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Speaker 1: This is Bloomberg Business of Sports where in a situation

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Speaker 1: that we haven't dealt with in modern times, the pandemic

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Speaker 1: here has really accelerated the investments that we've been advocating

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Speaker 1: for for a year. From a macro standpoint, I think

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Speaker 1: our sport industry is really forced to look at the

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Speaker 1: business a little bit differently. In depth conversations with the

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Speaker 1: leaders in the sports industry and sport, there's a good

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Speaker 1: admiration we're still moving forward part of something much bigger

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Speaker 1: than the sport right now, the health and tradustry of

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Speaker 1: our stakeholders are real smart important every moment, I think

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Speaker 1: we're all from a business respective thinking about the impact

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Speaker 1: that the virus is having across the country. In Bloomberg

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Speaker 1: Business of Sports from Bloomberg Radio, Hi, every when I'm

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Speaker 1: Chasing Something and I'm Mike Lynch and I'm Michael Barr

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Speaker 1: and this is the Bloomberg Business of Sports podcast where

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Speaker 1: we explore the big money issues in the world of sports.

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Speaker 1: And today we're really excited to dig into the world

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Speaker 1: of collectibles alternatives in a way that we've never really

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Speaker 1: thought about them. Alternative investments. That is, we're joined by

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Speaker 1: or Avadar. He is the CEO of Alto Sports also

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Speaker 1: the founder of that company. Le Are. It's really nice

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Speaker 1: to have you with us, because, as I was saying

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Speaker 1: to you before we came on this recording, this is

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Speaker 1: blowing up in the best possible way, this whole UH

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Speaker 1: area of collectibles. Tell us what all does and just

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Speaker 1: give us the backstory here. Yeah, So Alto is the

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Speaker 1: alternative asthlets platform that allows people to invest in sports

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Speaker 1: cards as e v as stocks. And it really all

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Speaker 1: started for me in I've been I've been into sports,

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Speaker 1: have been into finance, I've been into automation for many years.

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Speaker 1: And in my dad actually sent me a box of

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Speaker 1: my old cards from when I was eight because they

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Speaker 1: were moving from Chicago to Denver, and I started kind

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Speaker 1: of going through them, and you know, I got that

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Speaker 1: part of joy. I remember I had it every single

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Speaker 1: day when I was a kid, buying packed and I

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Speaker 1: wanted to feel that again. And you know, for me,

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Speaker 1: I was a big Kobe Bryant fan. I always wanted

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Speaker 1: this elusive Kobe Bryant card. And so in twenty sixteen,

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Speaker 1: I actually went on eBay and bought the box of

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Speaker 1: cards and so those out there who have never opened

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Speaker 1: up a sports card before. They get distributed in these boxes,

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Speaker 1: and there's this particular when there were two cards per pact,

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Speaker 1: and so I got the cards. I got the Kobe

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Speaker 1: Bryant card that I wanted, and I started looking on

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Speaker 1: eBay to see how much it was worth, and it

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Speaker 1: just opened up this new world to me, you know,

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Speaker 1: I started seeing different arbitrage opportunities. I had learned about

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Speaker 1: grading and authenticating and found some really unique things there. Uh,

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Speaker 1: and all of a sudden, I had the like goal

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Speaker 1: of buying all these Kobe Bryant cards. And since it's

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Speaker 1: actually been my highest performing asset out of everything. And

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Speaker 1: I've always loved to invest in really weird things and

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Speaker 1: sports cards in particularly, like my I r R over

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Speaker 1: the last five years has been a hundred and fifty

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Speaker 1: two percent. And so probably over the last two years,

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Speaker 1: I've really started to run into issues, um just with

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Speaker 1: the infrastructure in the ecosystem. And for a long time

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Speaker 1: I was just hoping that hey, someone else, you know,

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Speaker 1: hopefully someone else solves this problem. And then in probably

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Speaker 1: March during I was like, maybe I am the person

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Speaker 1: who starts solving these problems. And then in June. That's

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Speaker 1: when I really started all. I just I was fascinated

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Speaker 1: by the problems. I really felt that I was an

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Speaker 1: expert and I really wanted to change the space. I

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Speaker 1: just wasn't seeing anybody do it at the speed that

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Speaker 1: I wanted to do it at. The big thing about

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Speaker 1: collecting sports cards or any card in general, obviously is

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Speaker 1: the condition of the card, and it's the grading that

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Speaker 1: plays a big role. How do you handle that situation? Well,

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Speaker 1: everything on ALT is pre authenticated, meaning it's already been

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Speaker 1: graded by the two main authenticators p S A and Beckett,

