The guest list on this talk is stacked Coverage will begin soon, follow along below https://twitter.com/Austen/status/1359286939271057409

Topic? Securitization.
Guest list? @austen @immad @justindross @pitdesi @km @mikekarnj @ericsatz
Let's go

Difference between fractionalization vs securitization?

. @ericsatz: Fractionalization enables access to previously unavailable asset classes. For example, getting around accredited investor requirements.

. @austen: We're not involved in securitization. Layman view of securitization is bundling assets together and selling future cash flows on those assets. At Lambda, what we do is closer to getting a small advance on our ISAs.

. @justindross: With the data over the past years, why is the advance still a small percent?

. @austen: ISAs can be really valuable or worthless. It's difficult to underwrite compared to traditional debt.

. @austen: The average journalist's understanding of securities is literally from the Big Short.

Spice meter:

. @immad: How did securitization of properties go?
. @justindross: They haven't gotten there yet. We only hold homes for 30-120 days. They're not being securitized like a mortgage or REIT; what's happening is Opendoor making a market quickly and profitably.

. @justindross: As we proved our model out, we got more revolving lines of credit at better rates and expanded.

. @immad: How did you come about Otis?
. @mikekarnj: We take an asset, like Michael Jordan's rookie card, turn it into an LLC, and allow people to buy and sell shares in it. For the user, it's more about fractionalization; the securitization allows it to happen.

. @mikekarnj: Every generation has an asset class, and this generation's asset class is culture which has been enabled and accelerated by the internet.

. @mikekarnj: Culture as an asset class is tiny compared to art or equities but it will continue to grow and we're operating with that conviction in mind.

. @mikekarnj: We focus on the top 1-2% because thats where the best performing investments are in this asset class.

. @mikekarnj: Otis is what can happen when you apply the principles of fintech to another space. At some point in history, someone created the stock market where people traded pieces of paper. Someone created the art market.

. @pitdesi with a quick plug for @nba_topshot–tradable videos of basketball players.

. @mikekarnj: If they continue growing at their current pace, they'll be the fastest growing marketplace ever.

. @austen: Selling future earnings can also be seen as sharing risk with others. You can see this happen in poker when players agree to share earnings as a way of managing risk.

. @ericsatz: @SDinwiddie_25 tried to tokenize his contract earnings but the NBA squashed that. The shared earnings also occurred in Minor League Baseball in the past.

. @ericsatz: There's always the possibility everything may go to 0. We may have forgotten that in the public markets but it's important to remember that that risk still exists.

. @ericsatz: The incentives provided to collecting agencies for student loans is fucked up. What do you think Austen?

. @austen: The student loan bubble is a giant exercise in misaligned incentives. Government decided to guarantee all student loans. Schools and lenders don't have to care if students are successful because the money is guaranteed.

. @pitdesi: Is there an easy fix?
. @austen: Just have the government pay everything off. Our approach at Lambda is to align the incentives of the schools and students.

. @immad: Why haven't startups gotten together and pooled founder equity together to share risk?

. @ericsatz: We all think we have the best idea. More seriously, all startups have differing value depending on stage, traction, etc.

. @austen: Don't think this happens because no one has time to figure out fractional equity sharing. They're too busy trying to figure out, "how do I center this div?"

. @austen: This somewhat happens now if you look at the Facebook and Uber VC returns as subsidizing the salary that we're able to take from the funding we get.

. @km: Can you short a real estate area, like SoMA or Gowanus?

. @justindross: Short answer, no. You can't even really go long on those regions. Most securitization on real estate is through mortgages. Even if markets go down people still pay their mortgages to avoid destroying their credit. Default catastrophe is rare, like the GFC.

. @justindross: By shorting real estate you'd also be shorting inflation because inflation causes the value of hard assets to rise.

. @austen: We've been indoctrinated by the idea of index funds returning some % per year. It really breaks down into real growth and inflation. If growth declines, then that % return every year vanishes. What we see is a lot of growth moving to private markets, which aren't open.

. @mikekarnj: Lots of capital is moving into other assets, such as digital assets. They're getting 50x, 100x returns and laughing at 5% returns.

. @pitdesi: Everything is just greater fool theory. This plays out even in VC.

. @justindross: Got to drop off for dinner. I agree with what was said earlier by Eric and Mike; in the long term, we're all worthless.

And with that exit by @justindross, the show concludes entirely. Thanks to all of the speakers for an insightful discussion.