⚠️ This ENTIRE Asset Class is Disrupting Stocks & Crypto

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as an investor focused on disruptive
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innovation one of the things i'm
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passionate about is using technology to
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give everyone the same market
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opportunities just a few years ago the
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rise of commission free trading opened
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the stock market up to millions of new
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investors less than two years ago nfts
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digital collectibles and other d5
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projects stormed the scene giving
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everyone access to new investing
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opportunities and the new kinds of risks
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that come with them but lately growth
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stocks and cryptocurrencies have been
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tightly correlated and both trending
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downwards so the challenge for us as
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investors is to find a different way to
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diversify our portfolios to find an
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affordable asset class that actually
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behaves completely differently from the
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crypto markets and the stock markets
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while offering similar kinds of returns
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does such an asset class even exist to
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answer that question i sat down for an
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exclusive interview with mr hai tran the
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co-founder and cmo of masterworks dot io
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masterworks is a tech unicorn that's
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disrupting one of the oldest and most
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exclusive asset classes in history by
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giving everyone access to fine art
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without breaking the bank these are not
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no-name artists drawing animals on
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digital coins in 2020 investors saw a 32
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net return on masterworks sale of
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banksy's mona lisa that's two times
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better than the s p 500 over the same
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time period now could be a really great
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time to talk about that so if you watch
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until the end you'll have a solid
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understanding of art as an investment
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how fine art is similar to and different
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from the collectibles and nft scenes and
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how masterworks dot io goes about
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picking artists and paintings that
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generate returns for investors over time
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my transparency and your trust are
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important to me i'm not a financial
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advisor and nothing in this interview is
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financial advice masterworks dot io is a
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regular sponsor of the channel and
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they've given my audience vip access to
01:47
their latest offerings which you can
01:49
find using the link in the description
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below if you're interested and if you're
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not interested i still think you'll find
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a lot of value in this conversation i've
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kept it focused on investing cut out all
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of the fluff and enable timestamps for
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your convenience your time is valuable
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so let's get right into it before i
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heard about masterworks i thought that
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collecting art was really only for
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multi-millionaires who is the typical
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masterworks customer is it an investor
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an art enthusiast helped me understand
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like who the core user base of
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masterworks is
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yeah so fundamentally we really think
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our product is for everyone we try to
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kind of design a framework that allows
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um you know investors of all types right
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so from beginner investors who maybe are
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just starting out
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to sophisticated investors people with
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you know large portfolios who are just
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looking for a different type of
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alternative asset so our product is
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really kind of geared towards kind of
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like every type of investor stage and
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you kind of hints towards it right like
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the art market is
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essentially controlled by a very small
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group you know folks i can't afford to
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buy
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painting sometimes valued up to hundreds
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of millions of dollars so i would say
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you know typically our audience aren't
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necessarily art people because no one
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really knows how to think about
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investing r because this this world is