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Speaker 1: And so when you're going on all you really don't

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Speaker 1: have to think too much about how do I get

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Speaker 1: my card graded? You can just go and explore and

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Speaker 1: instantly by it. But to your point, yes, everything the

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Speaker 1: grading just impacts the price tremendously. If it's a p

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Speaker 1: S A ten or a beck at nine five, they're

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Speaker 1: not going to be the same price. And if it's

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Speaker 1: an ungraded card, it's definitely be a trade at a

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Speaker 1: much lower discount than a highly graded card. Highly or

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Speaker 1: this is Mike up in Boston, So I'm going to

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Speaker 1: give you my quick tale of woe that I'm sure,

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Speaker 1: you've heard a hundred times before. But when I was

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Speaker 1: a young and my brother and I would just sit

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Speaker 1: up in our room and we would just go through

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Speaker 1: our shoe box of baseball cards. And you know, I

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Speaker 1: didn't think my dad and mom really knew what was

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Speaker 1: going on, but of course they were parents, and they

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Speaker 1: knew we weren't doing our homework. So my so my

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Speaker 1: dad said, Mike, have you done your homework? He asked me,

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Speaker 1: like five nights in a row, and I said, yes,

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Speaker 1: I did. And so he finally opened up my notebook

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Speaker 1: and it was blank. He took the box of cards

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Speaker 1: and in the trash they went. Now lesson learned. I

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Speaker 1: never lied to my dad. I never lied to my

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Speaker 1: dad again after that. But till the day he died,

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Speaker 1: he was always given that the oh I could have

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Speaker 1: had a V eight thing like slapping his forehead. What

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Speaker 1: did I do? So let's just say I found one

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Speaker 1: of those cards the garage, like a nineteen fifty five

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Speaker 1: or Willie May's card or something like that. Um, do

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Speaker 1: I just send it to Federal Express to you guys

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Speaker 1: to authenticate it and give it to give value? Any

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Speaker 1: How do I ensure that stays in the same condition

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Speaker 1: from the time it leaves my hand to the time

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Speaker 1: it gets into your hands. Yeah, there's there's some guidelines

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Speaker 1: to follow when shifting cards, whether it's P S A

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Speaker 1: or Beckett UM. You know, when you're sending this to us,

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Speaker 1: will obviously handle all the gratings for you. But yeah,

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Speaker 1: you generally put it into between two cardboards, you know,

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Speaker 1: two cardboard pieces of two pieces of cardboard um, and

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Speaker 1: you just make sure that it's really tight, and then

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Speaker 1: you'll put bubble wrap around it and it actually through

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Speaker 1: fed X or usks actually arrives pretty safely. Very rarely

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Speaker 1: are their problems. Mental friction is what people struggle with

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Speaker 1: for many Like I hadn't gotten anything greater until I

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Speaker 1: had heard about it for many years. Yeah, I mean

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Speaker 1: it is interesting sort of the almost like ecosystem as

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Speaker 1: you referred to it earlierly, are you know the other

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Speaker 1: eCos stem that I'm fascinated in here is the investment

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Speaker 1: world and the investment world and some very notable investors

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Speaker 1: that you've brought on board really kind of coming around

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Speaker 1: or waking up to this opportunity. Help us understand that

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Speaker 1: process for you, because all of the sudden whether it's

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Speaker 1: you know, and we've talked to Rich Climate over atty Ventures.

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Speaker 1: We obviously know Alexa s Ohanian like, these are people

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Speaker 1: who you've got on board. Tell us about that process

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Speaker 1: of either opening their eyes to this or connecting with them. Well,

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Speaker 1: I think everyone has a similar shared belief on a

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Speaker 1: couple of different areas. One is that I think people

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Speaker 1: are starting to see that Gen Z, millennials and even

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Speaker 1: older generations are shifting away from just investing in stocks,

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Speaker 1: bonds and traditional like assets. People want to invest in

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Speaker 1: our culture and things that they're interested in, and they

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Speaker 1: believe that the future state of the world, you don't

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Speaker 1: have to only invest in things that you don't understand,

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Speaker 1: Like there are going to be lots of different assets.

