Bridging Financial Generations: Annelise Osborne on Innovating Digital Assets (E1)

I'm Phil Larmon. - And I'm Douglas Sporthwick. - And this is Old Men New Money. Today we have a very special guest, Annalise Osborne, author of From Hoodies to Suits, Innovating Digital Assets in Traditional Finance, and is the Chief Business Officer at Cadena, with over 20 years of experience in finance, credit, real estate, and now digital securities, with the past positions at Propeller and as Head of Institutional at ARCA. ARCA was an asset management firm that creates and manages institutional grade products using crypto and blockchain technology. Something I'm really excited about.

Annalise, you've been a champion of making technology like blockchain and its many applications easy to understand and connect the slow moving megaship that we call traditional finance on uses, on how we can use this. I'm excited to hear about what it was like writing the book, your past experiences, and what you're working on. So Annalise, welcome to the show. - Thank you so much for having me. I really appreciate it. I'm really excited to be here. So I'm looking forward to the conversation. - As are we. - I read your book Annalise, "From Hoodies to Suits," and I gotta say it's like an encyclopedia.

It's absolutely incredible in that you've managed to cover so many different aspects of the digital realm and really tie it together to traditional finance. And really that's what Old Men New Money is about. Trying to talk about digital to an older gen A that maybe is a little bit wary about what they know about blockchain, what they know about Bitcoin and digital assets in general. So kudos, it's an absolutely fantastic book. Why don't you tell us about your background? - Sure, first thanks so much on the book. I can just say that I wrote the book really for that target audience, right?

The Old Men New Money idea is that there's this fantastic technology out there. We just need to understand it. And so I wrote the book ideally to be like an entertaining and educational read as opposed to more of a textbook. So I do hope that other people pick it up and I have terrible ADHD. So I tried to keep it succinct and with lots of stories. - As do I, that's why I appreciated the way you wrote it. - Thank you. Someone like me so I could stay engaged. Okay, so my experience, I am a, you know, I've lived a different life, I think. I've never fit the norm. I grew up in a military base in the middle of the Pacific.

So I was different anyway. Then after university, I went and I worked in Europe for five years doing a lot of startup things even though it was for larger companies 'cause it was opening offices. And there I did do some, I did do commercial real estate. I came to New York for business school and then I worked at Moody's for 12 years, which was super interesting. I think that mortgage backed securities really changed the cost of financing and it allowed us to borrow more as well. And that was from a commercial perspective. So it was kind of office buildings and hotels and shopping malls and that sort of thing.

And I was there through the financial crisis, which was interesting as well. Like how do you grasp, how do you grasp valuation and risk when you're dealing with so many market forces but recognizing that there's still income coming in and so what was the right rating? What's the right risk for that? And then I left and I worked on more back to the entrepreneurial startup side and I did a lot of board work. And so I got into this space in 2018 when I recognized the real benefits of how this blockchain works for finance. And it was an eye opener. And then I assumed, of course, other people were doing this.

And back in 18, there weren't that many that were doing it. And a lot of people that were had no finance experience. And that was one of the problems. It was that you had, like my idea of hoodies to suits is really the technology going from hoodies to suits. But you had a lot of hoodies that were working in it, trying to create new products. But the problem is finance is not, I don't think finance is broken. I think it can be upgraded. And if you don't have that financial experience, which is understanding structure and regulation, there's a lot of misstarts. And I think that was happening. And so that's how I ended up getting into this space.

And I saw that as well. There was a Facebook model, almost a West Coast model of let's take finance and build it the way we want it without any understanding of regulation. And I think that first there were some suits that then put on hoodies. And now the hoodies are turning into suits. But you're bang on, the Facebook model will break it, then we'll fix it. And you can't do that in finance. You can't do that with regulatory folks like FINRA. So you're bang on. - Where we go to jail, right? I don't look good in orange. So that was always our line. So my first job was running a broker dealer. My partner had a broker dealer.

We looked together to launch digital assets. And that was always something to think about. Like, how do we create this? How do we use this technology within current regulation to create similar structures that are available in finance today? 'Cause I think it's too difficult to change the technology infrastructure as well. So let's deal with structures today and put it on a new technology and look at the upgrade. And that's what we'll get to it, but that's what institutions are doing now. - So I'm wearing my hoodie in homage to you and the book. It's five-star reviews across the board.

And so as you went through writing the book, like what was the, did you always, have you always wanted to write a book? Like what was the stimulus to go through this process because it is not an easy process to write a book? - I am a math person. I'm much more numbers. I never thought that I would write a book that was never on my kind of to-do list. But having been in this space, one of the problems for adoption, I think, is education. And so I had a lot in my head that I saw all of this coming together and I just, I wanted people to be able to understand why this technology matters. Like, why does it matter to me?

Right after FTX went down, I was working with a number of institutions and one of them said, we have a cease and desist talking about anything crypto until next year. And so to me, that was an eye-opener to think that this is a technology and yes, there were bad actors, which happens not, it doesn't just happen in crypto. It happens in traditional finance as well, right? That's not the first time there was fraud. And so for me, it was, wow, I think people just don't understand this technology, which is why they're saying that. And so I, that's in my head. I had a book, I had the book already in my head.

