#740: Hard Asset Lending For The 99% with Sadi Khan

Avon founder Sadi Khan explains the company's focus on asset-backed lending to cut consumer borrowing costs, drawing from their home equity success to launch a new Bitcoin-collateralized credit card. He frames this against Bitcoin's role as a reliable store of value, especially in inflationary environments, and details how Avon applies technology and capital markets expertise to make hard-asset borrowing accessible beyond the wealthy.

Framework for Reducing Cost of Capital

Khan breaks down cost of capital as risk-free rate (set by central banks) + cost of risk (an information problem) + cost of transaction. Avon targets the transaction cost, using technology to drive it toward zero. This enables passing savings as lower APRs on asset-backed products. For consumers, unsecured credit cards carry over 20% APR on $1 trillion in U.S. debt, costing $200 billion yearly in interest. Avon shifts borrowing to assets owners already hold, like homes or Bitcoin, to lower rates 50-70% while promoting responsible credit.