Uncorking Wealth & Making Fine Wine Investing Easy with Vinovest’s Anthony Zhang – EP 138

Interview with Anthony Zhang

Uncorking Wealth & Making Fine Wine Investing Easy with Vinovest’s Anthony Zhang

In this episode, you’ll learn:

✅ Anthony’s incredible story from paralysis to running a start-up from a hospital and building seven-figure businesses by age 22.

✅ What makes wine an unrivaled alternative asset and an effective hedge against inflation.

✅ Tactics for constructing a profitable wine investment portfolio and getting outstanding returns without the need for physical storage.

Featured on This Episode: Anthony Zhang

✅ What he does: Anthony Zhang is the Co-Founder and CEO of Vinovest, a platform committed to democratizing wine investment by significantly reducing cost and complexity for the average investor. He’s a proven leader who has founded/led growth & marketing teams at three venture-backed companies. He built his first company at 18, eventually growing operations to 22 markets and employing over 1,500. He also oversaw $10MM+ annual marketing spend into online media channels, SEO/ASO, offline marketing/branding campaigns, PR strategy, events, affiliate/influencer marketing, partnerships, and content development.

💬 Words of wisdom: “In tough times, that’s when you separate who is really there with you.” – Anthony Zhang

🔎 Where to find Anthony Zhang: Twitter | LinkedIn | Instagram

Key Takeaways with Anthony Zhang

• How to establish dominance in niche markets.
• Receiving a grant from Peter Thiel and pitching to Mark Cuban.
• How far are you willing to go to see your business thrive?
• Great teams and people you trust are the backbone of any company’s success.
• Why wealthy people allocate only 25% of their portfolio to the stock market.
• Marrying lifestyle and investing with wine and spirits.
• What separates a fine wine from the rest of them.
• The reason behind Vinovest’s expansion into the whiskey market.
• How investors can profit from their investments in Vinovest.

Free Strategy Session 

The Lifestyle Investor Insider

Anthony Zhang Tweetables

Resources

• Vinovest
• Anthony Zhang on Twitter | LinkedIn | Instagram
• EnvoyNow
• Château Mouton Rothschild
• Château Lafite Rothschild
• Château Haut-Brion
• Château Cheval Blanc
• Thiel Fellowship
• Postmates
• Grubhub
• Uber Eats
• Mark Cuban
• Mark Burnett
• JoyRun
• FTX
• Château Margaux
• Screaming Eagle
• Harlan Estate
• Château Ausone
• Dom Pérignon
• Cristal Champagne
• Krug Champagne
• Domaine de la Romanée-Conti (DRC)
• Domaine Leroy
• Domaine Rousseau
• Sassicaia
• Ornellaia
• Solaia
• Tignanello
• Opus One Winery
• Dominus Estate

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Read the Full Transcript with Anthony Zhang

Justin Donald: What’s up, Anthony? Good to have you on the show.

Anthony Zhang: Hey, Justin, always great to be here and chatting with you. It’s been a while.

Justin Donald: Well, this is going to be a lot of fun. There’s a ton that we can cover. You and I have been huge fans of wine and the wine world and wine by investment. I not too long ago had my sommelier on the show and we had just this epic trip. And we’ve been doing these really cool wine parties but we had this epic trip to En Primeur in Bordeaux and went to like all the crazy parties, The Great Gatsby-esque parties that they throw and the who’s who that you rub elbows with. I mean, it was a really cool experience in Bordeaux here. And so, I’m excited to kind of tie a bow on all of this wine stuff, all the wine investment opportunity, all the wine enjoyment, consumption. I’ve done several episodes on it, and I’m really excited to kind of wrap the wine sessions here with you.

Anthony Zhang: Absolutely. Well, that is one of my favorite topics. So, excited to dive in and chop it up, Justin.

Justin Donald: Well, I’m curious how you got into wine. I’d love to just talk about that real quick before we go through the myriad of other business opportunities and expertise that you have. But let’s talk wine for a second and then let’s go back in time because you’ve done very well as an entrepreneur and you have a Rolodex of people that most would, they would just die to have on their speed dial as investors and as board members and as advisors in some way, shape, or form.

Anthony Zhang: Yeah, absolutely. Well, let’s start with wine. So, I was born here in the States, but I actually grew up primarily in Asia, so I grew up in Hong Kong, in Beijing. And in the early 2000s, that’s when Bordeaux was becoming all the rage in China. So, I just remember just hearing about, “Oh, wow, French wine,” especially wine from Bordeaux, right, and you think of the great first growths, Mouton, Lafite, Haut-Brion, Cheval Blanc, right? Those are all of the ones that were just really so coveted, right? It’s really when the French market was starting to hit Asia, those exports are really rare and hard to come by. And I always thought wine was really cool because of those reasons. It was like, wow, this is one of X many bottles that even made it into China this year. And once you drink it, that means there’s X minus one left, which makes the remaining supply that much more coveted. And I kind of forgot about it when I went through high school and beginning of college but it wasn’t really until I met my now wife, who is a huge wine lover, by the way, that started rekindling my passion for wine.

