This Week in Startups - Apple Maps 3-D update, SEC Chair tips off coming crypto regulation + Pacaso’s Austin Allison | E1288

Episode Date: September 22, 2021

First, Jason covers the new Apple Maps and what he speculates it means for their next major product (2:11), then discusses SEC Chair Gary Gensler calling crypto the "wild west"(10:38). Then, Jason interviews Pacaso Founder & CEO Austin Allison about fractional home ownership, battling NIMBY's and more (24:46)!

Hey, everybody. We've got a great episode of this week in Startups, Apple Maps, iOS 15 upgrade, kind of tips their cards about what they're going to be getting into in a major way in the next decade. The SEC's chairman, Gary Gensler, is explicitly letting us know that cryptocurrency will be regulated and his intent. He gives a really great interview with The Washington Post, and there's really two very important quotes we'll go after and make some predictions about what crypto will look like over the next five to 10 years. I think it's going to be legitimized. It's going to be taxed. And then our feature interview with the founder of Picasso. Picasso is a really brilliant real estate idea. You take a home, you split into eight parts, eight units in an LLC structure,

and you allow people to buy into that. And we could, me and seven of you, could share a ski house in Tahoe or Park City. It's a great idea. But the nimbie folks in Napa are going wild. They're really upset about this startup. And so it's a bit controversial, like men, any innovative things are. And just a little programming warning. We had a dead redwood on the property that had to come down before it fell on somebody's house, mine or my neighbors. So you might

hear a chainsaw in the background. It's just for a minute or two. And we did our best to get that out in terms of using some sound mitigation. Sorry about it. It's a great episode. Stick with us. This week in startups is brought to you by Zendesk. Qualifying startups can join the Zendesk for Startups program and get six free months of Zendesk products. You'll also get access to an exclusive community of startups for advice and connections. Visit Zendesk.com slash twist today to get started. LinkedIn marketing. To redeem a $100 LinkedIn ad credit and launch your first campaign, go to LinkedIn.com slash this week in startups. And microacquire, the startup acquisition marketplace. Start the right acquisition conversations at your own pace.

Get free and instant access to over 100,000 trusted buyers with total anonymity. Say goodbye to brokers and meet your ideal buyer today. Go to try.microacquire.com slash twist. Okay, and our first story, Apple Maps for iOS 15 has been upgraded, and I think it's a pretty clear tell, a tip-off, a clue as to what Apple is working on very diligently, I believe. Who knows if it actually results in a product and when. But if you've upgraded to iOS 15, which is a major, major, major iOS update, and there's a lot of buzz about it, a lot of interesting features, Facebook, I'm sorry, FaceTime being one of them. And we've been

talking about some of the other features like their Safari email relay I talked about yesterday, where you can basically tunnel and people don't know what you're searching for. Well, let's take a look at this Apple Maps for a second if you're watching on YouTube or the video podcast, You can see some great screen grabs, and they're really highlighting landmarks like Madison Square Garden. Okay, that's nice. They did a little extra rendering on it. But you immediately start to notice that this feels like you're playing in a video game, doesn't it? It looks like the Matrix.

It looks like this is an actual 3D world. Well, of course, it is. You are clicking on the 3D button. You see this 3D rendering. And here's Coy Tower, a very interesting look. They lit it up. And the Golden Gate Bridge, a nice burgundy or, whatever orange that is.

I always hear people say red, and then I hear some people say it's burnt orange, the Golden Gate Bridge. But I think all bridges should be painted a bold color. Like the Verrazano Bridge between Staten Island and Bay Ridge, Brooklyn, where I grew up, imagine if that was painted a bold color, if it was blue or something. Here's Lombard Street, the famous snaking street in San Francisco that a bunch of people go and drive down in their wait an hour to drive down the street. The Salesforce Tower looking great. So if you're listening live, why?

is this look so good? Why do these 3D renderings, why are they investing in 3D so much? When, in fact, 2D is better when you're driving, isn't it? Like, this is nice to look at, but it's kind of unnecessary. And in fact, it's not as good of an experience as using a 2D overhead model when you're driving. You need directions. Like, this is obviously for a reason.

So if you're in the chat room or you're on Twitter, go ahead and give me your theory of why Apple has enhanced Apple maps in iOS 15 to this crazy level with these 3D models. Augmented reality, Linda says, yeah, maybe, but there's something more important. And there, Patrick got it, the Apple car. Very clear that Apple is taking their Maps product super seriously because once you have maps and you have everybody with these phones, you know when a phone is moving over 35 miles an hour, it's either somebody in a car, or they are on a really fast bicycle. So Apple knows from your phone when you are driving in a car.

Now, how many iPhones are there? What's the fidelity of GPS? Okay, they've got a Maps program. You click when you use Apple Maps. Would you like to give us feedback to help us refine maps? I'm guessing that that's somewhere in the terms of service. and they could be, without us all explicitly knowing it, but I think you would maybe assume that this is happening,

refining the maps based on your GPS data. Somebody can look that up if they want in the terms of service. Does Apple refine the Maps product when you're using it based on your GPS data? I'm assuming they do. Now, what that means is they've got, instead of having cars on the road, they have phones on the road.

Those phones are iterating on the maps program, just like Teslas are live on the road and are getting data, or Uber and Lyft and FedEx trucks, Amazon delivery drivers, excuse me, they are all providing data to refine maps. And it may not be cameras like on a Tesla where they have video of every junction and every weird moment when people slam on their brakes or turn too hard. All that data is being put into these models to build these 3D worlds. These 3D worlds are what self-driving is made of.

