Yieldstreet CMO Wittney Rachlin on Investing in an Alternative Future
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Investing in an Alternative Future
Connect with Wittney Rachlin on LinkedIn: https://www.linkedin.com/in/wittneyrachlin/
Read more about Yieldstreet: https://www.yieldstreet.com/
Full episode here:
FULL TRANSCRIPT BELOW
Adam Conner (00:09):
Today on The Future of Fandom, we diversify our understanding of investing and provide some alternatives to watching stock tickers. My name’s Adam Conner, I’m your host, and in this episode, we buy into a conversation with Yieldstreet via their Chief Marketing Officer, Wittney Rachlin. Yieldstreet gives regular folks like you and me the ability to invest in assets like art in short-term notes. Between the explosion in stock trading app use and the rise of crypto, it’s no secret that investors are looking for new and different ways to invest their wealth and Wittney sees opportunities in building communities of people building a future of their own from investing in these alternatives “before it was cool.” So let’s have some fund (get it) and predict the future with Yieldstreet and Wittney Rachlin.
Adam Conner (01:02):
Hey, Wittney. Thanks for joining me. How are you?
Wittney Rachlin (01:05):
I’m doing well. How are you?
Adam Conner (01:06):
I’m doing well. Thanks for joining me to, mostly, well, first to educate me, I think, about not only Yieldstreet, what it does, but what that whole world of alternative investing is, and then to speak about how to build community within it. There’s a few intricacies that I foresee, but first, before we get into the weeds there, let’s start with the baseline. You tell us a little bit about Yieldstreet and then we will get into this world of alternative investing.
Wittney Rachlin (01:34):
Absolutely. We are a New York-based fintech company. We were founded in 2015, essentially to fix a fundamentally broken process between investors and investments with a mission to provide access to the best-in-class, high-yield, institutional-quality investment opportunities that were previously unavailable to most people because the barriers to entry were just too high, or just didn’t exist before.
Adam Conner (02:00):
What were those barriers? Let’s talk about that real quick.
Wittney Rachlin (02:02):
Yeah, sure. I think prior to these retail platforms, and clearly we’re not the only one in the market, it was hard for a regular everyday retail investor to find these types of investments. They were being offered through hedge funds. They were being offered through institutions to other types of institutional investors and they were being offered at very, very high minimums that made it unrealistic for your everyday investor to partake in these opportunities. What we are trying to do is bring these investments directly to the investor, as well as at lower minimums to make it more available. I will not use a name, but give you an example of something we recently had on our platform, a really desirable institutional-like investment. When I say that, I mean, institutions are actually investing in these types of products, but the minimums were at about 250,000 per investment. Our minimum investment was 25,000, so it makes it much more realistic for somebody who’s putting away savings to invest in these types of alternatives to be able to partake and experience that type of investing quality.
Adam Conner (03:07):
Sure. What called you to this purpose specifically? Prior to this, of course, I know you were at Blockfi, but I’m more referring to before that, you were part of, shall we call them more legacy, large financial players?
Wittney Rachlin (03:21):
Adam Conner (03:22):
Which may not have been here, and then over time, it seems that you’ve drifted more into these certain vehicles. Was there something about them? Was there something about their potential, the communities, the type of people they attracted that attracted you?
Wittney Rachlin (03:32):
Absolutely. I would probably put myself squarely in our target market, so it definitely appealed to me. I come from a generation of people who were told, “If you put every dollar you can into your 401(k), starting at the time that you get your first job, you can retire comfortably at 65,” and that is no longer the case for most of us. We need to be investing outside of just the stock market and finding these other opportunities to generate wealth outside of our regular income stream. In the past, from where I had been, I had these wealthy friends who were investing in real estate or were getting access to these funds that I had never heard of before, and Yieldstreet is bringing this to people just like me and to many more people than previously had access to. And I think in the wake of COVID, especially, where you hear the richer getting much richer and not everybody else is getting there, we are looking to close that gap and bring more people access to things that were previously unattainable for them.
Adam Conner (04:31):
Gotcha. When you say that you’re squarely in the target market, who are the types of people, what are the types of communities Yieldstreet’s trying to build right now?
Wittney Rachlin (04:38):
Sure. Overall, we service accredited investors, which means people who make over $200,000 a year or have over a million in net worth. That is more of a regulatory outline, not something that we have imposed, so we also offer two types of funds for people who are non-accredited as well, and we will continue to work across government legislation ensure we give access to as many people as possible. But it is generally people who are a little bit older and have saved a little bit longer that have the investible assets outside of their 401(k) to think about where else to put their money.