We were huge foodies, going to nice restaurants and with nice menus where you have a nice wine list, and just me wanting to impress my wife, started researching. I didn’t want to be a fool and not know how to pronounce the right wine or the right pairing. And that passion kind of led to us taking our first trip to Bordeaux, now nearly ten years ago, and that’s really when we fell in love. You know, we learn more about the agricultural element of it, the historical part of it, the family-owned aspect of it. And then it wasn’t until a few years later when I started my own wine collection that I became more acquainted with the secondary market, the undeniable economic gain that you can have by owning and storing and collecting wine.

Justin Donald: Well, that’s a great segue into what we’re going to dive into today. And by the way, I feel so blessed to have had the privilege and opportunity to be standing in and tasting wine from some of the most exclusive chateaux in the world. So, you mentioned of Chateau Mouton Rothschild, Chateau Lafite Rothschild, Chateau Haut-Brion, and various others. Just it’s such an incredible experience to be standing in a place that has been producing wine since the 1500s, in many cases, since Napoleon himself was there on site, drinking wine with the makers of some of these world-famous chateaux. It’s incredible to think about the history, right?

Anthony Zhang: Yeah. And that’s really one of my favorite parts about wine is thinking about what was going on in the world in 1957 or 1996. What was the world even like? Who are the winemakers there? And how many other previous owners even exchanged hands for this bottle before it led to your dinner table?

Justin Donald: Well, I’m excited to dive into this more. Before we do, let’s explore, like the early years for you as you are figuring out that you are an entrepreneur and I’m curious like what the season of life was where you figured that out and how did you know about the Peter Thiel Fellowship and that that existed and that you could have a shot at getting in there? And then what was the process like of actually being accepted? That’s a big deal.

Anthony Zhang: Yeah. Let’s start there. So, I went and did my undergrad at the University of Southern California in Los Angeles and about two and a half months into my freshman year, I started what would become my first business, EnvoyNow. So, EnvoyNow was an on-demand food delivery app for college campuses. What really made us stand out from the Postmates and the Grubhubs and Uber Eats of the world was that we were made for students and by students. So, that meant that you couldn’t even access the app unless you were geo-fenced into on-campus or off-campus housing. You needed the edu email to even log in, and we were hooked up with the universities, which meant that you could swipe your dining card, you can swipe your ID to get into access into dorm rooms and buildings that a regular third-party delivery driver couldn’t. And that’s what made us on average, about 8 minutes faster than a Postmates delivery driver. And if you know food delivery right, all that matters is if you’re there faster than your competitor. You want a hot burrito, not a cold burrito.

So, I had the great opportunity of pitching Mark Cuban my sophomore year, and there both him and his executive producer, Mark Burnett, fund me on the spot. And that was kind of my holy sh*t moment of me being holy cow, someone else valued my company at $1 million. That was the biggest number I could even think of at the time. And what it did for me was it just gave me a lot of confidence because coming into college, I had always had the dream of eventually starting my own company, and that meant going to a good college, graduating in four years, getting good grades, getting a good job out of college, and maybe getting an MBA, and then starting a business later. And even though I was having great traction and working a lot on EnvoyNow, I never really saw it as like the thing to really dedicated my life to. And after getting that funding opportunity from Mark Cuban, that’s what really gave me that confidence to really pursue it. And I was still contemplating whether I should take it full-time or continue to be a student and run the business. And I got an email from the Thiel Fellowship.

And at the time I had no idea what the Thiel Fellowship is. It’s a program run by Peter Thiel where he gives about 20 students a year $100,000 each personal grant into doing whatever they want but the only condition is that they can’t be enrolled in any sort of formal education. That meant I had to drop out of USC, was a difficult discussion with my parents who were like, “Hey, just got on here on scholarship, and now you’re telling me you want to drop out? What’s going to happen?” And it was really, really lucky to have existing Thiel fellows talk to my parents, have the program talk to my parents, and they realize like, “All right. Now, these are pretty successful kids. It’s not just dropping out and having no plan. It’s a really amazing network to be a part of.” And that’s what really, I think kickstarted my entrepreneurial journey and really was the moment when I started to take it really seriously.

Justin Donald: That’s incredible. And when you think about the Thiel Fellowship, I mean, this is like one of the most coveted groups, one of the most coveted honors that’s out there for an entrepreneur. And yeah, your parents had to think you were crazy. My parents would have thought I was crazy because they don’t understand that. They probably don’t even know who Peter Thiel is, except now we know about his Roth IRA strategy of having over $1 billion or a few billion dollars tax-free, which is pretty cool. But when you think about this honor, like was there a weight or a pressure that you felt where you needed to deliver on this grant, this scholarship that you got?

Anthony Zhang: Absolutely. Because it wasn’t equity into my company, right? It wasn’t just a normal investor-entrepreneur relationship where it was mostly financial. This was him believing in me, right? This was a personal grant. I could have shut my startup down the next day and just wasted $100,000. So, I felt a lot of responsibility to be able to spend it the right way, even more so than the capital that I raised through VC. So, it was something in which I’m really thankful for because in addition to just the capital and the belief it gave me, what I was really missing at the time as a 19, 20-year-old was community, right? Building a company, especially when you’re just trying to figure it out, is extremely lonely. And I was able to talk to other people my age who are just trying to figure out as well and they were building all sorts of cool things. And being able to get together, solve problems together, be able to just really shoot the sh*t and be vulnerable as a founder because, as you know, everything goes wrong and everything goes right all within a day. It’s a huge emotional roller coaster. And having that support system was really crucial for me.

