Anthony Zhang (03:11):
And having the experience of meeting a lot of other Thiel fellows through the application process, a lot of the fellow of prospective applicants and candidates, and even talking to Peter Thiel himself really gave me that belief and confidence that I don’t need to wait for another eight, nine years maybe to start my business and realize my dream. I’m doing this right now, running a business out of college, and if someone like him could take a chance on me and give me both the confidence, as well as the resources to be able to support myself dropping out of school and pursuing my business, that’s not an opportunity I can pass up ever. So Thiel Fellowship was extremely rewarding for me. Having that community of other college high school dropouts, because when you’re 18, 19 years old, your friends are everything. You’re in the dorms. Social life is bigger than school life.

Anthony Zhang (04:04):
And when I dropped out, that was one of the things I was really afraid of is that, where’s my community, where’s my tribe going to be, and thankfully, I was able to make some really amazing friends of other young, sharp founders who were building world-changing ideas and were able to stick it through the thick and thins of building a business together and building very different businesses as well.

Trey Lockerbie (04:26):
Well, let’s talk about EnvoyNow a little bit. It’s a food delivery system, as you said, right? I believe it sold fairly quickly after the founding and maybe after this grant. So for those who don’t know about the grant, what does the money go towards? Because as you mentioned, $100,000, which might sound like a lot of money, and for an individual, yes it is. But for a business, that’s not that much money at all to kind of grow and scale in the grand scheme of things, maybe for a startup, but longer term. So what did that money go towards for you? How did it help you grow and ultimately sell the business?

Anthony Zhang (04:57):
So for the $100,000 grant, I put it all into the business. Thankfully right after I’d gotten Thiel Fellowship, I went out and fundraised. We raised a million and a half dollars. And I just put that a hundred K on top of that. It’s a grant, I could technically do whatever I wanted with it, but the best use of money was to grow the business. And for us, it was just expanding to more markets. We were college-focused. So it was tier two, tier three cities where the big Grubhubs and DoorDashs of the world just didn’t have scale. And we thought that by capturing these markets where there’s a lot of density around college campuses, really cheap labor because all of our delivery people were students. And also that extra sort of X-factor, which was the community.

Anthony Zhang (05:43):
You had to have an EDU address to be able to even get service, even open up the app. And students who say were 6:00 PM, they knew after classes, they were going to hit the library, but they wanted a Chipotle burrito beforehand. They knew that there were a lot of other students that probably wanted that exact same thing. So by just swinging by Chipotle getting six burritos, instead of one, you pretty much have your dinner covered for you. And it was just a really friendly and fun way for the community to be able to help each other out and get closer as well. So for us, that was really what the funding went into, and it was an amazing experience. As you mentioned, we sold the company about four years after founding to a company called Joy Run, which is now owned by Walmart.

Trey Lockerbie (06:27):
Incredible. So obviously you went through that fundraising process and probably met some VCs, which may be a good segue to your second venture, which was called KnowYourVC. So I’m sure there’s a story there. How did you come up with KnowYourVC? What was the background there?

Anthony Zhang (06:42):
Yeah. Trey, so KnowYourVC is essentially a Yelp or a Glassdoor for rating both venture capital firms, individual partners within those firms, as well as angel investors. I started this in 2017, which if you can recall in Hollywood, it was when the whole Harvey Weinstein scandal was moving and really catching a lot of steam. And in Silicon Valley, there was a very similar movement of a lot of brave women and minority entrepreneurs coming out into the spotlight and sharing some horrible stories about how these VCs had either sexually discriminated against them, racially harassed them and it was just a lot of the same power dynamics that I saw in Hollywood. And for me, being in a very fortunate position to be backed by Peter Thiel, being male, I had a lot easier of a time fundraising than those minority and female founders, even though fundraising is already very difficult.

Anthony Zhang (07:38):
So I do just feel very strongly that there needed to be some more accountability and transparency on both sides of the table. Not just, everyone’s kind of holding a lot of these investors to almost like a God status tier where they literally hold the keys to your company’s success or not with that funding. I just thought there should be some more balance to the ecosystem. And given the social climate at the time, me and a few buddies, we hacked together this website over the course of two weekends, we launched it and it just caught on like wildfire. Within a few months, we had hundreds of thousands of unique searches on the platform searching for different VCs. It wasn’t just founders submitting reviews on VCs, it was even VCs submitting reviews on their peers. If you’re all invested in a company together and you’re sharing aboard, that’s some really valuable insight for other peers to be like, Hey, should I co-invest with VCA or VCB? That was my second business and it was really not something that I ever imagined would blow up the way that it did, but I just felt so strongly that this needed to exist in the world that thankfully me and my co-founders, we were able to get it out at just the right time.

Trey Lockerbie (08:47):
I’m curious about your personal experience with VCs. What were some of the biggest learnings from actually taking money from a VC? You hear good and bad stories all the time. Was yours more favorable? Were there any big takeaways that you would advise upstart entrepreneurs today?

