You’re driving down the winding roads of Napa Valley, visiting the countless wineries, taking in the beautiful scenery, and enjoying the various pairings of meats, cheeses, and palate cleansers… But that’s not all that pairs well with wine. This week Anthony Zhang @anthony_j_zhang, an ambitious entrepreneur who created Vinovest, gives us the inside scoop on how wine is so much more than just those ‘soft’ descriptors, and can actually be considered an asset class. Even if Jeff asks… really? Is it really scalable and doable for large investors?
It’s no coincidence we’re dropping this week’s pod the day after National Wine Day. Grab yourself a glass of vino as Anthony aerates topics like; starting a company from a dorm room, getting paid to skip college, how wine gains value, why wine doesn’t need a token for Crypto, coping with paraplegia, and his outlook ahead. Plus, he gives us an exclusive insight into finding a gem within the wine list. This episode will make you want to sip, savor, and repeat — enjoy!
Check out the complete Transcript from this weeks podcast below:
Wine as an Asset Class: Demands, Dilemmas, & Distribution with Vinovest’s Anthony Zhang
Jeff Malec 00:07
Welcome to the Derivative by our RCM Alternatives where we dive into what makes alternative investments go analyze the strategies of unique hedge fund managers and chat with interesting guests from across the investment world. Happy National line day everyone well actually was yesterday, but pour yourself a glass anyways because we’ve got a great lineup shaping up for June. I’m actually in Vegas right now at the EQ de derivatives conference, where we’ll see the likes of Benn Eifert, Cem Carson, Vineer Bhansali, Chris Cole, Ben hunt, Kris Sidal, Mike Green and many more. It’s going to be exciting two days mute. Nice Jason buck is here in Vegas as well. And the two of us are going to do a quick recap after each day and put it up as a few pot episodes next week. So tune in next week to hear what all those worth hearing in the volatility space had to say in Vegas. Under this episode, which was a fun chat with vino vest, founder Anthony Zhang. I’m not a wine guy more of a Coors Light type. But I press Anthony on whether wine can really be considered an asset class if a $10 billion pension can’t get meaningful exposure. But Anthony’s up to the challenges and interesting guys you’ll meet having been paid to not go to college started multiple instances in dealing with paralysis. Send it This episode is brought to you by RCMs managed futures group and their newest white paper going through all the ins and outs of trend following maybe trend followers will have a certain vintage of wine and their portfolios one day and who would know which managers trade which one’s the team in RCM. That’s what they do. Check out everything RCM does at WWW dot RCM alts.com or cms.com And now back to the show Alright, hey, everyone, we’re here with Anthony Jiang. I didn’t ask you how to pronounce that last name. I get it. Yeah, you got it. Well, and where are you zooming in with us from today?
Anthony Zhang 01:59
So I’m usually based in Los Angeles. But today I’m about an hour south in Orange County.
Jeff Malec 02:05
Oh, nice. What part?
Anthony Zhang 02:08
Jeff Malec 02:09
Newport Beach. Love it. And this isn’t an actual Newport Beach wine cellar behind?
Anthony Zhang 02:14
You know, it definitely could be that there’s a lot of nice wine cellars around this area.
Jeff Malec 02:19
But you just turned 27. Right. Yeah. So God bless you. That’s you’re making me feel help. Don’t make me feel old and dumb. Just all right. So you’ve started and sold two companies now running a third. So kind of take us through your entrepreneurial roots, what it’s like starting a company from your dorm room.
Anthony Zhang 02:39
Absolutely. I always knew I wanted to start a company. But I think like most people, I was subscribed to the idea that I needed to study hard and in high school, go to a good college and study hard in college to be able to get a good job and then maybe go to a great MBA program. And then then I’d be ready to start a business kind of took a different route. My freshman year at college, I started a side hustle, which was helping to deliver food on campus. I spare time into my classes, students are studying all the time and need food in their dorms and libraries. And I will just do those, do those runs and make what school what school was at USC also in LA. Yeah. And that just really bloomed into a marketplace where a bunch of other college students wanted a flexible, easy way to earn some extra cash. And I provided the platform for it. That was called envoy now. And we were able to expand that business. And I was able to eventually actually take that business full time after a couple of years to grow out to over 20 markets nationwide, we had hundreds of 1000s of students using the app and delivering from it before we got acquired.
Jeff Malec 04:00
And how what were the students would get a cut of the delivery fee basically. Yeah, so
Anthony Zhang 04:05
students would get the delivery fee, they get the tips. It’s very similar to the DoorDash Postmates models of the day. But because you’re in a college campus environment, all the restaurants were a lot closer enabled students to deliver faster and also because they had their ID card they could get access to routes and buildings that regular third party like a postman is probably couldn’t be able to so our our food was just always there on average, you know, eight to 10 minutes faster than Postmates and in the world of food delivery that’s everything right? That’s a difference to Tina, hot pizza and a cold pizza.
Jeff Malec 04:42
I I missed it back in. What year was that? 97. Maybe I lived in Aspen for a year after college top destination for philosophy majors. So I worked on the mountain to get my ski pass but then also at a company called ala car. Uh huh. And basically, they would just do all this high end rest app and restaurant delivery, and they’d get 20% discount from the restaurant and up charge the customers 20%. So I was doing a 97. And never the light bulb didn’t go off with like, Hey, should this should be a good business model for the rest of the world?
Anthony Zhang 05:19
Yeah, it’s a it’s definitely a problem is all this time that people are still trying to solve today?
Jeff Malec 05:24
So if you hadn’t been there, I kind of come back to like, what year is this? This is in? This is 2013 2013. Okay, so missed the pandemic by bit, right. But imagine if you’d been there, right? If it had been pandemic times, and you that the stars wouldn’t have aligned, you would never would have seen the need,
Anthony Zhang 05:42
when there wouldn’t be a call and experience to even even be able to start it. So timing is definitely everything here.
Jeff Malec 05:50
And so do you. And you mentioned back in high school thinking you were gonna start a business, but what what do you rate that first experience on skill and luck scale?
Anthony Zhang 05:59
I mean, that one was, I think, just a lot of making mistakes and bang my head against the wall. Right? It’s it’s not a business that I think, takes a lot of innovation and technology, right? Food delivery is very technologically like, sort of breakthrough type of business, but it’s more than execution. So it took a lot of learning about operations, learning about how to manage different parties in a marketplace, right? The restaurants want their cut, the consumers want a low price and the delivery people want their cut to and there needs to be something in between all that for the business that I’m running. Yeah. And I’d say between skill and luck, it would, it would probably be about 60. On on the skill side 40 On the left side, because if I didn’t get a chance to be at USC, during that time, like you mentioned, to meet some early investors that believed in me, I think I would have just always thought of it as a side business and continue to run it marked time for my four full years of college, and instead was able to get the encouragement early on to take it full time.
Jeff Malec 07:13
Did your own kind of social network moment, there was someone said, You know what’s cool, not five deliveries 5000 deliveries. So but and I’m coming at it from like, so you knew you wanted to start a business, you knew you wanted to do that as early as what age?
