#136 with Jack Smith - Trading Cards and Collectables: A Deep Dive Into The Opportunities In The Space

I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's travel, never looking back.

So an introduction here, this is Jack Smith. He's, uh, one of my one or two closest friends.

He's number one, dude.

Number one.

He's up there.

Sam tells everyone they're the number one, so—

Yeah, it was a sweet concept. It was one card and then you just switch over, you just push a button. It's like, now it's your business, now it's your travel rewards card or whatever else. I think it was a Kickstarter project, right, Jack? Or like it got a big—

Yeah, it started as Kickstarter. Yeah. Yeah. It was like one of the first to use, um, Sandwich Video, which is the guy that has done videos for like Square and all these lot after. His was one of the first ones to do it. And then it kind of went viral mainly because of the video.

So talk about the sandwich guy, 'cause that guy is interesting, right? So he has, if you haven't seen it, basically he was like an ad agency or not ad agency, I don't know what to call it, but marketing agency. And he would make videos. And so people wanted their version of the Dollar Shave Club launch video, which was like this really like funny, entertaining, but like told the company's story really well and got a bunch of customers, got a bunch of hype. And so if you go to their portfolio page, it's like kind of like a bunch of big winners like Slack and others. And at some point, you know, they were just charging so— and the guy himself, I think his name's Adam, is that right?

Yeah.

He's in all the videos, which is cool.

He's a good actor. He's like a good straight man.

You know, he like is the perfect like normal dude just explaining this cool thing. And it got to the point where it was too expensive. He would only take equity or he would like require equity now for these projects that he was helping launch into kind of the stratosphere. Is he still doing that or have they pivoted or what's the latest? 'Cause that was a few years ago.

Well, actually Coin was one of the first ones. So I think Coin, it was something like, The video was something like $75,000 or something, I don't know. They paid in cash, but actually, it was because of the video that they just did so much better than they thought. Then the guy just told him like, "Hey, dude, you pretty much blew it out of the park for us." He just gave him equity.

Amazing.

Even though he never asked for it. After that, then the guy was like, "Hmm, probably should ask for just equity in any future deal I do if this guy's giving it to me voluntarily." Probably should have asked for it.

We're going to talk about today is collectibles. And the reason why Jack is here is because Jack sold Vongle, is it 2 years now or a year ago?

Yes. Something like a year, 1 year.

But prior to that, he wasn't working there. He left and has had a lot of free time, like 3 years of free time, 4 years of free time. And what Jack does in his hobby is so weird. He just like buys and reviews tons of stuff and he definitely returns a lot of it, but he just, he just consumes information and he, and he loves trying new products. Like he's up. So like, I remember, for his birthday recently, his wife and me and a couple of buds, she got— we went to Tahoe and she got him a cake that was an Amazon box. Like, that's what he's famous for, is like just buying stuff. And for my wedding, the gift that he got Sarah and I was he wrote 2 or 3 pages and he said, this is the best soap for Black women's hair. This is the best low-sugar gummy bears. This is the best foot cream. This is the best towel because it has copper in it and copper prevents mold. And he like explained. And so he bought us like probably $1,000 worth of just gadgets. That were his best. So he just reviews everything, and his latest kick is collectible.

Um, hold on, before we even go to the collectibles, because that's an amazing intro. Jack, why do you do this? This is so funny that you do this.

Just, um, like, uh, I mean, Sam is exaggerating the thing about like best shampoo for Black people's hair.

That's why you got her, dude. You got her, uh, demon curled.

Yeah, but that's just the best shampoo in general. Like, it doesn't matter that it's mainly for African Americans.

Well, she's Black and I thought that you were being thoughtful and you got her like, I don't know.

I just got her a good shampoo. But it's just like, if I'm buying something like a backpack, then I want to have the best backpack. So I'll just buy 10 of them, try them out, and then return 9.

And were you always this way? Like, you're like, I got it. Because I remember even when Product Hunt launched, I think you were the number 1 person on Product Hunt and you were like a successful, busy dude at this point. But you were like, just like kind of these randos on Product Hunt, but you were like all over it. You were on every, you had the number one most hunted products or something crazy too. So have you been this way for a long time?

Okay. And I called you a few weeks ago, maybe a month ago now, because I had this very interesting collectibles situation. And I didn't even know you were into collectibles, honestly. I just called you because I said, Jack's really, really clever. And I think for this business opportunity, it's a, you either out-clever it or you don't do it at all. And so I just thought, let me talk to the most clever guy I know. And it turned out that you were like super heavy into the collectible space. And you started telling me all these interesting things. And now you can, we'll talk about it. And then anything you don't want to talk about, we can just cut afterwards. That's no problem. Just pull that back. But basically let's start with what I learned on that call. Okay, so I call Jack and I say, hey, Jack, I don't know if you know anything about the collectible space. And you were kind of, of course, understanding. You were like, "Yeah, I know a bit," which really was like, "I know everything, you know, you don't know shit." And you were like, "Yeah, I know a bit." And I said, "You know, there's this opportunity to buy this multimillion dollar collection for like kind of 10 cents on the dollar, but I don't know what I would do with it. I don't know how I would flip it. How would you flip this?" And what you told me was like, "Okay, there are these platforms out there, these new emerging platforms for collectibles, like Rally Road, like Otis." And you said, I've been using these. And in fact, here's some of the things I learned from this conversation. Jack is not only an investor in a couple of these platforms, he is the number one, probably, power user of all these platforms. You are— it's like Product Hunt all over again. You are all over these platforms while they are small. You're probably the most active user on the platform buying and selling stuff. You have a full operation in the Philippines kind of like helping you, you know, like a machine work the system. So tell us what you could tell us about this stuff.

They think you're like a virus.