That's why Apple is basically taking a page out of Google's playbook and Tesla's. Let's use Google uses Google Maps data obviously to inform Waymo and Ways data. You can be sure it's informing Waymo in some way. And obviously, Tesla's been very clear that their million plus cars are on the road. Some number of them have self-driving, whether it's been paid for or turned on or not. And that makes it amazing for them to refine it. In fact, back in 2017, Tim Cook confirmed Apple was working on. autonomous software and systems. We know that. We're focused on autonomous systems. It's a core

technology. That we view as very important. We sort of see it as the mother of all AI projects. It's probably one of the most difficult AI projects actually to work on. Now, Apple is super secretive. When they do mention a project and they expand and give reasons or they give this sort of color or texture as he does hear about autonomous systems, that means they've got it going on. When they say, hey, we're going to pull the string on augmented or pull the string on, you know, TV and see where it leads us. Yeah, that means they were going to launch Apple TV, both content and the product. So we know that this is going to be a big deal. And in December of 2020, Bloomberg reported that Apple shifted the leadership team in their self-driving car unit, which is called Titan, giving the reins over to top AI executive, John Giann Andrea.

I hope I pronounced that correct, John. I'd love to have you in the program. but Apple people are not allowed to go on podcasts and talk about what you're working on because I would ask you, hey, what's next? And you'd say, we can't talk about what's next. So people gave Apple a really hard time about software and how poorly they made their apps and their software. And actually, I think they and previously how poorly they did cloud and any kind of cloud-based

service, like remember mobile me, how terrible that was compared to ICloud. iCloud is actually pretty great now. And so is their services business, whether it's Apple Music, delightful product with a lot of nuance in it. So I think that's what we're seeing here is Apple is really getting much better at cloud and much, much better at building software. Apple Maps was a disaster. It was when it was released.

You can type in Apple Maps launch and you can find all the things that were wrong in it. And now you're starting to see they're taking it seriously. Does this mean they're going to actually compete in cars? yeah, I'm not so sure. I'm not so sure that that's a market where they're going to actually have great success. It's a lot harder than people think. But I think people said that with mobile phones too when Apple just made PCs. So I would never underestimate Apple.

They seem to work on things for, you know, a decade. And when they do release them, they tend to be pretty darn good. Sometimes it takes them five or six versions, I will say. The Apple Watch was one of those products. I don't know if you have an Apple Watch, but it took about six years to get good. Okay, let's go on to our next story. Zendesk is the go-to tool for customer support. We all know that.

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Get six months of Zendesk for startups free at Zendesk.com slash twist. To qualify, you must have under 50 employees, that's reasonable, and you must have raised a Series A or below and be a new Zendesk customer customer. A couple conditions there because they're giving you something really valuable for free. Six months of Zendes for startups. Start building the best customer experiences at ZendSk. com slash twist. All right, next up in the news, SEC chairman, Gary Gensler, tipped off how he is thinking about regulation in crypto yesterday

in a live interview with The Washington Post. You remember the drama two weeks ago we covered it. Coinbase CEO Brian Armstrong was calling out the SEC in a really aggressive thread about Coinbase's new lend product. This is episode 1279 if you want to go check it out. Lending as a product meant you could take your crypto holdings and get like a 6, 70%, who knows, a return on your crypto. That was something the SEC was concerned about.

And Coinbase quietly announced on Friday that it was canceling the launch of their lend product in an update to Armstrong's original host. So it looks like the General Counsel's advice eventually got to Brian and like, hey, pump the brakes, let's not start a war with the SEC. The SEC is generally trying to keep people from losing their money. That's basically why they exist so that people don't get scammed and now will they protect

100% of people from scams? No. But if they make an example out of, you know, but 5% or 1% of scams out there, it's going to decrease the number of scams. It's going to highlight for people that they should be careful with their money just like people should be careful

when they're walking through you know, a parking lot in the middle of the night. You're taking some amount of risk in your behavior, investing in crypto, is like walking through a parking lot, you know, in an abandoned building on the worst side of town, you know, in the most crimeful neighborhood. Be careful, folks. There's a lot of people out there who could scam you.

So last week, Gensler said in testimony before the Senate Banking Committee that crypto exchanges such as Coinbase should register with the SEC, that's a no-brainer. And yesterday, Gensler, I don't think anybody disagrees with that. Gensler was interviewed by the Washington Post columnist David Ignatius on a live stream. When asked about the SEC being proactive rather than reactive in the crypto in crypto regulation, Gensler basically said crypto had gotten way too big to be considered a project, and it must be taken seriously as a financial industry, something I've been saying for a long time.

If you want to call it a project, then keep the maximum amount of money in the crypto project under $10 million or something, or under a million dollars. And then it could be a project and then have some reasonable regulation of classifying projects based on their scale. And as they reach more scale, they could have more regulation. I think this is just common sense. So let's watch this 90-second clip. I'm going to talk on the other side of it, but it's a really important clip to listen to. I don't think it's a good idea to wait until there's a spill in aisle three. And we hear in the loud speakers, the loud speakers overhead from the Washington Post and your competitors, clean up in aisle three. And then those of us in the official sector after Russia,

in and we've got congressional hearings and we're sort of like well why wasn't anybody worried there was going to be a need for you know clean up in I-L-3 and I think at two trillion dollars five or six thousand projects that it would be better to be inside investor consumer protection inside the tax compliance and any money laundering and financial stability Now, if we don't do anything, and there's never a spill and I three, great. But I think history tells us private forms of money don't last long. History tells us that investment contracts outside an investment protection remit, people get hurt, that if we have lending platforms that are outside either the securities perimeter or banking perimeter,

that usually they get excess leverage and we have financial stability issues. These stable coins are acting almost like poker chips at the casino right now. So add to the Wild West analogy. I mean, we've got a lot of casinos here in the Wild West and the poker chip is these stable coins. And so I think there's just a lot of kind of warning signs and flashing lights that we might have a spill in L3 and I'd rather get ahead of it. I mean, could you ask for a more reasonable take? This was exactly the common sense stuff. We've been talking on this podcast.