Anthony Zhang 07:32
I mean, probably like when I was in maybe late middle school, early high school, right, you start I think that age you Facebook was blowing up, a lot of these other sorts of billionaires were being minted from, you know, from the internet era early, sort of, like, boom of like web 2.0. And I thought it was really cool, right? I wasn’t, I’m not six, five, I’m gonna be a professional athlete. Yeah, right. And the other thing that I thought was really cool is being being a business owner. And that was really the goal for me. As soon as I started realizing that like, Alright, I’m not going to be a professional tennis player, professional swimmer. Those are two of my passions growing up, but it’s like, what else? Can I do it my life? That’s really cool.
Jeff Malec 08:20
Do you think high schoolers and even as you get to college like that, that’s doable dream? Like, can you compartmentalize it and say, Okay, I want to write catnip. Is it a repeatable process? So okay, all these people coming into college, everyone sort of wants that dream? And then does it become like, do you get taught the right things? Do you get presented with the right opportunities? Or do you just have the drive? Right? Is it a drive thing that makes it go over the? Because not how many people come into USC every year? Right. And 1000? Colin, and yeah, a ton, what small percentage actually ends up creating their own business?
Anthony Zhang 08:55
Yeah, and a lot of you know, a lot are in the business school, too, right? There’s a few 1000 people alone in the business school all wanting to, you know, be in that business world and eventually start a business. And I think it’s really about the tribe, right? There’s a million good ideas out there. Like starting a food delivery app, it’s not hard, you don’t need to be a genius to start it. But you need to be able to, I think have the almost like pain tolerance to go through and make a ton of mistakes and still get up and still keep going and and think that that’s all right, you know, failure is it’s kind of the going to be more of the norm than then the success part of it. Right? It’s a low percentage business to be in. If you’re starting a business, you kind of need to look at the statistics and know that most your businesses are gonna fail.
Jeff Malec 09:49
And what do you wish you’d known then what you know now and wish had been taught to you either in high school or as you got to college to help you succeed there.
Anthony Zhang 09:59
Oh, I think And it was really about really taught in classes because at least in my college experience, a lot of it was around like, case studies, right? And these case studies are really about companies that have made it into the billions, right? Yeah. It doesn’t really talk about the early days. And that zero to one phase. And I think that is what I wish I could have been taught because I was figuring all this stuff out. On my own right, from something very basic to be like, what is what is like the best way to incorporate a company? What’s the best state right? What’s the best legal information? Nobody teaches you that? Right? They don’t they only talk about like, oh, when you have 500 employees? How do you talk about like, employee management, right? So I think really, that zero to one phases is really missing. And that’s why I went to a startup accelerator. In Silicon Valley. It’s alert all
Jeff Malec 10:53
which was at accelerator. It’s called 500. Startups. Got it? And so we have 1847, what’s the one here in Chicago?
Anthony Zhang 11:03
The there’s, there’s a few good ones that are all around the world. And I think the main thing that those accelerators bring, other than just the money is really the network, right? Like, the alumni network of founders that have gone through that accelerator that you can get in touch with as well as the investor network, right? It’s a it’s a strong signal, if you go through a top accelerator, because the investors know that the company and the founders are pre vetted in a sense,
Jeff Malec 11:34
right, and you kind of know, the table stakes. So yeah, how to get the basics done. So that leads me to a new worked with Peter Thiel a little bit or had some interactions with him. Yeah, what do you think about his model of like, right, because basically just said, No one, no college classes teaching any of this? So why not just go straight to the accelerator? Learn all the startup stuff and start the business? If you’re smart enough, why not skip college?
Anthony Zhang 11:57
Yeah. And that’s what he enabled me to do. Right? Yeah. He gave me the teal Fellowship, which gave me the both the I think the sort of level of confidence in being like, hey, you know, being a teal fellow has certain benefits, gives you the ability to have certain doors open, and also the money, right, I was able to get $100,000 of a grant money from him to find myself dropping out, figuring out what was next, which turned out to be the accelerator program, and then also find my way through the accelerator program, and being able to use the money from the accelerator to go fully into the business instead of into my living expenses.
Jeff Malec 12:42
What number of that program really, was that early on in the program?
Anthony Zhang 12:46
That was pretty early on? I mean, yeah, it to fellowship started, I think, I think, like 11 years ago, and I was definitely one of the maybe the first five or six cohorts that
Jeff Malec 12:58
and how many has he done since then, every single
Anthony Zhang 13:00
year, he takes about 20 to 25 students, or high school or college, I think you have to be under 22 to be able to receive it. And the only condition is you can’t be enrolled in school once you accept it.
Jeff Malec 13:15
Got it? Did you ever go back get your degree or anything?
Anthony Zhang 13:19
No, that was a conversation with the parents. Right? Like, what what I got it because they’re like, Wait, this is awesome. But you know, the condition about leaving college where I was very academic in high school, you know, it was, it was there on scholarship, too, and putting all that away, and I kind of position it more as like, Hey, this is just putting it on hold, right, my credits are still there, and everything else is still there. It’s not like I can’t come back to college at a time. So those credits are still on hold for me at USC still to the state. But I don’t, I don’t think I can go back.
Jeff Malec 13:57
It’s just crazy to me, right? Like other people in your shoes are taking on hundreds of 1000s of debt, getting into this huge hole and you’re actually getting paid to go start the business. So it’s like,
Anthony Zhang 14:08
that was my thoughts. Exactly. I’m like, instead of spending my parents money, or being in debt, I’m actually making money to kind of get get to where I want to be anyways. And I know that’s kind of industry specific with being wanting to start a business right. Like you can’t really get without a degree in law or or med school, right that you kind of need to go through all four years. And but a lot of other industries you might not.
Jeff Malec 14:36
Yeah, which who knows, college seems to be sort of broken. I think on all these dead no one can really get into the right schools they want to get into. Yeah,
Anthony Zhang 14:45
it’s so competitive these days. Like I have a younger brother. He’s almost seven years younger than me. And I remember just helping him through the college application process was I was like, Oh my God, I don’t think I would have gotten into you see, like, seven years later because every one’s got president of club ABC. Everyone’s got perfect scores. And you just need to do so much more to stand out these days.
Jeff Malec 15:08
Yeah, we went, my kids are younger 13 and 10. But we went to a talk and that lady and it’s a private school here in Chicago, right? You’re supposed to get into the right schools. She opened the talk with, none of your kids are getting into an Ivy League school. And the parents like some of them might have started crying, their jaws dropped. Like what? And she’s just like, statistically, it’s getting harder and harder. Each Ivy League school could fill their entire freshman incoming class with kids just from Shanghai. Yeah, she was like, there’s that many qualified kids around the world that could fill these classes if the schools wanted. Yeah, so maybe your next venture, you can fix the college process. The intimate like, then, in the pandemic, you’ve got a $40 billion endowment, and you’re laying off cafeteria workers. You’re doing this stuff. It’s just like what? Yeah, kind of like hedge funds shrouded in academia. But I digress. So another thing just on the entrepreneurial side here, how do you avoid it? Maybe you’re too young to have come across this. Yeah. But what I call the entrepreneurial trap, right, like, success, success, success. Maybe the third thing, maybe the fourth thing, you get this recency bias, you get this confirmation bias, like everything I touch is gold. You plow all of your earnings from the others into this next one, and then it goes bust. Ah, yeah. So how do you think about that at all? I’ve seen it in real time with my father. Sorry, dad. Right. He took two companies public one failed. tried some other comps. So he had the entrepreneurial mindset. But, you know, every third fourth one didn’t work. Yeah.