Anthony Zhang (09:04):
I would say I’ve been very fortunate to have some incredible investors, but probably the biggest surprise is that the brand name really does not matter as much as the person you’re partnering with. You take a firm like Andreessen Horowitz, it’s one of the most famous VC funds in the country, probably in the world. But the person that you talk to, the person that you bring on your board is more important than the brand name. That’s something that I didn’t really realize. And then when I was looking for VCs, I was like, I just want to on a top tier VC, that means I’ll get the best help. I’ll get the most attention. But you realize that, especially with a lot of these bigger funds, especially in a seed round, a Series A round, even if they lead your entire round, they take the whole allocation that is such a small drop in the bucket for their entire fund size that it’s hard for them to justify the resources and the time that they’re putting into it, when on the founder side, they’re the only help that I have.

Anthony Zhang (10:03):
And then when you compare it to maybe an angel investor or a smaller emerging fund manager, where they’re just, I think, hungrier or more generous with their time, some of the smallest angel investment checks, like people would put in 10K, 20K of their money really went to bat for me in the early days. And really were people that I could lean on as a confidant, not just as an investor that, of course they want me to make money so they can make money, it was just a lot closer, so that would really be my piece of advice for folks fundraising is that there’s a lot of capital out there, but really focus on people who you think will actually spend that time with you, because it’s not always going to be sunny days and growth that’s up and to the right. There’s always going to be road bumps and you want folks that can actually help you, who maybe have been there before in your shoes as a founder in the past who can then be able to help to problem solve instead of just be like, Hey, you had a bad quarter, ignore you or they’re in radio silence, which can happen sometimes too.

Trey Lockerbie (11:03):
Now, what’s the story with Mark Cuban? Was he an investor as well, or was he just someone you met along the way?

Anthony Zhang (11:09):
Oh, so the Mark Cuban story, this was my sophomore year in college with EnvoyNow. And I had not yet made the decision to drop out yet a though I was considering it and he came to our school as a speaker. Idolized Mark Cuban. I thought he was so cool. So I actually skipped class to go and see his speech. And I remember the funny thing was that I was in an entrepreneurship class and the whole goal of that class that semester was for folks to launch their own business. And I remember in the syllabus, the professor said that if the class was able to cumulatively raise $50,000 in funding, then everyone would get automatic A’s, so just kind of remember that as I dive into this story. Our professor had trouble with me skipping his class to go see Mark Cuban. He was like, you can see the recording online. It’s just a speech. If anybody skips this class to go see him, you’re going to get docked a letter grade, so I took the hit anyways.

Anthony Zhang (12:07):
I was like, I need to go see him. I don’t know when I can ever do that again. And at the very end of his speech, his executive producer of Shark Tank, Mark Burnett was there, our business school dean was there as well. And our dean was like, “Hey Mark, everything’s recorded already. Do you want to do an impromptu Shark Tank session and we can pick some students in the crowd to pitch you?” And Mark’s like, sure, why not? And I was just waving my hand like crazy, like it to fall off because I wanted so badly for the opportunity to pitch Mark Cuban. Thankfully I was picked, I pitched him and that was my first investment offer ever, a $100,000 offer from Mark Cuban, Mark Burnett for 10% of my business, which meant that somebody valued EnvoyNow at a million dollars. And at the time, to a 19-year old, that is like the biggest number I could even think of.

Anthony Zhang (12:58):
And that was really a turning point in my life because just having someone that I looked up to so much, give me that confidence to be like, hey, your business is worth something. And not only do I think it’s worth something, I’m willing to offer you an investment to have you really be able to take it all the way. And that was, I think, between Mark Cuban and Peter Thiel, I was like, there’s two billionaires offering two that $200,000 to drop out of school and run my business. This is never going to happen again in my life.

Trey Lockerbie (13:30):
That’s a pretty good sign that you’re doing something right, I would say.

Anthony Zhang (13:33):
Yeah.

Trey Lockerbie (13:34):
Oh-

Anthony Zhang (13:34):
And just to wrap it up because I got that 100K, everyone got automatic A’s in that class. So getting docked a letter grade for skipping did not matter at all.

Trey Lockerbie (13:45):
Amazing. So, those guys are billionaires, you hear about stories, not quite like that, but them putting in $100,000 into a company and they do it quite a bit. So you’re like, okay, how much FaceTime are you actually getting with these guys? And is there really any influence they can have on you at that scale? I’m curious, have you had any personal connection with either of them that’s made a really lasting impression on you?

Anthony Zhang (14:08):
I’ll be honest in saying that the time that I spent with them was very fleeting. Maybe I would say two to three in-person meetings a lot more over email, especially Mark, he’s notoriously good at responding really quickly. And for me, it was really just having that sort of shift into feeling like I had the confidence and I could execute on this huge scale because I don’t think I ever saw that my ceiling could be that high. And coming from a background where no one in my company or in my family had ever started a company, my ceiling was like, just go to the best college ever and then go to a great investment bank and then try to make as much money as I can so I can save enough to start a business.

Anthony Zhang (14:52):
I’d never really thought about the venture capital world, where you’re hearing about these hyper growth companies, you’re hearing about these billion dollar valuations and just really opened my eyes to have them welcome me into their world, introduce me to people who had been there and done that, like founders, my age or even younger who have done incredible things. And I think just having those two folks be able to, I think, shine a light on that, and obviously being backed by them helped to open a ton of doors. That’s really the biggest value that have gotten out of being associated with them.

Trey Lockerbie (15:28):
Well, yeah, that belief in yourself is invaluable, so that’s a huge takeaway. All right. So now we have Vinovest, which is your third entrepreneurial venture. I mean, you’re 26, not too many 26 year olds are this interested in wine. So what got you interested in the wine market to begin with?