And so I decided this was in December, a year and a half ago, and I said, I want to write a book. How do I do that? And I just hadn't had the thought of it. Chris, you and Carlo had just released Crypto Dad. And so he was very helpful in the thought process of, okay, how do you even start this? And I think, yeah, so I decided I wanted to do it. I just decided I was going to do it. I guess it's more it, right? You have all these naysayers. And I did run into many of those, but it was relatively smooth. Once I got put together a book proposal, found a publisher, publisher, it took a little while to get through the contract phase.

And then I had that in June. And then I left ARCA to start writing the book. And I actually wrote it in three months. So I knew what I wanted to say. So I wrote like 10 chapters in two months, which is really all of this, which is backed up by facts. I have a very long bibliography really with just stories to show that this all, what I'm saying is real. And then the last chapter I spent a month on, because the last chapter is the only one that's subjective. That is where I see the world's going. And so I wanted to make sure that I would, that's where people will poke holes. And I did expect to get a lot more negative feedback.

I sent it to a lot of people that I thought would give me negative feedback. And I was actually very pleasantly surprised that it was positive. And so I sent it to the people I thought would be my biggest critics earlier on. So it's been a really interesting ride. It is a labor of love. I do not expect this is ever gonna make me a lot of money 'cause I hired an editor to help me with that process, which kept me accountable. So every Tuesday morning, I found out I was better writing in the mornings. And so I would wake up and I'd write from six to noon.

And every Tuesday I had a meeting with my editor, which made me, also since I was paying my editor, I wanted my editor to be on point and I had to be on point as well. So that kept my timeline tight. - I think everyone has like the aha moment with the new applications of blockchain technology and things like that. Did you have a aha moment in your professional career where you're like, this is something that I really wanna dive into. I need to learn it inside and out and be a thought leader in this space. - I don't know about that. I feel like it, I do remember when I decided, wow, this is a real thing.

And I never thought it would be me that would be the proponent or the voice for it. But I do remember I was asked to be on a regulatory task force for ICOs. And I, what do I know about ICOs, right? This is way back in 1718. And then just doing, and I went, I turned to YouTube to figure out, okay, what is this really? And why does it make sense? And what's this whole world? And I fully understand Bitcoin and digital money, but this is the technology behind that. And what does it drive? And so that, that to me, and then meeting my partner at the time who similarly thought the same thing, recognizing we can make a difference.

And it was a, the first propeller where they wild and interesting ride. It was not profitable in the sense that it actually did not, we didn't take off, but we learned, we did so many things with so many great players. We learned so much along the way. And it was just, I really think it helped lay a foundation. And so we, that was exciting creating securities. No one had created before. And so we were on a whiteboard and there's no one to ask, right? It's just, okay, this works like this. It was lawyer, it was all of us getting together definitely from a legal and compliance perspective, but structuring how the technology fits in.

And that was super exciting. - I think in the early, and I got into it around the same time as you. And also because of ICOs, I thought they were illegal. And I figured if we could do an IPO in a similar manner that was legal, then that would be very cool. But one leaving the traditional financial sector and getting into blockchain, I think a lot of folks and a lot of colleagues were just like, you're an idiot, you're crazy. This is the most stupid thing you've ever done. It's all mixed. And I think that there's still a lot of people that believe that obviously Larry Fink has changed people's opinions now.

And now that was really smart to get into the space at that time. But I think that in the early days, it really was, we were forging our own paths. And it was crazy. And people would, you'd raise money, but that money was essentially then handed off to lawyers. It would then tell you if something was legal or not. And you were paying for their education 'cause they had no idea whatsoever. - A lot of the money goes to lawyers, right? 'Cause you want to work, same idea. We want to work within, or we will work within regulation and compliance. So I agree.

The other thing about the ICOs that was an eye-opener to me was that there was such a demand for investing in an essence of venture-like product globally. I think it was people that missed out on the internet boom that wanted to have the opportunity to participate in something that had great upside that was technology-backed. And that to me was, even though there wasn't the regulation encompassing that, it was just the fact that there's a way we can do this within regulation. If there's this huge demand out there, then let's figure out and make it work.

- Yeah, there's thousands of, millions of retail investors out there that are all around the world that want to invest in new technology. And they're shut out by the traditional financial system. And they're shut out by Reg D in the United States. Maybe they're not millionaires, but maybe they're a hotel manager that's in Malaysia that wants to be involved in something in the United States or anywhere else in the world with new technology. And they can spend crypto in order to invest in it. And I think that was one of the most exciting things about the ICO thing. Now, what that did miss was disclaimers. There were no disclaimers.

Holding people to accountable. There was no way to hold people accountable. A white paper is not a prospectus. There was no sort of stamp, not of approval, but certainly that it had been declared effective. And there was a lot of scammers out there and it ended up with a lot of tears. But the new products that are coming online now, thanks to the work of yourself, in the early days are exceptional. And I look at BlackRock right now and what they're doing with Securitize with the Buildle product. And it's fantastic. Now there's a huge demand from crypto companies around the world to hold a digital asset that's linked to US Treasury bills.

