YouSaid · the spoken record

Stephen McKeon

lines on the record: 106
first: 2018-09-17
most recent: 2018-09-17
sittings or episodes: 1
sources: podcast

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“I guess one of the guiding principles has been there's this quote from Miangelo. It says, you know, people forget what you did and people will forget what you said, but they'll never forget the way you made them feel. And that has always stayed with me. I use it everywhere, right? I use it in the classroom. I use it when pitching investors. Like students, if you can make them feel something, will remember the lesson so much more vividly, right? Like if you can make an investor feel something during a pitch, it's so much more likely that they're going to buy in and invest. And there's something called the spotlight effect, which is that people always think they're in the spotlight, that everybody's kind of paying attention to them. But because everyone's kind of caught up in their own spotlight, they're not always sort of taking note of everything else that's happening around them. And so I think the way to kind of break through that and really get retention and memory and buy in.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say probably Twitter, which is interesting because I never used to use Twitter before I got involved in crypto, but it's so much of the conversation that's happening there. I'd say the other sources are medium. So again, something I never used before crypto, and now I am on it literally every single day. There is so much good content on medium that's out there for free. And I mean, they also have a membership where you can access even more content, but both as somebody who has pushed content as someone who's digested, I'm really enamored with medium. And then I guess the last piece is all the academic literature, right? Like SSRN, again, like SSRN is a free resource. Now, I think that's kind of one of my advantages in this space is that a lot of that stuff is hard to approach. You need some training in econometrics to kind of get through the math and whatnot. But there's, of course, a lot of...”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't quit, right? Which sounds very cliche. Maybe the right termism don't rage quit, right? With sports, or they always were like, I would have a bad game or whatever. And I'd be like, I want to not play hockey anymore. And they'd say, nope, you're finishing the season, right? Like you can transition at that point, but other people rely on you. You're not quitting mid-season. You're not quitting mid course. You're not quitting, you know, whatever. You're going to see it through to a logical transition point. And that's always stayed with me. Like if you look at the winery, right? Like I transitioned out of the winery, but I did it in a very I did in a very sort of like way that was well planned. It wasn't like I just walked in one day and quit and said, I'm going to go”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So preparation is the internal part. That's the part you can control. You can be prepared, right? But opportunity is often an external force, and that is the luck part. It's like you need both, right? You need the internal preparation. I don't want to discount that people can sort of make their own luck, but that always needs to be coupled typically with external events that are outside your control. And I think recognizing that piece of it and acknowledging that it's not all skill. There's always things that have to break your way is really important.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'll give you two. Within venture investing, a pet peeve is when we look at raising capital or when a portfolio company looks at raising capital as success. And as a venture investor, you're always trying to explain to them this is not success, right? This is an ingredient for success, but really getting traction, really getting users. Like that's success. So that always is irritating is that we celebrate fundraising to the extent we do. I think the other one is sort of misrepresenting luck as skill. And so, I mean, this is a common one that you'll often find financial academics complain about is like, is it skill or is it luck? And maybe it's even bigger than investing, right? Like if you look at going back to this example of at the winery, you know, I became CFO at a young age. That wasn't really skill. I mean, that was certainly like, look, I guess the way I look at it is like, you know, Seneca had this line about luck is when preparation meets opportunity.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Against him. So I sort of watched and I knew he had this one move that he favored, right? And so I'd sort of hatch this entire plan that like he's going to do this move and here's like the exact thing I'm going to do to like carry his momentum against him, get him all the way on his back. And so the match started. Of course, like he did this move and it worked. You know, I flipped him over. I had him on his back. Sadly, I could not pin him, so I still lost the match. But this idea of sort of like hatching a plan and then successfully executing it, it was sort of like one of my earliest memories of that really working in a sports or extracurricular environment.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I played sports and I was like, I grew up in Minnesota. So the big sports there are hockey and wrestling. And I played both. Now, sadly, they're in the same season, so you can't play both simultaneously. But started hockey kind of as soon as I could walk and played up until high school. And I was a goalie, right? So I have lots of memories about kind of like big saves and that type of thing. But I think my favorite moment was probably from wrestling. So I wrestled all through high school. And I was good, but not great. Like I was good enough to be captain of the team, but I was not state tournament level. And so I remember there was a regional tournament and I matched up against a guy that he was one of the best wrestlers in the state, right? Like state champion level. And there was sort of no question I was going to lose to this guy. But at the same time, I thought, well, maybe I can kind of use some, he was much stronger than I was. I thought maybe I can use his strength again.