Wittney Rachlin (05:14):
I think when you’re in your 20s, you’re hopefully putting money aside in your 401(k). You’re probably investing in some stocks and bonds by yourself, and when you get to be about in your 30s, I’m just generalizing, some of us in our 20s are much better at planning and generating wealth than I was in my 20s, but once you get to that point in life that you have the ability to save some more and to invest some more, that is where we come into play. Alternatives are all about having a place to invest side of the stock market, outside of the bond market. I think a lot of people think of crypto as being that only place, but there’s a whole wide world of alternative-type investments out there.
Adam Conner (05:52):
Yeah, crypto’s certainly the one which is the most media-forward and has had the most hype, arguably, shall we say since, oh, 2015, probably?
Wittney Rachlin (06:00):
Adam Conner (06:01):
Probably hyping up once in 2017, again in 2020, and maybe a third time now, given the state of the world, but that’s not the only alternative, as you said, which is why I want to get a definition of this next. While a 20-something looking at investment advice, which they shouldn’t do, by the way, on TikTok, might just see something like stocks, bonds, crypto, and then maybe a house, like you’ve mentioned. I know that’s not all there is. Could you define what alternative investments is in the broad basket that Yieldstreet and you think about it?
Wittney Rachlin (06:28):
Absolutely. It’s fairly easy and crypto is part of that alternative universe. We’re talking about public markets, which is more your stocks and your bonds, and then there are private markets, or anything outside of the stock market, which I would consider alternatives. I think crypto has gained a lot of popularity because in some ways it functions very much like the stock market, right? You can move things daily. There’s liquidity. You can go in and you can go out, you can track it very easily, whereas other alternatives can be more illiquid and long term.
Wittney Rachlin (06:57):
If you think about buying a house, yes, that is an alternative investment, but there are ways to invest in real estate outside of that. There are REITs, there are multifamily housing, there are office buildings. We also offer art investing. We currently have an equity vehicle where you can invest in a variety of different art pieces in a diversified way. We deal with short-term lending, long-term lending, so there’s lots of different flavors of this. Venture capital is another very popular one these days. But really, I would broadly call it anything outside of the stock market.
Adam Conner (07:31):
Got it. What you are helping people to do in an increasingly democratized manner is get access and then invest actively in these things where it might not be so clear without something like a Yieldstreet as to what their value is, the fluctuations they’re in, and the ability to enter and exit these types of things?
Wittney Rachlin (07:48):
Exactly. In general, it’s a longer-term investment. We have investments for as short as four months and as long as, I think, seven years right now, so it’s not something people are as familiar with if their experience has been with the ups and downs and the daily liquidity of the stock market, so it’s a generally different place where we are hoping to create a platform for not just access, but also education.
Adam Conner (08:11):
Well, yeah, that’s where I want to go next, or I mean, that’s the clearest question I have in my head first. I’m 30, all right, so I’m right on the brink of people who should have been investing well in their 20s and people who should be diversifying in their 30s.
Wittney Rachlin (08:23):
Adam Conner (08:23):
Of the instruments that you noted between stocks, bonds on one end, and crypto on the other, I mean, you just mentioned a few, which is at least more in number than those entities, why don’t I know much about this? I mean, is it just literally because no banker’s calling me up being like, “Hey, want to buy this art fund?”, or …? I imagine, as the CMO of the company, it creates a great awareness opportunity, but how are you trying to educate folks? I imagine that’s the beginning of any community that you seek to build, but what are the ways in which you’re doing that?
Wittney Rachlin (08:53):
Of course. One is we create a lot of content, a lot of blogs, a lot of co-sponsored newsletter, written articles about the different types of ways in which you can invest in alternatives, and the reasons why, understanding liquidity, understanding risk, understanding these types of investments. That’s more your broad-based awareness play.
Wittney Rachlin (09:13):
We also, obviously, we’re in the business of bringing on new people on our platform, so we leverage wider sponsorships and events to really bring that awareness, and in ways possible, we bring it with a very personal touch. We love to sponsor events where we can have people on the ground who help describe what we do to different people. I’d call that our very baseline education. But once you sign up on our platform, there’s a series of videos, information, how our offering pages will give you more information than you can probably digest in one sitting about the style of investment that you’re looking at, what it means, what the risks are, where the upside comes from, how the payment structures are, so we offer a very diverse, I’d say, from your very basic education to your really deep information to service all of the different layers and segments that we offer products to.