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Speaker 1: They are going to be stores of value. And why

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Speaker 1: can't it be sports? And if it were to be sports,

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Speaker 1: could there be an infrastructure or a company that allows

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Speaker 1: you to actually be the conduit for the currency to

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Speaker 1: do whatever you mean? And so I think a lot

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Speaker 1: of the people that you mentioned, not only are they

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Speaker 1: connected to sports, it's something that they're passionate, but they

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Speaker 1: do believe that it's going to be a currency in

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Speaker 1: the future. And so how cool would it be um

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Speaker 1: that in ten years, when somebody wants to go buy

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Speaker 1: their first home, they don't have to go to the

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Speaker 1: bank and say, hey, look at my stock portfolio, please

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Speaker 1: issue me a mortgage. What if they can go and say, hey,

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Speaker 1: here's my you know, sports card or alternative asset collection,

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Speaker 1: and can I get a mortgage against that? And so

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Speaker 1: I think just the idea of alternatives long term, I

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Speaker 1: think people have really shared belief that that's going to

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Speaker 1: be something that is going to change. I think also

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Speaker 1: with the idea of like culture and how culture places

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Speaker 1: a way into an appreciating asset in a store of value,

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Speaker 1: it's I don't know people have seen over the last

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Speaker 1: underd years. And so when you start diving into sports

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Speaker 1: card particularly, you start seeing this really unique effect called

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Speaker 1: the twenty five year effects that happens in a lot

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Speaker 1: of different assets. And what I mean by that is

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Speaker 1: generally people collect or start liking things between the ages

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Speaker 1: of eight to fourteen, whether it's sports cards or you know,

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Speaker 1: muscle cars a long time ago, or sneakers. And then

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Speaker 1: in your thirties is when generally people get your disposed income,

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Speaker 1: and so you have this twenty five year effects generally,

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Speaker 1: and once that twenty five year effect happens, you see

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Speaker 1: people getting really nostalgic and they want something um that

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Speaker 1: reminds them of their youth. And this cyclical pattern happens

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Speaker 1: in a lot of different you know, assets, collectible and

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Speaker 1: however you may call it. But then they become appreciating

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Speaker 1: because the demand for them, starting in your thirties, starts

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Speaker 1: increasing in the supply is fixed. And so if you

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Speaker 1: could start creating a an ecosystem or a marketplace or

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Speaker 1: next change, however you want to call it, you could

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Speaker 1: actually start making this market a lot more liquid. And

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Speaker 1: and for a lot of these assets, they're already very liquid.

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Speaker 1: And so that's what I think people are really buying into,

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Speaker 1: is this nostalgia is actually a currency that can be traded,

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Speaker 1: and these are the conduit for trading that nostalgia. I

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Speaker 1: always wanted to send Lynchy my nineteen seventy four Greg

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Speaker 1: Nettles card, just just because I felt sorry for the

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Speaker 1: guy of the story. That happens, it happened to a

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Speaker 1: lot of people. Fortunately, I hid my cards and mom

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Speaker 1: and dad didn't find him, and I found them one

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Speaker 1: day and there they are, and which brings me to

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Speaker 1: the next point. I'm yes, I'm lucky to have uh

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Speaker 1: some baseball cards that got the nineteen seventy four entire

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Speaker 1: set of tops, which is probably the biggest thing I got.

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Speaker 1: But there are cards out there now where people can

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Speaker 1: get together as investors to buy that one card. Am

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Speaker 1: I right on that. Yeah, there's a lot of different

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Speaker 1: companies coming out with securitizing and breaking up different cards

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Speaker 1: so that the price points can be a lot more accessible.

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Speaker 1: There's a lot of different ways that people are trying

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Speaker 1: to bring liquidity to this space and just introduce new

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Speaker 1: ways to get involved. So le Or, I take it

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Speaker 1: you probably don't have a target audience. You talked about

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Speaker 1: people in their thirties of war disposable income. But I

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Speaker 1: got to think this thing just spends multiple generations. Yeah,

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Speaker 1: I try to think about all it's very much like

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Speaker 1: a bank. I mean, I don't want to I don't

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Speaker 1: want people to think about it like a bank, but

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Speaker 1: everyone needs to use a bank, whether you're someone who's

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Speaker 1: eighteen or you're somebody who's seventy. And similar to all right,

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Speaker 1: this concept of nostalgia or sports, it crosses many different

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Speaker 1: generations and it's something that a lot of different generations

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Speaker 1: kind of lean on and talk about together. Like I've

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Speaker 1: always enjoyed being particularly in sports cards, how parents and

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Speaker 1: kids you know, share this, share this interest together and

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Speaker 1: kind of do it together. And so I would like

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Speaker 1: to create a platform that is intergenerational and it's not

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Speaker 1: segmented towards one specific generation. And so when you think

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Speaker 1: about this market continuing to develop, lee or I mean,

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Speaker 1: you know, as you alluded to earlier, I think you

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Speaker 1: know people would you know, maybe use eBay, or there

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Speaker 1: would be out of these ad hoc private markets, or

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Speaker 1: there would be one to one transactions, sort of one