Yeah. Or they were just trying to figure out like, dude, what are you actually trying to do? Like, how can we help you? Because this is not a good use of your time too. But it's just, as you highlighted, like emerging platforms, there's kind of different arbitrage opportunities somewhat. And what I've seen is, so from speaking, I've spoken to like the founding teams of these different platforms. I believe I'm like, they didn't want to confirm. They said you're the number 1 or number 2 user, probably in terms of assets under management there, because they're so small, it's not that hard to be their biggest user. What I learned as well speaking to some of these others is that you've got a few different users that are using these platforms, the majority of whom would fit into— they're calling stocks just like the Robinhood users that just don't care about valuation, and they're just buying stuff. Just because it sounds cool. What they're saying about stocks with Robinhood is what most users in collectibles are doing as well. Then you actually, it seems like you have sophisticated collectible people, more sophisticated than me, I don't know anything about what these things are actually worth. You're actually seeing a pretty strong, the market seems to be working there. Assets that are undervalued, they jump to being valued what they maybe should be. For example, there's these poker a Pokémon card collection that launched maybe 6 months ago. Then now, the platform got an offer that, hey, someone actually wants to buy the collection 4x the price they listed it at. Actually, what they do is they let the people that own that piece, they vote, should we sell or should we not? They actually voted not to sell, and now, it's trading at 6x the price. I was speaking to a founder of one of the other platforms, and he's like, yeah, that piece was undervalued. Somehow, people that are really into Pokémon cards obviously have found the platform and found that it's undervalued, and now they've bid it up to what it should be valued at.

How about we structure this conversation this way? First of all, we got to get background here, which is last week, Shawn brought up PSA. What's PSA stand for? Is that important? I don't even know.

Sports.

Yeah, it's a— Sports of art. It was a company that grades sports cards, right?

They grade not just sports cards, they'll grade other cards as well.

To highlight how I got into it is that I actually started looking at the collectible stuff based on the— because I was listening a bit to the podcast that Sam, you did with Gary Vee. You just kept asking him, what's the best opportunity? He just kept on saying sports cards. Then you were like, yeah, but what else is interesting? He just was like, I can't think of anything, just sports card is the only decent thing. I'm like, okay, well, If he's going into it that heavily, then maybe it might be interesting. And so actually how I started is I, again, with people in the Philippines, I just bought my own collection of 500 or so trading cards, like individual ones, and I'm storing them. But then I was like, this is like so much work trying to research what the actual fair valuation for a card is and doing all the accounting for it and then listing it to sell. So even though I did actually buy and flip some cards for a profit myself, I'm like, this is loads of work. Then I found that there's these fractional ownership platforms. They're basically doing all the work, and then they basically bring you like, hey, this— any collectibles, but some are trading cards. It's like, here's a really valuable card, it's worth $100,000, but users can buy $25 pieces of it.

Let's talk about Rally Road, because I think that's actually the one, the coolest one. Shawn, do you know Rally Road?

Yes. I'll give you the layman version of Rally Road. Rally Road is a platform that's letting you invest in what they call alternative assets. And these are things like, it could be a vintage car, it could be a Michael Jordan rookie card, it could be a Pokémon collector set that's, you know, unopened. And, you know, they'll put it up and it'll be thousands of dollars. And then like Jack's saying, you could do the sort of fractional ownership component where I can buy, I don't have to buy the full collection, but I can invest in that asset in the same way. You know, I could buy shares of Apple, I can buy shares of Tesla. That's the way that Rally works. Is that the, they captured the main bits there, Jack, did I leave anything important out?

They don't actually have that many products. I think they have dozens of products on there. They have a—

They have a few. It's blown up a lot recently.

It's got a lot more Well, as of recently, they had like dozens, and it was like a million-dollar Ferrari to a, like, a Babe Ruth baseball card, Harry Potter first edition. So it was kind of a random collection, but it was all so cool looking. They make it look so cool.

It's the Chicago Bulls 6 championship rings from Michael Jordan's run. It's a complete set of 6 rings, and I just clicked notify me when this goes live because it's, you know, valued at $300,000, and you can own a piece of the Michael Jordan kind of dynasty championship rings that they they have.

And this company has raised about $30 million. They're based in New York. Very interesting company.

So one other bit as well is that, um, I think a lot of their users, they're not doing anything about valuation, but they just want to own a piece. Maybe they support that sports team and they're like, oh wow, I can own a piece of that ring thing. So what they do is when you invest, they also sometimes they give, sometimes they actually sell memorabilia associated to it. So you can get like a share certificate being like, I own a piece of—

something you can put on your wall at home because otherwise you have nothing to show for it, right? That's, that's how when I used to go buy like an autographed basketball, that's going to sit in my office and people are going to see it. And you lose that value. You gain a lot of convenience, but you lose that value when you use one of these platforms. So it's smart, really smart. I think they're doing a bunch of really smart things. So I'll give you some examples of what's smart. So the things Jack's talked about where they kind of gamified it, I think is really smart because in any marketplace, like a marketplace all about liquidity, and early on you have pretty poor liquidity in the marketplace. So by compressing it where it's only going to IPO for one day and it's only going to trade one day a quarter, you're compressing all of the— whatever little supply and demand you have gets like aggregated into a short time window. So it actually feels like you have high liquidity during that period. So I think that's, that's really important. That also creates, you know, FOMO and it builds hype and it drives— it drives more demand, which is another way to fill the marketplace is by sort of manufacturing or amplifying the demand that already exists for it. I think that's a really smart business and product decision that I honestly don't think these businesses would work if you didn't do that at the early stage.

Where are they storing all this stuff, Jack? Because you were toying around with this idea of doing this, what's it called, a free port, or is that what it's called?

That's what it's called in the art world.