Anthony Zhang 16:47
Huh. I honestly have not spent too much time thinking about that. But it is something where it’s just that you’re you know, you’re not, you’re not Midas, right, like with every single company, you do learn a lot, you can probably get from zero to one or even one to 10 a lot faster. Right? You have employees from your previous network that believe in you, investors that have backed your previous companies that make fundraising a lot easier. And I’ve certainly been able to feel those tailwinds in my third company, but it’s still hard. It’s still so hard. The times are different. The industry is different. And I think you just have to humble yourself and be like, I know nothing. Right? And this is, this is something where, yes, I do have some advantage with my previous companies. But it’s never apples to apples. Right. And I think having that learning mentality can probably help to overcome that sort of, you know, entrepreneurs trap that you’ve mentioned.
Jeff Malec 17:54
So on to the wine onto vino vest. pronounce it correctly. Yeah, so the current ventures of wine investment platform, which is why you’re on this podcast, but so tell us what’s going on there. How it works, give it give us the elevator pitch.
Anthony Zhang 18:13
Yeah, so you know, this helps people diversify their portfolios into wine as an asset class. And traditionally, usually think of wine collecting or wine investing as kind of a hobby for the ultra rich. And that’s, that’s pretty true. Not too many people outside of serious wine collectors, or people with a lot of resources can profitably collect and invest in wind. And it’s very difficult to store, right, it’s very difficult to also value because there’s a lot of information asymmetry out there. And it’s very hard to transact today. Really, it’s just through brokers, auctions, if you’re not in the know, and most of the transactions are still happening offline through handshake deals. So it’s really just this nebulous space where I thought, hey, you’ve got this really old time tested asset, where one’s got some great fundamentals that has helped it grow and in price over the years, but it’s really not something that’s accessible. And especially, I think, with the boom of interest in alternatives that we’ve seen past 1015 years, this should be an option for more, more people who you don’t need to be a wine snob, or you don’t need to be, you know, having 10 million in net worth to be able to you can get started in this thing.
Jeff Malec 19:37
And so do you view it as a tech company, as an investment company as a beverage company? Like what what Lane does it swim in
Anthony Zhang 19:45
there? Yeah, that’s a great question we’ve got in terms of the makeup of our team, it’s about a third of each, right? We’ve got people who are like, deep, deep, deep into the wine industry. That’s been their whole life. Other people who come I’m from Wall Street and come from financial services. And then the other third is people who have built tech companies their entire life. I think at a core though our DNA is using technology to enable greater access. So we do consider ourselves a tech company, but we are, you know, tackling, you know, an asset that can also be a beverage and you know, many people enjoy as
Jeff Malec 20:24
well, with with valuations, right? Now, you might want to get rid of the tech, tech label go coated consumer staples, we’ll get into that later. And so I can go on, I can browse different ones, or you can set up a portfolio for me, how does that piece of it work?
Anthony Zhang 20:42
Yeah, so So both options, and most folks offer the setup portfolio option, because they don’t know what to invest in, right, or they want just a more hands off, easy to manage experience. And we can do that for them with our managed portfolios. And then we’ve got her other sort of, you know, hands on trader type folks who want to be able to, you know, browse the available trading pairs that we have able to set their own bids and offers and things and build a more actively managed portfolio. And our marketplace allows them to do that as well. And the common thread is that we have transparent pricing, we keep all of our wine in in our custody and in third party storage facilities all around the world. So that part is taken care of. And we also ensure and authenticate everything. So we really tried to decrease the barrier of a lot of the things that someone would usually need before they got started. And make it as seamless as possible where anybody on their phone could set up in five minutes and start trading and buying why.
Jeff Malec 21:45
And what if I’m in full disclosure, I’m not a huge wine guy, I’m more of a Bud Light guy. But what if I want to taste the wine, I want to get the experience, right? It feels like it starts to disconnect from the investor who’s like at the wine shows, right? Buying the cases, the wine, storing it himself, so takes away a lot of that hassle, but takes away some of the fun, I guess for lack of a better word of of having the experience of wine investing.
Anthony Zhang 22:14
I think for hobbyists, right? They, they enjoy the time it takes, right they like going to the trade shows or they like, you know, kind of rummaging around for the best deal at auctions. Right? And, you know, that’s, I think that that type of person is still going to exist. But the the people that we find, are attracted most or platform are not those people, right? They’re, they’re not the white guys, right? They’re people like you who are like, hey, maybe you think it’s an interesting asset class, and you want to test it out to get some exposure, but you’re not going to spend 10s of hours at, you know, HUD auctions or trade shows to get your favorite ball because you don’t even know or you don’t really care, right? You’re just looking for the best return not the best tasting wine.
Jeff Malec 22:58
And are you starting? Are you getting pushback from those hobbyists or others who, right, because now you have a person at the auction house, right at those auctions, sniffing out and doing all that and buying on behalf of these other groups who might not have the same economic incentives? Right. So what does that look like? Do you now competing with those groups?
Anthony Zhang 23:17
Yeah, because we are now one of the largest wine buyers in America. Yeah, we certainly do compete with those groups. And I think with with any change, where there’s always pushback, like hey, like, you know, you’re, you know, you’re creating this new avenue, where you’re taking something that I used to enjoy to drink, or that I wanted to flip myself and you know, opening it to a larger market. So in a way for them to buy, it becomes more difficult, but when they sell it also becomes a lot easier, right? Because more potential buyers. So there’s always two sides of the coin were hated, oh, you love it. We are just creating more participants in the market and creating also more transparency into the pricing so that these these hobbyists or collectors, they don’t need to spend hours price checking five different sites, they can just look at our site and know that this is the more transparent global pricing.
Jeff Malec 24:16
And what did you know about wine before you started? Were you a big wine connoisseur?
Anthony Zhang 24:21
I wouldn’t say connoisseur, I would definitely like to drink wine. And I certainly appreciated the value of older wines, but I always thought it was really cool that like this bottle that was you know, from 1980s or 1970s was still around today. And there were only maybe 100 left in circulation because most of its already been consumed, right? That sort of value. And appreciation over time was was always really interesting to me. But I never really spent the time looking into the numbers behind it right. I knew why and appreciates with age. I just didn’t know how much Until a few years ago, I was reading through a Wall Street Journal article talking about luxury assets. And, you know, top of that list like wine, whiskey art, luxury watches, classic cars, things like that.
Jeff Malec 25:12
I think that’s the same article, we wrote a piece of a negative piece on saying, Come on, man. But good.
Anthony Zhang 25:18
Yeah. And and a lot of it can seem pretty inconceivable because they’re like, you know, broken bags have like a 30%, year over year return to like, how many broken bags? Can you really get at scale? Right? So I totally can see the counter argument. But that’s kind of where the light bulb moment happened for me where I was like, well, this could be pretty cool to maybe track my wine collection a little bit better, because I was more just being like, alright, I’ll buy 10 cases, flip five in the future, and hopefully, I make enough profit to, you know, to kind of subsidize my consumption. And it kind of turned out to be, you know, best.
Jeff Malec 25:57
Another skill versus luck conversation, but we’ll leave them. So you see, the value rises over time. But besides the fact that it has what or do you have fundamental factors for why it does?
Anthony Zhang 26:08
Yeah, I think a few things is other than the supply and demand, right, there’s just, you can go back in time and make more old wine, and you can’t really speed up the aging process. And then on the demand side, global consumption for wine, especially on the high end, which is usually the stuff that does have limited supply has just been steadily increasing around four or 5% a year for the last 510 years and is projected to also increase at similar even heightened rates.