Adam Conner (10:05):
It’s worth noting here, listeners, you’re listening to a podcast in which we’re talking about this and Yieldstreet has their own called, appropriately enough, The Yield, where you can learn a little bit about this, one of the many content streams that they provide. Wittney, has the type of content changed the type of person that knows about this? Because I think about alternative investments in content. Maybe it’s because I’m a consumer of the platform, but the first thing that comes to mind is TikTok and how much garbage there is out there about how to do it, how not to do it, what to do, what not to do when it comes to investing. How have you made sure, other, of course, than putting the Yieldstreet name on it, to make sure that you’re not being lumped in unfairly with that muck?
Wittney Rachlin (10:48):
Absolutely. We’re really careful. I will say we’ve only recently really started entering the TikTok space and we only do it in ways that are highly informative and maybe in a slightly more fun way. We want to stand out in the quality of education we provide and it’s a way of bringing complex information to the market in a somewhat simple way. I always say, just because people are rich doesn’t mean they understand everything. Just because people are really smart. Doesn’t mean they know how to in the best way possible, so regardless of your level of education, we want to provide information to you in a succinct and clear way that makes mucking through all of that easy. We want to stand out, we want to be short, concise, and informational, and the best way to do that is obviously engaging on our actual platform, or you can find information in so many different ways based on your level of education about investing and the knowledge that you have already.
Adam Conner (11:45):
Yeah, it’s probably smart for us to start talking about that because even when you think about the broad swath of content out there, high quality, local, it doesn’t matter where it comes from, there’s also been, if you’ll excuse the pun, almost like a derivative market of content, which is simply ridiculing that which has come out, which is as popular or more popular than the advice or lack thereof itself, so the more you can control within your four walls, the better.
Adam Conner (12:07):
Let’s jump there. Let’s assume that I’m an investor and I want to get it access to some of these alternative things and so I dive in feet-first with Yieldstreet. What about the platform, the community there, what would keep me engaged? Here’s why I ask that, because if some of these have such a long maturity set up to seven years, it might be the kind of thing that I buy and let’s sit and ignore. How do you keep people active?
Wittney Rachlin (12:35):
That’s such a great question because we encounter this question all the time to that very point.
“If you come in and invest in a three-year real estate deal, why are you going to come back? Well, we hope you’re going to come back, one, because we’re going to give you updates about the investment that you’re in. If you’re invested in a real estate deal, we’re going to give you information about how that deal is progressing. Are you getting cashflow out of that? So while these investments can be illiquid from your principle, you still may be getting cash distributions on a very regular basis, either quarterly, twice a year, or annually, so that’s another reason to come back.”
— Wittney Rachlin (12:40)
Wittney Rachlin (13:10):
The hope is that you don’t just invest in one deal, you invest in several because it is about diversification, and because I can invest at lower minimums, I have the capacity to invest in a real estate deal and in a venture capital deal and in an art equity deal, and there’s always new deals coming on the platform at least every week, if not more often than that. I know for me personally, I had not invested on Yieldstreet prior to joining the company. Since then, I’ve been in about 10 active deals. The reason for that is something new comes along all the time that’s interesting and fits into the risk profile of my portfolio, where I feel like it’s a good return for the level of risk that I take. It has a good term at a good minimum.
Wittney Rachlin (13:49):
I’m always thinking about what’s the next thing. Plus, if you’re in a shorter-term deal, I’ve been in several as well, which are six to nine months in length, you get paid back. I start thinking about, “Well, if I put it back into my savings account, I’m going to make 50 basis points on my money, but if I put it back here for another two to four years, I’m going to start making much more than that.” The beauty of compound interest is something that we don’t realize until we start building it, so I’m always looking for what that next thing is going to be, and there’s so offered on the platform that I don’t really have to go elsewhere to do it.
Adam Conner (14:19):
Yeah. See, because in my mind, immediately where I jump is like, well, if I’m going to get into some of these alternatives, I would bias personally first towards something with a shorter timeframe because yeah, maybe my attention span is thin and I focus on this at part of my life, and then other things is as part of my life, and so I come back to this every now and again, but if I know that six to nine months from now, this money’s going to be unlocked, basically, with some return therein, I could go and put that back in. I thankfully understand the value of compounding as well.
Adam Conner (14:48):
That is, to me, currently more preferable than something on the long term, but I know there’s value in both, and it’s probably a result of two things, one, my age, frankly, and because I can afford to be risky right now in my portfolio, riskier, and two, just because once again, of all of this media-forward business around either, and again, it’s mostly stocks and bonds, it’s mostly in crypto, of wildly volatile things, where probably by survivorship bias, you get stories of wild winnings, and then in some cases, these ludicrous losses.