Anthony Zhang (15:44):
Yeah, that’s a question I get a lot and I think to really take it back to the early days I grew up abroad, I grew up in Beijing, in Hong Kong for the most part. And wine was a huge deal there. Especially wine from Bordeaux and Burgundy is a huge part of being culturally relevant or as a status symbol. So I always knew that wine had value, especially really rare wine, but I never really thought of it as an investment until selling EnvoyNow. I went to my first financial advisor and they’re like, “Hey Anthony, what do you want to do with the rest of your life?” And I said, “Start companies.” And they’re like, “All right, well, that seems risky. So let’s put all of your money into really safe stuff.” And I looked at the plan. I was like, “I don’t really want to do that.”

Anthony Zhang (16:29):
All of my friends are angel investing or they’re into of crypto and they’re buying real estate. And a lot of people that I really respected were getting more and more into investing in wine. And to me, it just had such a cool factor that the other asset classes didn’t, the fact that you could drink, it could invest in it, you could sell it. It just really aligned more with my identity than I thought it would. And I wanted try my hand out at it. And when I attempted to get into my first auction, I realized why wine collecting for most people is out of attainment. You need a ton of capital to even have a wine cellar to hold your wine. You need access to the best wine auctions to the best wineries. Usually those mailing lists or wait lists are even a decade long to even get on it.

Anthony Zhang (17:16):
And then finally the knowledge. There’s a lot of information out there on tasting notes and wine and how it tastes, which critics like what, but there’s really no stock analysts equivalent talking about, Hey, you should buy this winery’s wine because of reasons A, B, C that are more financial driven. And realizing that all of these pieces needed to be in place for even just someone like me, who was just a retail investor who wanted to just put a couple thousand dollars into it and see how it went. It just was very obvious to me that this needed improvement. This asset class that’s been around since even before our founding fathers has returned great appreciation and yield to investors all around the world, yet it’s only available to less than 1% of people in the world. So with Vinovest, we really sought to democratize that process first, just for me, just to figure it out myself and have an easier way to invest in wine.

Anthony Zhang (18:14):
And then I realized after talking with friends and telling them how excited I was about investing in wine, a lot of them were like, “Hey Anthony, why don’t you manage some of my money too? And I’d love to be able to try my hand out at being a wine investor.” It had that cool fact. And I realized that I could either just start a wine hedge fund or open up a platform so that anybody could learn and invest in wine with the technology and infrastructure that we built at Vinovest. And the latter was just a much more interesting opportunity that could affect hundreds of thousands, even millions, rather than just having a few large LPs and a fund.

Trey Lockerbie (18:50):
Amazing. So for those listening right now, who are saying, yeah, but I don’t know anything about wine, even if you do, and even if I’m giving this money to this platform, I know nothing about it. So I’d love to just take a little bit of a detour to talk about wine itself and specifically the characteristics that make up a “fine” wine from anything else.

Anthony Zhang (19:12):
Yeah. I think that’s a great place to start because I was in the same boat five, six years ago. I didn’t even know that you could invest in wine much less what made wine investible versus the stuff at Trader Joe’s. So to me, it’s a few criteria. Number one, it’s going to be longevity. Most of the wine that’s produced in the grocery aisles is actually meant to be consumed within a couple years, but there are subset of wines that actually age and get better with time. And that’s why you have that old adage, age is like fine wine. As the aging process happens, there’s inevitably going to be less supplied than it was on day one. Say at winery A, they make 10,000 bottles, by year five, maybe there’s only 5,000 just due to natural global consumption. Maybe at year 10, when it’s reaching its peak maturity, there’s only 1000 bottles.

Anthony Zhang (20:02):
So that supply and demand dynamic really plays into the price appreciation. And then you also have the appreciation the wine with actually changes a flavor profile. And then I think the third factor is really based on brand equity. Why are people paying $2,000 for a Louis Vuitton bag that’s made of the same leather material as another bag that maybe from a cheaper retailer, there’s that sort of brand value that is intangible, that happens with a lot of luxury goods and a lot of art or cars. And that’s really that third factor that we look for that, is it sought after? Does it have more global demand than the winery can actually produce? And those are really the factors that drive fine wine versus regular wine.

Trey Lockerbie (20:49):
And where did these wines typically trade? Is there sort of a Sotheby’s of sorts for wine? You mentioned these auctions, where does that typically happen?

Anthony Zhang (20:57):
Yeah, so Sotheby’s, and Christie’s are, I would say that some of the two biggest auction houses for wine. They sell everything, but wine is definitely a big part of their business. And the great thing about auctions is that they’ve been around for a long time and it’s a format that a lot of people are familiar with. And I think the downside is that there’s a lot of information asymmetry and the fees, you have to pay 25% on top of the strike price. And for someone who’s looking at it as an investment, wiping out 25% gains is very significant and can’t really recover from that even in a year or two.

Trey Lockerbie (21:32):
Another reason people might be looking to wine right now is that all other assets are pretty higher or at all-time highs. And as I understand it, wine is not very correlated with anything else. So it kind of makes it this alternative asset of sorts. Do you have any data around what wine is most correlated with?

