Name: Balancing The Ledger: Indiegogo's Slava Rubin Talks Security Tokens Vs. ICOs
Uploaded: 2018-08-24
Duration: 8 min 51 s
Description: Indiegogo is helping promote Aspen Coin, a tokenized share in St. Regis Aspen Resort real estate.

[MUSIC PLAYING] Welcome to Balancing the Ledger, where tech and finance intersect. I'm Robert Hackett. And I'm Jeff Roberts. And today, we're here with Slava Rubin, co-founder of Indiegogo, the crowdfunding site. Thanks so much for being here, Slava. Yeah, thanks for having me. So let's kick things off and talk about the latest news within Indiegogo. You guys are helping the St. Regis in Aspen Resort sell equity stakes on a blockchain. What is this all about? What's going on here? Yeah. So we're super excited about the announcement. From the beginning of Indiegogo 10 years ago, we've always looked to democratize access to capital and allow people to get more involved in these opportunities. And today, we're talking about our expansion into security token offerings. Very specifically, it's the Aspen St. Regis, which is a blue-chip, luxury resort in Aspen, obviously. Do you know it well? You know we have our brainstorm tech conference there every summer, not at the hotel, but it's one of the places a lot of people stay at. Absolutely. So you know like many, it's a real thing. It actually exists. It's an asset. And now people will be able to invest in it through a security token. And we're working with them as their marketing partner. But why do you need a blockchain involved in any of this? You there are ways to own parts of hotels. There are real estate investment trusts. Why do you need to have a token that's linked to a blockchain somehow? I don't think it's a requirement to be on the blockchain. This is really just where things are evolving. Right now, if you want to invest into the Aspen St. Regis, chances are not only do you have to be rich, but you probably have to be a institution. You probably have to be massively connected and somehow get access to this opportunity. Even if that did happen for you somehow, you'd have to be able to figure out your price transparency, figure out liquidity. If you did get a piece of it, when and how would you sell it in the future? All of these things make it a little bit challenging moving into where this could all head on the blockchain. So the Aspen Digital team is they're tokenizing portion of the hotel. And now they're selling it as a security token using Templum Markets as their broker dealer. And it's super exciting because transaction costs will come down, you're able to have more liquidity as more people are able to find out about it, and this becomes more of a democratic opportunity if you're able to invest. You hear of ICOs. And frankly, there's been a lot of scams out there. A lot of sort of gullible people just gave money to them. And you know even crowdfunding, you hear bad stories. And so is it possible, combining these two things, how do we know people aren't going to lose his shirt? I think it's fair that with ICOs it's highly speculative, and you're not sure if you might make a lot of money or potentially lose all your money quickly. Within STOs, a security token offering, specifically here with Aspen Digital, with the St. Regis, you actually have a real asset, which is the hotel. And traditionally, real estate is a decent place to park your money to try to get some appreciation over time. Obviously, there are ups and downs with the market. So there's no guarantee that you're going to profit, and you might now lose some money. But the idea of the actual hotel going from its current value all the way to zero is low. Could it happen? It is possible. But it probably has some sort of floor as to how low it can go. And it also has some limit as to how high it can go, which is part of also the limitations of a security token offering. Part of that is just you have an asset and it kind of backstops your risk. So I do think that it's quite different, but you still do need to manage your investments accordingly. Right. And compared to an ICO, where you're selling like a software project that hasn't been built yet, here you've got like a real building you can go to. Exactly. Within ICO, you have to tell the difference between vaporware and Mark Zuckerberg, which it's hard to tell sometimes when literally nothing's been even built yet and no one's actually using any distributed apps or anything on top of what you're telling them you're going to build, which is why it's highly speculative and why some people are making a lot of money and some people are losing a lot of money. But with one of these security token offerings, you have a clear building that has customers, has employees, it's been around for years. I'd like to know why is the hotel doing this in the first place. My impression is they're doing quite well already. They have their investors. The hotel looks full. I mean, are they kind of hoping to juice valuation, thinking more money's going to come in because of the novelty, or I guess put another way, what's the point? Yeah. What's the point? I think that the people who are leading