Business Innovators Radio - Interview with Stefan von Imhof, Co-Founder of Alts

Episode Date: May 3, 2023

Stefan lives and breathes asset analysis and valuations. Before co-founding Alts, he created a Due Diligence Service for evaluating website & micro PE deals. In his spare time, he enjoys record collecting and managing his short-term vacation rentals. Originally from Boston and later Santa Barbara, CA, he now lives with his wife in Australia.Learn more: https://alts.coInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-stefan-von-imhof-co-founder-of-alts

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us Stefan von Imhoff, who's the co-founder of Alts. Stefan, welcome to the program. Thank you for having me.

Hey, so I'm always curious and interested in how people choose names. So ALTS is nickname or short for alternatives. So I'm excited to see about what type of alternatives we're talking about. And I know we're talking about the financial investment world. But before we dive into that, get us a little bit of acclimated into your story. What's your background? Sure. So I came from the world of micro private equity.

So mostly buying and selling websites and digital assets. and domain names and stuff like that. And, you know, this is kind of a, it's an alternative investment. And it's not a very well-understood one. There's not, there wasn't a whole lot of existing frameworks for understanding the inherent value of a lot of these sites, these websites. And so I basically created that framework for understanding, you know, how much to bid and acquire these sites for based on their traffic, based on benchmarks, based on, you know, a whole bunch of different factors. basically kind of creating a due diligence framework. And then after a few years of this,

I realized that you could apply that framework to a whole bunch of other markets where they're a little thin in the data, right? And that's exactly what I kind of started doing. So I started a substack, and I was kind of just analyzing the fair market value, trying to triangulate the fair market value of alternatives in the world of collectibles.

And after about two months of, having a substack, there was another gentleman who had a very similar substack. His name was Wyatt. And he and I just started talking. And, you know, we basically just decided to team up and joined forces. And it's funny because we never met in person. We live, he lives in Spain. I'm here in Australia. We're both Americans, but we just happened to live overseas. And but we just, we kind of saw eye to eye and a lot of stuff and thought that, yeah, we could build something really cool together. So that's what we did. That's awesome. And so, I, I think that whenever people think about, you know, anything alternative, that means it's not the

traditional. So, you know, when you think about investments and you think about your 401K, your stocks, bonds, mutual funds, insurance, what do you do, what do you recommend when people reach out to you and say, you know, what percentage of my, you know, like, I don't know, portfolio or money or what should you put in? What percentage why should you put into and consider for alternative investments? Because we don't want to put all or eggs in any basket. You know, we don't want to put 100% of our retirement funds in, you know, a stock or a mutual fund. So it needs to be balanced. But what do you say to people as far as balance?

So I definitely don't recommend a certain percentage. I will say that if you look at the numbers, it's pretty obvious that the folks that have the high net worth folks in our society tend to be overly allocated to traditional alternatives. compared to the average person. And when I say traditional alternatives, I kind of look at this world in two different pockets, right? So you've kind of got your old school and your new school, right? Your modern stuff. And so the old school would be like private equity, you know, private debt,

private credit, fixed income, you know, bonds. It's not really the world that we focus on too much. We're more focused on the eclectic, the modern, and the esoteric asset classes. And this is, you know, this ranges from stuff like, you know,

farmland and alternative real estate to interesting stuff like music rights, a lot of collectibles. I mean, we're into comic books. We are into, you know, a lot of peer to peer lending, sneakers,

video games, startups, of course, is a big part of what we do. But, you know, watches, wine,

whiskey, tequila, you name it. I mean, if it's out there, that's really kind of what we focus on. those markets. It sounds like some of those things are things that would be almost you would be like bragging about them, right? You know, like you put money into sneakers. You know,

you don't really go brag to your friends that, hey, I bought some more shares of Tesla. So, but you would probably with some of these eclectic types of alternative investments, they're so unique that it is almost like a bragging conversation. Have you found that before? Yeah, it's like a conversation piece at a minimum. And there is, it's something more exciting than buying, you know, stocks. That's for sure. Yeah. I mean, especially if it's like a, you know, we call them passion assets.