Anthony Zhang (21:51):
Yeah, so you’re exactly right in that wine has very little correlation to your global indices, like the S & P or the NASDAQ. What it is correlated most strongly with is actually emerging market growth. So if you think about wine and the high end sector of wine is really is kind of that upper class that is consuming it. They’re taking the supply out of circulation, which then drives the market even more. So when you’re looking at emerging market indices, like developing countries like China or India, and see that upper class become even wealthier, that’s been the strongest correlation point that we’ve seen to prices of fine wine. And if you look on a more micro level, you’re seeing that certain regions are falling in favor or out of favor, which also leads to some pretty dramatic price increases in certain regions versus others. So for example, we had tariffs in the US against most European wines until earlier this year. And that led to a 25% cut on all French wine, all Spanish wine, UK wine, German wine, but those tariffs actually excluded the country of Italy and it excluded all sparkling wine imports, so champagne. And because of that, over the past two years, region of champagne and Italy as a country have outperformed the global wine indices. They’re returning 15 to 25% on average over the last five years.

Trey Lockerbie (23:22):
Amazing. That actually brings up another question about the geography of the best wine in the world, and you said is changing. What are some of the impacts that are causing that change?

Anthony Zhang (23:33):
If you think about your sort of blue chip wine regions, it is going to be what we call the old world. So in Europe, regions like Burgundy and Bordeaux are the ones that Thomas Jefferson invested in, the Romans invested in, and that was kind of your starting wine growing regions. But now it’s become a much more diverse and global landscape where you’re starting to see wines out of Napa, out of Oregon, out of maybe lesser known wine regions in Italy and France that are really coming up. And one of the big reasons other than just changing consumer preferences is also climate change. It really can’t be ignored that at the end of the day, this is an agricultural industry, and there are some really real effects that climate change has had on a lot of these blue chip regions.

Anthony Zhang (24:20):
Number one is the higher volatility in temperatures, which unfortunately destroy a lot of the yield. If your yields are 20% down, you have to release your wine at a higher price. And then on the other side, for wine regions that maybe previously were a little bit too cold to produce great wine, so regions like maybe Oregon or northern parts of Germany, they’re starting to come into the climate where they’re producing some really incredible world class wine. So newer regions are starting to pop up and gain a lot of consumption demand, which is then driving investment demand.

Trey Lockerbie (25:00):
You mentioned those auction houses. Do you have to be an accredited investor to even participate at those auctions?

Anthony Zhang (25:07):
So thankfully with auctions, technically anybody can participate, but there are minimum thresholds to be able to participate in some auctions versus the other. If the starting price of a case of wine is $100,000, most people are priced out of that auction, if they want to start with something smaller. So I would say that’s really the only requirement for wine, especially if you’re just buying it direct, there’s really no regulation around it. You just need to be drinking age so you can purchase alcohol.

Trey Lockerbie (25:36):
So you mentioned climate change. I imagine that’s one of the biggest risks to the wine industry overall. But are you saying that it’s generating some opportunity in other areas as well?

Anthony Zhang (25:47):
Yeah. I think where one door closes another opens. For a region like Napa, you’re seeing the average yield go down over the course of 5, 10, 15 years. And what’s special about this fine wine industry is that they can’t really just shift their vineyard to another part, then Napa wine wouldn’t be Napa. That’s why only certain parts of the world have great wine. So they’re doing a lot to be able to convert back to say more organic or sustainable practices, to be able to get the most bang out of their buck, the most juice out of their grape. But when you look at the opportunity side, not only does that create lower supply for even greater demand, but it also forces price appreciation. And then when you’re talking about those colder regions or climates that I mentioned, those are new sort of your, say emerging market stocks. Those are your maybe up and comers where they don’t have that same brand value as Napa or a Bordeaux wine, but there’s certainly a lot more upside to grow.

Trey Lockerbie (26:53):
Now, I did go to Napa once, and when I was there, I learned a little bit about estate grown grapes that produce wines. But not a lot of people may know this, but a lot of wines are just this amalgam of all kinds of grapes from all different estates that are kind of blended together sometimes in a big factory that’s not even on the maybe winery estate that you know and love. I’m curious, does that add any value to the end product or is it ultimately just the quality and the brand, as you mentioned before, like anything estate eat grown and a brand, does that make it more valuable?

Anthony Zhang (27:26):
It absolutely does, because if you think about it, the estate grown wine is a very specific place and the wine maker has a lot more control over that specific place. But that also means that they’re limited. They only have this say five or 10 acres to farm with. So even if their demand doubles the next year, they only have this five or 10 acres to farm with compared to bulk wine. They usually, if there is more demand, they can just scale up and just grapes from other places that might not necessarily be from their main winery, just to scale up and scale down demand. And because of that, and because of the different grapes, they still know that the consumer wants a consistent flavor year in, year out. And because of that, they add a bunch of stuff in it that is chemical, that does kind of strip away from what makes a single vineyard or an estate grown wine, a lot more unique. And it just kind of starts tasting a lot more homogenized, so that’s really the biggest difference.

Anthony Zhang (28:23):
And because of the extra labor that goes into estate grown wine where maybe grapes are handpicked instead of having a machine go through them, or they’re buying really high quality grapes from mountain tops where the yield is just going to be a lot lower than if you’re just buying it from say Fresno, or like somewhere in the middle of California where it’s just flat land and they’re just all optimizing for production. All of that moves into the price, moves into the desirability and also ultimately the taste for the consumer.