There's different rules for art and other assets have other rules. The free port stuff is specifically to art. It depends on the platform.— but what, let's say, Otis, for example, is doing, that they're just storing their stuff. They actually outsource it. They're just storing it in a normal collectibles vault. They're actually using PWCC, which is what I store my cards in. What is that? PWCC is a company that does their own grading, but they're not really reputable like PSA. So they're kind of just not that reputable for grading, but they grade stuff. And they're the largest auction house for trading cards. So it's kind of like the— whatever the big art auction houses are, they are that for sports cards. But then as well, they're in somewhere, maybe it's Texas or somewhere, that basically doesn't have any sales tax. And then there was news articles about it. They spent $3 million building a vault in the basement of their office, kind of like a bank vault. And so they can store trading cards for you as well. So they're kind of an all-services shop— grading, storage, listing it on their own auction house or eBay, and they also do lines of credit against your collection, which I can talk about more. But, um, Otis and Stuff store their trading cards there. However, some of the places like Masterworks actually have their own art gallery and are doing their own storage in New York, because one of the aspects they wanted Rally Road does this with some of their cars, is pre-coronavirus, a bit tougher now, they wanted to let users come and see the assets they own. Like, hey, come and see the car, and you can tell your buddy, I own $25 of this car, they can see it in real life, a real-life museum art gallery.

If I was going to invest in these companies, I think if I was going to rank them, PSA would have been number 1, because I think that they have the dominance of— they're the certifiers, so they become the kingmakers. Obviously, the demand has far outstripped their ability to fulfill it. Jack, give people a sense of, you send something in to be graded by PSA, roughly what does that cost? Roughly what's the turnaround time right now, which I think shows the opportunity that they have?

Well, you say opportunity they have, but they're like the dinosaur incumbent. Just because they've got the opportunity doesn't mean someone else can come up and grab it. PSA, basically all of the collectors respect their gradings. But this is because they have decades-long reputation and history of being the market leader. There's actually a competitive company called Beckett, which is— they were head-to-head, but then basically Beckett, maybe even like a decade ago, I'm not super expert on this, but this is what I remember, they basically had a scandal where some like professor had been like doctoring cards. He would just like take a knife and like cut the edges like He was really precise. And then it kind of got exposed that he had been doctoring them and Beckett had graded them like, oh, these are 10 out of 10, amazing. And so basically all the collectors started boycotting them and like, we don't trust their ratings. So PSA is like the only one that people trust because of these decades-long reputation. So if someone new comes up, they're not going to respect them because they don't have a history and track record. I don't know if I would invest in them now because I'm not sure how much growth potential there is, you know. It's a decades-old one. But to answer your question, right now, apparently they have a massive backlog, like 4 to 6 weeks or something. And basically the price that you pay to have your card graded varies based on what you estimate it's actually worth. So they have different price brackets. Like if your card is— you think it's worth over $5,000, then you have to pay more. I think the cheapest is something like $25, $50.

Yeah, I think it might go down as low as 10, but, but yeah, they have like kind of like a 3-month backlog right now. And I think that the opportunity for them would be, you have the brand and the trust, can you use technology to drive, you know, more velocity, more volume and make more money?

Right.

And I think they have the defensibility, but they don't have the innovation yet. The other thing that I think is interesting is PWCC. Ever since you told me about that, I really liked what they're doing. Can you talk about the lending thing that you're doing with them? I thought that was really smart.

They have custody, right?

What percent is in these alternative assets?

Maybe 10%.

That's a substantial amount for you. That's a lot.

I view these loans as like a separate asset class to owning. For me, I view this as like fixed income. Basically, I'm just getting a check in the mail every month.

Yeah, that's true. But to a normal person, like to my parents or your parents, they're like, Jack, this is kind of strange. This falls on that category of alternative property.

You're saying 10% is just the collectibles part, not the lending Yeah, well, I mean, the lending have only really started with it, so I only have a small—

Yeah. So right now you do Rally Road, which is base— which is everything, baseball cards, cars, boxing gloves, whatever. You do Masterworks, which is basically you can buy a portion of a Picasso. You can buy, uh, it's high-end art. What's Otis?

It's very similar to Rally Road. It's kind of a mix between Rally Road and Masterworks. They have high-end art but also high-end collectibles.

What's Mythic Markets?

It's more like niche. They're figuring out— they're the one of the— they're the smallest player, I think. They're figuring out the positioning. I gave them the feedback. Some of their stuff is like so niche. It's just targeting people that play Magic: The Gathering. Like, so they have like this painting of a card from Magic: The Gathering. I'm like, what the fuck is that? I don't know what the hell this is. Like, Rally Road is awesome because your parents would know most of the assets on there and be like, all right, that's pretty unique. They have the joystick controller that they used for the NASA mission that landed on the moon, or they have the first edition signed Harry Potter. Everyone knows this stuff. Then Mythic Markets has some stuff that's decent, some stuff that's just like, oh, this is the highest value card in Magic: The Gathering. It's like this plant. I'm like, what the fuck is that?

What other categories interest you? Because I have a few that I'm thinking about. Do you have any that you're like, there needs to be a marketplace for this, or this is a category that I think is going to pop in the next 5 years?

Well, kind of Rally Road is trying to be the platform with all of those. They have different tabs for all of the assets. They have wine, all of these. They don't have art, but there isn't really much of an asset class in terms of collectibles I could think of that— I guess one I haven't seen is maybe currencies, like unique currencies or historical artifacts from like dinosaur bones or something.

That's interesting. Do you guys know, uh, I actually don't know how to pronounce it even though I go to it all the time. Is it called Hodokey? It's the watch one. Yeah, it's— how do you— I don't even know how to pronounce it. It's one of those words that you like read it all the time. Hodinkee or Hodokey.

Oh yeah, yeah.