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“It is primarily performance data, but it also does have their holdings, right? Like we can see everything that they've invested in. It probably doesn't have the same level of disclosure like the vacancy rate of this building was eight percent or whatever in this month. I don't think it gets that fine. But I do think disclosure systems Are one of the other things that need to get built. And you've got various teams working on them. So there's a group called Masari that is trying to build out sort of an information disclosure platform. It's something that all of the compliance platforms are thinking about as well. Like, what is the information that a building is going to have to disclose if they tokenize the asset, right? Like rate.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I would argue it is visible. So if public pension invests in it, it is visible, right? Because prequin can go in through freedom of information act and access all this information, and they do, and they sell it to people like me, right? So academic researchers and others can go in and actually buy much of this data in terms of production.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Kind of curious in a lot of these illiquid assets, the nature of the flow of information, say between a GP or an LP or the owner of a building and the people who are participating in it tends to be information that's contained within its own network. How does that happen on this type of securitized token where there might be more anonymity of the relationship between the sort of manager of the asset and the owner of the cash flow?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“learning curve, that's when you're going to see more and more assets tokenized because there's going to be a larger and larger market to sell into.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then I've lost all this money, and it's scary, right? Probably in the same way that the internet was scary in the 80s, like bugs. Actually, you just mentioned it, right? Like people had all these concerns about using the technology and bad things that might happen. We're still kind of in that stage, right? So we've certainly seen more adoption, things like Coinbase, right? Like have a nice interface that feels like logging on to Fidelity or whatever. And that stuff is going to help a lot. But I think we just need, you know, you've got this intersection of crypto investors and they're looking for venture-like returns, right? And then you've got all the traditional investors that might invest in things like real estate. And the intersection between those two is not as large as a will-be one day, right? Because many of the traditional investors are intimidated by the technology or just the interfaces, but I think as they start moving up that”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mine was in maybe 1994 and was through AOL. You know, the internet had been around a long, long time before that, but what had not existed were the interfaces. The nodes were kind of very hard, right? Like you'd almost be a computer scientist to actually log on and access these things. But with the advent of AOL and then Hotmail, which is sort of like the first free, like completely free, I don't know if it was absolutely the first. It was early one that had a large rate of adoption, right? Where anyone could go on, they could get an email address. Now all of a sudden they could send messages to anyone else who had one of these things, kind of like wallets, right? So anybody can go on and get a wallet today, like, you know, absolutely free to go set up a digital wallet. But there's still sort of intimidating to people, right? Like this idea that if I lose my key or if I make a typo, like the thing's gone forever.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I would put the largest obstacle are just the interfaces right now. If you look at the internet, right? So the internet existed for like 30 years before we all started using it. I don't know when if you remember the first time you got on the internet. For me, it was like.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Concept. And I think one of the major sort of innovations we're going to see with programmable securities, regulators should be thrilled about this, by the way, because it's going to be much easier to maintain compliance.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“David Sachs started, and Josh Stein is the CEO now. And there are others, right? But the basic idea is that we want to infuse compliance into the security. This is one of the benefits of securities being programmable, is that now we can put logic directly into the security. So when I want to transfer it from me to you, right? So I go ahead and I send it from my wallet to your wallet, except now because we have some compliance language programmed in there, it's going to check off against a white list, right, or what we call a regulator service. And it's going to make sure that whatever the attributes of that security is. So maybe it's something that can only be traded among accredited investors. It's going to make sure that my wallet is associated with an accredited investor. It's going to make sure your wallet is associated with a credit investor. We're not doing compliance at the exchange level anymore. We're now doing it at the level of the security, which is actually a fast.