Justin Donald: What a great network to have. I mean, I talk all the time about how important your peer group is, how important it is to have mentors, and really like this level of access, this level of playing the game of business and life and thinking and education at a higher level. I mean, that’s what you do when you open up your peer group to the people that are playing in these different sandboxes and just the big leagues, right? And so, you’re thinking at a whole new level. I love it because like mindset shifts happen like crazy because what is so big and crazy to think about for you or for me is totally common for them. And so, it gets this level of growing expectations, growing understanding, like getting past this limited mindset and really scaling to more of an abundant place and what’s possible. And so, that’s been a game changer for me. I’m sure the Thiel Fellowship was exactly that for you. And you went on to scale this company and sell it in pretty short order, right?

Anthony Zhang: Yeah, although it didn’t seem like short order. I was running the business for about three years at that point. We were at, I think, 15 college campuses nationwide. We had hundreds of thousands of downloads. And I suffered a pretty life-changing accident at that point. I broke my spinal cord in a pretty tragic accident in which I was immediately paralyzed from the neck down.

Justin Donald: Oh, my goodness.

Anthony Zhang: And at that point, everything changed for me. I was really feeling like I was on top of the world like young entrepreneur, was just working hard, seeing a lot of success in his business, and just doing what I loved, and that everything really just completely came crashing down when you realize you don’t have your health, you have nothing. And I had to really start from scratch. I was on a ventilator for about six and a half months and had to relearn the basics, such as how to breathe on my own, how to swallow, how to even use an adaptive utensil to feed myself and bathe myself. I’m still in a wheelchair today, seven years later, but that moment was really a make-or-break moment for me because I realized the permanency of my injury. That set in. And I realized that, alright, well, this business that I had dedicated the last three years of my life to, got a call from my co-founders saying that, “Hey, they wanted to shut it down. They didn’t want to run anymore. They want to just return the capital to the investors.”

At that point, it really felt like I didn’t have much going on in life and I just clung on to it. I said to them, I was like, “Hey, you guys can leave but I’m going to come back as CEO and run this company.” Called my board, called my investors. They supported it. And while I was still in the rehab hospital doing about five or six hours a day of physical therapy, I came back as CEO, and I still remember this all-hands because I was in the hospital It was a remote all-hands, and I told them about my situation. Those were the first time that I had talked to my employees since my accident. And I told them, like, “Hey, we’re not folding down. We’re not shutting down the company. I think this business sells a lot of potential. Many of our livelihoods depend on it, and I think we owe it to ourselves, our investors, our customers to really give this a good try to grow and get acquired because I know there’s a lot of acquisition interest out there. I’d fielded many acquisition calls, turned them all down to four but let’s just go to market and see what happens, right?

By the end of this year, if we’re unable to get acquired, at least we can say we tried and we can shut down knowing that there’s really no stone unturned. And that’s what we did and really, really fortunate to have the team rally around behind me. I wasn’t able to operate at 100%, but being able to at least steer the strategy, at least be there for my team as they grew the company really incredibly. We had a period of time in which we had about 13 straight weeks of double-digit week-over-week growth, which was insane to me, right? These were growth numbers that I could only even dream of. And obviously, it was very focused to our division, but we were lucky to have a great exit, a great acquire at the end of the day, and have a really great outcome for both our employees and our investors.

Justin Donald: Yeah. That is just incredible. One of the things that I’m just so impressed with you about, and it’s like when a lot of people are kind of down for the count, they’re down and out, right? I always look for people that are going to find a way no matter what, no matter what great adversity lies in their path, that they’re going to figure it out. Like, that’s the type of founder I want to invest in. Your situation is about as tough as any situation as I have ever heard. And so, that gave me a lot of confidence as an investor and I obviously have invested in one of your companies, which we’ll talk about here today. But I just can’t even imagine what it was like to not only have people that wanted to like your partners, your executives, like, want to leave the business and while you’re rehabbing like a serious life-changing situation and injury, you’re also running a company that others didn’t want to be running, didn’t think that they could run. And I’ve got to ask, did your co-founder and these other executives, did they end up leaving or did they stick around when you said, “No, I’m going to do it. I’m going to step in.”?

Anthony Zhang: They ended up leaving. They disagreed with my decision to come back and run the company. So, I was down my co-founders. I was a solo founder at the time, so I’m really thankful to the people who stayed. The rest of our company rallied together. A lot of people stepped up, gave it their 200% to make this happen. So, it really also shows, right, in tough times, that’s when you separate who is really there with you. And I learned that the hard way in business and also in life, right? A lot of friends I had, a lot of people who were in my circles pre-injury, a lot smaller circle now, post-entry.

Justin Donald: Yeah. You know, there’s like blessings in disguise even in the worst situations and one of them is that you know who your real friends are, you know who’s loyal. And it’s better to figure that out as early as humanly possible and just go deep into those relationships. And so, I honor you for doing that and for stepping in and running this company. I’d love for you to walk us through what the exit was like. Was this an exit that went according to plan in the 11th hour? Did they try to change the terms like a lot of companies do when they try and lowball you or tweak some of the terms in their best interests, hoping that you have deal fatigue by then? Did you get the numbers you wanted? Did you have a good multiple? Let’s walk through some of that.