A lot of people have referred to them as like passion investing. So, you know, Pokemon cards and, you know, stuff that we all kind of grew up with or, you know, my personal thing is vinyl records. I love vinyl records. I have a huge collection. But they're also just, they can be a pretty good investment. And they're also just uncorrelated like to, you know, traditional markets or a traditional equities, right? So that's the real key thing is that you want to diversify, you want to find stuff

that doesn't just follow the same graph as everything else. I mean, take crypto, for example. Crypto is basically this, it's a levered play on the NASDAQ at this point. Like it just, it rises and falls with the most speculative stocks out there, tech stocks out there. That's it. That's all it is, right? So it's not, it doesn't give you anything different. There's no advantage to owning it that you don't, you know, you have no advantage over anybody else. You're basically following the crowd. So the stuff that we're looking at is stuff that is definitely uncorrelated. Some of it's more correlated than others, but a lot of it, by and large, is uncorrelated. And that's really what we look for.

So, you know, when you buy a traditional stock, you then can go track it with the graphs and charts and numbers and is it up today, down today? With these types of investments, how do people track to see where the investment is moving? Oh, man, it's tough. It depends on the market. I mean, it's so, you know, with certain alternatives, there's the ones that have a lot more data behind them, you can triangulate the price pretty easily. So wine, artwork, the platforms that offer these investments tend to be very data rich. For us and for our fund, we have, you know, investments in stuff like that. We also have some very esoteric stuff. And we're out there buying concert posters. We're out there buying, you know, really, you know, really, you know, you know, know, out there kind of stuff. And so that gets a lot trickier to try and get the value, which we legally have to do once per quarter. So you basically look at comps. That's how you do it. You just have, you have to look at the like real estate appraisal. Exactly. Exactly. And that's it. I mean, with real estate, it's a lot easier because it's just like, okay, what's zip code?

What's the square footage? But there's other, you know, factors that you can use to triangulate the price of a baseball card. It really comes down to quality grading is very important, right, for a lot of collectibles. So, yeah, there are tools that you, there are tools that you, you have at your disposal. So you've got on your website just a massive, massive list of categories. Do you have any favorites that you like specifically? Yeah. I mean, so it's funny about this market is that you start to learn about, you know,

markets that you don't even know existed. So there's a couple that I've recently discovered that I'm fascinated with. I wouldn't call my favorite, but I'm absolutely fascinated with. One is there's a huge market that's starting to get big. in heritage listed vanity license plates. So these are, you're going to laugh, but these are low digit license plates in,

you know, across the Western world. There was a recent sale over in Dubai. It was a number seven license plate for the Arab Emirates and it sold for, I think, $20 million just to have the number seven license plate. Yeah, it's crazy, right? And I didn't even know that there's a market for this,

but man, it's actually pretty big. So, you know, discovering stuff like that is really interesting. In terms of my personal favorite, yeah, like I said, I do love vinyl records. And the reason I love vinyl is because, A, you know, it's just I'm a music buff. But B, it's one of the few kind of alternative investments or especially one of the few collectibles

where it's expected that it gets used, right? Like with a lot of collectibles, you know, sports memorabilia, that kind of stuff, you're not really supposed to touch it, feel it. You know, really it's better off in a display case and everyone kind of looks at it and you admire it. And that's great. that's fine. But with vinyl, there's no expectation that the vinyl be, you know, new and sealed and shrink-wrapped. It's more than okay to have the stuff be opened and used. And obviously, the better, the condition it is, the better. But it doesn't, you can actually

use it. You can actually utilize it, which is oddly rare in the world of collectibles. So, yeah, that's my favorite asset class. And you like them because you've got a passion for it. Secondly, it's unique, but also they have some pretty good returns on them. like that license plate. So when people are investing in your fund, it's like a hedge fund or a fund, and you're going out and buying all of these types of things, what are you guys doing to allocate percentages of,

you know, you were going to take our whole pie and go 10% in sneakers, 10% in vinyl. What are you guys doing to allocate your percentages? Pretty much asked the community when we started the fund, like roughly what percentages would they like to see. And then we have the discretion to kind of override that as we see opportunities come up. So it was mostly about kind of getting alignment on the asset classes that we want to focus on. And so we got alignment on that.