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so small you know i i think we have a
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lot of overlap between like for instance
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people that are interested in crypto you
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know to art right because crypto is kind
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of like a newer investment and it's not
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necessarily new but it's kind of a new
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way to think about investing and with
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like you know kind of like you've just
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been following the market it's like i
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think people are just looking for
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something that that's you know
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uncorrelated from equities right it's
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been kind of a wild ride and whatever
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the market does like bitcoin is kind of
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seem like it's going to follow so ours
03:25
kind of a nice way to hedge against that
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we think you actually co-founded the
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platform right so i'd love to learn a
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little bit more about your background
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and who you are and how you decide to
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get into investable art yeah yeah so i'm
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uh i i
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found in the company was scott who's the
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founder he's been collecting art since
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he was like in high school essentially
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he's been like a very successful tech
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entrepreneur and then um you know we had
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a few other people as well on kind of
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the legal side and the product side i'm
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old i've been
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kind of around the block a few times
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i've actually you know i've been kind of
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in the design industry building product
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new design since 1993
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so if you kind of just think about that
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for a bit right what was happening in 93
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um it just so happens that um you know i
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had a computer at a super young age
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because when my parents came to america
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they they their first job was at uh
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one of the largest computing companies
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like you know one of the first pc
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companies right so i always had a pc i
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always grew up around a pc i was really
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into design and and coding programming
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um so i taught myself that when
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i was 13
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wasn't much to do in like rural michigan
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so um you know just super excited to
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have like this big kind of world wide
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web community of like folks right i got
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my start kind of in gaming online gaming
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um in you know early 2000s like
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literally 2000 i worked at sony i've
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done some advertising work and then i
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joined a online gaming startup called
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zynga in 2008 and they went public you
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know they made a game called farmville
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which
04:57
i'm sure annoyed a lot of people
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but it basically created the
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microtransactions concept or you know
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the notion of like charging for a cow
05:06
and charging for a hat
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so that's basically the legacy um they
05:10
were they were just sold so you know
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great great for them um so yeah i've
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been kind of been like on the startup
05:16
world product for a while and i met
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scott and um
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you know the original idea for the
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company was actually much different it
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was originally a blockchain project
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um it was kind of a super exciting time
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to think about blockchain this isn't
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like you know early 2018. we felt like
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it would have been a really interesting
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vehicle for blockchain and
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you know being able to kind of trade
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shares of art and ethereum
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but for kind of obvious reasons from a
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regulatory perspective when you're
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thinking about securitizing blockchain
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presents a ton of challenges in that
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regard right so we took the hardest path
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in the world possible and that was
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really you know going with the sec
05:52
you know following these public vehicles
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um you know if you're like an nft
05:56
project or a blockchain project i mean
05:58
it's
05:59
you can do whatever you want right it's
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kind of the wild west in that regard you
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know sure but yeah it's been an
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incredibly hard path to get here you
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know it took us two years to get our
