Securitizing Happiness: Solving the World's Problems by Making Trillion-Dollar Markets for Individuals, Small Business, & Natural Resources

Slideshow Transcript

1. Slide 1: Securitizing Happiness  …or, How to Solve All the World’s Problems by Making Trillion-Dollar Markets for Individuals, Small Business, & Natural Resources (v0.9) Dave McClure Master of 500 Hats 02/23/08
2. Slide 2: Agenda Concepts • What is Money? What is Value? • The Un-Level Playing Field of Securitization • Money 2.0 & The Missing $T Asset Classes • The Atomic Unit of Happiness Solutions • Capitalizing Small Business • Capitalizing Natural Resources • Hacking Human Suffering thru Capital Markets Innovation, Prediction Markets, & Contests
3. Slide 3: What is Money? What is Value? • Money 0.0 = Barter = “Past Money” = Exchange of Goods & Services for “Value” • Money 1.0 = Cash = “Present Money” • Money 1.1 = M1.0 + Debt = “Near-Term Future Money” • Money 1.5 = M1.1 + Securities = “Long-Term Future Money” – Stocks – Bonds – Mortgages – Private Equity & VC – Derivatives • What is Money 2.0? = All Possible Asset Classes = Fn(Happiness) • What is Value-able? – What do we value? – What can we value?
4. Slide 4: The Un-Level Playing Field Securitized Entities & Asset Classes • Corporations (Stocks, Bonds) • Governments (Bonds, Central Banks) • Some Real Estate (Mortgages) • Some Derivatives (Weather, etc) – David Bowie Un-Securitized Entities & Asset Classes • Individuals = 6B people * life-time earnings/savings – (everyone except David Bowie ;) • Small Business = 20-50% of Worldwide GDP • Other Real Estate (Mortgages) • Natural Resources = ? • Non-Profits = ?
5. Slide 5: Money 2.0 = Missing $X00T Asset Classes • Individual Futures = $X00T 1st world = 2B people * $25K * 40years * 10% savings = ~$200T? 2nd world = 2B people * $2.5K * 30 years * 5% savings = $?T 3rd world = 2B people * $250 * 20 years * 0% savings = $?T – Health & Education Derivatives • Small Business – Debt & Equity – 20-50% of US GDP – 50-80% of World GDP • Natural Resources – Air, Water, Land, Biodiversity, etc – How to Value? • = based on some F(n) of “Atomic Unit of Happiness” (individual futures)
6. Slide 6: The Atomic Unit of Happiness = Futures Markets for Individuals Q1: If we could provide health + education for every indiv. at birth, what is impact to lifetime GDP? 10x? 100X? Q2: If you could invest in this asset class, what is the ROI? Example: Big Pharma swap of AIDS drugs for upside in some derivative Fn(future earnings of Botswana) • Assertion: this is a $X00T asset class, with great opportunity for outsized annualized returns, albeit over 10-20 year period.
7. Slide 7: Solutions for Happiness 
8. Slide 8: Capitalizing Small Business Equity • Capital Access (Debt, Equity) • Metrics for Valuation – see Startup Metrics 101 • Back-End Liquidity, Secondary Markets – “Fannie Mae for Small Business Equity” • Trick1: Small Business GSE in CA/NY? – CA funding from STRS, PERS – =$250B funds (20% CA, 10% in PE/VC = $5B) • Trick2: Real Estate Hack for 3rd-world SME – Invest in both [really cheap] land + business – Sell land if biz goes up in value = synthetic liquidity
9. Slide 9: Capitalizing Natural Resources • Clean Air = A Better Kyoto • Clean Water = No More Mercury! • Land = No More Dumping • Biodiversity • Other Derivatives
10. Slide 10: Hacking Human Suffering thru Capital Markets Innovation, Prediction Markets, & Contests Create & Securitize “SpaceX”-style Contests for: – Cancer – AIDS – Malaria – Tuberculosis – Others? 1. Use Prediction Markets to Jumpstart Valuation 2. Use Foundations to Fund/Back “New” Asset Classes 3. Use Contests to Jumpstart Liquidity (Rinse/Repeat/Re-Value)
11. Slide 11: Feedback? • I’m sure there are several errors in both facts & logics… what are they? • I’m sure I screwed up some concepts, solutions, & hacks… what’s missing? • What’s completely wacky / not doable? • What’s only mildly insane / possible? – Great, let’s start with those.
12. Slide 12: Related Books & Posts Books That Will Change Your Mind, Your World: • Guns, Germs & Steel, Jared Diamond • The Mystery of Capital, Hernando de Soto • Banker to the Poor, Muhammad Yunus My Related Posts (500 Hats blog, Microfinance & Social Entrepreneurship): • Securitizing Happiness: Solving the World’s Problems by Making Markets for Individuals, Small Business, & Natural Resources • Real Estate as Synthetic Liquidity Hack for Small Business equity • Ex. Scenario for Securitizing Individuals (Pharma/Botswana swap) Inspiration & Capital Markets Heroes: • Soros • Milken • Gates, Buffett • Omidyar, Skoll, Google.org • … and you!