And people are giving me a hard time, obviously, like, crypto people are very passionate. Some of them have toxicity as their core belief system. You know, the way to deal with anybody who points out that crypto has got a bunch of flashing red signs, as Gary is saying here, you know, is to attack them. Right. And it's an actual psychological technique. Give any criticism, get attacked. give any criticism, get attacked, put the laser eyes and put Bitcoin in your bio, get lots of love, get lots of followers, right? And so this is a psychological operation that is being performed on you

by the crypto community. And you can be sure that there are people with hundreds, maybe thousands of Twitter accounts pumping all of these different crypto coins, NFT projects, etc. And they're using peer pressure, and they're using making fun of you and have fun being poor, which is a way of using fear, to motivate you to finally put laser eyes and say you're pro-Bitcoin. I said all the time, listen, we own Bitcoin, we got a lot of it. But these are concerns. You can like a certain project, but still have concerns about it. And I think the irrationality of the Bitcoin community specifically with their toxic approach,

which is not all of them, obviously. There are some people who are just holders. But there's a, you know, a vocal minority who are pretty toxic. I think that group is what's leading to all this regulation. Candidly, this regulation should have been here a couple of years ago. But Gensler's quotes here are pretty good. Those stable coins, I actually described them as poker chips earlier. And that, you know, these could potentially be problematic.

We talked about Tether. We talked about the New York Attorney General. And how stupid is Gensler going to look if Tether falls apart? New York attorney general took action on it. all of these weird bloggers and, you know, people who are on Twitter handles, anonymous accounts like BitFinext and people we've had on the program, if all of those people, CoffeeZilla, were on the tether thing. And if tether were to collapse and Gensler didn't do anything,

he's going to feel really dumb. And he's going to look like he didn't do his job. And he explains that exactly here. You know, we're going to look really dumb if we don't, you know, this spill, this IL3 spill happens and we didn't anticipate it. he would look really dumb. He's correct. And so getting ahead of it, doing regulation, and the crypto community, let's face it, growing up and acting like adults and maybe saying, yeah, we started as pirates, we started as Ronan, we were these, you know, crazy rebels,

but we understand there's a lot at stake here. We don't want individuals to lose their money. We don't want people to get scammed like the OpenC employee was front running the market and buying NFTs. He does have this other quote in here that, is a real money quote that just drifted by. And I actually didn't catch it the first time I watched it. When he says, history tells us that private forms of money don't last long. He's not wrong.

That is absolutely true. For a little history, a CoinDest article noted that Gensler could be referring to Wildcat banking era of the mid-1800s when banks in remote areas of the U.S. distribute their own worthless paper currency, and these banks were literally in the Wild West. The currency was backed by bonds

and other types of worthless securities. familiar. Who owns commercial paper? Nobody knows the value of that commercial paper. Nobody knows the details of it. Tether. So this led to the national banking out of 1863, which essentially made this practice illegal. When asked if the SEC needed additional help from Congress to reining crypto, here's what he said. One minute clip, I'll talk to the other side. I think that we have robust authorities at the Securities and Exchange Commission, and we're going to use them and continue. I think it would be better. The platforms that are trading securities, the platforms that have lending products,

who have what's called staking products, and I'm glad to describe that for your listeners, but where you actually put a coin at the platform and you earn a return, that they come in and we sort through, figure out how best to get them within the perimeter. We'll also be the couple and the beat, and bringing those in full. enforcement actions as well. Working with Congress would help because there's a lot of coordination by amongst our financial regulators. I would let the banking regulators speak on their own, but we're working right now under the guidance of Secretary Yellen and working on a report around stable coins. And in the world of stable coins, I do think that there would be some help

from Congress. All right. There you have it, folks. I think, yeah, the SEC would partner with Congress on reining in these stable coins. That makes sense. You know, it's been so high profile now, the last six months of people doing this tether investigation and how, you know, smarmy that all looks. And, you know, the scale of it is really what is concerning when they have 60 billion of these coins out there and nobody knows who owns what. It starts getting really, really sketchy.

I think for the people who are in crypto, who are in it for the long haul, you know, they've been in it for 10 years and they want to be in it for 20 more, all of this regulation is great. Because if you remember, ICOs really damaged how people looked at crypto and interest in crypto went way down after the ICO craze. Then people forgot about ICOs and then they started getting back into crypto again. Now, if these stable coins, if they were to go down, maybe you'd see, you know, Bitcoin lose 80% of its value or something. thing or the whole space become really regulated because now it's at a scale where it could start having some impacts. Some people asking about Evergrand. Yeah, I've been talking about Evergrand on this week and start us for at least two months. And I brought it up maybe three or four weeks ago in the All In podcast. And I put it on the docket for last All In podcast. And David Sacks,

my partner was saying, oh, you know, I think we talked about that already. I should have been more forceful and said we've got to talk about this because then on Monday the stock market crash or I shouldn't say a crash. It went down like three or four percent. And it was all because of the Evergrand, you know, coming to a head, basically. And that company would be coming clear that they're going to be insolvent on some level. So, crypto is going to grow up, whether they like it or not, people are going to pay their taxes. People might have to pay a tax on crypto. I think that's coming next because if it's cheaper and better to own crypto than own American dollars, that's going be a real problem for America and for the planet because I think America will have less