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first pain and qualified last year i
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think we did 700 filings
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so um for two years to do one filing and
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this year i think we'll do 5000 filings
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um you know the business has definitely
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come a long way and and groan a lot and
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you know the funny thing is like when we
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actually followed the sec it was
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obviously the first painting ever filed
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and they all looked at us like
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what are you guys doing right like they
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had never seen anything like that before
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and it wasn't even like they never seen
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a painting before they had never seen a
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non-cash flow generating asset before
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which is kind of interesting to think
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about because most people obviously if
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you're going to foster medical public it
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generally is something like a building
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that collects rent or a company that
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generates money so it's just kind of
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like a wild idea um and it took us two
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years to prove it and it's good thing we
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didn't give up on it uh because yeah it
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was
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you know took a long time to get to
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market i mean it sounds like that path
06:56
was absolutely worth it though right
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masterworks recently achieved unicorn
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status is that correct yeah we raise a
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110 million dollar series a from a group
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of investors kind of led by
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a left lane capital who like pretty much
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i think one of the leading firms are now
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in the consumer internet space um so
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really great team you know people i
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think they believe in what we're doing
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and and you know it's kind of gone from
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like a curiosity to something that um
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you know we feel like we can build a
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real business around i think there's
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definitely a lot of demand for it in in
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kind of today's kind of economic world
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right kind of your typical stocks and
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bonds strategy you know i think
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investors today are just looking kind of
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for more things to
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to just think about so i think it's the
07:38
right time i don't know this business
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could have existed five years ago i i i
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don't know if the audience would have
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been there i think it was hard to kind
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of think about you know maybe
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you know taking some of that that market
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from your traditional brokerages you
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know your your e-trades and fidelities
07:54
and you know i think a lot of credit
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goes to some of these like troll you
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know like pretty pioneering apps right
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that really democratize and investing
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um really made of on the forefront of
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maybe like a younger younger generation
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younger crowd i mean let's face it like
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when we were like in our early 20s like
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we didn't talk about investing like we
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don't really care about that right like
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i like the video games and i like going
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to concerts
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and uh you know today's today's young
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people are like
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checking their ethereum every five
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minutes they're they're sending like you
08:25
know articles about kathy wood and like
08:28
elon musk like it's all become like one
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cultural zeitgeist i don't know if it's
08:34
memes or stock advice it all just blurs
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together for me these days for sure
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so my background is in engineering right
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when i think about valuing an asset i
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usually turn to a spreadsheet or a
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powerpoint you know i'm looking at
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revenues cash flows things like that
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how do we even begin to think about the
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fair market value for an art piece uh is
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there such a thing as a fair market
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value for a piece of art yeah you know
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it's funny you mention that right
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because uh i i feel like there's like
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this the sentiment now where it's like
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uncool
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to
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you know do your research on investments
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um i mean investing has always kind of
