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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Justin Hughes, the general manager of Share Ventures. They discuss the innovative approach to real estate investment through blockchain technology, specifically focusing on the Shareland platform, which allows users to speculate on housing markets using synthetic assets. Justin explains the testnet phase of the platform, the importance of user experience, and the future goals of Share Ventures, including the integration of AI for market insights. The conversation emphasizes making real estate investing accessible to everyone, regardless of their background in technology or finance.
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Justin Hughes (00:00)
it allows people to speculate on housing markets in a way that they’ve never been able to do so before. We’ve pioneered what we call the square foot token. What this is, is a synthetic instrument, you know, like a options contract in the stock.trading world ⁓ that ⁓ is pegged to the dollar per square foot average of the SFR ⁓ stock in a given geography. So, you know, we could. ⁓
draw any shape on the map, whether it’s a city, a neighborhood, or a zip code, and we could create a liquid market where people could speculate on the price movement of that market. So if you think, if you’re bullish on Miami and bearish on Los Angeles, well, you could go long on Miami and you could short Los Angeles and you’d be able to speculate on markets around the globe.
Michelle Kesil (02:22)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil Today I’m joined by someone I’m looking forward to chatting with, Justin Hughes, who is the general manager of Shareland transforming residential real estate into a liquid on chain asset class. So, excited to have you on the show today, Justin.Justin Hughes (02:44)
Thank you, likewise, I’m glad to be here.Michelle Kesil (02:45)
Yeah, absolutely. I think our listeners are really going to take something away from how you’re creating this unique approach to investing.Justin Hughes (02:57)
Absolutely. ⁓ Where would you like me to start?Michelle Kesil (03:01)
Yeah,I guess first off for those who are not familiar with you and your work, can you share what your main focus is?
Justin Hughes (03:08)
Yeah, yeah. So my career has mostly been focused on developing financial infrastructure for the real estate industry. ⁓ Traditionally, it’s been in commercial multifamily. ⁓ Lately, it’s been in single-family residential. And ⁓ today, in my role as general manager at Shareland, ⁓ we’re building out a new and exciting real estate platform called Shareland. And what Shareland is is a exchange. ⁓centralized finance exchange. So it uses what we call Web3 Rails, blockchain technology, and
it allows people to speculate on housing markets in a way that they’ve never been able to do so before. We’ve pioneered what we call the square foot token. What this is, is a synthetic instrument, you know, like a options contract in the stock.
trading world ⁓ that ⁓ is pegged to the dollar per square foot average of the SFR ⁓ stock in a given geography. So, you know, we could. ⁓
draw any shape on the map, whether it’s a city, a neighborhood, or a zip code, and we could create a liquid market where people could speculate on the price movement of that market. So if you think, if you’re bullish on Miami and bearish on Los Angeles, well, you could go long on Miami and you could short Los Angeles and you’d be able to speculate on markets around the globe.
Michelle Kesil (04:34)
Interesting. How did you come up with this concept?Justin Hughes (05:26)
Yeah, a bit of a long story, but I guess they all are. ⁓ So first we wanted to look at how people were getting exposure to real estate. And my first startup, ⁓ we were doing it ⁓ kind of in a modernized traditional fashion where we were fractionalizing real estate. worked with these sponsors. They would have an apartment building and we would create a single purpose vehicle to allow people to, you know, be LPs, limited partners inthese syndications. ⁓ But there was a lot of barriers to scale there and there was a lot of complexity. ⁓
you’d have to really know what you’re doing when you’re examining not only the real estate asset itself, but you know, want to look at the financing. Sometimes ⁓ the financing on a property is really going to make or break it. Then you got to dig into the operating agreement. Who knows what the sponsors got in there as far as waterfall structure. And so it was a very, complicated product. And ⁓ we wanted to figure out how to make real estate investing a lot more easy and a lot more streamlined ⁓ so that the
the
average person out there could do it. And furthermore, we wanted to give people the opportunity to hedge on real estate. ⁓
you know, in the stock world, can borrow a share of Apple and for my broker and then sell it and effectively going short and then hope to pick it up for a discount and pocket the difference. But I can’t really borrow my neighbor’s house to short the local housing market and then buy it back later. just, it just obviously doesn’t work that way. ⁓ and so we worked with some PhD real estate econometrics, ⁓ professors that, ⁓ we’re publishing work at Wharton and we asked them like, how