influence in the world and we are the influence of democracy in the world as opposed to our major rivalry with the authoritarian's in China. And so we really do need to win for humanity. I think it's existential. And I think people in leadership probably share my OK boomer opinion that crypto can't replace the US dollar at this point or that would be really bad for humanity. I know that a lot of people believe that would be great for humanity. The problem with it is it's going to level the playing field where authoritarians are going to have, you know, a lot more control over the planet. And I think we want America to have a lot more control about it. As flawed as we are, I think it's better that we have more influence on planet

earth than China does, or at least keep some large amount of it. So I could see us literally taxing cryptocurrency at a higher rate to make it look more appealing to consumers. hold dollars. I think that's eventually where this leads, is that there'll be a tax on crypto that incentivizes people to hold dollars instead. Until we have a USD, you know, stable coin and you can trade the American dollar, you know, on some blockchain that is controlled, essentially not a decentralized blockchain, which I know for people is anathema to crypto, but I think that's what's going to happen. Okay, next up on the program is our interview with the founder of Picasso. And we will be having the NIMBY Napa crew.

I think on the podcast, they got into my DMs and they are replying to me. So please do come on the program, Nimby Napa folks. And here is the interview. Listen, right now LinkedIn is going to give you a $100 credit towards your first ad campaign. I want you to go to LinkedIn.com slash this week in startups and get that hundy right now. Now, why would you use LinkedIn marketing? high quality leads we all need leads we're all running businesses here my leads start up founders your leads might be SaaS enterprise it might be CFOs it might be CMOs it might be CTOs who knows everybody's got a different product

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for the Hyundai, no spaces, no dashes, and terms and conditions apply because they're giving you a Hyundai. All right, I am fascinated by this next startup. And the founder's name is Austin Allison. The startup's name is Picasso. And I heard about it

because I was listening to stay tuned with Preet and it's one of my favorite podcast, shout out to Preet, and I heard an ad for it. And I was like, this company is a brilliant idea. What do they do? They find a second home, which is a really considered purchase, and it's not accessible to everybody, and they're underutilized. And people don't like second homes being bought because it takes inventory away from people who need housing, and we're in the middle of a housing crisis. So what does Picasso do? Picasso takes that home, and they split it between eight

people. And they each get whatever 40, 50 days at the home, and they do all of the management of the home. But it is not a timeshare. You're not buying some virtual usage or paying in advance for hotel rooms. No, you own an LLC or a share of an LLC, I guess an eighth, a six, whatever it is. And so I thought, and also, by the way, you can tell that this is a brilliant idea because a bunch of nimbie people in Napa are on NPR complaining about it and protesting what Austin is doing, welcome to the program, Austin. Thanks, Jason. Great to be here. All right. You heard my little preamble.

What did I get right about what you're doing? And was there anything I missed? Well, I think you got most of it right. I'd love to just give you the background and the idea, though, to provide a little additional context and sort of fill in the pieces. Sure, yeah. Had to come up with the idea. But let's not, I hope it's not like media training, like a media training spiel. No, no, no. I'm going to give you the, you know, the real spiel here. Have you been to media training, by the way? When you get a company that raises 100 million, they send you to media training, right?

Yeah, they do. Oh, God. See, that's the ban of my existing. So, okay, you've got to promise me you're not going to use that meeting trading on this podcast because I can identify it in 10 seconds. No, I know you can. Tell me the back. Totally unfiltered.

Totally unfiltered. So, look, the facts are I grew up in real estate. My dad was a carpenter, so I was swinging a hammer by the time I was three or four years old. Right. And when I turned 18, I started selling. real estate to pay my way through college and kind of fell in love with the industry. And that led to my first company, which was a digital transaction software called Dot Loop, which we sold to Zillow in 2015. Congratulations. I stayed on there for about four years. Thank you. And along the way, my wife and I,

it was about, I guess it was about seven years ago now in late 2013, my wife and I were like most families who couldn't afford a second home. We never grew up with second homes because our family didn't, you know, have a lot of extra money. But we dreamed of owning a second home. And in 2013, we were able to save up enough money to use as a down payment on the second home. We actually had to rent the home out on Airbnb, which was a whole other experience that we could talk about. But owning the second home is a really life enriching experience for us. What I learned about the experience is that we didn't just buy a second home.

We bought a second community. We bought, you know, rituals and memories. and some of our best friends are now in Lake Tahoe. Like Lake Tahoe is now a really integral and important part of our lives, and it was made possible because of that second home. So having experienced this firsthand and also recognizing just how out of reach second homes are because they're very expensive, because they tend to be in very expensive markets, and they're highly underutilized.

The facts are that most second homeowners only use their home five to six weeks a year, which means that these second homes on average sit vacant 10 to 11 months per year. So 80 to 90% underutilized or you have to go run an Airbnb, which means now your second home, which is supposed to be where you relax, now becomes a business you're running. So for some people, that might be fun if they have spare cycles. But if you're busy and you've got kids, that could be a bit of an albatross. Exactly. Exactly.

So I've been thinking about this for the last seven or eight years about this opportunity and this problem. And really, my goal was twofold. It was how do we find a way to make better use? use of all these underutilized homes to empower more people to realize their dreams of second home ownership. That was like goal number one. But goal number two was really around utilization. You know, I've always been, you know, obsessed about making better and more efficient use of things. So that's what led to my first company dot loop. It was about more efficient real estate

transactions. And it just drives me nuts to think about all these homes that are sitting empty because an empty home drives up housing prices because it takes inventory off the market. It constrains and challenges local businesses because the bars and restaurants in these towns during the shoulder season don't have people to frequent the restaurants. It's bad for the environment because every home that sits empty is another home that needs to be built. So it was those two things, accessibility and utilization that I was trying to solve for. And that really is what Airbnb and Uber did well too.