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, like I make charitable donations every year, and typically I'll donate shares of stock because, of course, there's a tax benefit. So it's such an onerous process. Like, I have to go online. I have to find some form, print it out, go get it notarized to prove that it's actually me sending this transmission message. Eventually, like, you know, mail it in to some PO box in North Carolina, and then like two weeks later, the charity actually gets the share of stock. And I've actually had a situation where the price moved pretty substantially against me during those two weeks. And so the donation ended up being a lot less, which is not good for the charity. It's obviously not good for me from a tax standpoint. And so I look at that and I say, why is it so hard to transfer assets peer to peer? Well, partly it's a compliance issue. So Harbor is the company that...”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And he said, you know, I'm thinking about the same things. And like we've already started work on this project around this regulatory piece, because the idea is that regardless of where the token trades, you want to be able to keep track of who owns it. This is like one of the really important pieces. It sets tokens away from the way we do things now, is that if you look at the way we do compliance today, we do it within walled gardens. So like I get an account of Merrill Lynch, they do KYC, they make sure I'm not doing bad things. You have an account at E-Trade or whatever, and they do the same thing to you. And then we trade through these sort of two wall gardens, and everything's on the up and up because each of those entities has sort of done their piece to maintain compliance. What's very hard, though, is for me peer to peer to transfer shares of stock to you. So the example I often use is.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so when blockchain capital issued that BCAP token, they went through, they did reg D, they did KYC AML. The thing that wasn't built, so like the piece of infrastructure that wasn't built, two pieces really. One, we didn't have the exchanges that were regulated in order to trade these things so that the ones that had all the right”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The very first article I wrote, you know, I said, hey, this blockchain capital thing happened. It's really interesting. Like we might be able to increase liquidity and market depth. And then I went through some sections towards the end of the article kind of like trying to be balanced, right? Like what are the reasons this won't happen? One of them was compliance. And this is in many ways the most intriguing part of the whole puzzle to me because as I said, if you look in my background through skyward, all we did was think about the intersection of emerging technology and regulations. And so it was something I've been thinking about for a long time, like even before I got into crypto and I got into crypto. I'm like, oh my gosh, it's the same thing again, right? It's like this really interesting new emerging technology kind of bumping up against regulations that haven't really been formed yet. And so securities have a lot of rules, as we all know.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the short run, like I said, things are going to be sort of plain vanilla. We're going to do things the way we've done them, but on chain, and then in the longer run, maybe we evolve new ways to market these things through targeted advertising. And of course, the regulatory things we have to think about when we go through those as well”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“No question. People always ask me about cost reduction. Like, how much cheaper is it going to be to issue a token versus go through an IPO? And the answer is that today, I'm not sure it is cheaper. Because if you look at the costs around an IPO, yeah, there's some legal costs. There's some accounting costs. There's some things you could probably automate. But the really big costs are the bankers that are selling it, right? So this saying the securities are sold, they're not bought, right? And so that doesn't change in the short run. Like you're still going to have to pay people to market the issuance. Now, in the longer run, who knows? It's almost like the paradox of information, though. The more information we have, the harder it is to sort out the wheat from the chest. So I think there's definitely still a role for people marketing these issues.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Standard. That is the tipping point. That is the tipping point where you say, all right, everyone's just going to build on top of this thing, which is then going to create these huge markets. And I think it's been very difficult to do that in a centralized manner, which is why these sort of decentralized public chains have captured everybody's attention.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's very hard to create standards in a centralized entity. If your Google, like you don't want to sign on to Microsoft's centralized standard and vice versa, and so it's very hard for sort of a for-profit corporation to create a standard that's going to be widely adopted, because of course everyone knows that a lot of value is going to accrue to that corporation. And so you get all these sort of strategic forces that prevent that from happening. When you look at something like Ethereum, this ERC twenty standard, it's a public chain. Anybody can buy Ethereum tokens. It's sort of maintained by a for profit entity. And so everyone is just sort of adopted the standard as the way to build something that'sn't going to work with everything else. It's like this, the idea behind network effects, right? Like at some point, you have more incentive to adopt the standard than you have to deviate the standard.