And that's something that you worked on earlier on in your career. - Yes, I will say also follow on to the ICOs. Not only was it shut out by Reg D, they were also shut out about how do we actually access Reg D's because a lot of them are friends and family. It's not the same opportunity of buying a stock, right? So I think this technology can help with that. I think that there's obviously with a billion dollars right now in US Treasury, in digitized US Treasuries, there's a market for that. So at ARCA, we had created the ARCA ARCOIN, which was the US ARCA Treasury Fund and, or sorry, the ARCA US Treasury Fund.

So what it was really recognizing that we could tokenize a fund of Treasury. So it's not a stable coin 'cause it's a security, but it's a low volatility security. So instead of hold, and it's ideally liquid, right? Ideally, you're creating a market through being tokenized and that you can hold, instead of holding cash, you can actually hold digital Treasuries, which are technically as stable as cash from a ratings perspective. We look at how outside rating look at them. And then you can generate yield on top of that. So cash, you're not generating yield. And so from a Treasury management work and they're programmable as well.

So from Treasury management and collateral management, we thought that made a lot of sense. And so we had actually launched our fund before Franklin Templeton had launched theirs. Franklin Templeton is a bigger name. And one of the problems I think, we can go into why we didn't get as much liquidity and volume, 'cause it was really volume. The volume in helps with liquidity in the fund, but Franklin Templeton launched and then they did. And I think part of that helps with having an institutional name recognizing this, that it's not a startup, even though it's within a fund structure. And then obviously BlackRock.

And I will say that Jenny Jones, Jenny Johnson, sorry, from Franklin Templeton said that she believes every ETF and money market fund will be tokenized because they have recognized such gains in efficiency from that. So there's a lot of benefits this technology can bring. Think of high frequency trading. Think we used to do faxes, not emails. So this is just a progression of the world getting more efficient. - Yeah. I think to securitizes in that the BlackRock on one side and Ondo Finance on the other, right? So Ondo essentially would take these treasuries and then sell them to retail outside the United States.

So knowing that when you're gonna do an issuance, having a good big strong buyer that's on the back of it as well is very good. And what you find from the other ATSs is they've got lots of paper that's for sale, sorry, digital product for sale from startups or from new ideas. But what they don't have is huge demand for that. And it's because they don't really have strong marketing arms. Nobody knows where the accredited investor is in the United States that's interested in digital assets, a very small number of people. - Also, I think one of the issues is the regulatory clarity in the US for getting institutions involved and custody.

And so when we're dealing with security and custody, there's very few qualified custodians and the institutions that wanted to get into custody have been on hold because of an accounting standard that had made it less financially incentivized for them to do it 'cause they would have to hold whatever they were cussing the same amount on the books for these crypto assets. So I think this technology actually from a regulations perspective, this is the only technology that if a bank wants to touch it, they have to tell their regulator that it's not the same. If you had, like when everyone had cell phones, we didn't have to sell a regulator.

We were upgrading to using online internet, right? And so I feel like- - And the regulator wasn't educated. Regulator had no idea. - That's one of the, that's again, like hopefully this book helps with regulation. So my first book signing, I did have some regulators there. And so that was really exciting that they're looking to learn more. And that's, I feel like it's education, it is regulation. And then the next is interoperability that we need for adoption of digital assets. - You just hit on a question that I had.

It was, I feel like almost with blockchain, I had the same situation when the cloud launched back in the day, we were explaining, what are you talking about? Things are gonna go up in the sky and that's, and we're in the mass education process with blockchain now. If you had a magic wand to wave, what needs to happen for the major financial institutions to make moves? And then what does that mean to the general kind of average retail consumer? - So I look at different buckets, right? For different products. 'Cause this technology can be used in many different ways.

And first, I do believe that institutional adoption, the money, the trillions of dollars that go through institutions every day is really what's gonna move the market here. And also the fact that those trillion dollars we can save money on. If you look at JP Morgan, how they've announced that they saved last year with JP Morgan coin. Look at figure with how much they've announced they've saved doing securitizations and loans and lending. I think that is gonna be helpful from a trillion dollar perspective. But I do think one, we need education. We need to actually first, for institutions, we really need regulation.

We need clear regulation in the United States. Right now I feel it's a bit gray. We can't work in the gray. You need black or white, right? That's why once we have that, if you look in Europe, Europe actually has Myco, which is a little more, was more specific. And I feel there's more regulation, not regulation, more innovation happening there. There's proof of concepts. There's real products that are coming out. There's a lot in the fixed income, the debt, corporate bonds world. So that's why I think we need the United States and to get there, I think we needed education.

And then once we have clarity, I think we need really dealing with interoperability which happens both in the digital world, but it also happens with everybody's system. So every bank, because of regulation, every department has built on top of old systems, right? You have to regulatory requirements for keeping all your records and it's just easier to build on top. And so then it's just integrating with each of those 'cause they don't all speak to each other even within one organization. So then there's that interoperability as well as different companies talking to each other, if that makes sense. - It does.

So is that one of the things that attracted you, Kadena, is are you solving some of those problems or how did you end up there and what does your day-to-day look like? What are you tasked with? - Sure, so my goal as I see it is how do I contribute to upgrading finance? That is what I'm focused on, my mission, personally. And that when I left ARCA to rate the book, I thought it's from two perspectives. One, it's from the institutional perspective where you actually have the money and you can help them create and make products in those integrations. And then the other is from the tech side.

