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Welcome to the Property Pods Office Sous. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officeSous.com to media.com. Again, that's OfficeSous.com to media.com. First question.
Hey Scott, first time caller here. I'd love your analysis on the Change Healthcare United Healthcare IT hack in the ransomware. I don't hear anybody talking about this. I work in healthcare over 50% of claims passed through Change Healthcare. And we haven't been able to bill for two weeks. This is going to be a large issue with no date and site for a lot of providers and hospitals not knowing when they are going to get paid. Would love your analysis. Thanks for all.
I don't see these questions because I want to be raw and authentic. And the downside is sometimes I don't have the domain expertise and don't have time to do the homework. And this is one of those instances where I feel I feel naked. Or maybe that's the remnants of the ketamine speaking. Anyways, I'm grateful for your question.
So look, this is so what is a war? A war is a shooting match, right? Ukraine and Russia are in a war. They've committed, you know, they've declared war on each other and there are Russians shooting at Ukrainians and vice versa. And then our proxy wars. The Houthis are firing missiles at US ships or Western ships trying to wreak havoc is on the price of oil up. Generally just fuck with the West and it looks like they're getting a lot of funding and armaments from Iran. That's a proxy war.
To a certain extent until we entered the war, Vietnam was a proxy war, right? It's it's large nations don't want to get involved, engage in a direct shooting match because it connects, so what they do is they have proxy wars and they fund one side of the other, which is kind of it takes their finger away from the button a little bit if you will.
The proxy war is being fought all over the world right now or essentially the biggest proxy war being fought between, I don't know, our adversaries and us right now are cyber attacks and some of it is just pure criminality a group of people in wherever I won't name you know in an African or Eastern European country, maybe even some folks domestically.
You see an opportunity to shut down and this is having a couple friends mine, the IT of the business and the call them and say transfer $78,000 Bitcoin and will unlock it and what happens is a lot of these companies just go ahead do it because and they don't report it because they just want to get their business back online.
And so it's not your blackmail is pure extortion, but we absolutely need to beef up our security apparatus and put in place not only defensive measures but counter offensive measures, what do I mean by that. We need to increase the compensation of our government officials such that we attract more young and technologically literate people, we do have the best cyber defense and cyber offense in the world.
I would imagine we still need more and more funding because what I'd like to see is more investigative or forensics that identify who are the nations and bad actors doing this and then I think we should just turn around and kick them very hard in the nuts and do the same thing and start fucking with their government institutions, turning off the lights, just really wreaking havoc and basically have a disproportionate response every time they do this to us.
I think right now the incentives are so great America so rich that these nations have a group of entrepreneurial technologically literate, literate criminal gangs that see opportunity to shut down an institution or exploit it or blackmail it and their government either turns up blind eye or is actually in fact sponsoring it.
By the way, something I'm very excited about and I will make a more formal announcement and this is huge virtue signaling I am funding a program UC Berkeley and UCLA and I'm vocational programming and one of those programs will be a one or two year certification in cyber security.
I think there's an enormous number of young people specifically young men who are not caught who are not cut out for traditional four year BA liberal arts degree but our smart, our aggressive, our ambitious want to be good citizens, want to pay taxes, want to build a middle class life, have kids. My home, etc. And there's a ton of vocational training that they would benefit from whether it's nursing, especially construction or cyber security.
Anyways, anyways, enough about me. Is that great the way I turned it back to me? Totally appreciate the question. I think this is a huge, a huge problem. Why are magazine reported that someone paid 22 million and Bitcoin to the ransomware group thought to be responsible for the attack. If this was really a payment to fix part of the breach, it's a huge game for the hackers and again creates the incentive, the wrong incentives.
As experts say in 2023, the FBI documented 249 ransomware instruments targeting healthcare and public health entities up 68% in 21. So we're going to do more of this again. See above. We need a new algebra of deterrence. Thanks so much for the thoughtful question. So the word salad. Next question, question number two. Hi, Professor Galawai, Bradley from New York here.
I recently heard about this website called jukebox, which allows people to buy shares in songs and earn a proportion of the royalties from this fractional ownership. Do you think that this is a good new investment vehicle? Thank you for being a role model in inspiration. Can't wait to hear your thoughts. Thanks, Bradley from New York, although I get the sense you're from somewhere else and that you're just living in New York. And it was back to your music platform.
So fractional ownership, this company, and JKBX pronounced jukebox is aiming to democratize music investing and launch the platform that lets people invest in song royalties, think of it as stock shares from artists including Beyonce and Taylor Swift. The jukebox just recently launched with SEC approval. A June filing with the SEC shows that since January 2023, jukebox has raised $16.1 million.
So in terms of revenue, they enabled the rights holders to issue and sell royalty back securities, meaning they earned from transaction execution, for example. Investors can buy shares and Beyonce's halo for $6.78 each and receive quarterly distribution fees and various music revenue sources. So what kind of yield are you getting on these shares? According to jukebox, the annual yields are around 3 to 4% with potential for the underlying terminal value to go up.
Liquidity and future plans currently jukebox doesn't support trading of shares, meaning investors can buy but not sell their shares, stocks, but they plan to enable trading and expected to follow after overcoming regulatory challenges on premiums and become a broker dealer.
