The Exchanges

Q And someone's done that already. Has someone done that?

A What we've had is we've had several customers upgrade. So it's been interesting. Nobody sold their out, out of Ember because when you, once you've experienced it and tasted it, it's, it's something you can't really let go of, right? Because it is such an amazing experience. But what we have had is customers who said, you know what? We love the home that we're in, but there's a new home that you just listed. And we would like to buy a share in that home and sell the share that we have in our existing home. And actually during the first year, Of ownership. You can trade without any fees. So no real estate commission. So if you find a better listing, there's kind of like an Ember guarantee. You can just move to the other property. Maybe it's a bigger house or a smaller house or a different location. Um, within the first year, after the first year, it's just the traditional three percent real estate agent commission. And, um, you know, in this case they were within their first year. So they upgraded to a larger home. We took the shares that they had and we sold them, um, on the open market.

AI assessment note: “What we've had is we've had several customers upgrade.”

Q Um, is the model working? Do you think you anticipate any pricing changes? You know, it's 12% too high, too low.

A Um, I think the model is working. So, you know, the, the value that Ember provides and the reason people are willing to pay, you know, a 12% uplift on their shares because we're unbundling an asset, right? You're taking an asset that was previously unavailable to a group of buyers and you're making it more affordable and turnkey for them. And because of that, they're willing to pay a little bit of a premium. It's kind of like, um, you know, the analogy that one of my co-founders uses is like, you know, you can buy a six pack of Coke back in the back of the You know, the, of the grocery store that's, that's not cold and on the shelf for a couple bucks, but you, you, you inevitably pick up that cold one. That's like, you know, already set out in the refrigerator, in the aisle, in the checkout aisle. And so you, you're essentially just taking that asset and I'm bundling it and there's a lot of value in that. Um, so I would say, yeah, a hundred percent, we've got pretty strong product market fit. Um, we've actually had more of an issue keeping up with demand on the buy side and being able to get the inventory Um, which is always a good problem to have in a, in a startup.

AI assessment note: “I think the model is working. So, you know, the, the value that Ember provides”

Q Okay. Five. And I mean, look, anyone listening is going to go, wait, this guy's rich. Why does he want to sell 10%, 20% of his business over two rounds, the seed in series A to investors? What, why not sort of be greedy, bet on himself and keep as much to a hundred percent as possible? How would you answer that?

A Um, you know, there's a couple things. One is, you know, it's a fairly capital intensive business. Obviously we got to go out and acquire the property in the, in the first instance and then sell the property. Um, it's, uh, so there's reasons to have a lot of cash on the balance sheet so that you can take that cash and, and leverage it. Um, I also think that there's going to be a couple big players in this space and we're kind of starting to see those players form. And, um, you know, the way we view this kind of five, A nationwide marketplace and also a worldwide marketplace where people are buying and selling, um, are buying and selling shares. And I think speed to market is really critical for marketplaces. If you get out there and kind of establish the name, that's what gets you in kind of a, in a, in a, you know, first or second position. And, uh, so we're, we're going to be a pretty aggressive and aggressive, you know, it's helpful to have the insight and backing of venture capitalists.

AI assessment note: “it's a fairly capital intensive business... speed to market is really critical”

Q And you can sort of recycle there. Very interesting. Okay. Let's say averages are dangerous, but it helps really understand a marketplace quickly. What's, what's the average sale price of the home on the platform?

A So it depends on the geography in St. George, Utah, which again is if you've ever seen the red rock, you know, of, of Southern Utah, that's where, that's where St. George is. So it's a beautiful, a beautiful area. It's actually a very big vacation destination. Um, you know, your homes are typically between two, um, and, uh, three and a half million dollars in Newport beach that, that ranges from four and a half to eight million dollars. Um, You know, so we have two homes that are actually on the low end, you know, with four million, but that's, you're talking about a home that's in a stunning neighborhood and, you know, 90 steps to the, to the sand.

AI assessment note: “homes are typically between two, um, and, uh, three and a half million dollars”

Q Do macroeconomics matter? Interest rates going up. People can't get loans as easily. You know, does this matter?

A Yeah, they do matter. You know, I think, you know, we're obviously high in vacation homes. It's usually a discretionary spending. Um, we watch it pretty closely. You know, that said the growth trajectory to date hasn't been impacted. We're, we're continuing to grow. And what I would characterize as kind of the top, you know, one percent of startups. Um, and, and the company operates, you know, we were pretty tight lipped about like absolute numbers, but I can I can tell you, we operate pretty close to a breakeven. Like we've not burned hardly any cash. Most of the cash that we put on the balance sheet is to buy inventory. Um, and so, um, and so, yeah, I think like you could see a three, four, five X growth over the next 12 months, you know, based on, on what we know of the market over the last 12.

AI assessment note: “Yeah, they do matter. You know, I think, you know, we're obviously high in vacation homes.”

Q Where'd you get the cash to buy up all the inventory? I mean, to get, to get going.

A So it's a combination of the equity dollars that we've raised from the venture side. And then we also layer in a debt, uh, some debt on top of that, that gives us kind of the purchasing power. You know, the one thing I'd mentioned that you, that you brought up was the interest rate. So typically when you think of like a one eighth ownership in a home, you're not thinking like, oh, you know, that's something that can be financed, right? That in fact, historically that way, that's not a product that would have been financeable, but, um, that's actually not the case with these shares. Like these shares, uh, Um, can be financed. Um, we have a partnership with a bank that finances these shares at a low interest rate. In fact, in the Newport beach homes, um, the interest rates, four percent. So it's actually less expensive than a, than a traditional mortgage in, in kind of the current environment, which is, uh, which is amazing.

AI assessment note: “combination of the equity dollars that we've raised from the venture side. And... debt”