Anthony Zhang: Yeah, absolutely. And to give everyone a sense of timeline, this was in 2016. So, there was a lot of consolidation happening in the food delivery space. It’s really kind of like a market grab, land grab type of business where if you’re having the most delivery drivers, you have the most customers, that commands you to be able to go back to the restaurants and get the best margins. And it was really a race to zero when, say, an Uber Eats versus a Grubhub are both competing in the same town. And the only reason they’re getting customers is by discounting their delivery fees or offering free fees or promos. So, there’s a lot of M&A activity happening. We had multiple bidders. And at the end, I’d say in terms of acquisitions, it was quite smooth. The CEO of the company who acquired us very, very good terms on even until today, and he didn’t change anything on us. He recognized our value. And it wasn’t the highest price. We had another company that was going to bid quite a bit above what he did but I think at the end of the day, we wanted to retain the future of our employees in addition to preserving shareholder value.

And we knew that with a larger company they would just kind of chop the company up and kind of not really retain what made EnvoyNow special in these college markets, whereas the company that we got acquired by JoyRun, which is now a part of Walmart, they understood what made us special, what made such a small player and a small, lesser funded company in the large scheme of things, what allowed them to beat out the big players in a lot of these college towns that we were operating in.

Justin Donald: That’s incredible. And when you did sell it, was there some form of an earnout where you stayed on and ran things? Was it a clean-cut? What did that look like?

Anthony Zhang: So, I stayed on for exactly a year so really to help with the transition, help to grow new markets, and really integrate both the brand and the business model into the parent company. And that was also a very, very educational experience for me. You know, taking to account that I started my company when I was 18 and this acquisition happened when I was 22, I’d never really worked for anybody before, so that was a learning lesson for me as well. Having a manager, having a boss, and learning, being able to do that I think has also made me a better CEO and better manager today.

Justin Donald: Yeah. And so, when you sold, you sold to a strategic. It’s always good to sell to a strategic often and it sounds like you could have had a higher price but when you find the right group and it’s a seamless effort and that relationship can be fruitful for years and years to come, it makes sense to figure out what to optimize. Do you optimize the relationship or do you optimize the exit capital? And it sounds like you chose wisely on this one. Did you get the multiple that you were looking for? Was this a generous multiple? Was it below what you wanted but it was an easy way out, an easy transition with this other company? What was that like?

Anthony Zhang: I would say in terms of VC exits, right, it’s not a VC-level multiple but it was definitely respectful and it was something in which almost every single investor that backed EnvoyNow is an investor in Vinovest today.

Justin Donald: That’s awesome. Well, and before Vinovest, you had another business, right? So, you exited this business, EnvoyNow, and then you started another company. Know Your VC, right?

Anthony Zhang: Yes.

Justin Donald: Yeah. So, I’m wondering if there was like a learning experience in the first sale that kind of stimulated an idea for this second business.

Anthony Zhang: So, with the second business, it was really more of a nights and weekends project that got a lot bigger, a lot quicker than I thought it would. So, this was a year after the acquisition. There was a lot of chatter in Silicon Valley in around mid-2017 about VCs who had just done some pretty horrific things, right? They were sexually propositioning female founders during the fundraising process. They were being racially discriminatory and there was a lot of whistleblowers who had come up and told their stories, and this was all in the social climate. And for me, as a founder, I’m a guy. I’m Asian. Fundraising is already hard but thankfully, I didn’t have any of those additional hurdles to jump through. And when hearing some of these stories, I was honestly just really appalled. I was wanting to create a platform that could really have some more transparency for the funder and for the founder.

And that’s when your VC was, essentially like a glass door for rating investors where not only entrepreneurs could share their experience pitching VCs, but VCs would co-invest on deals together, right? They can do their diligence on who to be able to share a cap table with, and then it developed into an ecosystem in which LPs who are looking at these VCs and general partners who are even pitching them, they were using that as a diligence tool as well. So, this I think really just because of the social climate at the time and the chatter that was happening online quickly ballooned into us doing multiple hundreds of thousands of unique searches a month on the platform, tens of thousands of reviews submitted. And it ended up being a really useful tool. It was nothing that I thought was going to be my life’s work or anything like that but I wanted to just have it out and be there because it’s a tool that I would use. It’s a tool that all other founders would use and I thought it helped to level the playing field a bit.

Justin Donald: I love it. And for anyone that is unaware of this, if you have not gone through the entrepreneurial space, if you’ve not tried to raise money at an institutional level, had a Series A, had a Series B, one thing you should know is that not all VCs are created equal and you have to shop your VCs because there are some bad actors out there. There are some egregious deals being cut. There are some egregious terms that are in play. And we experienced a horrible VC and a great VC in one of our businesses that we ended up getting VC funding from. And then you got to be careful because once they own a large part of the company, you do answer to them. In many cases, they own more than you own down the road. And there is truth to owning a smaller piece of a larger pie than owning a big slice of a small pie. But there are some covenants and some constraints that happen. And so, I love that you built that because from personal experience, I can tell you I’ve experienced it in a very positive light and in a very negative light. And I have many friends that have horror stories of VCs that they’ve worked with.