You know, when the reason Ubers were so cheap was because you were taking cars that would be dormant 95% of the time. Cars are even less used than second homes. And you could put them in the market to be used another, I don't know, 10, 20% of the month. And they could be used for shuttling people around. And then some people don't have to buy a car. And then there's less cars, which means there should be less congestion or traffic. And there should be more parking spaces available, yada, yada, yada, yada. and that is one of the great things that technology does.

So on a mechanical basis, you create an LLC, Picasso owns no ownership in it. You take no ownership. Correct. Once it's fully sold. So to finish the thought on how we created the company, one of the things I discovered is that there actually was a solution out there. So I appreciate all the compliments up front about creating this idea. But to be honest, we didn't invent the idea of co-ownership.

I wish we could take credit for it, but we can. Co-ownership has been around for decades and decades and decades. It's actually very common in almost every market, you know, including every market that we operate in. Now, usually when people co-own homes, it's family members or friends that are buying property together. And who manage all that for them like an attorney? Well, they do it yourself.

So like if you and me, yeah, if you and me and two of our buddies decided we wanted to own a house in Lake Tahoe, we could go do this on our own. we would form an LLC, we draft an operating agreement that defines how we all, you know, coordinate access to the home. And we would either divvy up responsibilities or we would hire a property manager, kind of like Picasso, that does the management duties for us. All Picasso's doing that's different is we're taking this old practice that's been around for decades and we're applying a service and technology layer that makes it easy for people to

co-own properties with one another. And you don't have to know who the other owners are. You can own property now with people who you don't know. And Picasso serves as the intermediary to eliminate all of the, you know, the hassle. And I noticed that when you go to the site, you can see you have some inventory there that you've, I guess, pre-bought and that you're selling in fractional units. Yep. Now. And once it sold through though, Jason, what I was going to say is we do hold the property for a short period of time.

But once all the co-owners are aggregated, the owners own 100% of the property and we retain no ownership. How do you make money? We make money by charging a service fee. So like this home I'm sitting in right now in Fort Lauderdale is a Picasso. It's a $4.5 million home. With Picasso, you can buy one-eighth of it for $650,000. And within that $650,000, about $65,000 of those dollars is Picasso's fee. So all the work that we do to aggregate the buyers, to carry the cost of the property for a period of time,

design, furnishing, you know, all that stuff is baked into our service fee and it's baked into the price for the people who buy into a property. So on a house like that, if I do 650 times 8, that's 5.2 million. You said it's a 4.5 million now. So you make $700,000 for finding the house, renovating it, staging it, putting all the furnishing in, doing all the legal, and to operate your business. So that's nice. It's nice to make $700,000, I guess. But, it's not really a Silicon Valley startup if you're just going to make 700 grand per house. So how did you get all these venture capitalists to buy into you getting venture capital because they would say, well, you get a one-time fee of 700,000?

What is the yearly fee to maintain it? And how did you convince venture capitalists to get on this ride? Yeah. So to clarify, it's 12%. So in that case, it wouldn't be 700. It would be about, you know, 500 or so. But so the primary revenue stream that we have up front is the service fee. but we have recurring revenue streams that go into the future.

So management fees, we charge about $100 per one-eighth interest per month to manage the service. So that works out to about $10,000 per home per year for the oversight and the program. We also offer financing. So about 70% of buyers who purchase these homes end up using financing.

And that flows through Picasso, and we make a little bit of money on that. two. And then the last piece of it is resale transactions. So when somebody goes to, like, let's say you were to buy this interest for $6.50 and then, you know, three years from now, it's worth $800 and you decide to sell. Picasso would effectively be your real estate agent on the listing side. So you get 6% or something? Yeah. Now, a lot of that goes to third party agents. So we work with third party real estate agents on every transaction, but we would get the listing side of it and then we pay third party agents on the buying side of the transaction, which I think is

3% each side. About 3%. So you make a little extra like another 20 grand or something. So you have modeled this and this is going to be a large robust business? Yeah, we think so. And our investors think so, obviously. I mean, it's a huge job for duty. Is there some other business though that you see next?

No. Okay, great. So you think this is the sustainable business. Absolutely. Yeah. Microacquire is a startup acquisition marketplace. that cuts out the middleman. Basically that means they help startups get acquired efficiently. If you've ever had to buy a company or you tried to sell your company, there's all these

people in the middle. They're not looking out for you. Microacquire is looking out for you. To date, Microacquire has helped hundreds of startups get acquired and has facilitated hundreds of millions of dollars in closed deal volume. Over 100,000 buyers are on the platform right now. It's amazing. I signed up for it. I paid for it. Now they're an advertiser. It's crazy. thousands of startups are currently listed for sale on the site, and they've had hundreds of successful acquisitions so far, because they vet all of the deals they're putting up there, and they vet all the buyers.

Founders get free and instant access to these 100,000 trusted buyers, while staying totally anonymous. This is not like an open marketplace. If you're a founder looking to sell, microacquire is free, private, and involves no middle men. On the other side of the marketplace, buyers simply pay $290,000. a year for access to the platform like I did, because I might buy some stuff for Insight.com.

Microacquire helps startups find buyers, simple as that. They'll help you start conversations that can lead to an acquisition in just 30 days for free at try.macquire.com slash twist. Try.com.com. Go ahead, founders, and check it out. And if you're an acquirer or you're looking to beef up your startup's footprint, you really should just pay the $290 and peruse and see what you could buy there. It's a really cool service. When I explain this to my wife, she said, well, how do, who gets Christmas? So who gets Christmas? Who gets the, who gets the, who gets ski week for the Tahoe house? When we're all, if we all did this, and it was besties in the Bay Area, and it was Tahoe and all our kids have the same ski week,

and we all have the same winter break, are we all sitting there like trying to snipe on day one to get Christmas or how do you manage that? Yeah. So, I mean, this is the number one question that we get from buyers who, you know, talk to our sales team. And the answer is that we've come up with a really, you know, slick and innovative software. We call it SmartStay, which is basically a series of rules and algorithms that distribute the calendar fairly and equitably amongst the ownership group. The net of how it works is that everybody gets a little bit of all the calendar throughout the year.