They just sold a majority of stake. So basically it's a weird company. I don't know if it's considered a media company or an e-company., but they started out by just blogging about watches. Now they sell special edition watches. And I believe— and Abreu, you'll have to double-check— I believe they just sold on Friday or Thursday last week, and I think they sold for around $100 million and they're doing $20 million in revenue. But basically the idea— and I, I'm a very low collector of watches. It's— I'm very new to it, but it's for like, you know, high-end Rolexes and things like that. And I noticed that when I went to go and buy, I bought a I own two Rolexes from the '80s and '70s. If you want to buy an older Submariner, they are so hard to find right now. Watches, they've always been popular, but Louis Vuitton bought this company, which is an interesting signal.

Well, also, they also had an interesting background because they were a company that had been going for many years. Then Kevin Rose, who's the founder of Digg and stuff, he had raised maybe $5 or $10 million, like a startup studio. He was messing around with ideas, and he didn't really know what to work on. He just merged with the ancient company, and then just made them sexy. He was CEO for a year or two, then quit. Maybe he just made them more tech respectable to—

I think that's an interesting category, is watches. I think they're growing. A lot of young celebrities, John Mayer, cool people are super into them. I think that category is going to actually get a lot bigger.

I think that categories is hard because, like Jack was saying, I think that the larger— the most popular platforms will do well as they can just add your category faster than you can become large. There might be some exceptions. Like, I was looking at a company to invest in that's comic book space, and they have like a good reputation in the comic space. They are, you know, well known in that community. They already have relationships with all the kind of brick-and-mortar stores. And so, you know, they might be able to get to escape velocity in, let's say, the comic book world, which would maybe have a different population. I think that for the most part, there's the opportunities in this are, look a little bit different. So there's things like, Sam, do you know NBA Top Shot?

The game you played at the bar?

No, that's Pop-A-Shot. So Top Shot is a new collectibles type of thing. You know, the guys who started CryptoKitties? Do you remember CryptoKitties?

Yeah, it was like a joke that turned into like a huge thing on accident.

Yeah, kind of. So they pivoted to something called NBA Top Shot, or that's what they focus on now. I don't know if they fully pivoted or what, but what it is, is it's a crypto-based thing. These are called NFTs, non-fungible tokens, meaning like for Bitcoin, all Bitcoin are the same, my Bitcoin and your Bitcoin, you can't tell the difference. But like for a collectible, like mine and yours are two distinct things and there may be only 10 of mine in existence, right? So that's what NFTs are. The blockchain now allows for people to build NFT-based things. And so what these guys did was they initially made CryptoKitties, which was a collectible of these different types of kitties that they made. And it kind of went viral because it was kind of funny and goofy and whatever. And it kind of faded out. But what they're doing with NBA Top Shot is they licensed, they partnered with the NBA. NBA, and they licensed out moments, highlights, basically. So you open up a pack, and instead of getting a player's card, you get LeBron dunking in 2009 against the Orlando Magic, this one awesome dunk he had, and you get that. And they basically say that there are 400 of these highlights, these moments, these Top Shots in existence. You got one of them, and that's in your collection now. They tried to turn, instead of a static trading card, they're saying of this video moment that's 5 seconds long from, you know, the NBA, that's actually like, And they, they sort of artificially create the scarcity around it by saying there will only be this many of this moment ever created.

That bullshit to me, right?

Well, everyone's got a different opinion of it. I don't know. I've opened up one pack just to see what it was like. And, uh, and actually, Ben, Ben, you should— Ben's on the call too. Ben, you should tell them about the Top Shot you just opened and your reaction to it.

Yeah, I opened a pack and I got a Cam Reddish dunk for like $30. I don't know if you guys know who that is.

He's like a subpar NBA player, and I was like I was like, how the fuck is this going to be worth anything at any point?

This is kind of odd to me. I'm on it right now. They're selling stuff for $200, $300.

And also just collecting clips, I think, is— I can see why you would talk yourself into the idea and why it would sound cool in a pitch deck, but in practice so far, I don't think it's that cool.

The one bit I do think would be interesting, actually, sorry to interject, Jon, is that I don't think that this this virtual asset on the blockchain is interesting to me right now. It's too early. These assets, a video clip has no underlying value, but I would be interested to see Otis or Rally Road or a competitor put physical collectibles on a blockchain. Then I could own, like let's say they could just tokenize assets. Then a Michael Jordan trading card, I would have it as a— coin, and then I could send it to my friend, the coin, or sell it on— then you could have multiple trading platforms, then independent. That could be interesting, physical collectibles on—

Does Rally or anyone, do they let you send a fraction to a friend? No. Can you gift? No. Okay, that's interesting. I would say, okay, one opportunity is these guys who are trying to basically say, okay, shit, all the traditional collectibles, they're already on traditional platforms, so let's create a new collectible. That's what they're trying to do with this moments thing. Now, it may work, may not work.

Sorry, just to add in, Sean, actually, Otis is doing one bit like that. Otis is doing collaborations. They're doing like Otis x some guy. They haven't done that well so far with it, to be honest, because again, they're creating a collectible just for Otis. There's no data on what its actual value is.

Then there's another angle here, which is making it easier. One of the problems when I was looking at buying this collection was I was like, shit, I don't know what any of this is worth. Worth, you know, I'd have to send it in to go get graded. That's kind of expensive. And then, you know, we looked at, for example, there's a couple of apps that are doing what are called live breaks. Sam, do you know what these are?

Yes. And you talked about it last week, and then people on YouTube are doing it. I looked up this— I watched this Logan Paul video, 10 million views of him opening a deck of cards. And then there's this other guy named— is his name Pac-Man? I think his name is. And it's a channel with 2 million subscribers, and all he does is opens packs of cards.

Well, actually, I had been approached by a couple of users in the Trends Facebook group that are working on business ideas in the trading card space. One of them is looking to build an iPhone app that will try and use AI and stuff to give you their opinion about the grade as well. Doing that and grading it, that they would maybe grade it for $1 instead of $25. —right— obviously this is just their opinion, but you could maybe just have a rough idea.

