If I could give you 100% of your current annual salary in cash right now, would you trade me 10% of your earnings over the next 10 years?
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Replying to @AustenAllred
The only reason to answer is 1) You have an extremely immediate need for capital 2) you believe you won't have made at least 2X your salary in aggregate above your current salary over 10 years
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Replying to @nikillinit
Right. I'm curious mostly as to 1. If I can kill your credit card or student loan debt and your salary increases it's a win for both
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Replying to @AustenAllred
I think this also depends on the career trajectory of a person, if there's supposed pretty sharp upward trajectory than that tradeoff is massive I think this arrangement makes sense for a massive upfront cost (school, surgery) that increases that trajectory
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Replying to @nikillinit
Yeah. So what if there's a scenario where I pay off your student loans in exchange for equity in you? Could potentially be a win for both parties
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Replying to @AustenAllred
potentially - the question becomes for that individual person how much is student loan debt actually hampering them? For some people it's not a lot, for some people it's a ton
@TonioDeSo has been working at this concept for a while1 reply 0 retweets 1 like -
Replying to @nikillinit @TonioDeSo
Yeah, I think we'd both agree it makes a lot of sense in the case of education. My question is how much more broadly it could be applied. e.g. if you're paying 18% on credit cards you can't get out from under...
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Replying to @AustenAllred @nikillinit
Like Nikhil said, been working on this category for a while. I think the market for Austen's ideas isn't quite there yet - cost of capital is prohibitive. Once it's competitive I think someone will build a great business in it.
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If cost of capital is prohibitive now I'm not sure it would ever make sense. The big thing you'd fight on top of cost of capital is selection bias. You need to hit inflection points where the capital moves the needle on future earnings.
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