Adam Conner (15:23):
I’m curious about something else because through all of that, right, crypto market stocks and bonds, there is a common heartbeat and that common heartbeat is that I can go pretty much any website that provides the data and watch a ticker, I can watch it go up and down, sometimes faster than others, and that gives me a pulse without having to engage with additional content. It’s just like a number and that number’s good or bad and maybe it makes me feel a certain way, whatever. With these alternative investments, and you can educate me here as well, I don’t know that you necessarily have that heartbeat. I’m curious what the replacement, or if there is a replacement, or what the surrogate for that is, and probably again, to tackle the question of how do you make these investors feel involved? I understand there’s plenty of content there, but I’m just curious if that’s something that your current customers talk about, or where the hunger for shorter-term engagement comes from, do you know what I mean?
Wittney Rachlin (16:14):
Adam Conner (16:15):
That’s a huge question wrapped up, but I’m curious.
Wittney Rachlin (16:18):
It’s a huge question.
“I will tell you that a real estate investment is never going to have that heartbeat of crypto. I think a good portfolio has a balance of both because it’s not just about the excitement of investing, it’s about your short term in your long term. Going back to your previous point, there’s lots of opportunities to get into short-term deals, and I think a lot of first-time investors test the waters and dip their toe going into short term. We have three short-term notes up right now, which are less than nine months, so that’s a great way to do it.”
— Wittney Rachlin (16:19)
Wittney Rachlin (16:47):
But if you think about, “If I get into short-term notes, which is six months and that’s my short-term, I’m going to wait for my first payback and think about what next,” say I’m in a real estate deal. Suddenly, I’m thinking about markets and market dynamics and what’s happening in the space and what’s the housing markets sound like. I think content helps to replace that heartbeat and it becomes its own distinct heartbeat that’s a little less of following a ticker and more about absorbing more information and understanding the broader market context.
Wittney Rachlin (17:12):
For example, I invested in my first art deal recently, and suddenly, I find myself paying attention to the auctions and how much is the Banksy selling for, and is Basquiat as popular as it used to be? Those are the different ways, I think, that you start keeping people interested in their investment on a regular basis. That’s what we try to provide to investors on our platform. If you’re invested in an art deal, you’re going to get lots of information for us about how the markets are moving and what’s sold recently and for what and for how much more. I think there was a big note this morning that came out in The New York Times about how rents are skyrocketing in New York again and people have stayed away from real estate investing because of what happened during COVID, so it’s almost like this broader context and more intellectual focus that I have now on markets and market directions I’m invested in these deals.
Adam Conner (18:02):
Which I think is probably good for anybody to become a more prudent investor via that-
Wittney Rachlin (18:05):
I hope so.
Adam Conner (18:06):
… knowledge is opposed to a or mitigation of this volatility and fervor and fear mostly.
Wittney Rachlin (18:13):
Yep, and we’re hoping to deliver that in an easy way to our investors, so you’re not out there scouring The Wall Street Journal for information about where your investments are going.
Adam Conner (18:22):
Right. What are the youngest consumers on Yieldstreet or youngest customers on Yieldstreet saying, and craving? I ask this because on this podcast, partially we’re focused on what the, we say “next-gen consumer” but those that are digital-first are doing and thinking, and of course, with a nod to the future, which this is all about. I’m curious as to what they’re thinking because obviously, that’s going to drive where you go. What are they saying right now?
Wittney Rachlin (18:45):
I think of the younger investors, I’d say the way we provide crypto is probably for a somewhat more mature investor because a younger investor is very comfortable going out and trading coins in a way that maybe an older investor isn’t and we offer crypto through a diversified mean and through managed capital on our end.
“For people who are a bit younger, I think that the first step outside of stocks and crypto is probably real estate. It’s tangible, it’s understandable, it’s been around as an investment vehicle forever. We launched our first real estate REIT last week and that’s been a great way for us to engage new investors, especially because you do not have to be accredited to invest in it, and there is also a level of liquidity as we’ll be offering tender offers on a regular basis where you can actually move money in and out of the evergreen investment.”
— Wittney Rachlin (18:51)
Adam Conner (19:31):
Interesting. Then let me ask you this, because hopefully, even if folks are utilizing crypto investments in other means, ideally, you hope that as they age and mature, they move into your platform, so what do you see as the, I don’t want to use the word “future,” but I will, as like the next iteration of this sort of experience because as I’m understanding it right now, accessibility is growing. You can access a greater number of alternative investments than ever before, you can do it in a single place on Yieldstreet. Isn’t that great? Then once you make it, even if it is a long time to maturity, there’s this large content library in the middle to keep people, to give them a pulse on it.