Anthony Zhang: And that could be a whole other episode, right, sharing those horror stories. And I think also, something to note is the power of imbalance. You’re literally hand-in-hat asking for money for your business to survive. And they’re the ones with billions of dollars to deploy. So, there’s also that dynamic, which I think is not really talked about enough, where even if you do have a terrible experience as a founder, you’re really afraid of even sharing that because you’re afraid it’s going to get back to the VC and they’re going to blackball you. And that’s why we wanted to create a safe place that is still anonymous. You know, we’re doing all the work to verify the information but the founder’s identity is protected.

Justin Donald: That’s right. You just raised money in your Series A, you don’t want to get blackballed because you’re going to need money most likely in your Series B and potentially beyond. And by the way, the other thing is, if you blackball some of these VCs, then they tell all of their VC buddies and it becomes a lot harder. So, yeah, it is an interesting situation to be in as a founder and as a team that needs to raise money for your business to take it to the next level if you’re not bootstrapping.

Anthony Zhang: Exactly.

Justin Donald: And by the way, bootstrapping can be a great strategy as well because you retain control of the company. It’s probably just a lot longer of a play and some people want to accelerate it by getting the capital in the door. So, truly pros and cons to each strategy and each strategy can be a great one depending on what your outcome is for your business.

Anthony Zhang: Yeah, and unlike the first business, EnvoyNow, which we raised VC funding, Know Your VC was completely bootstrapped. We wanted to stay neutral, right? Not take VC capital in and then have potential conflicts of interest down the line when we’re publishing content about that specific VC. So, I’ve been on both sides of the table too. There’s definitely a nice sense of freedom on the bootstrapping side but you also have to deal with the cash constraints as well.

Justin Donald: Yeah, for sure. And you from there went on to take a leadership position with Blockfolio. So, you got into the crypto space. And by the way, I used to love that app because that was what I used as like my real-time updates for everything going on, all the pricing, everything. You know, interesting situation, you know, what happened to them because I believe they got bought by FTX, right? And then we know what happened with FTX here. But I’m curious of what your time in that space was like being on a leadership team of a monster company in the crypto space.

Anthony Zhang: Yeah. So, I think like many others in the late 2016, early 2017, caught the crypto bug and just like yourself, Blockfolio was the app of choice. I was refreshing that damn thing like none other. And because of that, I was able to just give some feedback and talk with the customer support. And the team was really small at the time, so I didn’t realize I was talking to one of the co-founders on the other side of the chat. And I was just giving him ideas and we were talking and he saw how passionate I was. He said, “Hey, why don’t you just come on board and work with us? It’d be pretty cool.” I was like, “Yeah, that’d be pretty cool. I just had kind of exited Know Your VC and was looking for my next thing. Let’s join an industry that was so exciting to me.” And being in crypto for about three years throughout 2017 through early 2020, I was able to experience both the booms and the bust, the run-up to 2017, huge crash of 2018, and then the sort of no man’s land crypto winter of 2019 into 2020 before things started getting hot again.

And I learned a ton not only as the head of marketing with, at the time, you couldn’t even advertise on Facebook and Google. advertising crypto-related products it was banned. So, as a head of marketing, when you don’t have Facebook and Google, you’re kind of having to do a lot more creative things. And there I learned more about different channels like affiliate marketing, influencer marketing, working just organic and grassroots. And it was just a pretty incredible time getting to meet some really incredible, passionate people, and very, very thankful for my experience at Blockfolio because it led to me meeting my now co-founder, Brent. We’re now co-founders at Vinovest. He was the Head of Design at Blockfolio. I was the Head of Marketing, so we collaborated a ton and there we developed our mutual working styles, our relationship, and respect for each other. And then also it turns out he loved wine too. So, we got along pretty well in many different ways.

Justin Donald: Oh, I love it. So, now we’re fast-forwarding to you stepping out on a limb to start your third business and this one being Vinovest in the vino space, in the wine space. And early on, so I believe I was amongst your first investors in your seed round, when I first learned about you and heard your story and was totally impressed and blown away, and knew that I wanted to be part of this because, number one, I believe in investing in uncorrelated assets, which we can get into. And number two, I love the element of scarcity inside of those investments. So, any time you have a limited supply, that often is going to influence demand, and then when that asset class is uncorrelated to the stock market, it gives a nice hedge as an overall piece of the portfolio. And so, I saw this as a great play for me as an investor where I could invest in the company at the beginning. So, that’s more of the high-risk investment, which for me personally, I really only do seed-level investments and early-stage investments from cash flow that happens through asset ownership.

So, I decided the riskier type of investment for me was going to be done with just a monthly distribution of cash. So, that way if it didn’t go well, I wasn’t eliminating the principal. I had already invested that into an asset. But then from there, I was able to take capital and invest it into unique wines and unique labels, vintages from all across the world. Even though you guys are pretty selective on just the handful of Chateaux and wineries, tenutas, depending on what part of the country you’re in. So, I’d love to hear some of your thoughts on that.