And then, yeah, then it's just a matter of kind of, you know, finding the good deals. I mean, you also have to win the auctions, right? So it's like, I mean, we see a lot of good deals out there. And, you know, we have our target price and we've know that through our data that, yeah, it's a good deal. But then, you know, you're still competing against, you know, rabid fans and collectors. Luckily, we're not competing with other hedge funds because, I mean, this would be a rounding error to them. This would be a joke. I mean, they don't even consider this stuff, right? So that's the good news. But, you know, that's what we're here for. And that's what makes it

fun. And it is more. The things that are tangible, like records and sneakers, for instance, and all the other items that are tangible, you said win the auction. Well, are you actually buying physical products? What do you do with them? Do you put them in a warehouse? Or is it just a, you know, like a NFT where it's, you know, it's just kind of, it's real, but it's intangible as well. Yeah, a good question. I mean, so with like crypto holdings and NFTs, which we don't have a ton, but, you know, that's a lot easier because it's just a wallet, you know, right? But yeah, with most of what we buy, I mean, it absolutely exists.

So it just depends on the asset, you know, like with the artwork we've bought that's sitting in a London vault with the, a lot of the collectibles there, and they're just stored and insured and vaults around the country. The tequila we bought, we bought a bunch of barrels of tequila down in Mexico. They're just in a distillery right now, just, you know, fermenting and getting nice and appreciating nicely over the next three years. And then we'll probably go to sell in about three years. It just depends. I mean, it's fascinating, though.

I personally have never once physically touched or felt a single asset that we held for the fund. It's just kind of a nature of a nature. It will be someday. Yeah. Yeah. So what about then at what? point do you guys go, okay, we bought XYZ, you know, category two years ago, one year ago, you know, whatever it is. When do you guys go, ooh, we're watching the markets and now we feel

like it's best to sell that batch to then get the best return for our fund? Well, it hasn't happened yet, and that's because we're a new fund and markets are down. But it's a 10-year fund. So, I mean, we're looking for stuff that's criminally undervalued in the long run. I think, oh, as the, as the markets generally rebound over the next couple of years. We'll see some selling opportunities. But, I mean, really for the most part, we're not really touching this for the next decade or, you know, say eight and a half years or so. So yeah, I mean, it's, we don't really think too much about the sell side at this point. So your website says you've got 90,000 plus people with, you know, interested in following your fund. How long have you been operational and how long

did it take to get to that 90,000? Because that sure tells me that there's some interest. in that type of asset class. There's a lot of interest. And it's, it took us about two years. But just to correct you real quick, I wouldn't say following the fund necessarily. It's following just kind of what we, our newsletter and what we do. The concept. And what we do, yeah.

And like what we do is basically just study alternative markets that no one else is studying. That's it. I mean, we don't pretend to be experts in all this stuff either. We kind of go in each week and we say, okay, we're going to look at this market. We're going to look at this asset. We're going to look at this company. And we just kind of set out without an agenda to learn as much as we can. and take everyone along for the ride.

And it's taken us to some pretty unique places recently. I mean, you know, just one area that we've started to realize is kind of untapped is just the idea of investing in other countries, right? I mean, there's just so much focus on North America and North American equities and stocks and companies. And for good reason. It's the most dynamic and interesting in the world, in my opinion, in many people's opinion.

But that is not to say there aren't opportunities all over the world. And so, I mean, we've started to look at opportunities in countries like the Philippines and Rwanda. and we've got experts from those countries to talk about what the startup scene looks like and what interesting companies are doing over there. And it's just a whole other way of thinking about alternative investing. And there's 180 countries out there. So we got a lot of more work to do.

But yeah, that's kind of our newest foray. And, you know, in my MBA program, when you look at international business, it's just like a, it sounds cliche, but it's a whole new world because it is, you know, the Philippines. It's a whole different world. So you've got to know the culture and you've got to know all of the different moving variables. So what do you guys do when you start researching opportunities in other countries to make sure that you're looking at that opportunity through the right filter and lens to make sure you're really accurate in your, you know, estimations? Find the experts, find people to talk to that are on the ground that live there, that know what they're talking about, that are involved in either finance or banking or the startup space or investing or private equity or something. I mean, there's no way you could, you could, like, for example, for the Rwanda issue we recently did, this is a big fat report on Rwanda.