Trey Lockerbie (28:54):
Awesome. Let’s talk a little bit about Vinovest. What does the team at Vinovest look? If I were to invest a thousand dollars, is there some kind of sommelier on your team that’s taking it to the market? Or how does it look?

Anthony Zhang (29:05):
Yeah, that’s a great question because I think with a concept this new, even though people may understand why you should invest in wine, the fundamentals of the asset class. They look at our platform, they have a ton of questions. Am I investing in wine? Am I investing in a wine fund? And the short answer is that for a retail investor to come on board, we don’t expect you to know anything about wine, what we do expect you to know is your expectations financially. Is this, Trey, for you a five year hold? Is it a 10 year hold? Somewhere in between? What is your asset allocation when it comes to your entire portfolio? Is this a 1% thing? A 10% thing for you? And then also what’s your risk appetite? If you’re only sitting on bonds and cash, you might want to get a little bit more aggressive with your wine portfolio strategy.

Anthony Zhang (29:51):
But if you’re saying all in on crypto and startups, maybe you want something a little bit safer to counter that volatility. So once we narrow in on those parameters, we’ve actually built out an algorithm that can automatically be a robo advisor for each customer. So everyone gets their own portfolio. Everyone gets their tailored strategy based on those factors of time horizon, investment amount, timing in the market, aggressiveness in terms of your risk appetite. And what we’ll then do is we’ll go source out all those wines from our connections, so winery partners, merchants, wine exchanges, and be able to store them next to strategically located professional wine storage facilities. So we’ve got one in Napa, we’ve got one in Bordeaux, France, we’ve got several that are also located next to major wine trading hotspots like London, Hong Kong, Singapore. And our goal is to really take away all of the hassle, the stress, the unknowns out of investing in wine, like access, custody, storage, and give you a beautiful online experience just like if it were on Robin Hood, just like if it were on Coinbase.

Trey Lockerbie (30:58):
So you mentioned a fund of wine. So now I’m kind of wondering, am I pooling my money together with other people to going in on very expensive bottles of wine or does my a thousand dollars or so go to buying its own one bottle of wine. How does that typically look?

Anthony Zhang (31:14):
We actually have both options. So for our retail investors, the option for them to each own their own wine. So Trey, if you wanted to put your $1000, you know own these say 10, 12 bottles. You could actually come to our warehouse and be like, Hey, this is my locker. If I, for any reason, wanted to drink it or visit it, you could do that. It’s not shared with anybody else, which gives the end-user a lot more control on when they want out and when they want in. With our fund product, which is primarily catered toward RAs and family offices, they have more so of a set strategy. They’re money managers, they’re managing money on behalf of a lot of clients and they want to get consistent exposure. So say we put together a 10, $20 million fund for an RIA, that’s going to look very different than if we’re constructing a $5,000 portfolio for a retail investor.

Trey Lockerbie (32:02):
Interesting. What’s the most expensive bottle of wine you’ve seen on the platform?

Anthony Zhang (32:09):
Ooh, that’s a fun one. We’ve had bottles of wines that are over $150,000 a bottle. These are going to be really high-end burgundies. So wines like DRC, which is stands for Domaine de la Romanee-Conti, and Domaine Lenoir. Those are two bottles of wine, were when I started investing in wine, I was like, there is no way a bottle of wine could be worth 50K. In every single year, those wines continue to appreciate and defy all expectations of just being more and more desirable because of the yield. They have such a commitment to excellence in quality that if it does not pass their test, they’re just going to make less. And especially with the sort of volatility of the climate in these past few years, they’ve not compromised on their bar of excellence, but what they have done is just released less and less wine.

Trey Lockerbie (33:00):
Now, have you been tempted yourself to pop open a bottle of $150,000 wine? Or what’s the best wine you’ve ever tasted?

Anthony Zhang (33:07):
Yeah. Thankfully I have got my drinking cellar here at home, and then I’ve got my Vinovest cellar, far, far away in France. So the temptations are easier when it’s out of sight, out of mind. But I’d say for my favorite bottle that I’ve had recently was got to be, I got married a month ago, so we had a really special bottle of wine.

Trey Lockerbie (33:27):
Congratulations.

Anthony Zhang (33:27):
Thank you. It was a 1995, Dom Perignon Oenotheque, which means that they left the champagne in the wine caves of Dom Perignon for an extended amount of time and they only recently released it less than 10 years ago. So that means that the champagne has had more time to interact with the wine cave, with the yeast, and be able to have a more complex set of flavors than a regular bottle of Dom, even from the same year would be. So it’s what we call an extended elevage. So just stays in the cellar for longer than usual.

Trey Lockerbie (34:03):
Wow. So what is the mark to market kind of look like for wine? You mentioned the $150,000 bottle. Is that fluctuating daily, annually? How often are these prices getting updated?

Anthony Zhang (34:16):
So that’s what we’re really passionate about at Vinovest is to be a market leader in providing data for the wine world, because if you don’t know how to value it properly, how can you treat it as an investment? And the wines that we deal with, we’re gathering massive amounts of data points from all different sales channels, whether it be an auction, whether it be the primary market, whether it be wine exchanges happening both in Europe, in Asia, and in the Americas, gathering all these data points, normalizing them and showing our end customer what somebody paid for it most recently. So it could be last week, could be last hour. The more so, I would say, liquid secondary market wines are being traded multiple times a day as well.