So it's one of the reasons I think that's interesting is because there's a lot of people out there that just have a collection from when they were a kid, when this was not a money-making thing.

And they're just like, ah, for the hell of it, let's just see what happens.

I always get caught up in this shit because I'm like, all right, Jack's talking, he's got a large, potentially maybe millions of dollars involved in this, but he said himself that he knows nothing about sports cards. It's so odd though that you've got these people that are creating like At the end of the day, there's got to be someone who wants to buy this just to hold on to it and look at it or hang it on their wall. Isn't it so weird how this market is being created around people who actually aren't fans of it?

Well, I think that's the beauty of it, right? This is just like Bitcoin or many other things, which is that the value is in the belief of it. So some people want it for the tangible use, the same way some people want gold for jewelry, right? They want to put it on the wall, they want to look at it, they want to think fuzzy thoughts about Michael Jordan every time they see it. And other people like Jack are just saying Oh, here's a scarce asset. Here's a rare asset that I can put some percentage of my net worth into, and I see the trends of where this stuff is trading, and I know that not more is being produced, and it's a safe store of value for me. I don't think my wealth—

that's my question. Is it that safe? So for example, let's say that you have a card of a guy, and tomorrow he says something racist, or he rapes someone, or he dies, or like, let's say happens in NBA, this guys get injured, right, and their card value goes down. Yeah, like what happens if Jordan does something tomorrow? He has an O.J. Simpson moment where it's like, oh my God, you are not a good guy, you're a bad guy. Something crazy happens.

Does that mean when they die, when they die, the price goes up 4x overnight?

Jack's waiting for these guys to die. I don't know who Wayne Gretzky is, but I can't wait till that guy creeps.

They say any new, any, any news is good news, right? If he said something racist, it gets banned or whatever, it makes his card more valuable. Like O.J. Simpson's cards are probably really valuable.

That's true. It also happens, right? Because right now all these rookie cards for like Luka Dončić or in the NFL, this guy Joe Burrow, he was a rookie, he was the number one pick, his card was worth X, he got hurt, he like blew out his knee in a recent game, his card value went down by about 50%. And a whole bunch of people are buying because they're like, look, I believe in Joe Burrow over the 15 years. This is my opportunity to— but it's kind of like a growth asset. Then I'm trying to make a bet because I think I can get a 4x multiple on this if I'm right. And that game of being right and wrong, I think, is what makes it fun. Just like, you know, in many ways people do that with stock market, right?

It's like, I love listening to mob stories and I listen, I follow all on YouTube, all these guys who are in the mob and they're like, yeah, uh, two things would happen. First of all, we would take so much money for a sports game. And in the '70s and '80s, you know, the athletes weren't making as much. And so they were able— like, we were able to bribe them. Or the athletes were notorious gamblers, and they would get into debt with us, and we would say, all right, make sure that this happens next game so we could bet money on it. I wonder if you're going to see anything like that going on, because this is like one of the very few assets— I guess you could do this with stocks, although there's way more regulation around it. But this is one of the few assets that it seems like you can meaningfully manipulate.

Jack, if Jack wanted to, could partner up with 3 other people and could pump. You could pump and dump all day probably on these assets because there's not enough volume.

That's what I'm saying.

It's crazy. You could take $10 million probably, and you could move markets and just profit every single time you do because of that. The same way people did this with ICOs, kind of like these shitcoins in 2017, 2018.

There's this famous episode from Entourage, that TV show Entourage, and I'm not a baseball guy, so I'm not gonna remember this, but there was a baseball player in the '60s and '70s for the Yankees, Sonny something, I don't know, maybe you guys know. And one of the guys on Entourage was like, hey, my grandpa's neighbors with X player. They say he's really, really sick. He's about to die. And so they go and buy his card for $250,000. And then they're like, oh, my grandpa said that he recovered. And they're like, they're like, shit. And they lose all this money. What's it? You know, I'm talking about the famous. Yeah, I don't have to remember.

But anyway, it was like, I'm afraid of that happening in terms of the tampering or sort of like the mob. I mean, sports betting is the way better way to go about it if you wanted to do it right, betting on a game. And getting somebody to shave points or throw is much easier than like decapitating or killing somebody for their card value. Right. So I think sports betting is a much bigger market, would be much easier to tamper with. Now, there is, of course, risk, right? If there was no risk, there would be no reward. So the risks that you're talking about are the risks that go associated with this. I think that's like, okay, I wanted to bring up two other things that are interesting. I probably should have led with this one, which is eBay.

Sandy Koufax, by the way. Sandy. Sandy. Okay. That's Sonny Koufax. I'm so not a baseball guy. I know he's like a big deal.

They've also been featuring on their homepage trading cards for quite a long time. So, you know, they're pushing that to every user that visits the homepage of eBay.

Here's another opportunity, or here's another idea that I've seen that I actually really like. So what are the opportunities people are trying to stretch? So there's Rally Road and others who are trying to be the marketplace. They're trying to beat eBay. Then you have people who are trying to create new collectible moments or items. That's like NBA Top Shot. And then you have people that are what I call making the on-ramp easier. So that's kind of what I was saying where I was like, even if I bought a pack, I wouldn't know what the hell it's worth. So there's a company that I talked to yesterday about potentially investing in called Dibbs. And actually, uh, D-I-B-B-S dot I-O. I'll tell you a funny story about the pitch. It had like every red flag you can imagine during the pitch. I hope the guy's not listening. I feel bad if I do, but like, I gotta say it was a hilarious pitch. He's like, A nice guy, but he's like, yeah, I'll tell you the 5 red flags. Red flag number 1, he's like, oh, my background is I was doing social media marketing. And I was like, that's like, to me, like, I know that type of person. So you have abs? Yeah. He was like good looking, funny, and had abs. And I was like, okay, already I don't want to invest. You're too good looking for me. Second thing was, oh yeah, I live in Colombia. I live in Medellín. I was like, ah, why do you live in Colombia? I don't know. I don't want to know this story. You're like, okay, that's already like— Is it American living in Colombia?