Anthony Zhang: Yeah. You know, I think that’s a great place to start and why even start Vinovest? I’ve been in crypto and wine is probably the furthest thing from crypto if you think about it, right? One thing is less than ten years old. The other has been consumed and enjoyed since maybe even 8,000 years ago. And the way that people make wine really hasn’t changed since then. And I think what really united and connected the dots for me and made friends and I want to take the leap was exactly to your point, the scarcity element. It’s something that you can only from a vineyard, right, only maybe make 100,000 bottles from this plot of land. And every single year as somebody cracks open a bottle, enjoys with their family, there’s just one less and one less and that makes the remaining supply that much more scarce, which pushes the prices up. And then there’s also the maturation, the bottle factor, right? That’s kind of the X factor in which wine actually changes over time. Doesn’t really matter if a Bitcoin is just mined off the block or ten years old. The genesis, you know, Bitcoin, that’s still fungible in the same.

Wine appreciates and people do tend to put a premium on older wine. So, with those two factors just from an economics principle made a lot of sense to me and I wanted to be able to get access to it. But looking at the existing options out there, I wasn’t able to find an intuitive and tech-friendly way to be able to efficiently deploy capital. And just with what’s inside me, I was like, “Alright. Well, there’s nothing good out there. Let’s build it ourselves.” And that’s why Vinovest exists.

Justin Donald: It’s so cool. And so, basically, what you did, as you said, all right, we’ve got this uncorrelated asset class in wine. And again, just for clarity’s sake, because I talk a lot about, you know, in the lifestyle investor mastermind, one of the things we always talk about is asset allocation and what do the billionaires do. What do the centimillionaires do? What do the wealthiest people in the world do to protect their portfolio? And one of the commonalities across the board, if you look at research from family offices, if you look at it from multifamily offices, single family offices, high net worth individuals, you will see that there are hedges in the overall portfolio. So, unlike most people, most Americans specifically who invest, they put the vast majority of their money in the stock market. The wealthiest people in the world put only about a quarter of their net worth in the stock market. So, they’ve got about 25% and everything else goes in other areas. It might be real estate, might be private equity, might be fixed income, might be cash, cash equivalents.

But then you start getting into some of the hedge funds, some private credit, and then you start getting into for some people it’s currency, for some people it’s infrastructure, for some people, you can even delineate down on that private equity side into VC. but we can break it all the way down into other uncorrelated asset classes. So, some people really like art. Some people like artifacts and historical documents. Some people like cars and watches. So, all these different things in the collectibles and so wine falls in there, and we should also mention bourbon because this is a new thing that now the platform Vinovest has availability on. And I’m proud to say that I’ve invested in a bourbon barrel with you guys. We can get into the specifics there but I just love looking at an overall asset allocation that has a little bit of everything. You know, we didn’t talk about commodities but like all these different aspects and some of these, you know, and we didn’t mention crypto, right? But like some of these family offices have a half a percent or 1% in some of these areas to the point that they’re not putting all of their assets there, but they’re putting some of it because it’s a smart way to win when the stock market, for example, is losing.

Anthony Zhang: Absolutely. I think, you know, to your point, looking at what the wealthiest do, it’s really in larger concentration to alternatives than what the 60/40 stock portfolio bond portfolio is suggesting. And I think if you look at the billionaires and centimillionaires in the world, how many of them do you think own a wine cellar? How many of them do you think have a whiskey collection? Almost all of them, I’d be venturing to say. And I think…

Justin Donald: Even if they don’t consume it because it’s a good investment. I think a lot of them consume, you know, for me, my goal is that I make money on wine and I can drink for free. And same thing with bourbon, right? But there are other people that they don’t even consume it. They’re doing it strictly for investment’s sake.

Anthony Zhang: Yeah. And that’s the secret that people don’t tell you, right? Someone could have a massive 10,000-bottle cellar and you think they’re going to drink it all. But there’s no way one person can drink 10,000 bottles. The majority of that is for investment. Majority of that is to actually trade. So, to your point, their profits off of those trades can offset the consumption part of their lifestyle. So, there is this sort of cool lifestyle component to it that is really undeniable with wine, scotch, bourbon. And we also are able to kind of tap into that with Vinovest.

Justin Donald: Yeah. Super cool. I love that. And by the way, there are certain chateaux, certain wineries that are kind of like your key wineries, the wines that you would want to invest in because they’re so high quality, they’re limited production. They’ve got a track record of great performance. Earlier, I mentioned three of the first growth chateaux that I’ve been to, and I actually forgot that we went to Chateau Margaux this last time, which was a really cool experience. So, I’ve actually been to four of the five first growths there on the left bank, which is pretty neat. But why don’t you run us through like, some of these brands? I mean, all the first growths I’m sure are part of it. Screaming Eagle, I think, is kind of like the mainstay on the Napa side. I don’t know if Harlan has crept in, but I’d love to know, like, what are the labels and brands that you like best for investment’s sake?

Anthony Zhang: Yeah. Now, this is getting into the fun part that’s close to my heart. So, I think if we were to make the stock market comparison, to your point, the blue chips or the large caps are going to be your left bank Bordeauxs, right? So, those top five first growths, maybe some of the super seconds, and then on the right bank, you’ve got some of the high-end Saint-Emilion labels, right? Like Chateau Ausone.