And so initially I thought I would go into an institutional role and then I spoke to a few institutions and I decided I would rather, I've done that already and I would rather go to the tech side. And Kadena's a layer one proof of work blockchain. So it takes the best of, and it was created by two JP Morgan guys that had previously worked at Apple and the SEC. And so there are hoodies that are suits wrapped in one and they left JP Morgan to create an essence, a public chain that took the best of block, sorry, Bitcoin and Ethereum, sorry.

So Bitcoin is the proof of work, which is the security and Ethereum was the programmability, the scalability and the speed and they put it together on their chains. I joined them because I believe from a tech perspective, I can help translate almost. We've got a great technology. I feel like there's a lot of benefits that have already been created in DeFi, which is decentralized finance, that is very similar to traditional finance, but they're using different terminology. So a lot of that is just working together and translating that and then coming and then working from the technology perspective, building traditional products.

We're a blockchain, so we get people to build on us. But that's my goal. My goal is to, instead of do the institutional side, I will step down, I will not step down, but come to the base layer, which is really more hoodies. And so it's really working with a bunch of hoodies and forming strategies from a business perspective that makes sense. And I love it. It's a great team. We've got great tech and we're really starting to focus. And it had previously worked on creating tech products and that's great, but we need to focus on strategy and kind of the business side. So I'm Chief Business Officer. I came in to focus and grow the chain.

- Are there any case study? Go ahead. - Sorry, I was Chief Business Officer at INX and I share some of the thoughts you have there in that it's really the job has been a translator in that you've got developers that are very excited about a product, but in a way that you can monetize it. And you have to translate their excitement, which is in gobbledygook to folks that really need to understand how to use it. And oftentimes that isn't obvious. And the developer might send a paper and say, read this or look at this on GitHub.

That's not gonna be really helpful to the guy that's gonna make the decision or the person you need to get through the gates. So that needs to be someone that has it translated to them in English so that they understand the business opportunity. So that sounds very exciting. - Have there been any projects since you've been there that have either surprised you as the use case or have there been any projects that have really just had massive amounts of success? - Sure, so I'm coming on. I'm not quite three months really laying the foundation, but the answer is of course, yes.

So we've created, Douglas was mentioning creating tech, but it doesn't mean the application and things. So we've created some really great tech and we just need to work on creating tech for applications as opposed to just creating great tech 'cause you need to find the use case for some of that. But there are, we're really working on trying to make web three more like web two. And not everyone loves those technologies, but the idea of making a crypto blockchain experience similar to what they would have if they went on the internet.

And so it's not too clunky 'cause in the past it's been clunky, but it's becoming refined for kind of user experience we call it. So we have some great, you can click through with NFTs to create your own NFTs and you can sign using biometrics as opposed to all of these. I will tell you, I wasn't familiar with D-Pin previously. D-Pin is very active on Cadena, which D-Pin is really decentralized infrastructure products, right? So instead of you can have like, I can do, I can run something using my phone that I get paid for that as a D-Pin project. And so that's newer, but it makes sense.

And it's also putting, if you go back to why crypto started, if you think about the Bitcoin white paper, 2008, and it was really a peer-to-peer electronic currency. So we could trade money and it put it in our hands as opposed to taking it out of all of these intermediaries. D-Pin does that too. It takes out intermediators and allows us to make money off of different types of infrastructure products. - So you talked about UI/UX there, UIA- - I don't wanna get into much to UI/UX 'cause that is very- - But it's terrible.

It's terrible for, you think about would your parents be able to buy and sell Bitcoin or digital security or any of these things? And could they go through it as simply as them calling up their guy at JP Morgan and saying, buy or sell stocks? - No, this is what, that's exactly what we're looking to create is that experience. And also I wanna look at, it was very clunky before. That's what I was calling clunky, right?

It was very, if you remember looking at like Ethereum, who wallets and dresses in Ethereum or what have you a few years ago, it's cleaned up a bit now, but it's still not as easy as going onto my app to look at my fidelity or trading this or that. But it's a little bit easier for me 'cause I'm used to doing, like understanding Coinbase wallets, for example. But UI/UX means is user experience and it's that interface that we look at. Like when you go to a website or now they have, it's important to have it on your phones. This supercomputer we hold in our hand, by the way, that these next generations have grown up with, it's very different.

But like applications, I think apps that you have there, it's important to have a good experience on those. And so that's what we're working to create from the decentralized world. - Now, do you think when the user is going through that experience, do you think moving from web two to web three, how much do you think it will impact the end user experience? Or is it just one of those things where it's something that happens behind a curtain and the end user doesn't really need to know how it's happening, but for the institution or for the platforms, it's just happening in a more efficient, effective manner?

- I think that's exactly where we need to get. I think that's what Douglas was alluding to as well. As my guests, I don't wanna put words in your mouth, but it was too clunky for, right? If you look at PayPal, PayPal has a stable coin now that you get from PayPal app. You don't even realize you need a wallet. Wallet's the same as an account. And is it the same as a password? Just to put it, this is that translation. So I think that experience, and I just had someone send me money that then I refunded and that they are gonna send me again. That process has taken two and a half weeks and I still don't have the money.