Jeff Malec 26:40
So for that, Chinese millionaires buyers entering our space.
Anthony Zhang 26:44
Yeah, it’s a lot of wealthier Millennials from Asia, that’s where we see the fastest growing segment for consumption. You the United States still remains a top consuming country of luxury wines, but I think in the next few years, it’ll probably be surpassed by China.
Jeff Malec 27:01
And that demand from China is all over the world are mostly us. What’s that split look like?
Anthony Zhang 27:07
Yeah, I mean, it’s, it’s right now, still, you know, still mostly us that we’re seeing on our platform, at least. But I think it’s going to be more globally diversified. Most people just don’t even know that line investing, you know, as a service is actually in existence, right? Or they might even know that you can invest in wine. Because it’s been so I think, you know, so really, like, propped up as like a really rich person’s thing to do.
Jeff Malec 27:38
Yeah. And do you have any fears is the wrong word. But right, I’m thinking of like Robinhood democratizing investing, and it kind of has turned out over the last year of maybe they made it too easy to invest in things that are just for sophisticated people.
Anthony Zhang 27:52
I think definitely, you know, when you’re throwing out leverage, you know, that’s when things start to get dangerous, right. And the volatility of stock market is certainly something that there needs to be a lot more education and preparation around. I think Robin Hood has tried to kind of backtrack and create more educational resources or limits before people go into that type of investing. So I do think education is a big part of making this space more accessible, right? We don’t just make it easy, right? We can totally just make a Robinhood clone and make it almost like gambling. But we want people to know what they’re investing in why they’re investing in it, both the pros and cons of the asset class and the specific region or a specific winery they’re investing in and give them all that information. Of course, it’s always up to the investor on if they want to consume that information or not, and use it to guide the decisions. But we want to make it available and right now, it’s not
Jeff Malec 28:55
the end. Is there any sense of leverage or can I leverage up online investment?
Anthony Zhang 29:02
Jeff Malec 29:04
That’s stage two.
Anthony Zhang 29:05
Yeah. I’m sure it will happen in the future right with any market as it gets more developed and larger professional traders and investors come in, they always want to see how they can do more of their money. Right. So it’s,
Jeff Malec 29:18
well there are wine futures, but not futures like I think a futures but what a wine futures those are buying it crap before it’s been harvested.
Anthony Zhang 29:27
Yeah, exactly. So that’s more of just like a pre sale, right? It’s not futures in the way that most people think of it. But that’s also I think, going to be interesting as well, because wine is a pretty long term, forward looking asset class where, you know, the harvest of right now 2022 We’re getting data on an on the ground with satellite data, we can be able to form a pretty good opinion on what it’s going to do. But that wind won’t be released until 2023 2024. So, it is an asset class that does lend Well to developing the futures market around,
Jeff Malec 30:03
let’s do it. We know some people at the CME let’s get that movement. Yeah. And create the index. Right?
Anthony Zhang 30:09
Isn’t this happening? Right? Right here on the podcast?
Jeff Malec 30:13
Right? You’ll design the index, we get the CME to do futures on that index. And then those producers can hedge their risk I love you mentioned the satellite imagery, all that stuff. What are your thoughts? The climate change the fires and nap about like all that stuff? For lack of a better term? Does that just decrease supply? It almost makes the investment could be better? Or does it threaten the long term ability of it?
Anthony Zhang 30:48
I would say it’s both a threat and an opportunity. Right? The threat is, you know, of course, because of climate change on the fires that we’re seeing in a lot of key wine growing regions, it’s becoming pretty tough to be able to have consistent supply. And it’s also leading to consistently lower yields. Because you’re getting frost, sometimes that’s destroying the crop, or you’re getting, you know, intense heat waves that are then destroying the crop. And, you know, with them, like they’re just trying to squeeze as much juice out of the grape as possible. And even though there’s more demand, they physically can’t make more. And that’s leading to higher prices. But it’s also leading to a lot of these wineries having to search on being like, hey, is this plot of land going to be able to still produce the same quality of grapes in 1015 years. So that’s where I think the opportunity starts arising is that regions that previously nobody thought of as suitable for wine growing, like, you know, northern parts of Germany, or Austria, or even Norway is starting to grow grapes. And a lot of the Bordeaux winemakers are actually buying up plots in Norway as kind of like, you know, their sort of development centers to be like, hey, is this a place where I could move, move for operations in the next 2025 years,
Jeff Malec 32:12
so crazy, and like 20%, and always above the Arctic Circle right now, like what?
Anthony Zhang 32:17
Like, oh, my God, and even Canada now is making wine. And, you know, 1015 years ago, Oregon was kind of put on the map with a lot of Burgundy and winemakers buying up a ton of land there. So places that people didn’t really think of, or maybe thought it was too cold to grow good wine are now becoming a potential sort of areas of development.
Jeff Malec 32:40
And what what do you see in turn, right, we do a lot in the ag space in terms of helping farmers hedge their corn and soybeans, cotton, things like that. And I’m always arguing right prices, you think the world’s growing crazily we need more food, we need more all of that. But the technology they’re putting on to those fields, right? You talked about satellite imagery. They have like robotic fertilizer and drone sprays and right, it’s just amazing. Every year, they come up with new technology to increase that yield. So right that they’re always saying demand is going to be record this year, price is going to go up. Oh, they match the demand with increased supply. So I guess is is there technology like that in the wine producing? Or is it kind of passe to be like, No, we don’t want to overly technologized the growing of it, and the producing of it, because it loses a little bit of its luster.
Anthony Zhang 33:33
Yeah, it’s definitely the latter. Because I think because of how like traditional this industry is, and because of the long aging process of these wines, a lot of them are against technology. And instead of using fertilizer, or using sort of additional water sources and things like that, they’re actually going back to more sustainable growing practices going back to being organic or even biodynamic, in some cases. And that’s also another way to be able to have a more sustainable growing future. So we’re seeing a lot of the top top estates go back, you know, maybe there was a phase in the, you know, in the 90s, and 2000s, where they were embracing it. Now, it’s kind of a drawback to go back to the way things used to be. And I think for a couple reasons, is that a, they feel like that is a more sustainable future. But B it also impacts the taste of the wine. And with consumers, I think being more and more conscious about how their food gets to the table. That’s another consideration as well.
Jeff Malec 34:42
Yeah, it’s super interesting, right? It’s like not, it’s a commodity, but it’s not just a commodity. It has this brand and that tastes, right. So you kind of have those two competing forces of like, how do we produce more of this commodity? It sounds like you’re saying for the top of states, they’ll just be like, Well, if we don’t get the yield we want we’ll just end He’s our price exec our brand is Ken can withhold
Anthony Zhang 35:03
that. Yeah, exactly. And for most one, though, like the bulk line, you know, especially most of the stuff that is put into, I think the more mass produced brands, they are, to your point, embracing a lot of that technology to kind of match supply and demand. But the top is states like a lot of these Napa Valley ones during the fires of 2020. They decided not to make wine at all. They’re like, hey, the smoke touches the grapes. We’re not going to compromise the brand this year. And what does that do that actually increases the price of all their previous vintages of wines, because the consumers still want their wine, they’re like, oh, we can’t get to 2020 Let’s buy up all the 2019 and 2018 and 27. So
Jeff Malec 35:45
there’s that doesn’t necessarily help the vineyard, right, because they might have already sold it on so it helps the investors but not necessarily the
Anthony Zhang 35:51
the secondary market. But a lot of vineyards, they just hold back some of their supply ways for for rainy days like that, right? They know they can inject more supply into the market, whatever, and, and kind of command whatever the secondary market price is.
