicated on seeing a substantial amount of growth in secondary market transactions right like you know i think what scott said before is right and probably about the same on our platform is we're seeing you know

SPEAKER_126: 20 of transaction volume happening in the secondary market you know if you look at you know nasdaq or something you know different types of financial marketplaces you know the turnover uh is is you know

SPEAKER_76: 100x in a year right compared to the market cap of those markets so i think that's uh there's a lot of room for growth uh in the in the transaction volume without necessarily uh having to grow primary

SPEAKER_26: issuance at some exponential rate forever yeah i mean being able to buy bigger and bigger assets is a way to have more liquidity as well in the marketplace so we went from a thousand dollar or maybe a two thousand dollar minimum on the syndicate for credit investors now we're making a 4k because we can only have 250 investors in an accredited offering up to 10 million and we've started to hit you know two three four million dollar i think we've done a 3.7 million dollar deal we had 6 million in demand but you know we have a cap of 250 people so we've had to raise the minimums and that's another way to deploy more capital and have a bigger impact uh and then i guess i'll end with you ben on just how much growth is left in this business for you

SPEAKER_181: right yeah like like what i think others were saying it's still early the idea that uh a direct

SPEAKER_182: investor platform is how people will invest in real estate is how every other sector e-commerce you know insurance it's just the it's just the transformation of how new demographics will will uh enter an industry so if i think about where we are now 20th largest real estate investor in terms of deployment a year you know i think we'll be a third biggest real estate investor you know within maybe three years three four years not not far off and um and it's and the market penetration right number of people who own stocks 100 million people own stocks uh 16 million people own like a home that they rent and so we have 170 000 active investors right so to 10x that it would still be a pretty

SPEAKER_55: small market penetration absolutely yeah i mean there's no reason we couldn't 10x the syndicate to 80 000 we have 8 000 now i think probably angelus probably has something in that regard and i think

SPEAKER_71: masterworks you have a hundred thousand members or i don't know how many active yeah 100 i think 170 000 now oh wow amazing and then how many people on rally road i don't know if you talk about that number

SPEAKER_55: chris yeah about 300 000 amazing and then how many of those are active uh in any given month you

SPEAKER_26: know 30 40 percent that's extraordinary all right listen this has been amazing uh great alternative asset round table let us know if you liked it you know how to get in touch with jason at calacanis.com

SPEAKER_71: highly recommend um really getting educated on this class and spending a little time on masterworks.io uh rally road is uh are you rallyrd.com rallyrd.com got it and then fundrise is fund r-i-s-e.com correct

SPEAKER_26: correct fundrise.com there you go fundrise.com go check out the platforms if you want to join mine it's the syndicate.com you can sign up if you're not accredited for now but uh we don't do not accredited yet uh but we uh we might in the future we're watching that accreditation laws might change as well and that's something i think everybody's monitoring yeah absolutely yeah could be a big impact in other countries anybody can in london where the uk anybody can invest in these companies other countries australia very difficult canada i think makes it a little bit difficult um we wrote and nobody here is thinking about making a coin to power their platforms right this doesn't there's

SPEAKER_69: zero appealing about making a masterworks coin you know we look we when we started the business

SPEAKER_88: three years ago that was that was the idea um really i don't yeah i don't know if it's like

SPEAKER_345: you guys have heard but i still don't think there's a single reggae offering that's gotten through sec with blockchain language um i know the republic was trying to do one i don't know six months ago but to be honest i think it's a net negative like sophisticated investors don't view

SPEAKER_349: it positively um although you know the crypto community obviously does but uh well i mean it's

SPEAKER_151: a religion for them and yeah the reality for a credit investor scott i think is what we're doing

SPEAKER_26: works why would we add this level of complication right what's the what is the upside like i mean

David Friedberg: i know that people in the crypto community are going to say an immutable blockchain or whatever but that doesn't really mean anything right yeah i agree like what does that mean to an art buyer

SPEAKER_357: who bought one percent of a warhol that it's on an immutable blockchain they don't care i think

SPEAKER_151: nobody and i think it's too complicated too complicated nobody cares so there are your two reasons for

SPEAKER_26: the crypto community you've made it way too complicated me and two like provide some value christopher are you going to take a superman or lebron james card and like tokenize it i mean

SPEAKER_76: has a customer asked you for that no because what's the difference right if it's tokenized if it's stored in a database you know we built a digital securities business right so it's you know it's still a regulated offering and it and it's uh it's still uh got its provenance and it's i think it's a fantastic but is it immutable is it immutable it is absolutely immutable right but is it on public

SPEAKER_256: blockchain immutable with nobody in charge i mean that's the crazy stupidity of the crypto movement

SPEAKER_03: is that they think that their hammer fits every now it literally means nothing to be public and

SPEAKER_182: immutable for this asset class like what is it it's called a title policy in a real estate it's a public immutable asset like that tells you ledger like that you own this house so it's like what's