Wittney Rachlin (20:08):
Adam Conner (20:08):
What comes beyond that? Or, I mean, well, what’s on your mind for the next two, three, five years of Yieldstreet, or even the ideal alternative investing experience?
Wittney Rachlin (20:20):
Sure. I think that’s a great question.
“I’m always thinking about, ‘How do we think about the younger generation who are accumulating wealth right now?” To me, the ideal portfolio, again, my personal view of things, is where I think people see the very wealthy getting rich right now is probably in venture capital. That’s kind of the hot ticket item and it’s easier and easier to invest in. There’s a lot more retail platforms out there that allow for it.”
— Wittney Rachlin (20:22)
Wittney Rachlin (20:46):
But if you were to come to Yieldstreet, I think the great diversified platform to really experience everything that alternatives has to offer is to have something short-term that you move in and out of and potentially free up cash along the way. Certainly better than putting your money in a savings account right now. Then you have a couple of different investments that run different time periods as well as different underlying assets, so you have something in real estate, you have something in the VC private market space. I think every celebrity athlete out there is now invested in 12 different companies. I think Kevin Durant was, I mean, every time you hear about him, it’s because he was invested in some company that recently went public, and that’s the thing that people are thinking about.
Wittney Rachlin (21:26):
Then for me, from crypto, and obviously, I am a crypto investor and I do appreciate the ups and downs and the everyday momentum of it. But then there’s also this part of me that there’s a lot I don’t know about it. There are the new coins, there are people who are managing it in a different way, and I think having that kind of active management of crypto is an interesting alternative to being out there and trading Ethereum on my own.
Wittney Rachlin (21:48):
I think it’s the right mix, it’s the right duration, and it’s making sure you have the right amount. Institutions have around 40% of their assets in alternatives. On average, the retail consumer has less than 10, so obviously, there’s a happy place in the middle there. I’m not digesting consumers put 40% of their assets in alternatives, but under 10 is clearly not optimizing the diversity of their portfolio, and I hope people start taking those measures because my goal is to see more people generate wealth for the long term and not be impacted by the ups and downs of the stock market or the ups and downs of the crypto markets.
Adam Conner (22:27):
Sure, or at least to learn, I mean, my God. Yeah, and you hit the nail on the head with something that I’ve been thinking about, which is that every so often, I’ll have a conversation with somebody who will talk about access to VC. I always just saw that as behind some Manhattan/Connecticut garden, which is neatly trimmed and only accessible to a few select people. Then you find people on the other side who our athletes or entertainers, you and I must be reading the same edition of Adweek talking about Kevin Durant and his wild portfolio of tech and media ventures, we’ve even talked about it on this podcast, where that’s clearly a huge unlock, and yes, alternative, but I don’t know anything about that. Again, I almost feel silly not knowing it because, what, I’ve been in the real world, let’s say about, anyway, eight years after graduation and this is the kind of thing that I should know and anybody building wealth for the future should, so I appreciate that, and I appreciate you coming on the show, teaching us a little bit more.
Adam Conner (23:24):
Final thought. How about this? Favorite alternative investment? You have one? A favorite one? You mentioned art a lot and talk about VC. What do you really like?
Wittney Rachlin (23:31):
I do love art. I mean, I love art in particular, and I certainly don’t have the resources to buy my own, and yet the values continue to appreciate, so having someone tell me where that’s going to go. I’ve been investing in a lot of real estate. Actually, I’m a New Yorker and I’m a lifelong renter and I actually don’t own any real estate on my own, so I’ve actually-
Adam Conner (23:49):
Same here, except for the New York part, but I don’t own either.
Wittney Rachlin (23:51):
… Yeah. I’ve been leveraging Yieldstreet to become a real estate investor outside of being a homeowner.
Adam Conner (23:57):
Yeah, that’s a cool one, too, just because I, as well as anybody look at those staggering prices and say, “My God. Am I going to dump all my money in this? I mean, I know I got to get a piece, but jeez.”
Wittney Rachlin (24:06):
Exactly, exactly. Well, thank you so much for having me. It’s been great.
Adam Conner (24:13):
Thanks again to Wittney Rachlin from Yieldstreet for joining us. This alternative world is certainly worth looking into more and should probably be a bigger part of our financial future. Thanks to you, the listener, for exploring The Future of Fandom with us today. I’d encourage you to stay connected, so be sure to subscribe to us wherever you listen to podcasts, or you can also find all of our content at livelike.com and across socials, LinkedIn at @livelike, and Twitter at @livelikeinc. I look forward to predicting the future again with, with you real soon. Until then, I’m Adam Conner saying so long, and thanks for being a fan.
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