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been hard right because you know doing
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the research like you said right like
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reading like financial prospectuses and
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then you know investor
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reports like
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it's not exactly cool these days like
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people almost like i'd rather just like
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yolo into a couple of meme stocks um
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so we take the totally opposite approach
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built out a fairly robust quant team and
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so with every painting that we file we
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create an offering circular and there's
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often circulars generally 160 pages
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of um kind of the the things you're
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mentioning right like it's it's
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basically like our investor perspective
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so it's a lot of pages of graphs charts
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financial information about the artists
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about the work
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and certainly we don't expect every
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investor to read that you know probably
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a lot of investors like don't they just
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ignore it and they just like the piece
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when it comes down to actually like who
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decides if something is is valuable or
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not or if like a work of art is valid or
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not you know in the real estate markets
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obviously if you have a house and your
10:07
neighbor has the same house and and if
10:08
your neighbor's house sells for
10:10
you know a hundred thousand dollars more
10:12
than you buy your house for then your
10:13
house is probably more valuable right
10:15
like it goes up in value so art's
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exactly the same way so you know you
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have these artists movements and these
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artists where
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um let's just say you know let's pick
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andy warhol um for example he's you know
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famous for obviously these maryland
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paintings but he's painted like kind of
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30 or 50 marylands like he called it the
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factory for a reason he had assistants
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who screen printed these paintings and
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they would just change the ink color
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and um they would just produce a series
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so some maryland's are turquoise some
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are orange some are blue and that's very
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similar if you think about kind of real
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estate right like you have these
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comparable works that are um
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you know like small shifts and and and
10:52
but they're generally painted like by
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the artist
10:55
in the same time frame when they really
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wanted to
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kind of you know do a series or say
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something about about their work you
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know it's very analogous to real estate
11:04
right so we actually use the same
11:05
methodology which is called the
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case-shiller methodology
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um so that looks at when paintings uh or
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works were bought and sold more than
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twice at auction so similar to a house
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and seeing like you know buys the home
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value
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we just take that exact same format and
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and we put it to our works but it's our
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and i think that gives us a pretty good
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sense in terms of you know works
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appreciate value what's for market value
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you know how much should we offer for a
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work
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when we are trying to acquire something
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or how much you know or should we pass
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on network that sounds like a lot of
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great information is that all available
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to us as investors when we choose
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paintings are those things we can see
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when we decide which paintings to invest
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in on your platform yeah so as a as an
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issuer um or reggae issuer you can go on
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to scc.gov there is a database called
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edgar and if you type in masterworks you
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can see every single filing for every
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single painting we've released as well
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as you know quarterly reports um you
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know uh your year-round filing year-end
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reporting there's literally thousands of
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pages of documents out there so if
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you're interested in for instance
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investing in a uh
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you know picasso that um
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you know we had last year or something
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they want to know more about that
12:15
picasso you know whether