The historical context, the concept of converting muserites into cash flows or financial assets isn't new. In 1997, David Bowie became the first musician to securitize his song royalties who raised $55 million through the sale of what became known as Bowie bonds. So essentially securitizing sure cash flows. If you win the lottery, you don't get a lump sum payment. They pay you, I don't know, whatever you say, you win the lottery of $3 million a pay, $100,000 over 30 years.
You can securitize that. If you get a settlement claim where they're going to they're obligated to pay you over 10 years, a certain amount from month, you can go to a company that will securitize it in exchange for you giving handing over those payments, they give you one lump sum payment.
So this is the same thing. You have a royalty stream and you're essentially buying a bond. I mean, a lot of these big music companies, their primary asset, is not the individuals who can go out and find artists, not even the current artists who are making them should tell them money,
but the music library that spends off royalty payments and his interest rates go down. That means that the yield or the value of these things go up. So if you can get 10% in the market and fairly secure bonds, that means that you should expect about $10 for $100.
So if a royalty catalog is producing 10 bucks a year in royalties from Bouncing back and whoever else in Tom Petty, oh my God, he produced so much more than that. By the way, I was asked last night in this quiz show at South by Southwest. What is something you do when you're alone and no one's watching?
And I said, one one I like to take Edibles drink and write. And also I like to turn on Tom Petty in my earphones really loud when everyone's asleep at 2 in the morning and dance around. It is not pretty. If someone looked into my living room at 2 in the 2 in the morning, they see a guy with no music on in jeans without a shirt on dancing, dancing around, but just know it's not as weird as it sounds because I'm listening to Tom Petty.
Anyway, not where you ask. As interest rates go down, the value of these catalogs go up because your ability to get cash flow from other things, you get less cash flow because the interest rate or the yield on bonds goes down, which means that any cash flow is worth more. The multiple goes up.
So the idea of securitizing or chopping up finally chopping up assets that democratize the opportunity to own them. It's a good idea. You need liquidity. You need to kind of an active trading market. And what happens is these things oftentimes it's not about the underlying assets. Sometimes they just turn to pure vehicles for speculation.
I think there'll be some of this. I'm not entirely sure it's going to take off. What I would say is if you love music and you find it fascinating, take a small percentage of portfolio. You know, enough money such that if the Beyonce share goes up fivefold and might mean something to you, but not so much money that if it goes to zero and you can't sell these things and become debt equity, did it would have any impact on your life.
It's just a small just a dabble just a scosh of your capital and do this if you're interested. But to me, this feels like a niche market that may or may not live up to its potential. Cypher, kind of the word salad and not a very definitive answer here, but it's definitely cool. I'm going to check it out. Thank you for the question. We have one quid break before our final question. Stay with us.
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Like you I'm also presenting at the upcoming financial grandfather and May. My session tackles the complex and impactful topic of the ethical legal and strategic risk of AI and banking. As I prepare to deliver this message I'm particularly impressed by your consistent ability to convey complex information in an engaging and impactful way.
This resonates strongly with my approach to crafting my presentation. My question for you is what are your top tips for presenting complex and potentially controversial topics in a way that is both informative and engaging for the audience. Thank you for your time and consideration Scott. I look forward to potentially connecting at the forum and learning more from your key address. See you in various plants. Lance from undisclosed by the way that's my favorite place to hang out undisclosed.
Okay so how do you convey or articulate or present around controversial or complex topics so. Okay so complexity trying to get distilled one analogies you know fit it into a story so when I talk about the anti competitive or monopoly practices of the app store right they charge a 30% tax on apps or revenues that apps get if they're in the app store.
The analogy I use is credit card companies and what if visa went into the business of retail and the retailers they owned didn't have to pay 30% transaction fees those retailers would be monopolies or on other retails wouldn't be able to compete with them that's an analogy or story that helps understand or maybe not but I think helps people understand.
How Apple is in fact engaging monopoly behavior in terms of presenting a controversial topic you want to data is this sort of says all right I don't like this guy's opinions I don't like him but if you presents data it just is what it is there is a certain truth and charts visualizations super super important also just some of the softer stuff I think it's fine to have humility here and that is to say that I predicted this I oftentimes say we'll say I predicted this this is what I saw.
And I got it wrong because just to acknowledge you wrong to bring some humility people empathize with you and then the most effective one is something that's difficult to force but if you're blessed with it it just softens the beach and that is humor John Stewart can say very very controversial things and is incredibly is this incredibly powerful before you say something provocative or aggressive or a controversial anything around humor it just kind of opens people's minds.
To listen to you and make the off lie I describe it as you know the neighbor artillery softening the beach before you invaded with a viewpoint so let's review. Analogies storytelling data visuals graphics all get the message across and then on the softer stuff having some humility admit that you might be wrong or they've gotten around before and softening the beach with humor so I will see you in Las Vegas the dog look.
The dog loves to roll in Vegas I put on a kilt I give myself a thousand dollars actually ten thousand dollars where I become very self conscious about my wealth recently I go down I gamble like fucking crazy I drink a shit ton and I lose it all but for me it's not gambling it's consumption I don't expect I don't expect to make any money I expect to lose it all doesn't matter to me and I have a fantastic time I think Vegas is the most singular city in the world
also singular in the sense that for 48 hours it's the best place in the world and by hour 49 it becomes the worst place in the world but anyways I will see you at the conference and good luck with the presentation let me know how it goes Lance. That's all for this episode again if you'd like to submit a question please email a voice recording to office hours at proptimedia.com.