this, including Stephane who's leading up to Aspen Digital team, really does feel there is opportunity for more people to get involved. He is trying to progress forward. He originally was thinking about doing this through a different vehicle, a different regulatory exemption. But then when he thought about what are the opportunities with blockchain to actually lower the costs, it was really interesting to try to do that. Instead of just a regular share, do it on the blockchain as a securitized token. Right. That's because Stephane was initially going to do an IPO with a single asset backed, REIT, right? And it was going through a REGA plus, so not an IPO but a REGA plus, which is a certain exemption that you can use that came out of the JOBS Act. Exactly. But here you're able to do it on the blockchain, lower some of the costs. And it's just really where this is all headed. There might be potential for appreciation. But one of the things to consider here is this is actually properly priced, meaning there is no, how should I say this, premium versus what the appraisers have said is the price versus what they're selling it at as the tokenized offering. So it's pretty interesting. If you own one of these tokens, will it simply be purely an investment vehicle, or will other benefits go with it? Will you perhaps get like a complimentary martini at the bar if you're a token owner? It's a great question since Indiegogo is very perks oriented. But this offering includes no perks. This is all part of the financial instrument. It's got to be accredited investors, that's right? Correct. For you to actually be able to invest, you have to be an accredited investor and you have to go through the accreditation process with Templum at Templum Markets. And the reason is for you to get certain appreciation on your investment, just like you decide to invest a certain portion of your money just in money market in your savings account, a certain portion in bonds, a certain portion in securities, public markets like in Facebook or some other stock or QQQ the index. This is really opening up a whole other asset class to more people, being able to get exposure to this compliantly and so much distribution opportunity. The key, then, is there you're able to then trade it in the future to get out of the position as opposed to being completely stuck in it. During the crypto bonanza that happened this winter, when prices were flying sky high, Bitcoin was approaching $20,000 per Bitcoin, Indiegogo rolled out an ICO platform. What did you learn from that experience? What did you take away from it? How has that impacted what you're doing now with security tokens? Yeah, so I would say 2016 we came out with our equity crowdfunding offering. And right away, these things called ICOs started tapping us, saying, can you help us? So we researched through a majority of 2017, what do we think about these utility tokens, security tokens? What is all this about the regulatory? We've always been very pro-security token, but the market just wasn't there yet. We did come out with our first ICO opportunity in December of 2017. And right away in Q1, following that, the SEC came down pretty strong to freeze a lot of that activity. There was a lot of hunkering down in the US. And we, similarly, wanted to make sure that everything was done compliantly. So we just doubled down more on security tokens and doing the research. We were looking for somebody who would be the right partner to work with as a potential first expansion into security tokens, which is why we like having this blue-chip hotel as our first security token offering. You obviously have a very broad view of this, being at Indiegogo. Which assets, if you had to guess, real estate obviously has been the first one, but what else, like jewels, boats, sports teams, if you had to guess? I mean, it is so early that I would just say that real estate is gigantic. And I would not be surprised if that vertical alone took a little while for it to really start to become interesting. Separate from that, I do think that you'll probably see that security token market start to become a little bit verticalized because different players will try to say that they specialize in certain areas. I don't want to tell you that we're specializing in any way or in any specific focus. We're really coming out with this first expansion. We want to learn. But I do think real estate alone is enormous and has a long runway before we can say it's tapped because this is literally one of the first of its kind. When will Indiegogo tokenize its own equity? You know, this is something that we'll have to look into. A lot of people have asked. I can't give you a date yet, but it is interesting. Excellent. Well, thank you so much for joining us today, Slava. Thanks for having me. I'm Robert Hackett. And I'm Jeff Roberts. For more Balancing the Ledger, please go to fortune.com. See you next time. [MUSIC PLAYING] 

Balancing The Ledger: Indiegogo's Slava Rubin Talks Security Tokens Vs. ICOs

Finance

Indiegogo is helping promote Aspen Coin, a tokenized share in St. Regis Aspen Resort real estate.