So if, let's say that four people own a house together through Picasso. So your 25% would entitle you to 25% of the peak season, 25% of the non-peak season, and 25% of the holidays. And the algorithm is designed in such a way that no one person is able to dominate the whole calendar. But you are correct in the sense that if seven families, all who have kids in ski school in Tahoe and go the same six weekends every year, if those people wanted to buy a home together through Picasso, this wouldn't be an optimal fit because everybody would want to. to use the home at the same time. But that's not representative of how most people own property together through this model. I'm curious with this model if you could select an algorithm. Because another possible algorithm is Christmas break is worth three points.

You know, the shoulder season is worth one point. And these non-premium holidays are worth two points. And everybody gets a certain number of points. Now, I know that sounds complex. But everybody at the beginning of the year could state their intention for 2022. too or for, you know, however you do it, you can do it for 18 calendar months. And I might say, you know what, I'm flexible. I don't have kids. I don't care about ski weeks. So I want to get extra weeks. And then other people might say, you know what, I'm in it for Christmas. I'm trying to

get the, I'm willing to spend the three points for Christmas. Have you thought about that? Yeah. Oh, yeah. We've absolutely thought about it. I mean, we have a, you know, super talented team of people who think about this all day long and we get feedback from our owners on a regular basis. And the scheduling algorithm actually does sort of solve for the problem in the way that you described. It just doesn't do it with points. It's found the optimal ratio of, you know, number of stays that you can have reserved at any given point in time. And it balances this out with the other owners. But, I mean, it works really well. Our average property is utilized over 90% of the time. You know, you say this is the key. This is your high ground with these nimbies.

I got, I hate these nimbie people. But this is the high ground. Because what these idiots who are so nimbie and so up in other people's business, this is America. You buy a property. It's your property. It's not your neighbor's property. The neighbor owns their property.

They don't own your property. If you want your property to be shared by eight besties, that's your decision. You get to stay in your house and make your own decisions and build a fence. and you don't have to look over the fence at my property. And these maniacs attack you in Napa saying you were destroying the community. When in fact, you're saving the community from having a bunch of empty houses. Because it's 90% utilized.

If eight people buy a house in Napa, that means you don't have to have eight homes or six homes. Let's say half of them couldn't afford this without Picasso. Then you would have four houses. instead of one. It's massively more efficient, correct? Yeah, I mean, it's, it's very, very efficient. I mean, I, I can't speak for what's on people's minds or, or why they, you got, you got into it with them. Why they, why they, they told you why they said you're destroying the sense of community. Are you destroying the sense of community in Napa? No, I mean, definitely not. I mean, what I can tell, what I can share with you is facts, Jason. And here are the facts. Like, you know, the first,

First off, I do think it's important to acknowledge that real estate is a sensitive topic. You know, right or wrong, real estate's a sensitive topic right now, particularly in second home destinations. And the reason why is because there actually is a real affordability crisis happening. Yes. And it's most pronounced in second home markets because of all this new demand and the shortage of supply. So I get why people are frustrated about housing. But you're correct that the way that we help to address.

of this housing crisis that we find ourselves in, you know, there's really only two solutions. We either build more homes or we make better use of existing supply. I mean, that's, it's just basic economics, right? Supply and demand. Yeah, that's it. Might it be just going to float a theory here that these affluent owners in Napa, the same ones who blocked native son George Lucas for. from building, you know, museums for the community and who blocked George Lucas from building

a studio up in the area up there north of the Golden Gate Bridge. These maniacs are so rich and entitled that maybe the idea that somebody who could only afford one eighth of a Napa home would be showing up for their vacation in Napa. Might that have something to do with it, you think? Again, I can't speak for, I can't speak for what's driving or motivating, you know, the people who don't really like our concept. But what I can tell you, again, back to the facts, what I can tell you is our average home price is $4 million. So when we, when we first started hearing the feedback from the community, I mean, the number one thing that we heard was that we were taking homes away from the local workforce, affordable homes away from the local workforce.

It's so disingenuous. And we did buy one house for $1.2 million, which was twice the median in the neighborhood that we bought in. We acknowledged, we heard from the community, acknowledged that that probably wasn't the right property for our model, and we chose to sell the house outright. And a second homeowner, I think actually ended up buying it. But all of our homes now, like our average home price is $4 million. So these are not affordable homes. That's for sure. These are homes that would have otherwise been purchased by second homeowners.

If you just look at the numbers and the percent of people who are purchasing these multi-million dollar homes, they're second homeowners. And so we think it's a much better use of housing stock to consolidate demand into fewer homes. But the other thing that we think is really powerful is the sort of the transfer of the demand that's happening through this model. All the people who are coming into the Picasso model, like these are not families who just woke up like last week and decided that they wanted to own a second home.

These are families who had been dreaming about owning a second home for a long time, many years in most cases. And most of them are actively in the market, working with a real estate agent or shopping on Redfin or Zillow for a home already. And if it weren't for Picasso, many of these second homeowners would be buying median priced homes. would buy the $600K, $1 million home and take it away from a school teacher, a firefighter, an accountant, somebody who, you know, is getting priced out of these markets. I think that these NIMBY people

have the worst intent in the world. I think that they bought their houses early. They've seen them appreciate in value and they delight in their being limited inventory and they delight in there being no other option because it makes their most prime asset, their home, their second home, that they got in early, appreciated in value. And they are so, so anti-community that they don't want certain demographics to be next door to them. I think that's what a lot of this is about. I'll be totally honest. And I think they want to protect their investment, which is reasonable, except these are homes and people need a place to live and people need a place to have their second homes. they got particularly vicious with you in Napa.

