Unlocking Home Equity with Point and Cadre | Disrupt NY 2017 | Summary and Q&A

Summary

In this video, two entrepreneurs, Eddie and Ryan, discuss their respective companies in the real estate industry. Eddie's company, Point, is a financial technology platform that allows homeowners to unlock equity in their homes, while Ryan's company, Cadre, is a digital stock market for alternative assets focused on commercial real estate. They talk about their backgrounds, their motivations for getting into the real estate market, and how their companies are aiming to transform the industry. They also address questions about investor appetite, the role of equity in unlocking value in homes, the importance of aligning stakeholder interests, and their choice of partners. Both entrepreneurs emphasize the need for transparency, access, and efficiency in the real estate market.

Questions & Answers

Q: What is Eddie's elevator pitch for Point?

Point is a financial technology platform that allows homeowners to unlock equity that's locked up in their homes. It's a new consumer finance product for consumers and a new asset class for investors.

Q: What is Ryan's elevator pitch for Cadre?

Cadre is building the world's first digital stock market for alternative assets, with a focus on transforming the world of alternative investing by providing transparency, access, efficiency, and liquidity.

Q: Why did Eddie decide to enter the real estate market?

Eddie has a background in starting venture-backed companies and saw an opportunity in the inefficiency of the real estate market. When he was in between jobs, he tried to refinance his home but was rejected by banks. This led him to question why debt financing was his only option when he had equity in his home that could be sold, just like shares of stock in a company.

Q: How did Ryan transition from a focus on residential real estate to commercial real estate?

Ryan has always been passionate about technology and antiquated industries. After starting a sports technology company and working in the real estate industry during the subprime credit crisis, he joined Blackstone's real estate group. There, he saw the importance of applying technology to the commercial real estate market, which he believed was an opaque industry with great potential for transformation.

Q: What did Eddie do in the real estate market before starting his current company?

Eddie noticed foreclosed homes in Atlanta and saw an opportunity to use technology and data to track and invest in these properties. He ended up buying dozens of homes and hundreds of units, which led him to join Blackstone's real estate group. His previous experience in the single-family real estate business inspired his current work in the equity market for homeowners.

Q: How does the concept of equity investments in homes create alignment between homeowners and investors in Point's platform?

Point's platform creates a natural alignment between homeowners and investors. When a homeowner's property value goes up, both the homeowner and Point earn more profit. If the property value stagnates or decreases, both the homeowner and Point do not do as well. This alignment allows Point to provide resources, tools, and products that advise homeowners on their home-related decisions, as they have a shared ownership perspective.

Q: How does Cadre plan to ensure alignment of interests between stakeholders in its marketplace?

Cadre's mission is to provide superior access and insight to real estate investing. They leverage data to give people tools, insights, and recommendations for their real estate investments, empowering a wider subset of the economy. They aim to democratize insight and increase access while still maintaining credibility, brand equity, and trust. They plan to start with a more targeted approach for institutional investors and eventually expand their marketplace to a wider set of participants.

Q: What is the investor appetite for creating more liquid access to illiquid assets like real estate, given the previous financial crisis?

Eddie explains that residential real estate, like venture capital, is an inefficient asset class with limited financing options. By creating a liquid market and more financing options, such as equity investments, it can help smooth out the boom and bust cycles seen in the real estate market. Homeowners can share the equity risk, and investors can benefit from diversification. Eddie believes that creating more ways to finance and be liquid in the real estate market can have positive effects on the overall economy.

Q: How do Eddie and Ryan address the concerns of leadism and the protection of retail investors in their marketplaces?

Eddie explains that Point is different from platforms like Lending Club or Prosper, which focus on borrowers. Point's platform is used by homeowners who have accumulated equity and are looking for diversification, cash flow optimization, or short-term bridge cases. They want to provide resources and advice to homeowners to maximize the value of their properties. Ryan mentions that Cadre focuses on providing superior access and insight to real estate investing, leveling the playing field between retail and institutional investors. They leverage data and technology to give people tools and insights similar to what institutions have had access to traditionally.

Q: How do Eddie and Ryan see the real estate market evolving with technology and data if it were to start from scratch?

Eddie points out that residential real estate, being the biggest asset class, is one of the few asset classes where the only financing option is debt. He believes that there is an opportunity to unlock the equity in residential real estate, which would put more wealth back into the economy. Ryan adds that real estate is a massive industry with ongoing inefficiencies. With data and technology, there is potential to create more efficient platforms, providing transparency and opportunities for buying, selling, and financing real estate.

Takeaways

Eddie and Ryan both see technology and data as catalysts for transforming the real estate industry. They aim to bring more transparency, efficiency, and liquidity to the market. They believe that by unlocking equity in homes and creating new financing options, they can smooth out boom and bust cycles, provide diversification for homeowners and investors, and increase access for a wider range of participants. Their companies, Point and Cadre, focus on aligning the interests of stakeholders, empowering homeowners and investors, and providing superior access and insights in the real estate market. They are optimistic about the future of the industry and their ability to achieve their missions.