Justin Donald: I went there this last time, too. That’s a cool winery.

Anthony Zhang: Angelus as well and then, of course, you’ve got the wines of Pomerol, which are unclassified, but you’ve got Le Pin and Petrus. So, that’s Bordeaux kind of in a nutshell. There are some sort of like midcap or up-and-coming chateau there but when we’re talking blue chips, that’s there. And then when you’re looking at other regions, it’s hard to really deny Burgundy and Champagne had some really exciting regions, right? So, almost everyone knows Dom Perignon, Cristal, Krug. Those are all wines that have been delivering 15% to 25% annual returns every single year for the past 5 to 7 years. So, there’s really been this huge explosion of interest in champagne. And because the aging process of champagne takes so long, the most recent label of Dom Perignon, I believe, is 2014 or 2015. So, there’s an eight-year lag, right? There’s an eight-year lag in the market between what people are consuming today and what they can then make in the future. And because of that mismatch, that’s what’s really causing a lot of the price increases.

And then finally, on to Burgundy, right? Burgundy is known for its sky-high prices and just tiny, tiny quantities. You’ve got producers like DRC and Leroy and Rousseau. They’re really making wines that are only in the thousands of cases quantity, right? We’re not talking tens of thousands or hundreds of thousands like Bordeaux. And because of that, they are just so coveted. It would have to be spending tens of thousands of dollars to acquire just a single bottle of some of these. And with it, you still have those price appreciation, 20% plus every single year for nearly 15 years running now. It’s been kind of wild. And if you’re looking at more like the growth sector or the mid-cap, you’ve got a lot of super Tuscans, right? We love our Sassicaia, Ornellaia, Solaia, Tignanello. And then in the US, we’ve mentioned Screaming Eagle, but also Opus One, Dominus. Harlan, you know, they’ve all been performing really well in the secondary market. And then if we’re going to go to our equivalent of emerging markets or sort of up-and-comers, we’re looking at places like even South America, right? Chile, Argentina, maybe even some parts of Germany that have really great producers. And of course, there’s way more places that make wine in the world but at Vinovest, we’re looking for ones for investment value.

So, I could go on and on for drinking wines but I’d say when we’re looking at the circle of wines that we would invest in and that we would then recommend to a client, that top tier is still pretty small. You know, it’s only a handful of these wineries and chateaux.

Justin Donald: Well, I’ve got a fun story since you mentioned Leroy and for those of you that don’t know, there was maybe a family feud or family situation where the winemaker from DRC, Domaine de la Romanee-Conti, moved over to Leroy, started her own production and chateau there and ended up becoming some of the best wine out there. And so, my sommelier, Mario, and I and you can check out the episode to anyone listening now that wants to hear that session, which is really fun. We talked about buying wine futures but we ended up getting our hands from a seller of some wine that they were selling this wine for like 200 and I think that’s like $285 or $290 a bottle. We bought three bottles of Leroy. It turns out that it was from one of the only unclassified vintages that they ever did. And so, these bottles were like $3,000 to $4,000 a bottle. And so, we opened one on my birthday last year, which was really fun and it was delicious.

But I got to tell you, I have never tasted a better wine than a high-quality DRC. I mean, it is just some of the most spectacular wine in the world. It is delicious. And if you ever look at a menu, it will likely be the most expensive wine on that menu because it has such a great name and such a low production, which again speaks to the uncorrelated asset class and the supply-demand constraints in the wine asset class, which is really cool.

Anthony Zhang: Yeah. Wow. That’s quite the return, too. If you’re going from $300 to $3,000, $4,000, you got a 10X return there as well. So, that also just shows how incredible some of these returns can be if you sit on it and have the right labels and the right vintages and sell at the right time.

Justin Donald: Oh, it’s unbelievable. And there are so much opportunity there because the reality is, if you hold on to some of this wine long enough, you’re going to make your money back. I mean, this is what I learned on the whole future side of things. You can buy wine at the cheapest price you’ll ever buy it, getting allocation to wine futures, which is basically like this year, 2022, is a lower production vintage, which I like right out of the gates, and the wine tasted really good. So, then to have the opportunity to be able to buy it at the lowest price, you can just sit on it for three, four, or five years and sell it and you’re probably going to make 100% or more on your money. And that’s the cool thing about wine is you don’t have to be all-knowing. You just have to be patient.

Anthony Zhang: Yeah, patience is really the name of the game, right? Because there’s really nothing that’s going to speed up or slow down the aging and maturation process. Time is time and then you’ve got global consumption. And when you have brands that year over year is coveted and where the demand exceeds the supply, to your point, you just buy the right wine and sit on it and you’ll be really happy a few years down the line.

Justin Donald: Totally. And by the way, talk to us a little bit about bourbon, because this is the new thing that you rolled out, and I was really pleased that you chose to roll out the bourbon barrels first with our mastermind. We got first dibs before this was ever public. And I thought that was so cool that you did that for our lifestyle investors. Tell us a little bit about how that came into play and why you like bourbon as an asset class.

