I think it is underappreciated by many technologists how many technology companies are, often quietly, building vehicles which have cash flow profiles similar to asset backed securities. The economy structurally wants those assets and capita for them is extremely abundant.
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The opportunity is twofold: one, there is some underlying customer need for a transaction that cannot be facilitated economically in the status quo. Two, there exist enormous pools of capital which are return-sensitive and need an option in a low-interest environment.
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“Can you give me an example?” Socially awkward, sorry, but you should look at basically any business model where there is a high initial expense and then a consistent stream of payments afterwards and think “Ahh tech companies don’t want that on their balance sheet.”
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SaaS companies have approximately this dynamic but largely don’t securitize yet, because equity funding is so abundantly available for SaaS, but I will eat my hat if there are not billions of SaaS-cash flow backed securities issued by 2030. Probably closer to 2025.
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yes, i worked with lew ranieri on an idea to securitize online mortgage leads from 2005-2007. then 2008 happened. was pre-saas, but his insights were clear: any “promise to pay” could be rated and pooled and securitized into a financial instrument that could be traded.
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this was also prior to the kind of real-time cac/ltv cohort analysis that we have at our fingertips now, and before we were able- like we are now- to tap into liquid fb/ig/google- based attention pools of users
@dkimerling
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New financial products tend to quickly revert to either The Mean or a ManagedMarket/PyramidScheme (like LBOs)
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Positive Black Swans at Scale!
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Ok, so if tanking the global economy wasn’t the inevitable outcome of this sort of thing, what went wrong?
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