Jeff Malec 36:08
So let’s go back, I want to read a piece of a blog post I wrote, I think it was that same article you’re mentioning so back in 2016. wrote a blog post called Bloomberg vomits alternatives. Here’s the paragraph, we get it looking at exotic property or ideas is a lot more fun to read about than say risk adjusted ratios. But to compare investing in wind and fast cars to private equity and hedge funds seems a bit off the mark to us. For one, there’s perhaps 1 billion worth of capacity in some of the exotic investments put up on the page. While some of the hedge funds listed manage many billions. It’s not quite fair to compare the return on a foreign dollar stamp or 1000. On bottled one with the trillions invested in the hedge fund and private equity space. One is attainable to a handful of people in the world the other day, millions. Sort of like comparing the Yankees win loss record to fill the power Taylor’s darts record. Fill the power Taylor there was a link in the blog. He’s like a famous English dart player, right? So he’s got like some unbelievable he’s never been beaten. Yeah. 50 matches in a row, but like, okay, is that the same as the Yankees winning 50 games? So anyway, just what what are your thoughts on that? What did I get? Right? What did I get wrong? It was back in 2016?
Anthony Zhang 37:20
Yeah, I think the main point is that it’s not apples to apples. Right. There’s a illiquidity aspect to these, these alternatives, that is certainly something that you can’t discount. And it’s a much smaller market, right, it’s a market with a lot less participants. And because of that, there’s both an opportunity to expand the market, it’s, you know, sometimes it’s less participants, because that’s just how many the market can take, and other cases. And I think for most alternatives, this does still apply, they have room to grow. But the alternative market is small, because of certain limiting factors that have been put in place, right for, for wine, it’s like not everybody can own a wine cellar. You know, not everyone knew they could invest, or maybe not everybody has the, you know, 25k to drop on starting up for a portfolio, right? So if you decrease barriers, they can be more participants. But that’s another thing is like, alright, well, if it becomes more and more liquid, and there are more participants, that also invites some additional concerns of hey, like, there’s there needs to be additional regulation, right? How big can this market actually grow? Right? Especially with something like wine where you cannot actually put more supply into the market, even if you want it to? There are certain limiting factors and the rate that which grows, which is, in my mind can be a good thing, right? It does, it means that there cannot be like insane hyper growth in industry that could be artificially inflated, but in other ways that it’s not going to be like the sexiest, like booming industry like like crypto all of a sudden, right? It’s not gonna be
Jeff Malec 39:02
right, it’s almost right. If we got two thoughts. One, if I’m like, Cool, let’s do an ETF together, and we get 5 billion in the ETF that’s investing in one, right, is that too much? What’s what’s too much that would flood the market and overwhelm the the asset class?
Anthony Zhang 39:17
Yeah. So today, you know, when we look at the wine market, if you don’t have all the primary sales, it’s about $350 billion a year, but the only the top 10 15% of it has secondary market value. So that top, you know, $50 billion a year. So say if we wanted to create a $5 billion ETF, it certainly would, you know, be a pretty big factor into the market. But building up over time, or if you take, you know, vintages from like the previous 10 years as well, and kind of blend it in I think that would be the strategy that we would take if we were to do something like that.
Jeff Malec 39:58
Got it and it wouldn’t get so right You can see a future where it’s fate. So 500 billion is invested into wine, right? Some big pensions, say they want to put five 10% into it. Now it’s affecting prices, like at the restaurants at the right, the hobbyist would almost get pushed out of the business. Yeah. Or not out of the business of out of the consuming it. And then do you lose the whole point of it of it
Anthony Zhang 40:21
cuz someone’s got to drink it at the end of the day? Right? Someone’s
Jeff Malec 40:23
got to drink it to a sign event? Well, I guess that’s a great question. Does someone have to drink it to assign a value to it? Like, how does it get its value? So a lot of it is old vineyards that’s been tasted that’s been has a reputation. For the new ones, how does that work? It hasn’t got a rating or what?
Anthony Zhang 40:41
Yeah, so we really do our mark to market buy real time sales. So if a wine gets sold for X price, this is the price we’re gonna see. Or, you know, if it doesn’t have recent trade prices, we looked at the bid offer spread as well. So those are two ways that we do our valuation. But I think when we are looking at if wine does need to be consumed to have value, I think that answer is yes. Right? Because, you know, someone needs to have that ending utility of it to, for that wine to like be taken out of the supply. So that’s, that’s what I really believe in.
Jeff Malec 41:25
Thinking of it needs to have a utility, my mind went to crypto is the why didn’t you like tokenize this or do some sort of crypto wrapper around it? I don’t think it needs to be. That’s fine. Well, that hasn’t stopped the rest of the world.
Anthony Zhang 41:41
Yeah, yeah. There’s there’s blockchain everything now. Right? And I think, sure, it can be it can be useful to some and I think it would help, you know, the 10s of millions or hundreds of millions of people who have made a ton of money in crypto over these past few years, make it easier for them to come into our market. So I do see some benefits for for our business. And, you know, it’s definitely not out of the question for us. But I think the core user experience, right we we are linking a sort of digital ownership certificate of wine that you’re buying on our platform with something physical that is stored in a warehouse somewhere. So that is, that is something that, too, if we wanted to go like full trustless, you know, you don’t believe in being of us is telling you this, you don’t you don’t believe in our terms of service, right to have it on the chain and have it on the chain. Right? That’s for the extreme skeptic. But
Jeff Malec 42:38
it’s super refreshing to hear someone actually say out loud, doesn’t really need to be at the
Anthony Zhang 42:44
right. Time and crypto for three years before this. So I’m Yeah, I couldn’t be you know, and I still am very biased in some other ways, too.
Jeff Malec 42:55
So mentioning that let’s pick your brain a little bit. Did you hear SPF on the odd lots pod talking, he’s sort of calling out crypto as a Ponzi in a nice way, which is amazing for him to hear. And then he wants the SEC to kind of bless his exchange and everything. So I think I had a question there somewhere. But what’s, where do you see the opportunities where you see the risks? Why did you leave it to do this?
Anthony Zhang 43:24
Yeah, I mean, I still have a lot of my personal allocations in crypto. Our company, actually, or the last company worked at block folio actually got acquired by FTX. Yeah. So I’m also a shareholder there
Jeff Malec 43:38
and get some meetings with Sam. I’ve never met
Anthony Zhang 43:41
sound person No, but have definitely met him at conferences and conference calls. Prior to that. That’s when
Jeff Malec 43:49
you’re big right when they buy your company and the founders don’t ever meet. Yeah.