Trey Lockerbie (35:01):
Yeah, that was my next question was how liquid are these markets? What would you kind of compare it to?

Anthony Zhang (35:07):
I would say it’s very much so not like crypto or the stock market, maybe one day. But the cool thing is that because it’s not a regulated financial market, it is 24/7. It is global. So is wine. So when you’re looking at the liquidity, especially as a lot of these wines get closer to their peak maturity period, so maybe could be 10 years, could be 20 years in the future. We start to see a lot more activity when they reach their drinking window. So for example, if you knew you wanted to hold this bottle of wine for 10 years, everyone else is probably having the same view as you, where they want to probably hold it for the first seven. And then once you get to year eight, year nine, a lot of people are looking to buy and sell it, offload. So we do see different liquidity windows where some wines start to really pick up in liquidity either traded multiple times a day. Other times they’re not traded even for weeks at a time.

Trey Lockerbie (35:58):
And so going back to my portfolio, now, we’re talking about on Vinovest, what does the fee structure typically look like on Vinovest? Are you paying a management fee on top of finding these wines and storing them, et cetera, or just an asset center management kind of fee? What does that look like?

Anthony Zhang (36:14):
Yeah. So Vinovest doesn’t charge a carry fee, we lump all of our services under one management fee. So that includes your acquisition of the wines. It includes your storage, insurance for the storage, which is really important because wine is one of those few asset classes where custody is one of the most important things for it to retain and increase in value. And for us, all of that ranges from 2.85% all the way down into below 2%, depending on the package that you choose with Vinovest, depending on how many assets you have on the platform in terms of your dollar value.

Trey Lockerbie (36:51):
Very cool. And so you mentioned having a fund as well. Is there an index of sorts for wine? If I only wanted to invest in the best burgundies from all over the world, is there an index for that? What does that look like?

Anthony Zhang (37:05):
Yeah. I’m glad you mentioned that because there is built out an index called the Vinovest 100. So we track all of the major regions as well as major players within each region. And then to your point, we’ve also got sub-indices. So we’ve got the burgundy 50 or the Bordeaux 50, where if folks wanted to dive in and develop a thesis around a certain region or a certain producer, we’ve got the tools for them to be able to have that analysis and be able to make those decisions as well if they wanted to.

Trey Lockerbie (37:33):
You mentioned generating a lot of data around the wine market. Is this secret sauce behind Vinovest? Is it a whole nother business stream to consider data on wine on top of the just management of people’s portfolios?

Anthony Zhang (37:47):
I really think that is our secret sauce because no matter how good our algorithm is, if you don’t have the best data set, it’s useless. You need clean data, you need reliable data and you need the most, let’s say largest access to data in the world. So that’s what Vinovest is today. We’ve spent a lot of time and resources in ensuring that we have sort of the best bird’s eye view of the market that anyone can have. And for us, we want to be able to leverage that into our technology, but we really do believe in increasing transparency in the secondary market. The thing I don’t like about auctions is that it’s very opaque. You have no idea who else is in the room. You have no idea what the past comps are. Sometimes the fee structure isn’t really transparent and I’m sure everyone’s had a similar experience, maybe even at a restaurant. They see the price of the wine on a wine list and they go to a different restaurant in the same town, that bottle of wine could be a completely different price, maybe 20, even 30% off. And I think with the data that Vinovest is bringing to light in the secondary market, it helps not only consumers have more trust in the market in general, but it also helps winemakers.

Anthony Zhang (39:00):
They know their wine is going to increase in value in the future but by when? By how much? Should they be holding back some of their inventory and release it on like a 10-year anniversary or on a 20-year anniversary when they know they could probably make more money on the release rather than releasing it all on day one. So we believe that data can really empower both sides of the industry to be able to have more transparency, more trust. And I think that also breeds greater participation, which is the whole mission of Vinovest.

Trey Lockerbie (39:32):
So what happens when I want to sell my bottle of wine? Do I have to wait for someone like me on the other side? Do I have to wait for a Sotheby’s auction for it to sell? What are the typical constituents of exiting a deal, so to speak, on the wine side?

Anthony Zhang (39:47):
Yeah, that’s a great question. So we have our own secondary trading platform where you can interact with thousands of other traders who are looking for that wine. So you can put it up on the platform, you’ll be able to see all of your bids and offers just like a stock market would be, and you get matched up to the highest bidder.

Trey Lockerbie (40:06):
Very cool. Well, listen, this is so incredibly inspiring. This is your third company and you’ve exited two already. This is an awesome idea, but what I found most inspiring just when I was researching you, is that you’ve actually persevered not only through multiple companies but through a significant personal challenge as well. So I’m wondering if you’d be open to perhaps sharing about an accident in your life and how it’s impacted because I think it could be really influential and inspiring to a lot of our listeners.

Anthony Zhang (40:37):
Yeah. I’m happy to, Trey. And I think, how do I say this? About five years ago, I had an accident. I broke my neck diving into a pool. And what that did, in addition to just break my neck was it rendered me a quadriplegic. I had a spinal cord injury on impact and I was unable to move anything below my shoulders. I knew immediately something was wrong. What I didn’t know was the extent of that injury. It’s a permanent injury. I spent four months on a ventilator learning how to breathe again before another almost a year in intensive inpatient rehab at a wonderful hospital called Craig Hospital in Denver. They’re specialized for traumatic spinal cord injuries and brain injuries. And I learned how to live life again, just something as simple that you take for granted, like being able to breathe without the assistance of a ventilator or developing the muscle function to be able to feed yourself with a fork and not have to be on an IV drip for months.