Anthony Zhang: Yeah. So, bourbon, I think, shares a lot of the same commonalities from a fundamental standpoint as wine, right? It’s something in which you have to age it in the cask. And because every single year, you have what’s called the angel’s share, right? There’s a little bit of evaporation that happens in the cask. So, if a brand new make was going to make 350 bottles of bourbon, probably by year 2, year 4, year 6, maybe it’s only 300 bottles, maybe it’s only 250. It really depends on how it’s being aged. And when you look at the prices at your retail store, a ten-year-old age bourbon is just going to cost more than a five-year-old one because of that time and because of the decreasing supply. So, with our new whiskey offering, we’re allowing people to be able to invest in not just bottles of bourbon because once it’s bottled, ten years is ten years. The real value accrual happens in the barrel, and it’s nearly impossible for an individual to try to own and age a barrel by themselves, which is why we’re super excited to be able to offer this new level of accessibility and tap into what’s a red hot market. We’re seeing it. Every single bar now has got their bourbon special, their bourbon drink, and people are becoming much more attuned to that sort of craft and high-end side of it, too, rather than just picking off whatever is on the shelf and chugging it.

Justin Donald: And you guys even have the opportunity to invest in Macallan, like one of the biggest name Scotch whiskey producers in the world. So, it’s neat that you’re getting because of your platform, you’re getting doors opened to you that most people in the world are never going to have access to, right?

Anthony Zhang: Yeah. And that’s the beautiful thing about this market is that even the world’s largest or most coveted producers, they realize for them it’s still a working capital issue. If Diageo has a cask in Macallan for say they know they’re going to age it to 30 years, that’s a 30-year expense where they have no cash flow and just expenses that they need to sit on. So, we know that, all right, let’s buy it for a few years. Our investors are very patient and we’ll sell it back to them. Of course, they’ll still have their markup when they bottle it and sell and send it to the end consumer. So, it’s really a win-win to be able to work with a lot of these distilleries and brands in helping them out with their working capital needs.

Justin Donald: Yeah. That’s really cool. And talk about the platform a little bit here. I know we’re kind of getting low on time but I want to make sure people understand that this type of investment, you’re not raising money for the company right now. I mean, it’s been funded, you’ve been growing, it’s been taking off. But what people can do is they can have their own virtual sellers online, like many of our Lifestyle Investor Mastermind members and like I myself have. So, talk a little bit about that as we wrap things up.

Anthony Zhang: Yeah. So, what you’ll get with Vinovest whether you choose wine or whiskey or ideally both is direct ownership into the bottles and the barrels. So, all of our bottles are stored in temperature-controlled warehouses. Many of them are in Europe, in UK, and France, where the producers are. And then with our scotch, it’s in Scotland. With our bourbon, it’s here in the United States. And we just handle all of that authentication, custody, and insurance, you know, the tough parts about owning a real thing, right, a living and breathing liquid. And what we’ll do is, as you’re an investor with us, we give you access, commentary, market analysis, and tools to be able to know, “Hey, like what’s going on in the market? Why is the price of this barrel going up more than the other one?” And then finally, what we’ll do is when it reaches a maturity window or maturity period, we’ll help you find a buyer at the end of the road. So, it’s really kind of an all-in-one. We’ll at first determine how long you want to hold the asset for, what else are you owning really as part of that holistic asset allocation assessment, and be able to choose the right wines and whiskeys that fit a time window of your choosing. If you’re planning to hold for five years versus someone who planning to hold for ten years, that’s a very different type of wine that will want to get you.

Justin Donald: And it’s cool because if there’s a bottle that someone wants to drink, they can actually take it. You can ship it to them and they can have and enjoy that bottle, that investment that they can kind of hold in your virtual cellar. So, I love that new feature that you guys added and really like when I think about the storage of it like wine you have to store it right and I love that you guys have these you have third-party insurance, third-party storage, you’re storing many of these bottles of wine, many of these virtual cellars are actually stored in the cellars that the royal families of many of these different countries and nations use themselves. Right?

Anthony Zhang: Exactly. Or one in the UK, the royal family is also a cotenant of and it’s the coolest warehouse ever. It used to be a World War I bunker that they’ve then refurbished. So, if it’s able to stand the test of time of two world wars, it’s pretty good for the wine as well.

Justin Donald: Oh, I love it. That’s so cool. Well, Anthony, this has been awesome. I appreciate you sharing all the wisdom that you have and your stories and how you’ve had so much success. And I’m excited to have more people find out about the opportunity to really utilize wine as an investment vehicle, as an uncorrelated asset for those that it fits some of their goals. So, where can people learn more about you and Vinovest?

Anthony Zhang: So, Vinovest is Vinovest.co on the website and you can reach out to me directly. I’m at anthony@vinovest.co. I read every single email. So, really welcome, everybody, to come check it out.

Justin Donald: I love it. Well, maybe we’ll get something fun and special for Lifestyle Investor podcast listeners. And I’m excited for many of the things that you guys are up to. I know you have big plans as you continue to scale this company. And again, I just want to thank you for being on the show and I like wrapping up every episode that we do here on the Lifestyle Investor podcast with a question that really comes in the form of taking some sort of action. So, what’s one thing that’s been holding you back from financial freedom that you learned in this episode today that you can now use to help conquer this milestone in your life to create financial freedom? I’d love to hear about it. Send us an email. We’d love to help support you. And we’ll catch you next week on The Lifestyle Investor Podcast.