Maybe you could talk a little bit about some of the, and I know your media people and PR people don't want you to talk about this, but they were pretty, they got a little edgy with you up there. Tell us, what did they do to try to stop you? They made it pretty personal. Yeah, well, look, I should clarify that it's not everybody. Like, we have, I mean, we're in 25 destinations now across the U.S. and, you know, a lot of, a lot of people are really welcoming their new neighbors with open arms.

Like I was just in Aspen last week for the Food and Wine Festival where we had some activities going on for Picasso. And I actually got to meet one of our neighbors. She came out of her. She basically came over to our property, introduced herself. And she opened up by saying, thank you so much. These homes surrounding me, I've been living here in Aspen for 30 years. and all these homes on my streets sit empty for 10 months per year. I'm so thankful to have neighbors and friends and members of the community that previously

weren't here. So it's not everybody, but you're right that, you know, some neighbors aren't quite as welcoming. They basically put up like signs and cars and like banners that Picasso was destroying Napa and Sonoma. Yeah, I mean, you know, we've had threats to burn down our houses. Oh, yeah, that was the crazy thing in the NPR story. That was like, because once I found out about you, I googled you because I was going to invite you on the show and I DM'd you on Twitter, I think. And then I saw the NPR story and I was like, oh my God, they threatened to burn the house down.

This is how deranged these sociopaths are, these nimbies sociopaths. We've had threats that we should be shot. Literal physical violence. I mean, not only. property violence, but shooting you. This is deranged. And you know what? It is because you won't say it, I will. They think that people who are not white people are going to come to Napa and own an eighth of a home who couldn't previously afford it. That's what this is about. I'm sorry. And they're just also concerned that maybe if you're a more affordable solution when they want to flip their house, they won't have a buyer

because somebody said, oh, this is more efficient. But they should be thinking, these nimbie sociopaths, What they should be thinking is, what kind of society do I want to live in? One where people can't afford homes and people have to suffer and have to live an hour and a half away. And all this inventory dries up. We need a solution. Picasso is a great solution. Take the win, Napa. Other places.

Yeah, I was going to say, we definitely think it's a great solution. I mean, it'll take time for people to understand any new concept. As you mentioned in the opening, Jason, like anything I've ever been a part of, of or seeing that was doing something new and interesting faces some resistance and it takes time for people to fully understand and appreciate the concept. And I think co-ownership is one of those things. It'll just take some time. And we're going out of our way to try to to try to communicate as well. Like, you know, we want to be part of the solution, not part of the problem here. Like as an example, you know, and one of our properties this weekend, we hosted a pancake breakfast,

you know, to get to know our owners. Our chief revenue officer stayed at the home. He hand-cooked every single pancake by himself. He handed out flyers to every neighbor on the street as well as the neighbors on the adjoining street and just invited them over from 9 to 11 a.m. just to have a conversation and get to know us. And guess how many people showed up? You tell me.

Zero. Fascinating. Zero. So, well, you know, We're trying to have the conversations. We want to be part of the solution, but we also realize that it'll take time for this concept to be understood. How many homes have you done so far? We don't share the home count.

I mean, what I could share is. Are you over 100 yet? What I can share is we've got a couple million people that visited our website last quarter. And that's up a couple hundred percent year over year. We just shared for the first time ever, we shared our revenues. You know, we're tight with this stuff because we're a private company and that's one of the advantages of being private. But, you know, we finish Q2 at more than a $330 million annualized run rate. And we just started, you know, a year ago.

So growing really quickly. We're in about 25 destinations, as I mentioned, mostly in the U.S. And we also just announced that we're expanding to Europe. So Spain is going to be our first market. Oh, my God. I can't wait for that. I was thinking about buying a house in Florence. When I was in Italy, I was like, you know what?

I'm going to get an apartment in Florida. I think I love it here so much or maybe in Tuscany. And I was on your website. I think that's when I invited you in August to come on the pod. And I started looking at it. And I was thinking, you know what? I'm going to talk to my besties from the All In Pod. And like maybe Chmott, Sachs and Freiburg, we find some $5 million place.

We chop it up. But if you do all that and you find the place in Tuscany for us, I don't want to deal with like finding the place and managing it. And that's not the fun part. I'd rather give you the whatever 50 dimes a year to do all that. Yeah. And also, I mean, buying internationally has an additional layer of complexity beyond the obvious property management details, you know, because transactions are different from country to country. So it's part of our job to have the right people in market and make that transaction easy. Why'd you go with Spain? Is that your favorite? You like Spain over Italy? Is this a personal choice? No, I'm actually, if it were my choice, if we had such thing as founder privilege here, I would have chosen Italy. I'm fond of Italy. Yeah. I'm fond of Italy. Yeah. There is found a privilege.

I can assure you who you can use it. Yeah. We don't apply it here at Picasso. But to answer your question, you know, the main thing that influences all of our markets is where our buyers want to be. I mean, at the end of the day, Picasso is effectively a service provider for all these owners, you know. All right. I'm going to look over to the side here. And I'm going to take two questions from the audience.