How are you guys, how does anybody get correlated neighborhood level ⁓ housing market exposure? And after analyzing REITs, mortgage backed securities, I mean, you name it. The answer just wasn’t all that thrilling, which is, well, you just gotta buy an asset in that neighborhood. That’s the way you do it. Whether it’s fractional, there’s other fractionalized real estate platforms out there where you can own a piece of a house. ⁓ But as far as being able to short something,
also just not not heard of not not in a correlated sub market way and so we explored opportunities there like what could we do how could we make that happen and there was a lot of really exciting things happening in the crypto space ⁓ I think there’s there’s certainly a lot of hype in the crypto space but I think that there’s also some really interesting applications of the technology that can add real value not just you know basically another digital casino ⁓ and so
we looked at what was possible there and this ⁓ opportunity to create a new derivative product, a synthetic, where you have a digital asset that’s pegged to the value of a real world asset. So you get the flexibility and the liquidity and the ease of use of this like highly liquid instrument on an exchange that gets you exposure to the highly illiquid ⁓ hard to access ⁓
⁓
asset ⁓ that underlies it. ⁓ And so, you know, even if there’s no, you know, even if the housing stock, you know, you’re not finding any good deals. I mean, I’ve done traditional real estate investing myself and, you know, like…
Identifying a good deal is extremely hard. ⁓ You know, you always say you make money when you buy. ⁓ And with this methodology, ⁓ it doesn’t matter. You’re just looking at what transactions are happening. Any lack of inventory in the market is not going to affect our ability to create an investment platform where people can get exposure, long or short. And so, that’s the story. That’s how we got there. Just identified a gap in the market.
identified an opportunity, saw some really interesting and cool things being done on the technology side, and figured out a way to connect all those dots.
Michelle Kesil (09:30)
Awesome. And so how has this platform been working so far? people investing through it? Can you kind of explain how it works for the end user?Justin Hughes (10:16)
Yeah, yeah, absolutely. So we’re in what’s called the testnet phase. And testnet is, I guess, what you would call the web 3 version of beta. ⁓ I mean, I’d invite any and all users to come check us out. You can go to testnet.share.land to see the platform that we’re building. We basically just.give your account $100,000 in fake money so that you can see how it works. can ⁓ go long on some neighborhoods, short on other neighborhoods, and just to get a sense for how it’s working. ⁓ In the meantime, we’re soliciting feedback from the community and ⁓ continuing to iterate and improve upon the product. Our goal is to ⁓ bring it mainnet live in the coming year. And ⁓ more details on our socials will
We keep the community posted on our progress there. But yeah, so no, can’t trade real money yet, ⁓ but ⁓ you can’t see how it works. And we’ve got a lot of people really excited about it. ⁓ Not only, and for me, I think it’s not only the obvious, being able to go long on a neighborhood, if somebody wants to buy a house and you save some money, but then the value of that property goes up and so you’re
need for a down payment goes up and there’s kind of this treadmill effect.
by parking your, your, would be your down payment into the tokens in the neighborhood you’re looking to buy your savings is growing and lockstep with the host, the house you’re trying to chase down. So it can actually slow down that treadmill effect when you’re looking to buy a house. ⁓ and on the flip side, you know, as a real estate investor, you know, sometimes you’ve got a concentration risk in a particular sub market and you’re worried about what the future might hold. And maybe you want some kind of equity protection, ⁓ and
you know, being able to basically short the market that you’re, you know, hedge the market by going short on a synthetic where you have the underlying asset, it can be a viable strategy for many people that might have exposure that they’re looking to protect.
Michelle Kesil (12:23)
Yeah, absolutely. So, do people need to have a crypto knowledge background to use this?Justin Hughes (12:30)
Man, great question. So our goal is to make that answer a no. ⁓ So we do use technology. There’s a company called Privy. What they do is bridge the gap between what I would call the Web2 experience and the Web3 experience. We’ve all done the single sign on with our Google account or Apple ID or Facebook, right? The social login kind of thing, or just logging in with email and password. In the crypto world, because they’re trying to createthis
trustless infrastructure where you control everything nobody can move anything around without your your authorization that’s where the crypto wallets come in and so
Under the hood, do have a crypto wallet. are connecting. is all crypto rails. But what we’ve done is we’re using, different techniques and technologies to abstract that out, to make the user experience something that people are used to. This is something really important to me. I like, you know, as a product guy, you could build something really cool and really just innovative, but if nobody can use it or nobody cares, it’s a giant waste of time. And so, you know, not to throw my dad under the bus.