American living in Colombia. Did he have an ICO under his belt?

Yes. So that was the next thing. Oh my God. Spent the last 3 years doing marketing for random ICOs. Oh my God. I just predicted this.

Does he have a Ferrari?

Okay. Very close. Very close. So there's 2 other ones. One was, I can't say his name. I don't want to totally, totally bash the guy because this is just for jokes, but his name is the name of a city and his partner's name is like this total white guy name who lives in Santa Monica. And I was like, oh God, these names. I can't even deal with these names. And then the last he had posted, I was stalking him on Instagram during the call, and he had posted like this video of like Grant Cardone. He was like, Grant Cardone is the man, I love Grant Cardone, I aspire to be like him one day. And I was like, you know, no offense to Grant Cardone, I think actually he's kind of interesting, but like anybody who admires him, that's like, I'm like, okay, that's the sort of like level of depth you have around kind of your, you know, who you are, what you admire in many ways. And so like for people who are like, Gary Vee is the most brilliant businessman I've ever met, and it's like, you know, he's just so inspirational. I'm like, okay, that's cool, like I'm glad he's inspiring you, You know, that's one specific type of like celebrity entrepreneur, maybe for that to be your hero.

This guy just checked all the boxes, man.

RAOUL PAL: Well, the idea that I was having on this call, I was just thinking you could abstract it a step further. If you get someone who actually knows financial markets, they could just launch an actual ETF on the New York Stock Exchange. I would just start with, well, one, you could just have alternative assets. As an ETF, just have it so broad. Then going in deeper, then you could just have sports cards, or art, because actually, one guy I know, he's just launched an ETF for Bitcoin in Egypt and Africa region and Europe. You can't trade it in US for some reasons, but he's just making a bunch of money, just made an ETF for Bitcoin. How easy is it to make an ETF?

Because I know people have been trying this for Bitcoin in the US and just getting blocked. But I don't know, we just don't do it in the US.

Just, I don't know if that's a Bitcoin regulation.

Do it in Colombia.

Holler at your boy. Yeah. Good guy.

Oh, that was the, that was the other one. He's like, oh yeah, we use the blockchain. And I was like, oh, why do you use the blockchain? He's like, um, sort of our secret sauce. I don't really want to talk about it. And I was like, wow. Okay. Hadi San Diego.

That's his name. Hadi San Diego doesn't, doesn't know his shit. Okay. So you could launch it.

So, so, uh, Jack, do you know how long this guy was working on launching an ETF in Egypt or wherever you just said?

Well, you can— it's quite big, actually, and you can trade it in, um, he's in Egypt, but then it's basically you just can't do it in the US because of some rules. But, um, basically what you— I don't know how long it takes, I would guess maybe like 6 to 12 months or something. But basically what you can also do is the simpler thing, how these things often start, is you— there's ETFs and then there's indexes. So indexes you can't actually trade against, they are just a way of tracking. Then basically, people can create ETFs that mirror an index. There's probably already an index for the art world, just create an ETF, allows it to be tradable. RASHID KHALIDI: You could do this in Europe.

I was looking at— this company that's behind this stuff is called Panini. Panini is a European company. What ended up happening, I was like, why does this European company make all the basketball cards? What happened was Panini was like a billion-dollar company back in 2009, something like that. They're doing a billion-dollar revenue, it's probably worth a bit more than that. They were big in the space in soccer, I believe, and in Europe. And I don't know the full history, but what happened was they came to the US and they outbid Topps and Upper Deck for the basketball rights. So they got the NBA rights, they outbid them. And so all the basketball cards that are like super, super hot right now, like that's probably like the most bought into card collection right now is basketball cards. And they're all by this company called, you know, the cards are by Prism. Prism is owned by Panini, Panini's the maker of it. And so I don't know how long these rights work, but they got basketball, they got hockey, they got for baseball, they got like a certain type of right where they can't show the player in uniform, uniform. They can show something else. But they were basically pretty aggressive, and they outleaped those guys. And so I think you could do potentially an ETF in Europe where you have to have the belief in alternative assets, and maybe the regulation is looser there. So I like that. This could be like the way Chamath and these guys are making $100 million per SPAC. This could be like that.

Is that how much Chamath is making, by the way?

Oh, more than that, dude. I think he's making like $100 million or more per SPAC, and he's doing 26 SPACs.

They get like 20% of the capital raised. As the manager. Some of these are like entrepreneurs. I just had another idea. Basically, the opposite of that kiddie cards thing, whatever. I think lots of stuff is going virtual, but I think there just is intrinsic value in physical. The more stuff goes virtual and virtual, that's why I'm bullish about physical stuff like Harry Potter stuff stored in a vault, because you're preserving a time capsule. Physical is important. I just had another idea, a bit more niche, but Couldn't they just create trading card, physical trading cards, but for esports players?