So let's take two questions from the audience. Charbacks says, can home shareholders, home shares, what do you call the people, fractional owners? The owners, you call them owners, right? Yeah, we call them co-owners. Co-owners. Can the co-owners rent out their shares on Airbnb via Picasso? That's an interesting question because that is something the NIMBY folks are super, super sensitive about. It's their property. They should be able to do what they want, correct? Or not correct? It's, it, well, it is a great question. So the answer is no, Picasso owners are not allowed to rent their property out. It is their property and they ultimately have complete control. But when owners sign on, they sign on to an operating agreement, which has a set of shared, you know, rules and principles that the owners agree to. And one of the things that they agree to is to not rent their property out. So if an owner were to rent their property out, short term or long term, Picasso has the ability to basically enforce. and stop that from happening.

Got it. And if somebody, let's say they own it, can they cancel their arrangement with Picasso? Like if we get to year 10 and I'm like, you know what? We don't need you anymore, one of our ourselves. So they can cancel their with Picasso as the, yeah, like can the ownership group cancel their management agreement with Picasso? Yeah, totally. I mean, Jason, this is true ownership.

Like if Picasso were to dissolve and go out of business. business, hypothetically. It's just you and a small group of people who own a house together. You know, so yeah, you have complete control. If Picasso fails to deliver on our service, the owners could go find another property manager. Okay. Here's a great question. Another great question. Can a single owner by multiple shares? I was thinking this myself. Yep. It's pretty common, actually. So our average home, I would say, has five to six owners. We allow a maximum of eight, but several owners will purchase a quarter or in some cases we've seen even three eights. We wouldn't allow somebody to purchase more than 50%.

If somebody wants to purchase more than 50%, we would recommend you just buy the whole home. For sure, buy the whole home. And somebody says, if I can't rent out my property, not buying it, sorry. So that's interesting. You're probably not the person for this market because what the people in this group are saying, See, I can answer this for you, I think, is you don't want to have random strangers destroying the home. When you run an Airbnb, which I did for a little while on a property I owned while we moved to another property, somebody threw a party there and did $8,000 worth of damage.

I had to file a claim with Airbnb. They had to charge a person to a house. It was a whole big controversy. And we wound up getting paid eventually, but it was like a massive headache. People don't want that nonsense in this class of owners. And if you want that nonsense, you really shouldn't, I think, go for this level of home. When are you coming to Canada? Okay, you had something to say?

Yeah, I think this Airbnb point is an important one because this is kind of like almost the anti-airbnbee. Like this is for owners and families who are not just there for the weekend. Like these are people who are spending $500,000 to a million dollars that own the property. They're committed to the community. like I'll give you an example just to highlight the difference. You know, we recently, unfortunately, you're probably aware of this. You're in the Bay Area, right, Jason? Yeah.

Yeah. Yeah. So you're probably aware of the South Lake Tahoe fires that just happened, right? Terrible. And, you know, think about if, imagine if you're a renter, like an Airbnb renter that had stayed at an Airbnb a couple years ago in South Lake Tahoe. Do you think you would be inclined to go help with what was happening, you know, with the fire situation? Probably not, right?

Like, you have no skin in the game, no. ties to the community. In Picasso's case, we saw this. We found a charity that was helping with the cause. We wrote a check as a company to support the cause. And then we emailed all the owners that we serve in the Tahoe region and encouraged them, told them that we were doing this and encouraged them to strike a check as well. And we had something like, I don't know what the total number was. It was like five or ten owners stepped up and wrote a check to support this local cause. So like the families who are buying these houses, these are not frat parties. You know, these are like families with kids that are interested in being part of the community,

interested in meeting their neighbors. And, you know, they love the town that they're buying in. And it's a very different mindset when somebody is an owner with significant skin of the game when compared to a transient renter that has no skin of the game and it's just there for the weekend. Yeah, you know, it's interesting. I'm thinking about buying a Tahoe place. And I see you have five places up there now. now you've already bought these places because you have that holding period so if I were to buy one of

these this week like right now I'm looking at one it's like 645 dimes I can afford that if I bought into this could I be using it in like two weeks how long if I you know assuming like I want you the money when can I like get keys if it's available you could be using it this weekend we can close and I mean we can close and you know 15 minutes like the process is that easy that is so amazing. As we wrap here, what about cleaning and that kind of stuff? Do I get charged for that? That's included in the fee. How does that work? And you can only do two weeks in a row, right? I'm not sure why you have that rule. It depends how much you own. So during the peak season, that's one of those rules in the algorithm to ensure that somebody doesn't, you know, block all the

dates. But during the peak season, for one eighth interest, you're entitled to two consecutive weeks. you're allowed to have more than that in the off peak season. But if you own a quarter, and this is one reason why somebody would buy 25% instead of 12.5% is because they could have a full four weeks during the peak season. But we handle every detail, including cleaning, everything from bill pay to maintenance to design and furnishing, to when you go to resell your interest at a future date, we make that process easy for you too. And the way that it works is the actual cost to run the property, things like taxes, insurance, utilities, All of those things are just passed through to the owners and split pro rata with no markup.

So if you own one-eighth of the home, you just have to pay for one-eighth of the operating expenses. Man, I'm looking at this donor and I'm like, you know what, I kind of like it. Now, if I, hold on a second, I'm an influencer. I got a following. Do you have an affiliate program? If I bring folks- We could probably work something out. This would be killer.

No, this is a killer idea. If somebody makes the commitment and then they bring people in, they should get a little taste. A little taste maybe. That would be a killer idea. Affiliate program would be great. I can't get any special treatment as the host of this weekend startup. I love it. But affiliate products,

listen, continued success. I love what you're doing. I'm super sad. I'm not an investor, but I think you're going to be super successful at this. So congratulations. You're already getting competitors because when I tweeted about how brilliant

I thought this was, I had somebody from South America and somebody in Europe are like already doing the same idea, exactly the same idea, exactly the same website. So put your foot on the gas and keep going, brother, because this is a killer idea. I love it.

All right. We'll see you all next time on this one. Appreciate it. Bye bye.