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you're trying to decide if you want to
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maybe buy it on secondary market you
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could read the you know this prospectus
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160 page document it'll give you
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as much information as you'll probably
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find anywhere about
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not only that artist but that particular
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piece so that's just kind of one of the
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differences between like you know kind
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of us with this kind of regulatory
12:35
framework you know maybe more like a
12:36
crowded funded platform where it's like
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you kind of have to just trust the
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issuer and be like yeah you guys kind of
12:41
know what you're doing like
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it'll probably get delivered right um so
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yeah everything we do we have to do we
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do all the filing up front has to be
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qualified by the sec um which is a it's
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a tough hurdle it's a tough standard
12:54
probably one of the toughest out there
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in terms of
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um regulatory approval does that kind of
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regulatory approval process do you think
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that adds to your moat as a platform do
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you think that other people can easily
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go through that process and securitize a
13:07
painting of their own or yeah i mean
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it's hard to securitize a painting right
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like i said it took us two years uh it
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was very expensive from a
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kind of a legal standpoint but anyone
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can do it now and after we did it a lot
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of companies have also securitized
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paintings so i don't know if we kind of
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like um i don't know give people other
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ideas on what to do but um yeah i mean
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nowadays everything you see a lot of
13:30
things being securitized right from kind
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of collectible cards to um dinosaur
13:35
bones to the constitution
13:37
um all sorts of things like that i i
13:40
don't think that's a moat because i mean
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it's a good thing right it's a good
13:44
thing that there's more platforms that
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are offering an investment that that
13:48
people can feel like there's security
13:50
and and there's accountability and
13:52
transparency and i think
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you know the crowdfunding model i think
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it's good for a lot of things but the
13:58
reality of it is is you know there have
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been a lot of wildly successful
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crowdfunding projects
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and once the funds are deployed what
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what's the incentive for the founders to
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follow through right i think they've
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kind of
14:10
raised a bunch of money and when it gets
14:11
hard
14:12
they're like well this is too hard and i
14:15
just give up i'm going back to my day
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job and it's like what happened to you
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know these millions of dollars of
14:21
investor funds and because it's not an
14:22
investment um so even though like this
14:24
path is extremely difficult i feel like
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we feel like it's the kind of the right
14:28
approach and and at the end of the day
14:30
if you just hear like i said like you
14:32
have to do right by your investors like
14:33
it doesn't matter how fast you scale how
14:35
cool your product is what you're
14:37
offering if your investors aren't
14:39
protected then you're not going to have
14:41
a business that's really cool that you
14:44
know
14:45
you have this you know investor first
14:47
mentality in a world of art right so a
14:50
lot of crypto projects i think that's
14:52
one of the core differences that i try
14:54
to talk about all the time is you know
14:56
this is an investor first focused
14:59
platform focused on art
15:01
whereas i would argue that some of the
15:03
crypto projects and some of the
15:05
collectible projects out there are maybe
15:07
more about you know getting in as fast
15:10
as possible building that sense of
15:11
scarcity and not really thinking about
15:13
the underlying asset and you know its
15:16
significance you know to people in the
15:19
art world or on the investing world for
15:21
that matter so i think physical
15:23
paintings are very very different in
15:25
that way
15:26
yeah i mean it's definitely probably a
15:28
lot less sexy from uh like a tech
15:30
perspective and a project perspective
15:32
right because i mean some of these works
15:33
are like uh you know one we have a work
15:35
from 1881 um so it's hundreds of years
15:39
old and i think there's this element
15:40
that
15:41
you know i think with all
15:43
kind of projects right like you need to
15:44
have the right team um you need to have
15:47
kind of the right framework
15:49
the right business model um
15:51
and so a lot of these crypto products
15:54
they seem super cool you know you have
15:56
to you're betting on the team that these
15:58
people don't operate and this netflix
16:01
show will happen and you're going to
16:02
make this game and i you know i've spent
16:05
six years in the gaming business making
16:07
games making games are super hard
16:09
maybe you do make a game but making game
16:11
people want to play is actually really
16:13
hard too right like people spend a lot
16:15
of money on on that so yeah you're
16:17
betting on the team and and um you know
16:19
if it's the right team and the right
16:22
project then
16:23
you know like i'm too precise about a
16:24
lot of crypto projects but you
16:26
definitely like you want to be very
16:28
thorough and selective when it comes to
16:30
the team you're vetting on and the
16:31
project you're vetting on
16:33
one of the
16:34
attributes of fine art that i think
16:36
really attracts investors is this idea
16:39
of exclusivity right so we think about
16:40
the mona lisa and typically
16:42
throughout history only one person or
16:44
one museum has been able to own the mona
16:47
lisa at a time is exclusivity somehow
16:49
tied to art's value or can a thousand
16:52
people own the mona lisa without ruining
16:55
its value somehow a lot of these these
16:57
