Asset Envy and the Investible Human Being

This article is part of The Assetizer, GenTwo's thought leadership platform.

In this week’s podcast I have an interesting chat with Professor Pier-Luc Nappert of Laval University in Quebec.

We talked baseball: specifically, how some minor league baseball players are assetizing themselves – via human capital contracts – in order to fund their development and progress in their sport. It’s a subject Professor Nappert knows well, having co-authored a paper on it. You can check out the podcast here.

I have to admit that when I first heard the term “human capital contract” it made me a bit uneasy. The idea that you pledge a certain amount of your future earnings against cash today smacks (to me at least) of the old practice of indentured servitude.

But as Nappert told me, for many of his players these contracts can be a blessing. Like young artists or students, young players are often strapped for cash. Getting ahead requires not just talent, but time and resources – things that only money can buy. (It is hard to train in the off season if you’re forced to drive an Uber cab just to make ends meet.)

These players often have what Nappert calls “asset envy” – the desire to be considered (valuable) assets by their clubs, worthy of investment.

From this perspective, marketing oneself as an investible asset can make sense. On the other side of the equation, investors looking to diversify might also find these types of “future cash flow” opportunities worth a look, as I outline below. (We talk about this briefly in Chapter 6 of our Assetization book as well.)

So in this post I thought I would take a look at this whole idea of assetizing human talent. Turns out, it’s anything but new.

Learn now, pay later

Learn now, pay later

The idea of human capital contracts is generally traced back to a footnote in a paper published by Milton Friedman in 1955. In it, he is talking about students, suggesting that people could fund their education by selling stakes in their future income. This idea was later formalized by Nobel laureate Gary Becker with his theories on human capital economics.

The first real attempt to implement this concept was Yale University's experimental Tuition Postponement Option in the 1970s. Students received funding in exchange for a share of their future earnings. Although well meaning, it did not end well. A similar program at Purdue has also recently hit the skids. MyRichUncle did something similar as a private company, before succumbing to the 2008 financial crash.

Yet the idea remains. The company Clasp allows companies to invest in (i.e., lend money to) college students in exchange for a pledge to join that company for a number of years.

The practice of assetizing human talent has fared better, not surprisingly, in cases where there are existing income streams.

The most famous real-world example of this is the Bowie Bond, where in 1997 David Bowie assetized the future royalties from his music catalogue. The Hipgnosis Songs Fund, which was listed on the FTSE 250 before being taken private by Blackstone in 2024, has done something similar with song royalties in general.

Why Investing in People Makes Sense (and Sometimes Doesn’t)

Why would investors be interested in HCCs? There are several reasons:

Diversification: Human capital investments offer returns linked more directly to an individual's success than to market fluctuations.Novel Returns: High returns from successful individuals or artists can surpass traditional investments.ESG Appeal: Supporting education or career growth can align with investor sustainability and impact goals.

But it’s not without risks. Investors face significant challenges, including:

Valuation Difficulty: Predicting future human earning power is inherently uncertain.Volatility: Careers can change drastically due to injury, shifts in popularity, or market dynamics.Regulatory and Ethical Considerations: The idea of owning a stake in someone's future has ethical implications, and regulatory frameworks remain uncertain.

Is it time to revive this idea?

My chat with Professor Nappert got me thinking that it might be time to revive these ideas. As I’ve written before, diversification is getting harder and harder, so there is a search on for new asset classes.

Technology is also having its say.

When I was in blockchain, I saw a lot of projects around the idea of tokenizing the future earnings of young athletes. Some of these have come to fruition.

Certainly the rise of digital assets and their convergence with the worlds of sports and entertainment are likely to drive adoption of this kind of investing if for no other reason than making it easy to do.

It’s a space we should probably be keeping an eye on.

I'll leave you with a question: Would you invest directly in someone's future potential? Why or why not?

Tom Lyons
Head of Communications and Content, GenTwo