SPEAKER_184: you kind of have that already what's the problem you're solving with title insurance that's actually insured right so if your blockchain is not insured right if you i don't know exactly how you insure but

SPEAKER_182: it's it's it what's the problem blockchain is trying to solve that's the thing i'm trying to

SPEAKER_181: understand i can't i can't i'm the crypto people have to wrap my mind around it like what what's what's the is the problem that the dollar is just like as a fiat currency is over but by the

SPEAKER_345: way did goldman release uh so i i'm friends with the the cio of isg and they he i thought he said

SPEAKER_172: they were releasing a pretty comprehensive report on uh crypto bitcoin this week

SPEAKER_261: huh so it's 20 100 000 or crypto in three or bitcoin three thousand or bitcoin who knows i mean

SPEAKER_26: i think this is the reality if somebody is listening to this in the crypto community and you're building the technology not you're just like a crypto crazy person yelling and screaming on stage in miami but if you're actually a developer in the crypto space put aside bitcoin and that sort of toxicity but if you're just a crypto person i think you have to look at what just happened on this round table you have four people running the four largest best of breed

David Friedberg: for real real estate art collectibles and startups like we're talking about the mount rushmore here of alternative assets in this new space not to be conceited here but we're all putting nine figures to work

SPEAKER_69: plus and we can't understand as technologists as asset class managers we can't come up with a reason to

SPEAKER_03: use it we would love something innovative we'd literally see nothing of value here and i was open to it i didn't lead the witnesses here none of us we all have the same exact reaction which is what's the point so if you're in crypto there's your gauntlet what is the effing point we can trade on these platforms we have databases we have developers like we have titles we have llc's like are you actually

David Friedberg: solving something like give yourself a real hard look in the mirror if you're a crypto person you're making some tokenized fund and ask yourself if you're doing it for like the virtue signaling of

SPEAKER_70: being a crypto person or some religious reason or there is actually value to the consumer i mean

SPEAKER_03: i don't think any of our does somebody want to put their tokens for a warhol in a wallet scott and then risk losing it or they rather you just have custodianship of it i mean yeah they would just

SPEAKER_345: rather us have custodianship of it um you know our average investor invests i think now anywhere between 30 and 40 000 over their lifetime depending on the cohort yeah you know they're not they're not you know they're kind of mid-sized investors yeah they don't want to deal with this mashugana what

SPEAKER_69: about you chris anything is there anybody who's wants their tesla roadster number 16 on a blockchain

SPEAKER_76: no but i mean i think i'm interested in the nft market i think we're creating new types of collectibles right i think there will i think there will be it as an asset class i think it's fascinating i think there are places where um you know rarity and uh and cultural like significance will will will create longevity and value and create appreciative potential right like so i'm fascinated by that i do agree with that it's a place we want to be and you know speaking of intangible assets i think it's one that that we'll look at really seriously um but i think we also have to you know we we've created a a trust layer with our platform and we have to be i think really careful about uh you know underwriting standards and the quality of the assets we bring and then and the

SPEAKER_126: historical sort of uh you know view of appreciation and where you know where value is going to going

SPEAKER_57: to be stored in the long run so scott i'm sure people pitched you on taking your collection and then

SPEAKER_26: nfting some of them and burning the original painting to make the nft go up in value like those crazy people did that time but um in all seriousness making an nf do would you have the right

SPEAKER_32: to make an nft or a collection of nfts based on an artwork you own yep we actually don't have the right

SPEAKER_345: so it's a it's a misunderstood thing about about copyright law but you know we can buy a 20 million dollar painting and we don't actually own the copyright to it so really the the nfts um that are

SPEAKER_172: happening today are primarily being happy or primarily primarily being created by artists

SPEAKER_47: themselves um or the estate so for somebody like monet yeah could anybody create an nft of a picasso or

SPEAKER_390: monet you know so i'll give you i'll give you an example so the warhol foundation recently uh agreed to

SPEAKER_345: you know quote unquote nft some of their um some of their their their rights i guess or their images

SPEAKER_104: of specific warhols and i know you know i know the former chairman of the warhol foundation and they're very aggressive about how they think about copyrights protecting their copyrights etc so they

SPEAKER_394: uh they're doing these nfts without transferring the copyright um so you can buy the nft but you still

SPEAKER_70: don't get the copyright you just get that digital asset for a million dollars and the person who bought that warhol the same one also doesn't have the copyright so if another medium comes out

SPEAKER_71: um they still have the right to it if t-shirts are going to be made or a mural is going to be made or fine art prints all that goes back to the original artist and then the the great masters

SPEAKER_397: are in the public domain yeah i can't remember the rule i think it's after uh i think it's 75 years

SPEAKER_11: plus the life of the 75 years after the life of the author of the artist and then it's the mickey

SPEAKER_107: mouse they call it the mickey mouse rule because they disney keeps getting it extended it was originally like 50 years and now they're like oh mickey mouse is going to be in the public domain we gotta we gotta protect the mouse all right listen this has been great we'll see you all next time on this week in startups bye bye