And my, if we were using PayUSD, which is PayPal stable coin, it's immediate. - How do you think that-- - Solid disaster. - What we call things really impacts the end user experience. Because traditional, the masses don't know these words wallets and things like that. I know Starbucks had a lot of success launching their program 'cause they just called it rewards. The end user really didn't even understand what was going on or how it was happening, but it was just the rewards program. - And I think we won't even talk about blockchain later. It'll just be integrated exactly to your point on the back end.

We will just have much more efficient ways or different ways to do things and more rewarding ways too. So there's the Aspen coin, which came out in 2018 or 2019, is in essence, investing in the Aspen St. Regis Hotel in Aspen. Now, if you own that coin, you also get rewards other ways. So this is where I think that there's different opportunities where you can actually, they can go direct to the investor gets utility benefit. The utility benefit could be upgrades to rooms, for example, or bottles of champagne and both of those when you actually go there. I think you're gonna have these new types of opportunities and securities.

One thing I talk about in the book is like the Amazon Prime Amazon stock example, is that if you have this, if you can connect to your best consumers or your best fans, for example, that you have a direct interaction with them. So Amazon Prime, you pay for, and they're the super users of Amazon. And then Amazon stock, you buy and you benefit from having more super users spending more money, but there's no combination of those two. And so I believe this technology and these securities will be able to offer that. - Yeah, we call that the consumer model, really the investor and the consumer.

And I spoke with a lot of Fortune 500 CFOs, who said, we know everything about our consumer, but we don't know who our investors are and we can't match the two. 'Cause when you hold shares, regular shares, it's held in your name by Morgan Stanley. So they see Morgan Stanley. But they all said, if we could take a wad of our stock and we could sit it aside and we could make that digital. And then when it's in your wallet, because someone's bought that stock in a digital way, and that wallet sinks in with our website, then we'd be able to say, you know what? You own a million shares, 500,000 shares, 100,000 shares. Here's some discounts.

And I think about this a lot. I go to this shopping mall and I see all these different companies that I own equity in. And I'd love to be able to get a discount when I go to the counter. And we think of NF being JPEGs of dogs or cats, but if it could actually be a barcode that it could be scanned at the counter 'cause I own 100,000 shares of that stock or something, and I get a discount, now I'm getting rewarded. And I think that there's gonna be a big move towards that, certainly from the conversations that I've had, in that companies want to be able to match the two and get data on the two.

And knowing who your shareholders are and being able to reward them is something that we can do in the digital way. - Totally, and I'll take this to kind of Phil's world, right? If you can connect with your best fan base, if you think about Rihanna's soul, Rihanna didn't sell. Someone sold shares of Rihanna's, one of Rihanna's songs. They sold out immediately. Every time, if I'm a big Rihanna fan, I listen to the song, I will get paid. I am not an investor, but if I did buy those shares, they're not NFTs, they're royalties.

But also the whole idea of Taylor Swift in connecting with her fans, Taylor Swift is not, that I am aware of doing NFTs, but there's a, how do you talk directly to the fans? So social media gives you that benefit, but what if I want my fans to have the first opportunities to buy tickets and I don't want them to be exorbitant or I don't want them to be, have to buy fake tickets? And it gives us opportunity to connect, just like in, in perspective from securities, I think there's different ways that you could connect, which is like Starbucks did, right? Starbucks connect, could connect with their consumers.

I think these NFT ideas will, there's a lot of benefits that will come out of that because that feedback loop, I think allows companies to become more beneficial to serve as clients and also their investors. - And it looks like your sports are moving towards it. You get Watford football club in the UK, now doing a raise on secure ties. So I'm sorry, on Republic, that looks like it'll get listed at INX once it goes live. You've got the NFL that just voted to say that private equity can own percentages of the teams. Private equity means crowd funds, significant funding. They could come from their fans as well.

And I think you're gonna have that huge move where if you're a season ticket, there's some tickets if you spend $50,000 to buy the equity. And I think the feedback loop is gonna be fantastic for sports teams, for entertainers, actually owning your artists makes a lot of sense. And I do like the idea of a musician going out there selling a percentage of their rake, essentially what they'll make from doing concerts, et cetera, to their fans. 'Cause obviously, as you say, the fans will just play them on Spotify all day long, which means more money coming back to the artist. - You guys don't even need me. I'll let you two just talk about it.

(laughing) - There's so many things you can talk about. That kind of leads me to, what are some of the major industries that this technology impacts? I'm in the sports entertainment world. I'm also in the real estate world. How do you see this impacting real estate from a standpoint of investing in properties to the closing process? Like, where does this impact? 'Cause on one side, it's beneficial to the investor because folks have looked at real estate as sometimes it's in a liquid investment. It's harder to get out. Obviously, if they're not doing like a read or something like that. But how do you think that it impacts real estate?

'Cause a lot of our listeners, maybe they do something in real estate and they have bought a house or rented a house or invested in real estate, that maybe they can have a little bit better perspective of what this is. - Sure. We can look at the granular today or where we can go. There's so many different steps. If we look at, public markets are much more efficient now, right? Just like you mentioned, if you wanna read, you can go and buy and sell. If you look at private markets and private markets is where fortunes have been made.

Fortunes have been lost too, but people wanna access different things within private markets, which is for example, commercial real estate has done very well over time, generally. And how come only large companies and corporations get to do that without the idea of a reach. You can also think if buildings were tokenized. So there's a couple of hiccups along the way. I think the biggest of which is if institutions wanna invest individuals, right? And that whole supply and demand, a hundred million dollars is a lot for retail raise, where it's not a lot for a commercial raise.