Anthony Zhang 43:54
Yeah. I mean, this was back in we were doing talking about deal in late 2019. And no one knew about FTX. We’re like, what this like, Hong Kong company that seems to be growing really fast, and like boom, like, two years later, everyone knows about them. Right. And I think they’ve done an amazing job on kind of reaching that kind of consumer tipping point, as well. I think for me, right, like, being in crypto also exposed me to, I think a lot of the parallels between wine and crypto, right? They’re both have very, very much are lacking and user experience only, like, you know, only kind of like geeks or experts or someone who’s very motivated can like be a user. Certainly our custody issues both in crypto and in wine, even though one is fully digital and one is physical. And then in the early days, there was a lot of there’s a lot of pricing in lack of transparency, right. Sam made his fortune on an arbitrage opportunity between Bitcoin prices in Korea, Japan and the US right If there’s certainly a huge arbitrage opportunity, similarly in Japan and Korea in all of Asia, versus European prices versus American prices, so we just saw my co founder, I just saw a lot of parallels. And we’re like, Hey, this is an awesome time to start a company in this space, because we saw that sort of tailwind of alternatives. And I think crypto also helped us because we realized that if you’re crazy enough to get this many people in crypto, wind is a concept that’s a lot easier to understand, we can get a lot more people into it. And I think the main reason for leaving cryptos was we we both had an itch to start a company again, we both been founders in the past, and, you know, we knew that that’s always our, that’s always the path that we’re gonna go back to. Right. It’s, it’s great to be able to learn and, and build a company under another founders vision. And I think all founders go through those phases, right? It’s exhausting to build a company, and then go right to into building another one. But that’s, that’s always our path. So we knew it was gonna happen sooner or later.
Jeff Malec 46:07
I want to come back to some of that founder stuff, but NF Ts. So were you doing NF TS at your? What was it called? Again? Black blockfolio? blockfolio? Yeah, so we were that predates the
Anthony Zhang 46:19
pricing tracking company. So we help people price their their tokens on different exchanges and track them. I mean, we were there during the first NFT boom of crypto kitties. I still remember, I still own a few crypto kitties being like, Oh my God, how are how are these cats worth? Like this might want to my crypto kitties was worth 50k At one point, I’m like, What in the world? But I think I never really understood the application of it, how it can help to, I think enhanced the real world until this most recent boom, right now people are linking NF T’s to ticket sales and a T is a real world experiences or NF T’s like artists royalties, or linking them to wine even right. To me that represents a really exciting opportunity for people to just have more transparency into who was their most engaged fan or, or customer?
Jeff Malec 47:14
How do you How are they linking it to one?
Anthony Zhang 47:17
I think they’re just doing it more. So as a club membership kind of thing. Yeah, like a wine club membership. You know, if you’re an NFT holder, you get free tastings at the winery and stuff like that. And I think the cool part of that is, if you are an entity holder of a membership, you know who those other like minded people are, right? I think that’s the cool thing that it’s been able to, really organically encourages that sort of community feeling. Right? If you’re one of the top 1000 members, you probably want to meet other people. And you can know for sure, online like, Hey, we’re both like minded, we both own the same thing, right? We have common interest, and it’s more and more people are spending their time online and tying their digital identity online. That is, I think, a really cool thing that I can help people do.
Jeff Malec 48:05
Yeah, what what’s that crypto kitty worth out?
Anthony Zhang 48:07
Only probably a few 1000 I haven’t haven’t sold it. So I got that That ship has sailed for me. So I’m just gonna keep it as almost like a momento of like, Hey, I was I was there during the first vote and I’ll tell them like,
Jeff Malec 48:22
maybe it’d be like a fine line one day, okay, this is a vintage 2018
Anthony Zhang 48:26
Crypto aged aged crypto kitty. And then my grandkids be like what in the world is a crypto kitty?
Jeff Malec 48:35
So back to being a founder. Selling businesses, private equity valuations like how, how are you seeing in your network and running a private company? Are valuations getting hammered along with NASDAQ and tech stocks and all the publicly traded stuff? Have any insight on it?
Anthony Zhang 48:53
Yeah, I think the interest rates have definitely helped to cut down the valuation multiples. Certainly getting pretty frothy. And we’ve seen already a lot of the pre IPO or later stage growth stage. Private companies get their valuations cut. A lot more of an emphasis back to fundamentals. Right. We’re not valuing our company on our revenues next year. Right. It’s our revenues now. Right. And I think that is something that investors are certainly having a lot more discipline toward. Which I think for companies that have always focused on fundamentals is great, right now there’s a less frothy playing field and you can really make the metrics that actually matter shine. And then for a lot of other companies, you’ve got to start extending your runway, right? Maybe hire 50% Less people and try to try to be creative. And I think our company we’re still relatively early stage right? We’re less than three years old, and I think next time we go out to fundraise later in the year you know, we may see some A difference in investor sentiment, but it’s already something that, you know, we’ve been preparing for and has kind of always focused on our revenues, and being, you know, being good stewards over a runway as well. I feel good about where our company is heading, despite, I think, a lot tougher the funding market that’s off the head.
Jeff Malec 50:22
And you do your own venture and angel investing, right? Yeah,
Anthony Zhang 50:26
I also angel investment side.
Jeff Malec 50:28
So what what do you think there? What’s kind of scary about the current environment for you in that you can angel investments,
Anthony Zhang 50:34
like, you know, I’m doing pre seed seed stuff, and sometimes Series A, there’s really no difference yet in that early stage, because it’s still, so a lottery ticket. So it’s really just still a lottery ticket, right? Like, you’re just betting on the founder, they’re really doing nothing. And it’s something that we are, you know, we’re just like, okay, cool. I believe, whether it’s a 10 million valuation or a 15 million valuation, this is still gonna be a billion dollar company. So what does it really matter? You’re talking like companies that are already worth hundreds of millions, that’s really going to matter because your your expected return multiples a lot less.
Jeff Malec 51:15
Moving on the you had a nice thread, I don’t know how long ago was a couple weeks ago or months ago. Thread you put out trying to teach people how to interact with paralyzed or wheelchair bound people. For those of you listening or don’t know about your accident, you were paralyzed from the neck down, correct?
Anthony Zhang 51:35
Yeah, so that was a had a spinal cord injury that left me a quadriplegic about. See, now it’s been six years,
Jeff Malec 51:44
six years. But you’re moving your arms around now. So you’ve, you’ve made great strides, right?
Anthony Zhang 51:50
I’ve definitely made some good progress, I can now independently roll my own wheelchair around and, you know, have been able to relearn a lot of tasks that, you know, used to be just completely subconscious to me. So, you know, still need somebody to help a lot of things. But that’s a big thing I worked, where it in my personal life is just becoming more independent, being able to get back to doing things that I love or find creative ways to, to learn new hobbies.
Jeff Malec 52:18
Yeah, but take us through what you put in that thread of what what do people know, how should we be better at what we know about the handicapped people, the world? And how should we treat them better?
Anthony Zhang 52:30
Yeah, I think, you know, the main kind of, kind of pointed my thread is just that. I, you know, before I became paralyzed, I never even noticed people in wheelchairs, right. I didn’t even know about all of the things that happen below the surface, which just looks like someone who can’t move their legs. But it’s so much more than that. Right? There’s, you know, there’s a lot of things that you’re restricted from doing right, just because they’re near the world is not meant for meant to be built for people in wheelchairs, right. So I think, really just thinking about accessibility, thinking about, you know, the way that you you know, even talk or address someone, like a lot of times, with my wife at a restaurant, or, you know, checking out a counter, like, they won’t even talk to me, they’ll just, like, look at my wife and be like, what does he want type of thing. I’m like, Hey, so I can talk. I’m not brain dead, right? So it’s small things like that, that, you know, just still treat them like people like, like, hold people, because it takes a lot more effort to even go outside into the real world again, right? A lot of people will deal with, you know, image issues, or, you know, it’s just physically tougher to, you know, unpack your wheelchair, get in the car, then repack it and get out. Right, and, you know, just just kind of noticing that and just kind of asking for help before, just like, offering it a lot of times, I’ll just feel somebody like behind me pushing my wheelchair. I’m like, holy crap, who the hell are you? Right? Like, yeah, things like that, that are just like small things that I know that it’s just because of the lack of experience and education that is happening. It’s not people being mean, right. People are not just inherently like that. But those are, I think, sort of the few things that, you know, just to be a little bit more aware about.