He’s actually quite tech savvy, but I always say like if my dad can’t log in and use his credit card to hedge his primary residence ⁓ Then I will have failed ⁓ I need it to be something that anybody can approach and then You know if you know web 3 you can maybe peek under the hood and look at it and go. ⁓ okay Yeah, I know that makes sense. I totally understand what’s going on ⁓
But in the same way, it’s like, I drive my car from A to B. I know vaguely how an internal combustion engine works, but could I build one? Probably not. ⁓ So no. mean, the short answer is no. You don’t need to have Web3 Knowledge to do it. ⁓ If you had Web3 Knowledge, you might see some of the things that we’re doing and recognize them as common design patterns on other DeFi platforms. We’re really not reinventing the wheel in some ways. ⁓
In other ways, we are putting our own spin on the ball, ⁓ obviously with a ⁓ single-family residential real estate specific focus ⁓ and trying to make it really, really easy, not have it be something that’s exclusive to the crypto bros.
Michelle Kesil (14:52)
Got you. Okay, yeah, thanks for explaining that.So what are your goals for what you’re solving or scaling to next through this platform?
Justin Hughes (15:43)
Yeah, well, right now, our goal is just to get it in the hands of people and get feedback. We’re also in the middle of working on a big design refresh on our front end, improving mobile usability and…just a handful of other nice to have features just to make the experience more pleasant, more straightforward. I think one of the biggest challenges that I faced is trying to take what can be a rather, you know,
complicated ⁓ financial instrument and try and make it approachable and accessible to folks that aren’t native to the space. ⁓ And so that’s one of our big goals is just to continue on that mission of making it really easy and approachable so that anybody could easily use this.
Second, ⁓ we actually recently launched an AI agent called Tycoon. Tycoon is our AI agent that has access to all the data on the platform. He can surface insights and ⁓ report on.
what’s going on in the markets, ⁓ not only in kind of the digital synthetic asset space, but also in the physical real estate space. ⁓ And we’re integrating him with what’s called the agent commerce protocol. ⁓ In the future, you know, we’ve, we’ve, we’ve seen, you know, RIAs registered investment advisors that are managing people’s portfolios, you know, have these robo visors where it’s effectively algorithmically balancing your portfolio and managing it for a fee. The next wave is likely going to be a
Antic
advisors where you have. ⁓
you know, you have an agent that is helping you deploy and manage capital. ⁓ And we want to be able to support that. And so our agent utilizes agent commerce protocol ⁓ so that if there is anybody out there that wants to transact through a, you know, through that protocol or through just a natural language interface by just talking to Tycoon, Tycoon would be able to effectively say, okay, well, you know, know, click here to finish this transaction that you asked her, it sounds like
you really love the DC area, know, would you like to get additional exposure and can help users walk through that. ⁓ Part of that Tycoon agent, we launched the Tycoon agent token, and this is how people can actually economically participate in the success of that agent. That agent actually makes money based on the services that it provides to people. It basically just takes some of our transaction fees for
the costs that we have for ⁓ performing these transactions. And then some of that goes back into a buy back and burn program. So effectively, those tokens are being ⁓ bought back and then burnt to basically reward folks that were early adopters on the token by providing us with that liquidity to help build out this vision.
So continuing to develop Tycoon, continuing to get the message out there, develop the community, launch the platform. And ultimately the day when my dad can hedge the biggest chunk of his personal net worth as he’s, you know, as, as a retiree, then I will say, okay, great. ⁓ I think we’ve done it.
Michelle Kesil (19:08)
Okay, interesting. That’s so cool. So let’s say someone doesn’t really understand this technology and they’re more of an old school investor, how would you kind of like convince them or prove to them that this is the way?Justin Hughes (19:22)
Yeah, yeah. Well, you know, I’ll go back to my car analogy. Like, you know, we can all drive a car without really understanding ⁓ how a carburetor, you know, where a carburetor would attach to the engine, right? And if I continue with this metaphor, it will only illustrate how little I know about cars. But… ⁓But there’s a couple options. mean, one, we do have an extensive knowledge base where we do go into the details of the math on how this works. ⁓ But on the front-end interface, very simply, you just have to have ⁓ an opinion.
Are you bullish on a particular sub market or are you bearish? And if you’re one or the other, you can act upon that sentiment. ⁓ and then if you want proof as to how it works, ⁓ you can actually look at the price chart for the token overlaid with the price chart for the sub market in the physical asset. so what we do is we ingest a lot of data, ⁓ for the sub markets that we support.
