If you aren't familiar, these platforms let you invest in incredible collectables you could never afford to buy on your own: a 1952 Mickey Mantle card, old school Marvel comics, Michael Jordan’s game worn jersey, or a pristine copy of Pokemon Blue or Grand Theft Auto.
Here’s how it works. Shares get issued for these collectables just like a company. An asset IPOs for $40k and the platform issues 10,000 shares at $4 per share. They have a drop: you get notified in the app that Derek Jeter’s signed jersey is IPOing next Monday at 1pm. You set a reminder and turn notifications on at 12:59pm because you want to get in before shares run out. After the initial IPO, some of the platforms allow you to trade your shares with other users on the platform. The industry has already seen some successful exits in 2020.
But you might wonder (as I did): why are so many people parking their money into risky assets that provide zero utility that they’ll never get to see?
You could chalk it up to COVID forcing people to sit at home with nothing better to do, or the fact that household finances might be in the best shape they’ve ever been; but, there’s a deeper undercurrent driving the demand and the fervor.
Here’s what’s really going on with these collectable fractional ownership platforms:
We have a huge problem in America today: we’ve lost our sense of community and our ability to participate with others to build meaningful things. Investing in rare, coveted, and meaningful collectibles provides a much needed cushion; for just a few dollars, you get to participate in some of the greatest moments in human history. Participation in groundbreaking books, historic performances on the basketball court, once in a lifetime missions: just a click away. It creates a sense of attachment to the rest of the community also celebrating that event (or person).
The first asset I bought was a 1962 World Series game used and signed Mickey Mantle bat on Rally Road. It was an opportunity to invest in a legend of my favorite team in one of the most exciting World Series ever played. Even if I lost every dollar I put in, I felt as if I owned an important piece of history. It’s this feeling that keeps people hooked: the aura and participation in great moments. Investing in that bat was the same as how some people invest in Tesla. You have the opportunity to make money of course, but the act itself, however small, of participating in a monumental moment in time is more satisfying.
These fractional ownership platforms also have a dimension that Tesla can’t compete on:
Until I became old enough to have any, I never appreciated how deep nostalgia runs. Nostalgia powers 70 year olds returning to their alma mater for their tenth time for another reunion, countless moms around the country keeping their kids’ 4th grade poems hanging on the wall, and why Pokemon card prices have reached all-time highs.
These platforms allow you to own items that would make your 10 year old self explode with pride.
To best understand the power of nostalgia on the mind, think back to the mindset you had as a child. All that existed for you was pure consciousness; a complete tie to the present moment. You didn’t care about a work deadline. You didn’t care about money. You lived second by second.
As an adult, nostalgia creates a bridge back to that mindset.
In Power of Myth, mythology expert Joseph Campbell discusses the significance of these psychological bridges across all cultures. Most cultures throughout history have created powerful stories around a metaphorical cycle of death and rebirth. This cycle contains four distinct stages that explain how life is best lived. For example, the second stage says that you must die as a child in order to become an adult. The third stage, the one we care most about, teaches that the adult must die to become childlike again. Why? This represents an adult rediscovering the awe and wonder at the mysteries of the world, exploring new possibilities and opportunities, and transcending into and appreciating life in the present moment.
Investing in collectables creates these feelings of nostalgia; this in turn helps to create the bridge back to your childlike mindset, recreating the experience of being a kid. It helps to fulfill this fundamental need and push the cycle forward.
This feeling of nostalgia also helps to reclaim old traditions. I’ve written about the importance of traditions here; they tether us to important ideas around our culture and family, and how to live a successful life.
Collectables can help remind us of these more recent traditions. For me, Rally and Collectable reignited my interest in sports card collecting; as a kid, I used to collect with my Uncle, who had thousands of cards littered in his house. It was a fun way for us to bond - we’d sift through his cards trying to find the gems, the star players, and any cards with funny errors. It was like a treasure hunt, but you could watch the heroes play live on TV.
Now that he’s gone, continuing to collect helps me to honor his memory, to connect me back to a small family tradition that I can laugh and talk about with my cousins. Without these fractional ownership platforms, I would have never recognized the importance of this tradition in my own history, and would have let it slip until there wasn’t anyone left to carry it on.
These platforms help tether their investors back to traditions, creating a sense of nostalgia and an ability to participate in historic events that can meaningfully connect them to others.
The fulfillment of these fundamental human needs have driven the demand spike that we see across these fractional ownership platforms. This is why I’m so excited about their future. If it helped me to rediscover these important ideas, they can do it for countless others just waiting to discover the asset that resonates most.
Also, the financial returns can be insane.
I invested in a 1955 Sandy Koufax rookie card on Collectable. The IPO sold out in less than a minute. Later that SAME day, an offer from a third party to purchase the card from shareholders came in at a 62% markup. The shareholders, including myself, voted no. I don’t know of any other asset that gets that type of return six hours after purchase. Not even bitcoin!
But this seems like a rare event. Practically speaking, since you can’t hold the cards or memorabilia in your hand, we’ll have to see how critical financial factors like average returns and liquidity play out for these platforms to go mainstream like Robinhood.
But as of now, they’ve nailed the hardest part: creating a business that fulfills and strengthens fundamental human needs.
I promise there won't be any spam. You'll get sporadic and infrequent emails. But when you finally do, I personally guarantee it'll be worth it.