works are essentially priceless right
16:59
like it's hard to put a value on the
17:02
mona lisa i i know that there is an
17:04
insurance policy on it and and it's like
17:06
quite a large amount of like france's
17:08
actual gdp
17:09
you know let's compare to other asset
17:11
classes right like
17:12
uh commercial real estate for instance
17:14
so there are properties in new york that
17:16
are valued just as much as perhaps the
17:18
mona lisa right buildings that are worth
17:20
hundreds of millions or even like
17:22
billions of dollars you know how many
17:24
people own these buildings like 150 000
17:27
people generally like there's so many
17:28
parties involved that go into you know
17:31
constructing and and owning and
17:33
operating a building like this what's
17:34
interesting about art is that even if we
17:36
do take something like you know like
17:38
let's let's not use the mona lisa for
17:40
example but you know
17:41
we have works from picasso banksy warhol
17:44
right if there's a thousand investors in
17:45
that
17:46
there's still like a large difference
17:48
between like 150 000 party group into a
17:52
commercial real estate product or a
17:53
thousand people into art so there's
17:56
still an element of
17:57
scarcity somewhat even though it's being
18:00
fractionalized and scarcity is is is
18:03
really key because you know there's
18:05
going to be new commercial real estate
18:07
buildings that are constructed um new
18:09
investment vehicles but there's never
18:11
going to be another da vinci painting
18:13
ever painted right or another partosa
18:15
painting every painting it's just
18:16
impossible so over time in theory if
18:19
these artists hold their cultural
18:20
significance um these works should
18:22
hopefully keep becoming more scarce and
18:25
the the demand should keep rising and
18:27
therefore the value should keep rising
18:30
no that makes a lot of sense yeah the
18:31
scarcity argument is a really good one
18:33
so when you securitize your paintings
18:36
it's in you know thousands of shares or
18:38
tens of thousands of shares how do you
18:39
decide how scarce to make those shares
18:42
yeah so we actually use the same
18:43
structure for every single one of our
18:44
paintings we just take the price of what
18:46
we offer the painting at right it could
18:47
be twenty million it could be two
18:49
million it could be two hundred thousand
18:50
we just divided by by twenty dollars
18:52
everything is priced at twenty dollars
18:53
per share so some paintings may have
18:55
millions of shares some paintings may
18:57
have thousands of shares and i kind of
18:59
touched on our investors come from a
19:01
broad spectrum of an investing
19:03
experience so um you know definitely
19:04
some people you know will want to
19:06
allocate more to it and some people just
19:08
kind of want to try it out and add it to
19:09
the portfolio and kind of um have buy
19:12
and hold strategy and kind of see what
19:13
happens you know art is not something
19:15
that you know you're going to um you
19:17
know really think about like spending a
19:19
large uh portion of your investable
19:22
income on right your investable assets
19:23
there's been some published papers a
19:25
report by bank of america in particular
19:27
um they literally look at artists as a
19:28
strategic asset something like a five
19:30
percent allocation and so that's kind of
19:32
how we look at it as well you know it
19:34
could run the gamut but uh i think
19:36
anywhere from you know one to five
19:37
percent i think could add a lot of
19:38
strategic value to portfolio that's
19:40
really interesting to hear uh strategic
19:43
value is that just to decorate you from
19:46
the rest of the market or is there more
19:47
to it than that when it comes to fine
19:49
art and investing in it
19:51
yeah i mean i i tend not to you know
19:53
give financial advice to folks when they
19:55
think about you know how much investment
19:57
are but you know for us to kind of think
19:59
about an asset to be strategic right i
20:00
mean it has to be able to kind of
20:02
weather
20:02
market volatility and market conditions
20:05
and so right now you're seeing perhaps
20:07
you know a fairly large you know stock
20:09
market sell off and this happened in
20:11
march of 2020
20:12
and um you're also seeing like you know
20:14
like bitcoin fall a lot right so is
20:17
bitcoin although an alternative asset
20:20
is it maybe uncorrelated or strategic
20:22
when you think about you know kind of
20:24
its place in a portfolio um and i i love
20:27
you know i love crypto and i love crypto
20:29
projects but it seems like it does
20:30
heavily follow equities um and then by
20:33
extension of that if you go you know a
20:35
few levels down um you know ethereum
20:37
seems like it's off correlated bitcoin
20:39
and then nft products are correlated to
20:41
ethereum um so you know art and you know
20:45
if you kind of look at some of the
20:45
published data out there it has like
20:48
really very little correlation to the
20:50
stock market um you know city did a
20:52
large report on it they're really the
20:54
first ones to do it and um had you know
20:56
the lowest correlation factor of any of
20:58
the ten major asset classes you know
20:59
it's strategic in that regard um but you
21:02
know i mean you're not going to
21:04
you know yolo your paycheck into and
21:07
expect 8 000 times returns right like
21:09
that that's just not the kind of asset
21:11
class that um it is and we don't really
21:13
think it's interesting i think from our
21:15
perspective too to kind of think about
21:17
art in that way like i said a five
21:19
percent allocation right that feels
21:20
strategic to
21:22
it to us um for the type of asset class
21:25
it is right which is uncorrelated
21:26
strategic
21:27
yeah that's that's really good to hear
21:29
yeah i've i've heard anywhere from five
21:31
all the way up to 30 for some you know
21:34
billionaires who consider art like
21:35
almost a core position in their
21:37
portfolio and they're building
21:38
generational wealth over the long term
21:40
right yeah i mean certainly there's
21:42
collectors out there that have you know
21:43
collections valued in the billions of
21:45
dollars and i think at that point it
21:46
becomes more of like a it's a passion
21:48
thing for them right if you ask a lot of
21:50
folks like that like what's the most
21:52
important thing to you in life like
21:53
what's what's your you know what do you
21:55
want your legacy to be they're like a
21:56
smart collection
21:57
like it's it's it's more than just like
21:59
kind of like i just want to make money
22:00
and i'm just thinking about my portfolio
22:03
and if they do well then then that's
22:04
that's another thing and that's great
22:06
what is the typical turnaround time for
22:08
a painting like if i'm if i want to hold
22:10
it how long should i be expecting to
22:12
hold my shares uh of a painting and can
22:14
i there's you guys also operate a
22:16
secondary market it's not financial
22:18
advice um yes it's a strategic buy and
22:21
hold uh type of way to look at things
22:23
you know artists only held for i'd say
22:25
three to ten years right and and it's
22:27
thirty ten years for i think a very
22:28
particular reason i think one
22:30
uh i mean ours is is kind of a growth
22:33
asset right so you want to leverage the
22:35
appreciation there's not a huge amount
22:38
of liquidity in the art world you know
22:40
like art artisan being day traded so
22:42
some artists that are like still
22:44
you know living or maybe like you know
22:46
mid-career
22:47
that may be like a longer hold um
22:49
because you want to see where their
22:50
careers go and they get more
22:51
significance and more you know
22:53
exhibitions um so we generally try to
22:55
look at things that from a three to ten
22:56
year old cycle that said um you know we
22:59
we've sold two paintings since since
23:01