And in doing so, we publish our index values, so to speak, you know, whether it’s ⁓ LA, New York, Miami, Denver, whatever. And what that allows us to do is just have this, okay, here’s the dollar per square foot of this given market, similar to like his estimate. And the price chart for the…
for the real world asset price and the price chart for the token price, they’re not necessarily identical. There’s going to be some deviation. For example, if everybody is bullish on a neighborhood, it’s going to trade at a premium. Similar to how ⁓
call in option contracts will trade it, they’ll go up and down depending on how the underlying asset price is performing. So that’s similar to how this works. We’ve resolved the math in such a way that it’s a one-to-one motion. ⁓ Now, where market sentiment will deviate from the underlying asset price.
you might see a price graph where it goes up and down and up and down. The market price of the token will have the exact same shape. It might just be like shifted on the Y axis, one or 2 % up or one or 2 % down ⁓ because of a natural imbalance between longs and shorts. Because again, like any market, supply and demand is going to have an influence on that asset price. But there’s other mechanisms at play, not just supply and demand, not just ⁓ users buying and selling.
We also have, ⁓ you know, ⁓ each token has collateral put up and it’s in a ratio to the underlying asset. So let me put that a different way.
If I want it like we peg the, ⁓ the token price to the underlying asset price. And so there’s these mechanisms where when the underlying asset price goes up or down, there’s a mechanism where either more tokens are being added to the supply or removed from the supply algorithmically so that the token price follows the asset price around. And so I invite everybody to go onto the test that you can see this in action. You can pull up these charts. You can see how the, the,
We call it the Oracle price. That’s a Web3 term. Basically, it’s ⁓
It’s a methodology for publishing data on chain in a way that is accessible to smart contracts. Sorry, probably way too technical. ⁓ Didn’t need to get that technical, but at any rate, you’ll hear me use the term Oracle and all I really mean is the real world index value. So you got the Oracle line, you got the market, ⁓ the token line, pull it up for every market that we support. You’ll see what I’m talking about. You’ll see that they’re the same shape, but maybe not like exactly the same, but at the end of the day,
If I was to buy a million dollars worth of token in a particular sub market and I was to buy a million dollars worth of house in that exact same market and I held both of those assets for the exact same amount of time Statistically speaking I’m gonna wind up with the same ROI, know plus or minus basis points
⁓ In fact, I might do better on the tokens because I don’t have escrow, title, ⁓ broker commissions, and things like that on the transaction. ⁓
So yeah, so I don’t know. mean, ⁓ for folks that aren’t crypto natives, I’d say don’t let that stop you. Go ahead, click around, poke around. Also, I would love your opinion. Sometimes as a tech guy, like, you know, I lose sight of what is understandable. As you can hear me talk, I’ll like get lost in the deep end. ⁓ But so honestly, those opinions are what are most valuable to me.
you know, and, but yeah, it’s like, it’s driving a car, hop in, drive it. I’ll explain to you how an internal combustion engine works. If you like, if not, you can just look at the speedometer and see that you are in fact traveling 40 miles an hour. So.
Michelle Kesil (24:15)
Amazing. Thank you so much for expanding and sharing all of your insights.Justin Hughes (24:19)
My pleasure.Michelle Kesil (24:20)
So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you?Justin Hughes (24:25)
Yeah, so you can find us on X. Our head of marketing, Nate, ⁓ runs our socials. ⁓ We’re at sharedotland That’s all actually one word, not an actual dot. So S-H-A-R-E-D-O-T-L-A-N-D is our X handle. My email address is [email protected] ⁓ Feel free to bother me, anybody, anytime. ⁓ And yeah, I would. ⁓I would invite everybody to come check out what we’ve got going on. ⁓ Real estate investors, just investors like your ⁓ listener base are actually exactly the kinds of people. I talked to a lot of crypto folks. you know, and so I have a lot of access there, but traditional folks, I really want to hear their opinions and get their insights. I think that would be incredibly valuable to me. So please don’t be a stranger ⁓ and then check it
out and then stay tuned for more to come. We’ve got a lot of exciting things coming down the pipe and you know I’m personally really excited. We have a lot of fun here.
Michelle Kesil (25:29)
Awesome. Thank you for your time and your perspective. Appreciate you being here.Justin Hughes (25:34)
Well, thank you so much. Likewise.Michelle Kesil (25:36)
Of course. For the listeners tuning in, you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Justin who are building real businesses and we’ll see you on the next episode.