Anthony Zhang (41:39):
That was the hardest thing I’ve ever had to go through. And even today five and a half years later, I’ve been really fortunate to be able to regain some function, but I’m sitting here, I’m in a wheelchair, I still need a lot of help in my daily life to be able to work and be independent and still do the things that I love to do, which is building businesses, but having that experience in my life, and I just remember having a statistic stuck in my head after I learned about my injury is that 80% of people who have a spinal cord injury never go back to the workforce again. And for me, I was like, holy … I didn’t want to be that 80%. I wanted to not only get a job or now I guess I made my own job, but also give other people jobs.

Anthony Zhang (42:29):
That’s part of what I love about starting and building and scaling companies. And I hope that what I’m doing can inspire others, not just a spinal cord injury, but any sort of life-changing event where a lot of people are just faced with a decision where it’s like, hey, do you want to just roll over and give up and feel sorry for yourself, or do you want to push through? And really having that decision, and I remember I was staring at a ceiling in the ICU for weeks on end, just being like, what’s going to happen to my life again. Can I ever go back to normal? I realized that life moves on with or without you and you can choose whether you want to still try to pursue your dreams and do the best that you can, or if you want to just let fate happen to you. And that’s really the biggest lesson I learned through having a spinal cord injury.

Trey Lockerbie (43:21):
Unbelievable. Well, I am so incredibly impressed, not only with your background, but just all you’ve persevered through and you obviously seem like a very optimistic, very focused entrepreneur, the kind that you aspire to invest in. And knowing that about your background, it’s just one of those things you’d never know just having met you, but it’s something that’s incredibly profound and really just, I guess, inspiring. That’s the best word I can think of, so thank you for sharing that first and foremost. Before we kind of wrap things up here, I wanted to see if you had some resources that we could share with our audience that maybe that helped you get to where you are, especially caught up on the wine education you have. Maybe the best books you’ve read about wine, and then maybe even the best books you’ve read about investing since you do a bit of that as well.

Anthony Zhang (44:13):
Yeah. I’m more than happy to. I think the book really got me into wine was called the Billionaire’s Vinegar. And if you haven’t read the book, it’s fascinating. It’s a quick read and it’s detailing a story of a bottle of wine that people believe to be from Thomas Jefferson’s cellar. It was going to go up in auction as one of the most expensive bottles of wine ever sold. And it was just a whole kind of almost like a national treasure-type forensic hunt on determining the origin and authenticity of the bottle. I won’t spoil it for people who do want to read it, but the mystery and intrigue just really drew me into the world of fine wine and got me into the mindset of why old wine is that valuable. And I would say another bonus resource, if you’re not a big reader is going to be a movie called Sour Grapes.

Anthony Zhang (45:04):
It’s on Netflix, it’s on most streaming platforms and it details the chronicles of the largest wine fraud in history. This kind of mad genius type/conman person scammed some of the world’s most influential and wealthy people in the world out of nine figures worth of wine over the course of almost a decade. And today this guy is still free in the world. So it’s a really, really intriguing story as well on that sort of high-end wine world. In terms of investing, I would say I read a really impactful book about a month ago called the 15 Commitments of Conscious Leadership. It’s more so in investing in yourself, but I believe that that’s the best way for you to gain clarity on what you want to invest in, not just money, but your time, so that book has been really impactful for me.

Anthony Zhang (45:59):
And I often flip back to it and in chapters and commitments that I can make to myself to be able to learn faster, be a better person and be a better CEO to my company as well. And in turn, I will leave that breeds better outcomes for our investors on Vinovest, who are trusting us, investing in wine through our platform, but also our shareholders. We’ve raised venture capital funding for this company as well. And I have two different duties to serve them the best I can in addition to my duty to our employees.

Trey Lockerbie (46:32):
You know, when you mentioned the Billionaire’s Vinegar, which I haven’t read, but I’m going to now, what was coming to my mind was this joke I’ve heard about how do you become a millionaire? You start as a billionaire and then you open a winery.

Anthony Zhang (46:44):
Yes.

Trey Lockerbie (46:45):
It raises that question. Why are wineries stereotypically just known to be such a bad investment?

Anthony Zhang (46:51):
I think that’s a really funny point that you brought up because it really is, I think, such a tough business. If you think about it, a, it’s agricultural, so there’s a lot of things that you’re at the mercy of that you don’t have control over. Number two, there’s a very long cycle. You actually need to wait five to seven years after planting the grape for it to actually mature and produce fruit. There you’re already more than a decade in the hole or more than half a decade in the hole. And then you need to find a winemaker to actually age the wine. So that’s another one to two years, which puts you up to the seven to the nine-year mark. And then you have to find distribution and licenses, especially in the United States. We’re all familiar with how convoluted the three-tier system is where there’s a different license you need in each state. Those licenses alone can take up to a year, year and a half to obtain. So you’re a decade in, you burn a ton of money and you haven’t even sold your first bottle of wine yet. And the average American is drinking $20 wine.