Jeff Malec 54:26
Yeah, well, hats off to you. I would have I don’t know how I would have reacted, but you just took it on, kept running the businesses started two businesses since then. So hats off to you. And what’s the what’s the outlook look like long term.
Anthony Zhang 54:43
So I mean, spinal cord injuries, especially things that affect your nervous system are, are still largely unsolved. The nerves are something that either don’t regrow at all or regrow very, very slowly. And I think there are a lot A lot of promising technologies out there people are, you know, Elon Musk, right? He’s building neural link. That’s the most high profile example of it. But a lot of people are building things from exoskeletons that can help you move like an Ironman suit to, you know, sort of these sort of like, neuro stimulators, which really act as bridges. Because if you think of your spinal cord as like a highway, right, it’s like, a highway is broken, right? Now there’s a, there’s a gap in the road. So you got to build a bridge around it, if if the bridge isn’t if the highway is not going to repair itself, right. So a lot of promising studies on implants that can be put into, you know, people with my sort of injury, to kind of help them relearn those neural pathways. So I think, in the next five to 10 years, we’ll have some more commercial applications for a lot of this stuff, where we start to see really exciting results are still in the clinical stage. And, you know, it’s only been able to impact, you know, a few people’s lives really positively to this stage.
Jeff Malec 56:03
And what are your thoughts have we read? Thank God, you’re in this world versus 20 years ago, or even 10 years ago? Right? Like, is the world making progress in terms of handicap accessible? And all that, especially in California? I’m sure,
Anthony Zhang 56:18
yeah. I think even in the US, it’s really great. Because we have the ADA, the Americans with Disabilities Act, that doesn’t really exist anywhere else, I found that I found that out the hard way, you know, I’ve been traveling outside of the country and realize that like, wow, right, there’s either, you know, the infrastructure, which was built so long ago, that it can’t, you know, be accessible, or it’d be really hard to be accessible, or there’s just no sort of advocacy for that type of stuff. So in the US is definitely a lot greater. And then in other countries, I think it’s, there’s still a ways to go.
Jeff Malec 57:02
Alright, we’re gonna finish up with our what would you invest in? Bit? So I have two thoughts on this, either, what would you invest in just solely focused on wine? Or I like that you’re in some venture and do some hedge funds and whatnot, as well?
Anthony Zhang 57:18
I have not been LPS in any sort of hedge funds before.
Jeff Malec 57:23
Got it? All right. So what would you prefer? What would you invest in broadly in the whole world or just on the wind side?
Anthony Zhang 57:30
We can do both. We’ll take both.
Jeff Malec 57:32
Alright, so we’ll just jump in. So you’ve got $1,000? Where are you putting it?
Anthony Zhang 57:38
Was just $1,000? I think I would put like, into very liquid stuff, right? Because I’m assuming I might need it. So probably mostly, mostly stocks or crypto right now.
Jeff Malec 57:51
Got it. So you’re not you’re not a crazy crypto, like 1000. All Aetherium. All in
Anthony Zhang 57:57
all in on the next crypto kitty,
Jeff Malec 57:58
right? lottery ticket. I like that we’ll do assets first, then we’ll circle back to it. So now you go up to 100k. What are you looking at there?
Anthony Zhang 58:08
100k. Definitely want some like passive income stuff, too. So maybe that’s like 10 to 20% of the portfolio, whether it’d be real estate or some sort of loan, then that can kind of have like a base for me to just be able to like invest more on and then I might start diversifying a little bit more, right, I think with 100,000, definitely would want to put maybe two to 5% into wine, something long term that I won’t be taken out for a while, and then put the rest given that I am pretty young, I’m 27 into into listings that would be able to earn higher growth like like steel stocks and crypto.
Jeff Malec 58:44
Okay, on to a million.
Anthony Zhang 58:47
Oh million. All right. I think I would go five to 10% long term. So wine, I would go about 20 to 30% Crypto, and then I would definitely buy or have more sort of like passive income opportunities. I think that you know, whether it be like buying buying a business that can get me passive yield, or more into the sort of, you know, rental property space, something like that, and just like almost subsidize a lot of my daily living costs, so I don’t really need to focus on that. And then rest into equities.
Jeff Malec 59:25
Do you? Do you view yield farming as yield in that regard? Or is it still crypto and has all the crypto risk?
Anthony Zhang 59:34
Yeah, how does all the crypto at risk because like, you know, it could be one day you’re getting, you know, 700% The next day, all the liquidity is gone and you’re stuck with the back right. So yeah, that’s something that I think requires a much more active eye. And just for me, like I, I have done that before for a few months, and sure it made great returns, but it also took a toll on my health, just like being able to check that so frequently. So I think at this stage in my life, I wouldn’t want to do that. It’s just too hands on for me.
Jeff Malec 1:00:06
And now 100 million 100 million when we’re done.
Anthony Zhang 1:00:11
All right, I mean, hope to be able to get to this point one day.
Jeff Malec 1:00:15
So thank you on your way. Yeah, I
Anthony Zhang 1:00:17
think a lot of it would be around like wealth preservation at this point, right. It’s about, you know, what things can I invest in that long term for the next generation of my kids, things that would be able to yield tax benefits. And, you know, I really don’t need the rest of it that much to like, putting the rest of the thing is that I can just donate donor advised funds and things like that. I think that would be like the bulk of
Jeff Malec 1:00:41
- Got, so the risk profile would come way down. Yeah, it really would. Which is crazy, right? When you see these guys who, right go from five to 50 billion, or Elon Musk gets cashed out on stripe and says, Alright, I’m going to do these things, right? They’ve just have it screw of like, I’m going all in to get the next billion. Yeah. Next Billion. All right, now we’re now on to the wine. So $1,000 wine, what am I looking at?
Anthony Zhang 1:01:10
Yeah, $1,000. I think, you know, there’s really no point in diversifying at that point, you just want to have a concentrated portfolio. So I will just look at a region that I believe in, say, right now, I definitely believe in Napa Valley, just because of all the shortages we’ve been seeing. And then champagne, so probably just like two nice bottles $500 each?
Jeff Malec 1:01:29
And how does, how does it work? We could ask, it’s really, if I have $1,000? Can I get like fractional ownership things? Or no? Or you get?
Anthony Zhang 1:01:38
Yeah, you get the entire bottle. So for fractional shares,
Jeff Malec 1:01:42
that’s another idea. We’re going to do derivatives options, fractional shares.
Anthony Zhang 1:01:47
All for more liquidity in the market. That’ll help.
