Howard Lindzon believes in a couple of big investment trends, two of which converge in a company called Rally Rd.
Rally Rd. has a simple business. It buys vintage collectible cars and sells shares in them as if they were a company. The shares can then be traded in a secondary market.
For Lindzon who was among the seed investors in the company, the BIG IDEA here is the combination of fractionalization and liquidity.
Howard’s thesis is that if you let investors buy small stakes in assets (fractionalization) and organize a secondary market (liquidity) it will open up huge untapped opportunities.
It’s hard to overstate how much this could change the game.
Most people buy stocks and bonds, or maybe commodities like gold. They don’t have access to illiquid, expensive assets like wine, art, lumber or collectible cars.
Rally Rd. started selling $635,000 worth of shares in a Lamborghini Countach LP400 S Turbo yesterday. The car is rare – only two exist – and was believed lost for many years before being re-discovered in a storage facility in Nevada.
The 5,000 shares were priced at $127 a piece. By the end of Friday some $544,000, or 85%, worth of shares had been sold.
The company opened a store in Soho to show off the Lamborghini, though business is entirely conducted via an app on your phone. The app shows what’s available to buy, as well as historical comps for the asset.
Downloading the app and registering to buy shares takes only a few minutes. Howard says that accessibility is a key part of the strategy.
In that way its similar to Robinhood, the no-commission brokerage, which has leveraged an easy-to-use mobile app to attract 6 million accounts and a valuation over $5 billion.
One of the questions posed to management at a reception the night before the Lamborghini sale was about liquidity. It’s easier to build the app than guarantee shareholders they can sell.
What happens if the market melts down and there are no bids?
It’s a reasonable question and a legitimate risk. Of course anyone who remembers 2008 recalls the moment that there was no bid for Lehman and eventually no bid for anything.
For Lindzon that day is not today.
He sees Rally Rd. as model for the future when investors will access all kinds of previously hard-to-invest-in assets.
Unable to restrain himself, he bought five shares in the Lamborghini.
*Published on January 18, 2019*