Yeah, so there's a couple of companies that are doing this. Is there one in the app? The more popular version of it, actually, because esports players themselves are actually not that popular, but the idea of a YouTuber/Twitch streamer, which is basically the subset of either really good player who actually gets famous, because otherwise, esports players are like this nameless, faceless— only hardcore people know about them. There's a company called LMAO. So what I saw this come out and I thought this was interesting, or L-A-M-O, LAMO cards, or not cards, they're doing it as dolls. U2s is another one that's making these little collectible dolls that are on either memes or influencers. And what LAMO did was they partnered with the 4 biggest Twitch streamers. And the way they did this was they gave a piece of the company to the agency that manages it, or the agency that manages it incubated this company. I'm not fully sure what the deal was,, but there was this agency called Loaded. And what Loaded did was they said, hey, we represent Ninja, who's the number one streamer in the world, also DrDisRespect, also Summit and Lyric. And what these guys did was they made this collectible little figurine, action figure basically, of each of those streamers. They actually sell them in physical stores. They did an activation at like Comic-Con where they built like a 6-foot-tall version of it, put it outside and said, scan your phone on this, like put your, hold your phone up to this. And they put a QR code on the body so that when you held it up on your camera, it launched their website and said, "This is coming soon." And it also was like an AR thing. Like when you were holding your phone up to it, action figure like came to life like a Transformer and had like smoke coming out and whatever. It was like, "Buy this thing coming soon." Pretty intense. It didn't take off as big as I thought it would have, but I don't think that that's a bad idea. I would still go after that if I could, right? Because it's the same idea, right? What's the difference between LeBron and Ninja at this point, right? Both of them have 20 million followers and armies of 13-year-olds who think that they're gods. Could you turn that into a physical trading card asset and license their brand and likeness? Probably in a way that you could never do with sports, because it's all too— it's done already.

Is anyone doing income share agreements for Twitch people?

Now you're talking Sean's language.

Someone is just a brand new streamer, and you join together to give them $100,000 because you think they're going to be massive, and then in exchange, they give you 25% 5% of their next 5 years' income.

So there's two things that are like this that are interesting. One is some people have tried to copy the K-pop model. So this is how K-pop works, right, in Korea, which is they basically say, okay, come to our factory, right? We have a studio with cameras and lights. You get to come into our accelerator like a Y Combinator, and we're going to teach you how to build your brand and all this stuff, but we get a piece of you and we get to represent you as your agency.

And I think that's what, like, what BTS— what's it BTS.

Yeah, I don't know if BTS came out of that, maybe they did, but that's a very common, very popular thing in Korea. So some people have tried that in the US to mixed results. But the bigger version of this was actually the other day, MrBeast, who's one of the— probably the fastest growing YouTuber. Are you guys familiar with MrBeast? Yeah, he does these videos that are like kind of just like random ass.

He like will give away 5 cars to people who need them.

How's that different to just getting an agent?

Because MrBeast can blow you up, right? So he can shout you out on his channel. He can basically kingmake anybody who he thinks has the raw ingredients. But what's the incentive for him to shout out these cool people? Well, if he owned a piece of them, like if he had a portfolio of these up-and-comers, So he's not on the content treadmill every day. He uses his following to put the next person on the treadmill, and he just sits back and relaxes from there.

Yeah, I'm into all this shit. I think that this is— we're at the hour. I think that this is— I want to go work at Rally Road. That's what I want to do. How fun would it be to work at those places?

What type of returns are you seeing investing in these IPOs when you think, like, I guess what's good, what's normal? Is it super volatile? What are you seeing?

Not sure about blended returns. And I'm doing this with a longer time horizon. It's kind of hard to quickly flip stuff. But RallyRoad has had some awesome exits in the past year. So basically, you can buy in at the IPO stage, and then maybe someone off the platform is acquiring it for double the price, quadruple the price, or you can just buy a bunch of shares during the IPO, and then like flip them to someone else later, you know. The challenge is that you kind of have to have some money to start with. I think the people, if you're coming there not with much money, like if you're coming there wanting to buy $25 worth, I don't think you're going to make much money because you're just washed out by the whales. All these platforms are having stuff like, for me as a whale, they're doing presales for me. I can just buy in before anyone else actually sees it.

JP Morgan does this, or whoever will do this before an IPO. They go to their big clients and they say, hey, you get the early bid on the IPO before DoorDash goes public or whatever.

I'm not sure about blended returns. Pretty low at the moment, because as I said, looking— want to have a few-year horizon. Hopefully, I don't— Do you have a goal?

You have a goal?

10% to 20% a year. What did you say?

10% to 20%? Percent a year return. If something's like an alternative asset, it should be paying outsized returns. For the risk.

Are you doing it for that reason or you're just doing it because you just want to do it?

Just both. Yeah, it's kind of fun.

By the way, Ben just linked us this thing in the chat. So after MrBeast tweeted that out, he then made a video saying get this random person a million subscribers on YouTube and he just tagged this guy @Zealous. And if you go to Zealous's YouTube channel now, he has almost 2 million subscribers now. Thanks to MrBeast, right? So he just literally, it's like if Sequoia could invest in you and get you your first 10 million DAU basically. That's basically what he did. That's basically what he was able to do.

Wow. What is that one that he got 2 million views? What's that called?

Zealous. Z-E-A-L-O-U-S. Yeah, I posted it.

I'm not sure how many he had beforehand, but I think it was a small account.

He made a video about it, like he made it into a contest.

I mean, that just proved the power of MrBeast. I just got one other idea though, Sam, related to the Houdinki thing you were saying, that are they a media company or are they an investment company? It would be kind of interesting to see a media-type company tapped onto Rally Road or something.

Well, that's kind of what they are. A good example of this is Huckberry. Huckberry is a weird store. Huckberry is a store that sells just guy stuff, so camping gear or guy clothes or outdoor stuff. It's like REI, but for yuppie guys. And they tell the story behind the clothing. And with Rally Road, whenever I go to the stuff, I'm a car fan, so I like I like hearing the history of that car, or I like hearing the history of that baseball card. I want to know the history around it. And I actually do think that they do need to do a better job of telling the story because I used to work for this TV show called American Pickers, and we had 6 or 7 million viewers a week at the time when I worked there. We were number 2 on cable, so it was the second most popular show in the country. And the guy, Mike Wolfe, the main guy, would go and tell the story behind a gas pump. He would find a '60s gas pump, and he would say, this was created by Mobil Oil. Mobil Oil made it this way because in World War II, they didn't have enough supplies, so they had to do whatever. And people would come in from around the world, and they would buy this gas pump because of that story, and they would pay a massive premium for it. And I do think that a lot of these platforms, they need to do a much better job of telling a story. And if they could copy media companies' strategy of storytelling, I think they'll have a significantly larger business. This. And I think Ben said something about— what was this? Someone's a newsletter for fractional assets. What are your— Atlan Insights.

