November 30, 2021

What is an Experiential Financial Product?

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Most investing products obscure the actual management and workings of the assets they represent — investors must analyze and interpret various tea leaves like financial reports and media coverage to understand what they actually own.

Legends choreographs design, data, and finance to create the experience of impact in investment holdings, starting with utility scale solar facilities.

Most investing products obscure the actual management and workings of the assets they represent — investors must analyze and interpret various tea leaves like financial reports and media coverage to understand what they actually own.

Young investors are increasingly uneasy with the ambiguity of their financial holdings. Many supplement their traditional 401(k) type investing products with investing activities on brokerage accounts, crowdfunding platforms, or crypto exchanges. These novel products are fun and engaging — they let individual investors feel in control of their financial lives, even if most of their savings are invested in a traditional manner.

Part of the reason young investors seek to 'take control' of their financial lives with these products is because they know that many of the companies normal savings accounts invest in might not be aligned with their values — for example, they are likely to own shares in oil companies or companies that benefit from the proliferation of war and weapons.

Institutional money managers have attempted to address this sense of guilt by producing socially responsible alternatives to diversified index funds, which cut out objectionable companies like oil producers and weapons manufacturers — these products are often marketed as ESG Investing or SRI investments.

There are two separate motives identified here: the first is the desire of the investor to feel a sense of comprehension over how the assets in their financial products function and generate a return — the second is their desire to know that their investment capital is being deployed in a way that comports with their values.

Legends is creating a design research process that will explore how people think about their savings — we will tailor the structure of investments available on Legends to match the mental models & expectations our users already have of how an investment generates cash and social impact. In doing so, Legends will create an experiential financial product — one that will give the investor the feeling of direct ownership, but maintains the benefits of institutional finance.

Legends is inspired by a number of existing financial products that provide retail investors with a powerful experience — products that respond to the emotional needs and cultural context of their customers.

Let's highlight two examples that create a powerful experience through thoughtful design: the SPYR Gold ETF and Masterworks.


The vault where SYDR's gold ETF holdings are stored
The vault where SYDR's gold ETF holdings are stored

SPDR Gold ETF is tethered to the price of gold — SPDR litterally keeps a safe filled with gold bars that ETF investors own through their brokerage accounts. This has helped SYDR serve a class of retail investor who has all kinds of emotional associations with gold — but who are confused by or suspicious of the stock market. Each share of SPDR Gold represents just 1/10th ounce of gold, meaning that retail investors can buy their first share for less than $200 dollars. By designing their asset for maximum simplicity, transparency, and accessibility, SPDR Gold became one of the most popular ETFs, and among the largest custodians of gold.

Masterworks purchases fine artwork and packages it into a security which is sold through their crowdfunding platform, After a holding period of 5–10 years, Masteroworks resells the artwork and returns the (hopefully) appriciated value to the shareholder, taking a management fee and share of profits along the way.

While Masterworks plays up the investment potential of their investments it is also clear that the novelty and experience of owning a fraction of an iconic artwork is appealing to potential investors. Legends will approach retail investors who might have similar kinds of motivations — while they might be attracted to the moderate but reliable financial return solar facilities offer, they will also be interested in the experiential aspects of being on the Legends platform.

The Masterworks and SPDR Gold examples share important qualities:

  • The denominator, or trading unit, of the asset is clear. With SPDR, you own an amount of gold through your holding. On Masterworks, the investor owns a share of an individual artwork, and on SPDR, the investor owns a fraction of an ounce of gold through their ETF. Legends is likely to use a similar strategy, selling fractions of solar facilities in increments of watts or panels — a strategy which helps the retail investor better grasp what their holding represents.
  • Iconography and cultural currency matter. Masterworks draws new investors who might enjoy the novelty of owning a fraction of a museum quality, iconic artwork created by a top-tier, household name artist. SPDR sells gold, which is one of the best understood and most sought after stores of value through history and across all demographics.

As Legends structures and markets it's first product, these insights will be top of mind. A major tailwind in our favor is the tremendous goodwill and public understanding of solar — both it's environmental impact and the way it generates electricity and sells it to earn revenues. Rather than selling shares in arbitrary units, it is likely that Legends will select a trading unit that taps into the user's understanding of solar, for example selling solar units in square feet of panel (as is the case on Legends wireframe prototype), or in watts of generating capacity.

Perhaps solar infrastructure does not have the cultural power of fine art or the allure of gold — but Legends will design a powerful emotional experience and connection between the investor and their holding. Legends' design process will result in a continuously evolving set of touch points that draw data from solar facility performance & financial returns and uses them to animate powerful interactions like data visualizations, artwork, badges, and more.

Fundamentally, Legends' thesis is that people want to feel in control of the financial lives. That means knowing what they literally own through their financial products, and knowing that their values are being effected upon the world through their savings choices. Legends' goal is to create an 'experiential' financial product that uses the power of design to prove to the investor that those demands are being met.

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