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The place where I always went with this when I was thinking about it is, you know, because we'd always ask this question like, why blockchain? Like, why can't we just do this with databases, right? And, you know, stored procedures. And we have a lot of technological tools at our disposal already. And the place that I always come back to is like, well, then why don't we have this already? If this is something that seems really interesting and people are interested in, like, why don't we already have all these things we're talking about with tokens? I guess I just always come back to this idea of interoperability. The Green Bay Packers share, there's no real market to trade that. And, you know, with these fractional real estate offerings, like there's no real market to trade that, like, we need to create a system where we've got markets and wallets and all the pieces you need to build a market that all work together. And that's kind of the piece we've been missing. And I think part of the reason we've been missing it is because”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“To some degree. And again, you come back to this question of the concepts are innovative, right? That there's value, there's financial value into things that aren't being ascribed, valued today. To what degree does that need to be on the blockchain? Or is it just an innovation that someone should take advantage of?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Access rights are clearly something that people value highly, yet they're not explicitly monetized. Another example, if we step away from funds, is if you look at the Green Bay Packers or public company, right? That one's interesting because there are no cash flow rights, there are no voting rights, there are only access rights, the only thing they're selling with that share of stock are access rights, right? You can access, I don't know, probably like memorabilia or gear that, you know, maybe isn't access to the public. You get to go to this giant party every year, and maybe you get to access to this community. And so the only thing people are paying for when they buy a share of stock in the Green Bay Packers are these access rights, which indicate that there's some value there that's probably not really being taken advantage of by all the other sports teams. And so I wouldn't be surprised to see other sports teams try to.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The people that have allocations into that fund, presumably that's a valuable asset. And to the extent that benchmark could formally include, like say they actually tokenized that fund and it not only gives you a right to invest in this fund, but it also gives you a right to invest in say every subsequent fund or at least the next fund, well, all of a sudden to raise a dollar of capital, somebody might pay a dollar twenty five because not only are they putting the dollar into this current fund, they're also buying the access right to the next fund. It actually would allow benchmark to raise more capital yet retain the same size fund because what they're also selling are access rights to follow on offerings. I think it's an interesting idea. I haven't really seen anybody do it, but I guess I'm always interested by items of value that people aren't monetizing, right?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Crushed it, right? Yet they're not going to raise a bigger fund. This is what the article was saying, right? It's like they're actually going to raise the same size fund they did the last time. Of course, it'll be massively, massively oversubscribed, right? Like they could raise...”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, so access rights could take a lot of different flavors, right? So right now, when I buy a share of Microsoft, I get these two cash flow and voting rights. I don't get the right to, I mean, maybe other than the shareholder meeting, like go visit the Microsoft campus or if I invest in Sequoia's current fund that does not typically, I mean, there may be sort of an informal arrangement. There's not formally endow my ability to participate in their follow-on fund. But that's actually considered a very valuable, that allocation. Like take benchmark, right? So benchmark, you know, I just read an article the other day, like the recent fund is just.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right? Like sell it for the next six months or lease it for the next six months. That's something that potentially we could build into these smart securities or programmable securities.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I guess another unbundling example would be just going back to this cash flow and voting right, like say I hold a share of Microsoft, it has these two rights, the voting rights are almost inconsequential to me if I hold a hundred shares, right? But for most atomistic investors, like the voting rights are almost meaningless. However, they might not be meaningless to an activist. So to the extent we could unbundle the voting rights from the cash flow rights, you could actually sell off the voting rights separately while retaining the cashral rights. It's kind of like non-voting stock. And that's perfectly legal, right? It's like you can't sell your vote for president. You can sell your vote on a corporate action. And in fact, some of that does happen. Like there's a famous example with Carly Fiorina on buying votes, like when things get close, those votes actually become valuable when there's particularly contentious issues. So to the idea that you could sell your vote or lease your vote.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Assets will increase substantially? I think people are still going to need advice. Large pools of capital are still going to be managed. So, I mean, I think there's some things that won't change, but I think the particular assets and the manner in which they invest in them will change.