Jeff Malec 1:01:50
Yeah. All right. 100k. For my wine, hey, yeah, that’s,
Anthony Zhang 1:01:55
you know, a lot of folks like this. So I would say about 30%, into Bordeaux, which is, I would say, like your equivalent of like, blue chip, you know, large cap stocks is a very stable region that has a pretty, pretty low volatility return profile. And then I would go another 30% into burgundy, even though it is more stable, the return profile is much higher. last two years, it’s been around 20% annualized. And it’s much smaller quantities, so 30k, into burgundy. And then with the rest of the 40k, it’d be pretty diversified and be like, you know, 10 to 20%, into champagne 10 to 20% into Tuscany, and then Napa, so those would be like, the five main areas that I would invest in.
Jeff Malec 1:02:43
And Champagne is part of the one portfolio.
Anthony Zhang 1:02:46
Yeah, we would still ages right. It’s still produced the same way. And yeah, still made from grapes at the end of the day.
Jeff Malec 1:02:55
All right. And the million
Anthony Zhang 1:02:58
Million Dollar Portfolio, I wouldn’t really do it to do differently from the 100k. Except for there are just different bottles of different price points, that would be really like not feasible for some with 100k. Right, there’s a few bottles, you know, even champagne bottles or burgundy bottles that are over $10,000 A bottle, right? I wouldn’t, I wouldn’t do a 10k bottle in 100k portfolio, but at a million you could be able to reach pretty much any any bottle of wine. So we would put some of those more like unicorn high priced bottles in there. Because even though they are much more expensive, like the demand for those are, you know, they get traded every day on the secondary.
Jeff Malec 1:03:42
And now 100 million too much.
Anthony Zhang 1:03:45
Now, not too much. I mean, not too much. We’re managing that already. So that’s something that we think that for a
Jeff Malec 1:03:53
single client or across the
Anthony Zhang 1:03:55
US, yeah. If you want to be my 100 million dollar client, I’ll gladly take that. But But yeah, I think I think I don’t think it’d be very different than the 100 the million dollar strategy, but I’d also go into futures, right. So going into buying, buying up large quantities of harvests that we do believe in, assuming this client also has a longer term trajectory. So buying a lot more futures, they’ll set you up because you’re you’re pretty much just getting something that’s at a guaranteed discount to when it releases.
Jeff Malec 1:04:29
And what’s that? I was gonna use Elon Musk, but he probably doesn’t even have a wine cellar, right. Oh, he is a pretty baller wine cellar. Okay, like so what’s the value of his wine cellar?
Anthony Zhang 1:04:41
I don’t think they’ve published that. But I think like he’s got, you know, 6000 to 8000 bottles. That was like during, probably like, last time I think I heard about his wine cellar was back in 2018. So it’s probably a lot bigger now.
Jeff Malec 1:04:57
Right, right. But what’s the view any idea on the bat? Oh, yeah, that probably like two to $3 million. So that’s it. So it’s, it’d be super odd for someone to have a seller worth 10s of millions of dollars.
Anthony Zhang 1:05:08
Yeah, very, like, if it’s if it’s like, oh, yeah, my number of bottles would be Yeah, you gotta be like really into line. Right? Or, or you’re managing, you know, other people’s money, right. So yeah, if you’re a private collector with over 5 million, you’re probably getting like the top like 5% of collectors worldwide. Got it. Brothers, for example, I think they have like, a $10 million wine cellar. Who’s that? The Koch brothers are
Jeff Malec 1:05:40
awesome. That’s all I got. You
Anthony Zhang 1:05:42
got any other thoughts? No, I really enjoyed this. This was fun. So yeah,
Jeff Malec 1:05:45
thank you. I’ll come visit. Next time. I’m in Orange County.
Anthony Zhang 1:05:49
All right, we will la open bottle of wine.
Jeff Malec 1:05:52
Yes, definitely. I know. I screwed it up. I should have when we were talking about like, alright, send send a bottle to me. So we can have a bottle during the pod container.
Anthony Zhang 1:06:02
At nighttime, this is a little too early for exactly
Jeff Malec 1:06:07
what I’ll finish it with leave me with three things being the bud like leave me with three things I should know about one that I should memorize and look to lock into memory for for my wine future.
Anthony Zhang 1:06:19
For your wine future? I think
Jeff Malec 1:06:23
I can impress my wife with Yeah,
Anthony Zhang 1:06:24
that’s a good one. That’s I think a more practical one, I think when he looking for wine pairings, right? I think that’s something that a lot of people have. probably have a lot of anxiety with. When you look looking at a wine list. You’re at dinner like someone asked like, what do you like any wine? And you’re like, I have no clue how to even pronounce half of these. Yeah, I think always asking for the sommelier is a good is always a great educational experience. Because like a those people don’t get called out that often. And like B they love talking about wine. So I think that’s always just like a fun experience. And like, they can help you spot the gems in the wine list. Because every single wine list has a few wines that are not like marked up three 4x. Right, they’ve got a few sort of like, fun gems in there. So that would be like just find the gem and the wine list pass the psalm, they’re always glad to tell you what they think is the best deal.
Jeff Malec 1:07:17
But don’t they don’t they? Aren’t they paid on what they sell? Don’t they have a little bit of a incentive to steer you towards the highest? profitable one? Yeah,
Anthony Zhang 1:07:26
but I feel like you could tell between like a sale. And like, it’s really just like trying to look out for you and be the be a good person. A sale.
Jeff Malec 1:07:34
So yeah, it used to be you never wanted to buy the cheapest one or the most expensive and you’d go in the middle. But then someone was telling me all the restaurants know that now. So they actually make that second and third choice. The highest markup?
Anthony Zhang 1:07:48
Yeah. So that’s the thing is the markups are very inconsistent. Right? And only the psalm will be known or unless you’re, you know, walking wine pricing database, you don’t really know what they’re being marked up the most. I think second is like when buying wine just for yourself. Right? It’s is like, just really being able to know, key regions that you’d like, right? And based on the wines that you like, if you want to be able to explore, like, just ask them like, hey, I really liked this bottle. Last time I came to you like, what else would you recommend? And a lot of times, I can just help break you out at the thought of just buying the same line again and again. And I think thirdly, like if you’re Yeah, if you’re going to be more serious with it, right? Just explore your options on, you know, starting a salary at home versus being able to have someone else manage it. Because if you ever do want to sell wine from your cellar at home, it’s extremely difficult.
Jeff Malec 1:08:43
Like how do I trust? You didn’t mess with this? Or is there? Temperature control? Yeah,
Anthony Zhang 1:08:48
yeah. So then like you get a huge huge discount on on what your real value of the wyness like auctions will probably value it like 50 to 70% lower than what it could actually sell for and you just kind of get ripped off. Whereas like we store everything in like bonded facilities. They’re fully temperature controlled, climate controlled, 24/7 monitored and that sort of if you take like a sports card reference that’s like the PSA 10s of the world. Right? Those are the ones that are like pristine condition, and everybody wants those because there’s very little risk of that being turning out to be a bad one.
Jeff Malec 1:09:29
You’re going to do sports cars next. So I think we’ll sport our best
Anthony Zhang 1:09:33
Yeah, yeah. Sport of us. We are moving into whiskey though. So both Japanese whiskey and, and scotch. So that’s something that we’ve been rolling out off and off our waitlist. We’ve got nearly 10,000 people on our waitlist already.
Jeff Malec 1:09:47
All right, looking forward to that. Now you’re talking my language. There you go. Alright, this was fun. We’ll talk to you soon.