I've never been to South Saharan Africa. I couldn't tell you the first thing about Rwanda, you know, except for, you know, it's a tough history. And so, you know, we found, we found experts. And we basically just interview them and we let them, you know, tell the story and, and guest post and write for us. And so we basically do a lot of partnering up to find the people who are, you know, have boots on the ground, understand the landscape and to help tell the story. Yeah. Yeah.

I mean, that, and then you got to make sure that it's, you know, yes, find the experts, but find the right experts because, you know, Google and online will find all kinds of, you know, people that say they're experts. So that's, that's got to be some type of vetting process too, I would suspect. Yeah, you kind of know when you see it. I mean, it's like, well, again, it's, it's, it's, it's, uh, we don't start with Google, put it that way. Yeah, yeah, yeah.

Yeah. Yeah. I would hope not. Yeah. Yeah. So what are you seeing, like, look, ahead, you've mentioned some unique type of investments, you know, from cars to whiskey and wine and sneakers. Those are pretty unique. What are, what are you seeing moving forward as the

concept of alternative investments starts to get more popular? Maybe people are more aware of this. What are the kinds of things that we can be watching out for that could pop up as a potential investable opportunity? We'll always be on the leading edge of this stuff. So once the rest of the world starts to really get wind of, you know, what's happening with kind of normy alternatives, like, you know, artwork and wine and baseball cards. We'll already be two moves ahead. I mean, so right now we're looking at stuff that markets that most people don't even realize exist, but are absolutely going to be a thing in the next decade. I'll give you one example, is airspace rights. So the idea of buying and selling the airspace above your property without getting two,

deep into the weeds. This is basically a market that's, it's a market that's needed in order to bring drone delivery to light, right? So drones operate below 1,000 feet, below the purview of the FAA, but they need airspace corridors in the sky in order to make deliveries. And those corridors don't exist because there's no real protocol for where they can travel. So there's companies now that are looking to create markets where people can property owners can claim and sell the rights to use those corridors above their property so that drone delivery companies can can make their deliveries. And so, I mean, it's fascinating.

And it just doesn't exist today. There's also, you know, you can go down into the ground. Mineral rights is a whole other area of interest for a lot of companies, especially with, like, you know, talk about tunnels and a lot of what like Elon Musk wants to do. And so this market's all around us is the point. Yeah, you think about like buying land. There's only so much land and they're not making any more land. And if you can own land, then hey, but then what about in addition to that?

Well, go below that mineral rights. How about go above that air? And it's kind of interesting when you mentioned that because, yeah, you don't want to get into the FAA world of that. So that's too high. But then we know that Amazon and Bezos are looking at drone delivery for delivering their packages. So there has to be that kind of a sweet spot in the middle. What if there could be a new frontier to monetize the air above your house? That'd be pretty cool.

This is why, I mean, this is why, you know, I mean, when did Jeff, you know, Bezos talk about this originally, 2013? Okay, what's happened since then? You know, how come there's no drones in the sky? Where's my flying car, right? I mean, this is, there's a reason. The reason is there is nothing in place to govern this. And so that's a big market that's about to open up.

I think that's pretty amazing. Well, it's so neat just to kind of think about these opportunities and to hear the passion behind what you're doing, which led to creating this research and then this fund. So I think that's spectacular. So if someone is interested in learning more, Stefan, what's the way that they can learn more about what you do and then maybe participate in your alternative investments? Yeah, just head over to ALTS. That's ALTS. Alts.co. So A-L-T-S dot CO, ALTS.com. And yeah, sign up for the newsletter. That's where it all begins. If you like what we're putting out there, you like our vibe,

sign up and welcome aboard. Awesome. Stefan, thank you so much for coming on today. It's been a real pleasure talking with you. Hey, thank you. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, Visit www. www. influential entrepreneurs

radio.com.