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Speaker 1: off transactions. How does this develop competitively? I mean is

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Speaker 1: it something that you know, an established player like an

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Speaker 1: eBay or other market places get involved in. How do

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Speaker 1: you see that going? We'll also gone a couple of

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Speaker 1: things to kind of change the ecosystem. The first thing

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Speaker 1: is around sees with any mature market, the spees or

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Speaker 1: transaction speed start being reduced. If you look at eBay

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Speaker 1: right now, they're charging twelve and a half percent all

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Speaker 1: these auctions, all these auction houses are charging between twenty

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Speaker 1: and so came out with Okay, we're gonna do one

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Speaker 1: and a half percent. We're just going to move the

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Speaker 1: industry forward. We know that it's a liquid market. Why

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Speaker 1: are we charging everybody's such high feels? This is why

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Speaker 1: everybody is getting off of eBay and starting to do

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Speaker 1: everything on Instagram and forms. I mean, eBay has gotten

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Speaker 1: this nickname of the Bay and it's still the lowest place,

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Speaker 1: you know, out of all the auction houses. So the

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Speaker 1: first thing we did was really change kind of how

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Speaker 1: people are thinking about fees. The second part is just

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Speaker 1: remove all the logistics and hurdles um and fraud associated

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Speaker 1: with buying something Like countless times you go buy something

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Speaker 1: on eBay, you pay for it, then you know, the

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Speaker 1: steller gets remorse, he says, oh, I don't want to

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Speaker 1: sell it anymore. And so with fault everything you know

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Speaker 1: is in custody. But when you do a transaction you

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Speaker 1: buy something or sells something, the seller immediately gets the

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Speaker 1: money and the buyer immediately gets the card within their faults.

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Speaker 1: And so being able to settle just instantaneously something that

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Speaker 1: we a concept that we borrowed from the stock market,

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Speaker 1: just allows people to remove all the scription or hassle

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Speaker 1: um that consistently you know, happened over eBay and other

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Speaker 1: different platforms. So those are the core things. The other

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Speaker 1: thing that we added, and it's probably the one question

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Speaker 1: that we get from everybody until we wanted to educate

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Speaker 1: the market, is when you see a sports card, whether

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Speaker 1: you're a buyer or seller, your first question is how

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Speaker 1: much is this worth? Right? And that is such a

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Speaker 1: loaded question. You know, first you have to figure out

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Speaker 1: what is the name of this card, and so we

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Speaker 1: created a concept called the alt value and you can

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Speaker 1: think of it like this estimate or the Kelly Blue Book.

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Speaker 1: And what we do is we just tell you how

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Speaker 1: much all thinks it's worth. And we're utilizing all the

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Speaker 1: data sets of this card that have created historically comps

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Speaker 1: of this card that are very similar in order to

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Speaker 1: tray and relate a price and just to allow people

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Speaker 1: to easily know, Hey, you know my Lebron James refractor

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Speaker 1: is worth X amount of dollars right now, how is

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Speaker 1: the pandemic impacted your business? I mean, it would seem

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Speaker 1: to me that people because are they're all stuck at home,

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Speaker 1: there was more site traffic. Am I correct on that,

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Speaker 1: but we launched last Thursday, so uh, you know, I

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Speaker 1: would say the pandemic allowed the idea to get created,

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Speaker 1: is for people to come together and work on the concept.

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Speaker 1: But for sports cards in general, I would say it

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Speaker 1: has accelerated, Like people have been very focused on sports

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Speaker 1: and talking about sports. A lot of people went them

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Speaker 1: and connected with their parents and have time to go

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Speaker 1: and look at the attic or the basement or under

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Speaker 1: their bed to find the cards. That accelerated the conversation

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Speaker 1: of what do I what do we do with these cards?

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Speaker 1: That keep seeing them on CNBC or other places, and

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Speaker 1: some of them are worth millions of dollars. I wonder

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Speaker 1: if minds worth. I think it accelerated that concept. So

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Speaker 1: a lot of people win and try to find their

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Speaker 1: old cards. So LEO, what's next? Are you going to

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Speaker 1: stay with with with trading cards? Are there other alternative

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Speaker 1: assets that you're going to add to um your portfolio?

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Speaker 1: I think right now we're sticking with trading cards. You

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Speaker 1: know that the company is named all for a reason,

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Speaker 1: like they're going to be a lot of different alternative

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Speaker 1: assets over time. But we want to do trading cards

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Speaker 1: really well. We want to be the leader in that

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Speaker 1: staith and then slowly over time we'll listen to our customers,

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Speaker 1: and there are things that we are excited about going into,

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Speaker 1: but uh they're they're quite a bit uh time away.