But if I wanna own shares of a big commercial office building, which has performed well, like it's tax deductions, all of that, you could technically, we could tokenize it and we could sell shares. How is that different than a REIT though, right? REITs have a lot more because they're generally public. I guess there's private ones too. You have a lot more reporting requirements. But if you can trade on an ATS, if you can trade on through broker dealers, that you could have this great opportunity to be, or exchanges, you have this great opportunity to be able to buy something and hold it.

So one company I worked with was doing a retail, it happened to be for real estate as well, but they already raised money out of the retail markets. And their investors might not wanna hold the investment for seven years because life changes and maybe Bobby's gonna go to college. And the idea of tokenizing that investment is an option. They have an option to trade out. And so if you just look at that, like how much will you pay for that option to trade out? Like an eighth? And so then it makes sense. Then it makes a lot of sense because you can actually ideally create a liquid market for these.

Now a market, you have to have buyers and sellers. We can create the sellers. We need to generate those buyers. And those buyers is where the world is gonna go. But I also am a huge believer that the world is going that way because of the next generations who are inheriting the majority of the wealth in this great wealth transfer. So I think there will be more opportunities.

But from a real estate perspective, think if you like Dallas or if you don't like Denver, you could actually, and everything's tokenized, you could actually buy tokens of all the properties, either be at hotels or office buildings or homes in one market and then short the other one. And so there's different opportunities for portfolio construction. I think when there's more tokenized as well, you'll see ETFs with tokens inside of them that aren't just treasuries, that are tokenized products, which can lead to being long or short. So I think it's super exciting where we can go. It's just a matter of getting there.

And there's already tokenized debt right now on houses. Like Figure has come up with HELOCs and tokenized mortgages. So that's-- - Douglas I spoke about was how do we handle the 1031 exchange for real estate investors? What does that process look like? If they go from one token, then do they need to swap to another token of the same, or what does that look like? - That's yet to be determined, right? If it's a factionalized 1031, how that is the upgrade. And that's the gray that we need to figure out. - Yes, exactly what you were talking about. - Right, and so we just need to have that clearly defined.

But from a, you asked about the process as well. Through COVID remote motorization, which does not sound sexy, but it's also amazing. - That's right up Phil Street, Phil created it. - I have a confession to make. So I was one of the champion people behind getting video notarization passed in the state of Ohio. At the time, we were the fourth state in the entire country to get that passed. So you are, this is music-- - You guys see? Notarize, when notarize came out, I thought, wow, this is outstanding because the requirements of being in person for signing, and now remote notarization allows us to actually not have to be present.

When you buy a house or you get a mortgage and you sit there and you have to sign 50,000 documents and you have to, you pay your title insurance person just for being there as a tip. The whole thing is, the whole process is crazy. That even will get even better, right? Remote notarization is one step in that process, but it's just so much more efficient. One is being digital and then two is being on blockchain. I think those are two different steps, but the first digital step is outstanding. So thank you for passing it in Ohio. - You're welcome. - I'm still a little wary about real estate and tokenization in its current form.

I think you could go to Miami right now and have breakfast, lunch, and dinner and cocktails going to an event that talks about tokenization of real estate. - I agree. - So everyone's talking about, about that's on the supply side, right? So there's lots of supply people that want to push it, but where's the demand? And we talk about liquidity that's pitched right now, but if you look at liquidity, even for a blockchain fund on an ATS, there is none. You'll find a bid at 10 and the offers at 60. No market makers in ATSs right now that I'm aware of. And so the bid offer spread is such that it's very unlikely.

You'll find the liquidity that you're looking for. Now I was pretty excited when I saw BSTX. I thought the Boston Stock Exchange, this would be great 'cause now you're gonna have digital versions of equity and there'll be market makers and this would be great and be nice type prices. But then that was shuttered essentially by TZERO and ICE. You've got guys like Upstream that are coming in using merge, which is in the say shell, and that promises to have market and have digital assets with market makers, which is going to be better 'cause it means that a tighter bid offer spread.

But right now the liquidity that's promised, yes, it's better than zero liquidity, but it still doesn't sell me as being liquidity. So lots of supply, but the demand isn't there. And I guess that's really where Annalise's book comes in that it really helps educate so that people then start demanding. 'Cause I agree, I'd probably rather own some real estate in a city that I think is gonna be up and coming that's gonna give me a yield over treasuries and I'd use that as my stable coin.

- So I agree with what you're saying that to have one, we can't promise any liquidity, but the idea, the thought of having liquidity assumes that there's a market with buyers and sellers and the price doesn't change if I try to sell something. And if you Apple stock, that works great. But even when we have some of these tokenized products, if it's a small product, you're probably always gonna have a bit-esque spread. - You will for something that's under a full prospectus. But if it's under Reg D or Reg S, you're limited to maybe what, 2000 investors.

And the odds of one of them being on the Apple is very low compared to someone that does it under a full prospectus. Even INX that has, I think it's like 8,000 wallets now holding the, still the liquidity isn't spectacular. - I do think they are early INX. I do think- - Oh, it's definitely early INX, we're at the start of it. So I'm not poo-pooing it totally. I'm poo-pooing it in terms of for right now. - And I would say also commercial real estate, if I'm gonna invest $100 million in a project as a commercial, as a large company, I don't wanna have a $20 million stud like tick for all the real estate, like all the retail investors, right?