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“What do the founders do? They create a share of like a class of shares that has ten votes and then everyone else gets one vote. It's kind of the same idea as tenured voting. It's just a very crude mechanism to accomplish it. It's like the people that have been involved the longest are going to get the lion's share of the voting rights. Well, if you wanted to, so maybe you were worried about kind of like being myopic. Because that is something that might be able to counteract that particular issue. If you give the votes to the long-term shareholders, they can sort of empower management to take long-term actions, right? So you could program that into the security relatively easily with smart contracts where you look at the length of time that a particular asset has been hold by a particular wallet and allocate voting rights in that way. But as it comes to money managers, I don't know. I mean, I think the options they will have to deploy.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess if you're thinking about sort of like being myopic or sort of short-termism, it's interesting because one of the things I guess this goes to really that last point I made in the security token thesis is that I think you're going to see the nature of what a security is begin to change, or at least what features can be included. So right now we have two basic rights that we see in equity security, the cash flow rights, voting rights, those kind of the typical things you'd see in a common share of stock. What I think you're going to see is that there will be both bundling and unbundling or maybe just those rights in and of themselves, we can start to sort of alter. So I'll give you an example is a lot of people are talking about this idea of tenured voting. So tenured voting is the idea that the longer you hold a share of stock, the more voting rights you get. And if you look at kind of what a lot of founders do, like recently some of the tech issues we've seen come to market,”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“More depth you get and the more breadth you have of these assets, in theory now you have price discovery by buyers and sellers of illiquid assets. And I just think forward of you have more trading, more price discovery. Does that end up changing the incentives of the people managing assets in the same way that, say, corporate CEOs are more shorter term than everyone believes they should be because of information and price discovery?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sat Protocol, for example, right? And what you can do is you can create your own basket. So say we had a bunch of buildings tokenized here in Manhattan, and you wanted to build a upper west side basket. Like you could do that, presumably using the set protocol. And so what you'll see is almost like an explosion in investable assets, not only at the underlying individual level, but in sort of like any basket you could possibly imagine. So like an upper west side basket or make a basket with all the VC funds that are focusing on AI or some specific strain of biotech or whatever.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think there's going to be a few things that happen. The first is that you're going to see a bunch of these assets tokenized. They're going to adhere to standards so that they can be held by any wallet. So wallets are a really important piece of this ecosystem. They're kind of like your interface to this world. It's where you hold the assets. It's where you can trade the assets on decentralized exchanges. It's probably your interface for where you'll vote to the extent their voting rights with some of these things. It's probably where you'll receive your distributions like dividends, lease payments, whatever. So the wallet is really, really important. And so that's where I think you're going to see the interoperability is that the Ezi's things are issued. They're going to make sure they're compliant with all of these wallet interfaces that are out there. The other thing I think you're going to see happen is that there are already people building protocols to bundle these things, almost like homemade mutual funds. So there's a group called”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, do you see that eventually, instead of having just the blockchain capital token that someone will create a platform where you have interoperability of all these different illiquid assets in one place so the accredited investors could sort of create the marketplace?”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So to the extent you can start opening that up, even like setting retail aside for a minute. Like if you could just open those assets up to all accredited investors all across the world, that's an enormous increase in market depth. And so you have to believe that that is going to impact liquidity. It's going to impact some of these price impacts and spreads.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very, very little market depth, right? And so when we think about illiquidity or liquidity as academics, we don't think about as ability to trade or inability to trade. We think of it as costliness to trade, right? So like price impact or bids spread, like these are the measures we might use to measure how illiquid an asset is. And so to the degree that you can expand markets, so like then, you know, eBay came into being like later in my life. Of course, if it had been around when I was a kid, I probably could have gotten a lot more than $10 for my Darryl Strawberry card. Because what it did is it created a lot more depth in the market for those types of assets, right? Now, all of a sudden, you had this asset and it didn't only have to be your local market or a very small number of buyers.