Well, this one went a little long. We normally keep them at an hour, but I think it's good. This was fun. Anything else we want to go over, Sean?

No, I mean, thanks to Jack for coming on. Jack, is there anything else that we didn't talk about that we should have?

You learn by watching how the markets react over time that I've just seen, like, oh, okay, this Pokémon thing, it was available at this price, and it now has gone up to this price. And I would kind of just see how the markets move. I mean, one insight is for Masterworks, they have a minimum of $10,000 per art piece because these are like $5 million pieces of art. But what they do is they segment their users —when they're doing Google Ads and stuff, they're like, hey, if you have over $10,000 to spend, go here. If you don't, then they direct them to the trading platform where you can buy a piece for like $20 apiece. Actually, what I'm observing on Masterworks is that on average, every single piece on their platform, none of them are trading below the IPO price. Basically, if you had bought, you would not have lost money. The challenge is that they don't have much liquidity yet. You wouldn't be able to sell all your shares all at once, because $10,000 would flood the market. It is interesting observing on the countryside, Rally Road, a bunch of their cars are like, some of them are down 50% from the IPO price. It's not to say that you can't lose money on this. That's why Rally Road does seem to have more accurate market for what the true valuation of the set is, because some of their assets are trading below Got you.

Jack, do you have a lot of Bitcoin? Yeah. What's your take on Bitcoin? What's your like?

RASHID KHALIDI: That's great. By the way, I did the same. I went to a wedding in DC, and my aunt who has a thick Indian accent tried to tell me about how great Ethereum was. She's like, Ethereum is very good. I was like, you know Ethereum? What's so good about it? He's like, very good, very good investment. And I was like, oh God. So I came back and I tried to sell every crypto I had. And this is when Bitcoin was at $3,000. So I had gotten like a 10x and I sold as much as Coinbase would let me. And then I hit the limits and I was so upset. And it turned out to be a horrible move, right? If I just held it, it would have done better, which reminds me of, I think your rule of thumb is absolutely right, right? It did, it ran up to $20,000 and then it crashed back down. But there's another phrase that goes around, around money is the bubble that never pops. It's unlike other assets. Because there is no checks and balances around it. Like, a stock can— like, Tesla stock is like running up out of control, and at some point they will have to deliver profits against that valuation. And if they ever have a setback in their production or their profits or whatever, it's gonna hurt their stock. There is no revenue, there is no profits of Bitcoin. The price is the stock, the price is the profits. And so the more the price goes up, the more people believe that this thing will keep going up. And that is the— I what's happening with Bitcoin?

My understanding is it's either in the top 5 or top 10 of all currencies in the world right now in terms of assets in that currency. It could easily become the number one held currency in the world. It's very appealing because it's not owned by any government or whatever.

I had a long talk with my wife last night because I told her how much Bitcoin I had been buying over the last 2 weeks. She's like, what are you doing? She was more like, why didn't you talk about this? I was like, it's an investment. I'm not buying things. It's an investment. And she's like, that's like if I went and bought a house and didn't tell you. And I was like, no, but this is an investment. It's not like I'm buying things.

Speaking of which, Sean, did you ever sell your house? Yes, I did. Was it a bloodbath? Yeah, I lost like $180K total.

Oh, oh, well, I mean, yeah, that sucks.

But like, I would have thought it would have been even worse.

Well, it's just like, right, like you lose that out of your down payment, right? So I lost like whatever, 20% of the money I had in the property I lost, right? So it's a 20% loss. It's not— that sucks. Not great.

That's not great. But like, the way that I see the headlines now in San Francisco, it's like death and over and carnage.

I'm lucky that I got out at all. I think it would have gotten much worse. That's what I'm saying. I only had one offer. I had one offer and I took it.

And who was it, like a family or just a rich person or what?

Yeah, they are like kind of an exec at Wealthfront. They're both execs at Wealthfront. One's like the head of out of whatever engineering or design, the other ones that have been of design or something like that. I don't know. They're both like kind of like top-ish people at Wealthfront, I guess. So they were unaffected, you know, by the— but you know, they weren't like the economy was not hurting their business necessarily.

Right. But, uh, it seems everyone else is getting the hell out of there. Yeah. I mean, everyone I know at least, but yeah, ETF to be able to short San Francisco.

Ah, now you're talking. I really think Jack, I'm surprised you're not in the SPAC game. I'm surprised you're not the guy with the ETF in Egypt.

Or like, you know, but the thing about Jack is he's got the IQ and the ability to pretty much pull off all this stuff, but he's missing one major component. What's that component, Jack, that you're missing? You know what it is.

Um, social, emotional intelligence. You're incredibly lazy. Okay.

That as well. I'll say, Jack, I'll say, Jack, why don't you do this? And the answer is always too much work.

Way overboard on things that most people wouldn't lift a finger on. Didn't you like spend like a month building a chair, like a super ergonomic chair for yourself?

Oh, I didn't actually send you the photo. I actually, um, I bought the Altwork now, which is like the actual— gotcha, gotcha. Yeah, um, but SPACs, I can't say anything, but actually like speak to me in like 3 months about SPACs.

Oh, okay, okay, great. I love it. Crazy, crazy. Okay, we should stop recording and we should start talking to them. All right, we should, we should wrap it up. Thanks, Zach, for coming on, man. I appreciate it. Thank you.