Then it makes more sense for $120 million investment, which is not as big for it. So I do think there's steps along the way, but buying company shares, public shares, you have both retail investors and public and institutional investors. So that's something to think about. - Yeah. - Wonderful. Well, I'm sure I could talk about that for much longer, but I don't wanna bore our listeners on just real estate. So going through this process of being a voice in a space where there's not a whole lot of women, right? I think Douglas and I, we love to see more and more women just, we don't care if anyone's black, white, yellow. - Let's be clear.

We call this Old Men, New Money 'cause we're two old men, not because that's our audience. - Yeah, that's not our audience, right? We absolutely should emphasize that. We are really excited to have other thought leaders out there championing the education, handling the frequently asked questions. What has it been like going through the process of being one of the few women in the space? - So there are some fantastic women out there. And it's hard to compare it 'cause it's all I know. And so it's really- - And the others make sometimes bigger deals of it. When you're a high achiever, we just look at working with high achievers.

- Yeah, I think- - You're just used to doing it. - You just find your crowd and figure out like the amount of people that, wow, can I write a book? Of course I can write a book if I wanna write a book. I'm only saying that because people give you the statistics or it was impossible to find an editor that would work with me. I found a wonderful editor, she's fantastic. But I always turned down 20 times because- - Why was it so hard to find an editor? - It's digital assets, no one knows it. And it's all in my head, which is my point is I'm paying you to learn, I get that. But I'm like, I'm baying you.

And so to find someone that would take that challenge. So I think you're always, you're gonna come across challenges like that. And so from a female perspective, it's making real, the network, I wanna say the network is super important. I was gonna say making good friends, but even though we're working in a technology world, your network is what brings you opportunity that even though you don't realize or think that way, yes, her work defines people, but your network offers opportunities. So both of those things I think are important.

But creating, surrounding yourself with like-minded people, with thought leaders, whatever that is, is super important because you expect more from yourself versus being male, female. And not taking things that seriously, right? I'm a very straight shooter. I would much rather people communicate with me directly. And I have a very positive mindset, which I think helps too. If someone's difficult to me, I figure they're having a bad day. I'm not internalizing it. This is not about me. I'll try to have that conversation later. I do, I also think it's important.

I think it's important to be seen of it in the sense that if there's not many people that look like you, make sure that you're seen to help the next crew come up and say, oh, I can do that. I ran the women's network at Moody's. And one event we had with women in sports was, there was a great sports caster from one of the football teams. And a question came up from one of the analyst, financial analysts that was prefaced by, I never saw a woman with that role. So I never thought I could do it. And it's funny 'cause it's a very intelligent, educated woman that brought that up, but had always had a dream of being a sportscaster apparently.

And there were no women sportscasters for men teams before. So that to me always reminds me that it's important to be out there and visible to show that you can be C-suite at some of these finance companies or tech companies or whatever it is, you just keep working hard. - So where does this life philosophy come from? Is it something that was built into you from a young child? That I can tell you're an absolute go-getter and just whatever you put your mind to it, you're gonna do. - What's nature and nurture? I think probably a lot of it is nature. I also grew up on a two and a half mile by half a mile island. And it was the space race.

And we should, it was missiles out there. We had total free, like it was a very different world and women didn't work where I grew up 'cause it was generally rocket scientists. And so that to me was always frustrating as well is that why aren't there all the dads and I, it was true that all the dads go and work on another island because that's where all the rocket stuff is. How come it's only dads that do that? Like why, so for me, it was a little, for me, I was always a little frustrated that like, why can't I have that opportunity? And so then it's just get out there and get out there and do it. - And was this one of the Hawaiian islands?

Was this out there? - Marshall islands, even further out. So yeah, Wajilin was the name of the island. But it was a great childhood, it was super fun. But to me, it was like there were boys jobs and girls jobs. And I wanted to have one of the boys jobs 'cause why not? And so that was early on, but I think that kind of also spurs you to, I should be able to sit at the table, right? Don't sit in the back or don't think that you can't come in or look people in the eye and we're all people, right? We just share your opinions.

This is what I would also, when I was at Moody's, I had a running teams of analysts, we all have jobs 'cause we are paid to have an opinion and do what we do. And so it's encouraging people to think that way. Encouraging people to speak up and share and think forward, right? We can't just be reactive, let's be proactive. Why are we, don't come to me with problems, come to me with solutions, just all that. That's what we all deal with. But I do have a good group. I do have kids as well, which my first job, there weren't other professional women with children. And so that was funny. So finding a network of other moms was super helpful to me.

So I have networks of women as well as just my general network. So I will say, that's always helpful. When you're dealing with something that is just, you just wanna vent for a minute, it's nice to have those networks. Or as a working mom, some of them were non-working moms. And so when my kids were younger, they would fill me in on what I needed to know or what was happening. And so that was super helpful. - So on that note, having children, how much has that helped you in thinking about the different applications on how this technology could be used?