Anthony Zhang (47:50):
It’s really hard to break into that luxury segment of these crazy bottles that we’ve been talking about because it just takes time. And another thing is that wine takes time to age too. So how do you even know as a new winery, if you can make a bottle of wine that can age 20 years, 30 years and stand up to the grades? That’s another thing that only mother nature and time can tell. So if you think about it, it’s like the learning cycles are so long in an industry like wine, which is why a lot of people are attracted to it because of that sort of romanticism and traditionalism that a lot of winemakers still have to respect.

Trey Lockerbie (48:26):
All right. So tonight when I go to the wine shop with my wife and I want to sound smart and look cool, give me some tips. What is like a couple of wines I should look out for, dollar price that’s a good deal, so to speak? Give me an idea. Is there anything that comes to mind, one to three options or different varietal, something I should be out on the lookout for?

Anthony Zhang (48:49):
Yeah, that’s a great question. So I think now that we’re around the holidays, a lot of us are thinking ahead to Christmas, New Year’s. I think champagne is going to be one of your best bets, but champagne isn’t cheap. It’s expensive for a reason. And I think the main reason is that it’s from Champagne. However, you can have some pretty incredible sparkling wines that can’t be called champagne because they’re not produced there but are made in the same method or have the same level of care and detail. So a lot of the Proseccos and Cavas, especially when they’re made by, to your point, the estate, there’s a lot of producers that just buy bulk grapes, but the ones that do grow their own grapes, ferment their own grapes, and sell them, those are the ones that have the most control over the quality.

Anthony Zhang (49:34):
So if you look for grower sparkling wines, your local wine shop sommelier or employee there could point you to some pretty special stuff that’s usually undervalued. If you’re looking ahead to something maybe a little bit bolder for the main course, I think there’s a ton of value in Italian and Spanish reds. Napa Valley, great Napa Valley wines are incredible world class, but they could also cost you easily into the hundreds of dollars. For the same level of quality, for the same level of attention to detail and history, a lot of the Italian Brunellos or riojas from Spain, you can get for under 50 bucks. And it is just every bit as good it just hasn’t had, I think that same sort of reputation and name recognition as your Bordeauxs or your Napas or Burgundy.

Trey Lockerbie (50:21):
A big trend I’ve been seeing lately is around natural wines. And even like orange wines, it’s a little bit different. But are those the kind of wines you mentioned earlier that are supposed to be enjoyed sooner than later?

Anthony Zhang (50:36):
So that’s a great question and a very controversial one in the wine industry, but I’ll give you my take. We all want to be healthier. The natural movement has swept through everything from your food to now spirits, and now wine. The reality is, is that most investment quality wine is natural and has been natural since day one. So a Domaine de la Romanee-Conti, the one that I mentioned earlier, that’s $100,000 a bottle, they’ve been organic for decades. They’ve been sustainable and biodynamic for decades, but they just don’t publicize them as being natural, because for them, it’s not a fad. It’s not a trend. It’s a way of living. It’s a way they believe will get the best results out of their vines, and that’s why they do it. On the flip side. A lot of the newer, I think, trendier wine companies are doing it to catch a trend.

Anthony Zhang (51:28):
Because there are very loose rules around what you can call natural and what you can not call natural, there’s a lot of controversy in the wine-making community. Is it the fact that you are not using pesticides, you can be called natural? Or are you actually fully devoting yourself to being organic? What is that hard mission, and because there isn’t one, or at least there’s no guidance issued by the FDA or anything like that, there’s been a lot of back and forth in the wine community? But I think at a high level, it’s usually lower sugar, it’s usually lower in additives and it’s made with more respect to the land where you can be able to use less water the next year around, be able to not have to put in a ton of pesticides for it to get to the right yields. I think moving back to that style of farming is better for all of us in general.

Trey Lockerbie (52:19):
Well, I have to agree. Well, Anthony, this has been incredibly fun, really entertaining and educational and inspiring, and I’ve had a lot of fun. Before I let you go, I want to make sure I give you a handoff for those who want to follow along with what you’re doing with Vinovest. Any other resources you want to share?

Anthony Zhang (52:38):
Absolutely. I mean, first of all, thanks for giving me the time. I really enjoyed our conversation as well. And I think, for me, I realize that most people listening are probably brand new to wine investing and I want to be a direct resource for you. So Anthony@vinovest.co. I read every single email. So if you want to personally give me a shout-out or ask me any question, I’ll be there for you and on Twitter as well. I’m Anthony_J_Zhang, just my first, middle, last name. And I also respond to everything on Twitter. So I realize that wine can be very intimidating to most people and wine investing is a whole other dimension and I want to be that resource that I wish I had started out in this industry.

Trey Lockerbie (53:19):
Anthony really enjoyed it. Thanks again.

Anthony Zhang (53:22):
Awesome. Thank you so much.

Trey Lockerbie (53:24):
All right, everybody. That’s all we had for you this week. If you’re loving the show, please don’t forget to follow us on your favorite podcast app. Check out all the amazing resources we have for you at theinvestorspodcast.com. And if you want to get in touch, you can always reach me on Twitter @TreyLockerbie. And with that, we will see you again next time.

Outro (53:41):
Thank you for listening to TIP. Make sure or to subscribe to Millennial Investing by The Investors’ Podcast Network and learn how to achieve financial independence. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only before making any decision, consult a professional. This show is copyrighted by The Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.