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Speaker 1: So we are as we wrap up, I want to

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Speaker 1: ask you one more question, in part because as it

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Speaker 1: comes up all the time, and I'm gonna lean on

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Speaker 1: you as an expert in this field, to make us

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Speaker 1: all smarter, including our audience. We hear so much about

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Speaker 1: n f t s non fungible tokens and sort of

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Speaker 1: sweeping the the investment world candidly. You know, you see

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Speaker 1: it on Twitter all the time, all these references to it.

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Speaker 1: How does that fit into sort of the broader trend

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Speaker 1: here And what's the cleanest and clearest explanation of how

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Speaker 1: that market works. I don't even know if there's gonna

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Speaker 1: be a clear explanation. I mean, it is. I think

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Speaker 1: this is the part with n f t s right now.

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Speaker 1: It is it's an emerging market. Is another alternative asset,

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Speaker 1: but people don't quite understand it yet, and so for

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Speaker 1: anyone listening, the n f t s are associated with

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Speaker 1: a shared concept called the metaverse that people are excited

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Speaker 1: about the metaverseus a shared virtual reality, and a bigger

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Speaker 1: group of society is believing that this is going to

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Speaker 1: be a thing. You know, we have oculists, we have

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Speaker 1: you know, Google Glass, we have all these concepts that

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Speaker 1: are coming out there are going to share a acrual

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Speaker 1: reality with the physical world, and so people are preparing

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Speaker 1: for what this world is going to look like, and

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Speaker 1: these n f T s are a part of it.

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Speaker 1: They're they're part of their basically what what we well

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Speaker 1: when we see art in the physical world, These n

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Speaker 1: f T s are art and objects for this metal

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Speaker 1: world or this metaverse, and so it's quite a unique concept.

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Speaker 1: You know. The big question that a lot of people

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Speaker 1: in this space ask is when will this metaverse be

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Speaker 1: a real thing? Is it two years away? Is it

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Speaker 1: five years away? Or is it a hundred years away?

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Speaker 1: And until we have a more clarity into that, I

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Speaker 1: personally believe that things like n f T it's all speculation.

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Speaker 1: There's not true depth to it because there's no utility yet.

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Speaker 1: Um And so I think one day they're going to

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Speaker 1: be a really big thing. Is it today? Is it

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Speaker 1: gonna be top shot? Is it going to be still rare?

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Speaker 1: Is that going to be the thing to buy when

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Speaker 1: the metaverse is up and running? That I don't know,

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Speaker 1: but I know that people are really excited about this

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Speaker 1: kind of this concept and so that's why you're seeing

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Speaker 1: kind of a big group of people n fqs like

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Speaker 1: you've never seen before. Yeah. Now, it's a fascinating twist

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Speaker 1: on what's going on out there. And I mean, especially

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Speaker 1: as you said, at this nexus of technology and and

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Speaker 1: the very tangible and you know, some of the most

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Speaker 1: tangible things that we can think about. And as you say,

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Speaker 1: there's a nostalgia play to to what you're doing for

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Speaker 1: a lot of us, as you heard in all of

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Speaker 1: our voices be at excitement or you know, a little

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Speaker 1: bit of lament on the part of Mike Lynch uh

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Speaker 1: Lear Avadar. Thank you so much. This was a lot

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Speaker 1: of fun and I feel like we're all a lot

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Speaker 1: smarter on this market owing to the time we spent

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Speaker 1: with you. So thanks a lot. Thank you guys. It

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Speaker 1: us enjoyable. Thank you. This is the Bloomberg Business of

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Speaker 1: Sports podcast on Michael bar You can follow me on

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Speaker 1: Twitter at Big Bar Sports and on Mike Lynch. Dad,

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Speaker 1: I learned my lesson. I never lied again. But couldn't

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Speaker 1: you just hit him in the garage, you know, and

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Speaker 1: just punished me for a month. You can find me

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Speaker 1: at Lynch w CVB and I'm Jason Kelly. You can

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Speaker 1: follow me at Jason Kelly News. We're here each and

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Speaker 1: every week with you Monday's Wednesdays, and he says, exploring

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Speaker 1: the world of money in sports. Join us again. At

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Speaker 1: the end of the week, we're gonna catch up with

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Speaker 1: Stephanie McMahon. She is a former professional wrestler. She's now

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Speaker 1: the Chief brand Officer at the w w E. That's

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Speaker 1: gonna be fun. You're listening to Bloomberg Business of Forwards

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Speaker 1: on Bloomberg Radio around the world and online wherever you

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Speaker 1: can get your boders