Has that kept you at the tip of, "Oh, it could be used this." Or are your kids even of an age where they know what mommy does? - Yeah, I have teenagers. So, but absolutely at the gaming world, the fact of the world shifting, that is, I have in my book that I talk about how this next generation is shaping finance as well. And that has been part, my 18 year old was 13 at the time, when "Wall Street Bets" was happening, this is with GameStop. And so my 13 year old is on Reddit, on this chat room telling me about what's happening with GameStop. And that to me was such an eye-opener. My, I don't know how old he was at the time, probably nine or 10.

His hero was DanTDM, which was someone that had a billion views on YouTube. One of the first guys that was on YouTube playing Minecraft, and you'd just watch him. And he came to town and we went and saw him. It was a really interesting crowd. It just, to me, it opens your mind about how the world is changing. And it's how do I see, where are we, if this is what's changing now, where are we in five and 10 and 20 years, right? - Yeah, I share that. I share that, I've got teenagers, now it's 18 and 22, but they were younger. And when they were younger, they spend all their time consuming everything on a phone or on a computer.

When it comes to sports, they don't come down and look at the big screen television, they watch it on their phone, or they watch it on their computer. When they play games, they have wallets in the background holding the digital assets that they're buying with my credit card. And then they leave a game and the assets are dead. We went through a thing with Grand Theft Auto, where I think they spent a couple of thousand dollars buying a car because they didn't want to go through the motions of actually earning it. And they bought cars and layers and planes and everything. And after four weeks, they said they didn't want to play it anymore.

And I realized I've just lost all of this money and it's gone to nothing. And, but what's interesting is my understanding from talking to some gaming companies is that they're going to allow it soon where you can buy something like a skin or a car or something that move it from one game to the other, which is now going to be the moving of digital assets from one game to the other, from one wallet to another, creating tax consequences. But really our kids have been doing it for years. They just haven't realized they had an electronic wallet holding a digital asset. - It's called GameFi, right? It's interesting.

And I think that's going to continue to develop. I will say another thing, not just my kids. I continue to have mentees that I look at as reverse mentoring. So they keep me up to date on acronym. It's so funny. When I get text acronyms, I'm like, what are they talking about? But we are dealing with all the telegram or signal or all these different, the way that the world discord. It's, I think that's important to keep me with my eyes open to what's happening. So I'm not just in my own head. I love learning and understanding the way the tides are shifting. - I bet, low key. - Yeah, yeah.

If you could leave our audience, 'cause we have almost the exact same audience with some things to think about on how to prepare, better prepare themselves outside of obviously reading your fantastic book. What can they do to better prepare themselves so that they can function and either A, invest in the space or just use it on their day-to-day adventures? - I would just keep your eyes open. People take stances without education, which I think is tough. I also feel like there's not even, if you're in a financial world or you're creating financial products, that's more what I'm focused on.

We started to talk before about where blockchain we might come up at work. There's works in so many different worlds, but I'm more focused on traditional finance. So I would just recommend education in an open mind, right? And anytime you're like, we're all fiduciaries if we're investing our own money or someone else's money. And so just making sure risk returns, it makes sense. It's interesting. I think it's interesting. I bought cryptos ages and ages ago, and that was just because I wanted to try it out. And I'm not a day trader. And now why not see what it is, right? Small amount of money for me. That's how I look at it.

I bought games, not game stuff. I bought AMC stock because they're supposed to have the user experience where you get free popcorn, right? And it doesn't connect, but I looked at it as like the cost of going to a movie I put into the stock. And so now I may, so I like to experiment. So that's what I would encourage people to do. - I got into Bitcoin and Ethereum right after I got divorced. And I figured, do you know what? I don't know much about this, but I'm going to stop my bad habits and the money I'm spending on bad habits. I'm going to spend on Bitcoin and Ethereum. - Keeps us young too, right?

- And it was probably the best thing I've ever done. If I think that you can put money into things, if you see that you'd already have spent it on something else and you just make a choice. I think that by doing that, really by investing in something, buying something, that's the best way to learn about it because now you've got a position, right? When I was a trader at Morgan Stanley, you'd hear all the day, "Oh look, I like buying the dollar against Korea." Look, there's one thing to say you like it. There's another one to actually put the position on because then you're going to learn absolutely everything about it.

And I think that you have to get involved and they are getting involved. You're seeing the, I think the charts in your book as well that people are getting into crypto faster than they were getting into it. And it really is a huge movement and it's happening very quickly. And I think the sooner that people get involved in it, then they're not going to get left behind. - Yeah, and I don't get bored, right? There's always so much out there to learn. I don't get bored. So thank you so much for having me, gentlemen. - Absolutely. - Absolutely. - Annalise, where can our listeners find you? - LinkedIn is the best way to find me. Reach out to me.

Happy to be in touch. Happy to answer questions. Thanks so much. From Hoodies to Suits is on, it's really anywhere books are sold. Amazon tracks it. So it's easy. That's where I usually link to, but Barnes and Noble and any other booksellers out there, if you support smaller ones as well. - Wonderful. Thanks again for taking the time. You were a fantastic guest and we look forward to tracking what you're doing in the space and championing your book from Hoodies to Suits, Innovating Digital Assets in Traditional Finance. With that, I'm Phil Larmon. - I'm Douglas Sporthwick. - And this is Old Men, New Money. - Thank you.