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I mean, I was so excited. It was worth a lot of money. So I tell the story, I looked up, you know, Beckett Monthly was kind of where you got your prices of these cards. And I looked it up and it was maybe $50 or something. It seemed like a fortune when I was a little kid. And so I went over to the card shop and the guy there was Calvin. I said, Calvin, like my $50, I want to turn this in and buy Snicker bars or whatever. And he said, you know, I'll give you eight bucks. And I said, well, that sounds terrible, right? This thing says it's worth $50. And maybe I negotiated him up to $10. Got my $10. And then next time I went to the store, it's on the shelf for $50. So that's like the bid-ass spread. in finance. And I didn't understand that terminology when I was a kid, but it was very impactful. It was the sense that there was no other market other than Calvin. I couldn't walk to any other card shop. I mean, none of my friends had fifty dollars. And so there was just”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think it comes down to market depth. I often use this analogy of this baseball card I had when I was a kid. So when I was a kid, I got a Daryl Strawberry rookie card. I had the same card.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“out there, right? So you may have a different wallet than I, just like you have a different email client than I. But to the extent they both adhere to a standard, so like ERC20 is an Ethereum standard. And many of the wallets you see out there today are all ERC20 compliant. The reason they are is because everyone knows that if you just build a token and make it ERC20 compliant, it's already going to work with all of this software. That's the thing that we've been missing Intel blockchain came around.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Send it to you, maybe in Outlook, and both of the interfaces can make sense of the information. That's because we have an interoperable protocol that sort of dictates how that data moves and is interpreted and is exchanged. What blockchain offers us are protocols that are specifically built to move value. So that is the thing that we've been missing until really the Bitcoin blockchain was invented is that most of the protocols we have today have been good for moving various types of information, but not necessarily for moving value. And so that really is the big innovation, is this idea that digital wallets will be able to hold all different kinds of assets. You'll be able to hold shares of stock and bonds and pieces of real estate, maybe the mortgage to your home, like all these different sorts of assets, if they can be represented as a token that's interoperable with all the other pieces of software.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Platform. And so many of them have not built out secondary trading models, but even if they have, you're then locked into whatever liquidity exists within that one pool. So whatever investors are on that platform. What you can't do is take something you bought on realty shares and move it over to Crowd Street to access a different pool of liquidity. Or just if you like their interface better. So in a sense, although we have a lot of these things already, what we don't have is interoperability between different platforms. And so that is one of the things that blockchain gives you. So blockchain really is their protocols, right? And so if you think about protocols more generally, we've been around protocols our whole lives, or not our whole lives, but certainly like the internet itself is just a set of interoperable protocols, right? Like HTTP, that P is protocol, right? Like IMAP, the thing that allows me to write an email in Gmail.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's a great question. I think it's one that I thought about for a long time. And I think the idea is that when securities are programmable, you get a lot more features. Now, you don't necessarily need to be on chain to be programmable, but the thing that you get with blockchain is interoperability. So let me tell you what I mean by that. Maybe I'll use an example of realty shares and cadre. So in those models, you already can fractionalize ownership, right? So you can take a building, you put on one of these platforms, sell $1,000 shares or whatever, and raise millions of dollars for a skyscraper. What you can't do is take that asset, first of all, there may not be any secondary market, because what would happen? It would have to be built by that platform, right? Because their business model is keeping the assets on platform. They get a percentage, right? A management fee for all the assets that are on their platform. They don't want the assets to leave the platform.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“The way that blockchain capital did it is a full raise up front. And so that is different than the traditional model. You could imagine scenarios where we could start to see a migration towards capital calls as opposed to a full upfront raise, but we're not there yet. I mean, the way I view this is the initial versions of security tokens are going to be plain vanilla issuances. We're going to take the simplest version of representing an ownership claim in one of these assets and represent it on chain. And those will be kind of the test cases, right? And we'll see how that works. And then over time, we'll start integrating more and more complex features. So why does that”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“Strikes me, there's a difference in an asset. Say there's a skyscraper where the cash flows can flow through to all the investors and a partnership where there's a dynamic flow of capital. So the GP draws down capital. How does that? That work, say in that example with blockchain in the token.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source
“And this idea with the BCAP token is that they can lock up the capital without locking up the investors. So that's a line that Josh Stein from Harbor often uses, is this idea that what the VC fund cares about is that the capital is locked up. They don't really need the investors to be locked up. They don't mind if a secondary market develops. And so that, I think, is one of the promises of tokens is this idea that funds or various types of assets can raise capital and the capital is locked up, yet the investor can achieve some degree of liquidity.”
2018-09-17 · Capital Allocators · Stephen McKeon – Professor of Crypto Security Tokens (Capital Allocators, EP.69) · IDENTIFIED FROM THE TRANSCRIPT · source