we've launched you know one was a banksy
23:03
we held on to it for
23:05
i want to say uh 14 months and we sold
23:08
it for a
23:09
32
23:11
net return and then in 2021 we sold the
23:14
george condo
23:16
held that for 16 months and sold out for
23:18
a 31 net return i think we're pretty
23:20
good at kind of being selective and then
23:22
you know obviously as fiduciary
23:25
we have to return value to our investors
23:27
i wouldn't expect that you know
23:29
paintings can be held for 12 months or
23:30
16 months and so that's why we have the
23:32
second year market so you just you know
23:34
you create an account you know once
23:36
you've invested in work uh there's a
23:38
regulatory uh holding period it's a
23:41
90-day holding period it's pretty
23:43
typical of most assets like this
23:45
so you wait 90 days and then you can
23:46
list your shares at whatever price you
23:48
want and if you find a buyer then um you
23:50
know you could you could conclude that
23:52
deal we don't have any any kind of part
23:53
in in the regulatory um kind of
23:56
framework with a secondary market we
23:58
don't say commissions um kind of on like
24:00
a lot of other platforms yeah yeah we
24:01
just kind of let folks just kind of um
24:03
decide what what they want to list
24:05
things at so it's not a way for us to
24:06
really make money it's just introducing
24:08
liquidity into you know it is a market
24:10
like i said it's not being day trade
24:12
although we have people day trading on
24:13
our platform which is kind of funny
24:15
people have you know like they i think
24:17
people have treated like a job some
24:18
folks
24:20
but you know they've
24:21
it's it's really up to the user that's
24:23
really exciting yeah you know i think
24:25
one of the things that as an investor i
24:28
always look for is being able to
24:30
quantify my investment whether i'm even
24:32
trying to value it or just noticing
24:34
patterns and trends in the markets my
24:35
investments operate in so it's great to
24:37
see that even from the beginning you
24:39
guys have this super quantitative
24:41
detailed oriented approach at least
24:43
data-driven approach to picking the best
24:46
investments and going from there um how
24:48
do you pick which
24:49
artists you guys invest in which
24:52
paintings you securitize can you tell us
24:54
a little bit about the methodology you
24:55
go about to find art that investors want
24:58
to invest in you know i mean the whole
25:00
name of the game apart is you know
25:01
obviously the value is very subjective
25:03
and who's to say that like you know a
25:05
piece is valuable versus another piece
25:08
you could also just make it a very
25:10
simple question answer right like is the
25:12
artist important you know are they
25:14
deceased you know are their works you
25:16
know collected by other institutions or
25:20
prominent collectors but for us like you
25:21
know we take a very data-driven approach
25:23
um you know something we did very early
25:25
on
25:26
before we even started the business and
25:27
this is probably something that like i i
25:29
don't think a lot of people we don't
25:31
even appreciate right but to understand
25:33
really the art market it's a very
25:36
opaque market right like
25:39
a lot of the art market is transacted in
25:41
private deals um private galleries and
25:44
there's really no regulatory framework
25:46
any type of reporting whatsoever and the
25:48
other half is at auction right and on
25:50
the auction side you have a lot of data
25:52
because the auction houses christie's
25:54
and sotheby's in particular they go back
25:56
hundreds of years like celebrities was
25:57
actually the the oldest listed company
25:59
in the new york stock exchange until
26:01
they went public in 2018 but they've
26:02
been around for like literally almost
26:04
three centuries right so you have all
26:07
this data because auctions are always
26:09
tracked right so what we did very very
26:12
early on is we actually had to go back
26:14
and buy physical auction catalogs from
26:17
some of these auction houses
26:19
in scales we're talking like thousands
26:21
of catalogs that exist in a warehouse in
26:24
jersey if you will right so um we had to
26:26
like track over there and like call them
26:28
back to our office
26:29
and we're really the first ones to
26:31
really kind of like digitize the history
26:33
of the art market
26:35
so we had a research team that went in
26:38
and pulled every single data point
26:39
scanned all of the works of art and they
26:42
implemented it into a database that we
26:44
could index and that that really gave us
26:46
for the kind of the first time that it's
26:48
ever seen in the art market a way to
26:50
really understand like trends art market
26:52
returns at not only the artist level but
26:54
from like the artist segment level so
26:56
for instance andy warhol is is famous
26:59
for his uh maryland's right but he's
27:00
also famous for his dollar signs and his
27:03
uh you know mouse
27:04
so we're able to kind of like you know
27:06
look at specific movements in the
27:08
artist's uh history like we attend every
27:11
r auction uh that happens throughout the
27:13
world
27:13
um we have people in the room we count
27:16
bids we um we gauge you know how many
27:18
people are buying things how many people
27:20
are bidding on things where they're
27:22
bidding if it's on the telephone it's on
27:24
the internet so we have this huge amount
27:26
of like quality out of data that not
27:28
only makes this kind of lets us
27:29
understand if an artist's
27:31
market is is gaining momentum but also
27:33
on the sell side you know is this
27:35
something that like will to be liquidity
27:37
for this right like was there demand for
27:39
this work this artist works uh painted
27:42
by this artist and x you know time frame
27:45
um so we have you know i i think what
27:47
you know i would say we have about the
27:48
industry leading uh like quantitative
27:51
research team and our data is you know
27:53
it's been published by you know bank of
27:55
america city
27:56
you brought up nft's ethereum you know
27:58
cryptocurrencies i'd love to get your
28:00
take on the phenomenon that's been
28:03
happening with digital collectibles and
28:05
nfts as somebody who's in the physical
28:07
art you know the classical art business
28:09
what do you think about that yeah i mean
28:10
i i personally think it's really
28:12
interesting i i love the um
28:14
you know how just how much people are
28:17
thinking about art and in today's you
28:19
know day and age and i don't think it's
28:21
something that people really
28:22
could have predicted right like i think
28:24
at one point our significance and
28:27
culture and society was maybe a little
28:29
bit stronger right when you go back to
28:31
kind of the days that you know people
28:33
would visit from all parts of europe to
28:35
see the renaissance right or um andy
28:37
warhol was you know a huge celebrity in
28:39
his day and i don't know if it's like
28:41
kind of like culture or like attention
28:42
spans but um you know people just
28:45
started talking less about art the
28:46
average person probably doesn't have a
28:49
a portfolio of their 10 favorite artists
28:51
right um but nfc is definitely kind of
28:53
brought back into the limelight which i
28:55
think is really good um i have high
28:56
interest in nfcs personally and there's
28:58
like i think two ways to think about
29:00
entities right one is just like i think
29:02
a fairly speculative vehicle or
29:04
collectible and even like a lifestyle
29:06
membership where you get to put it in
29:08
your twitter profile and and that is
29:12
cool right you belong to a club and on
29:14
the other side of it like i think there
29:15
are a group of people that are really
29:16
pushing it forward because
29:18
you know digital art is
29:20
an art form you know just like any other
29:22
medium um and i think that's the side
29:25
that like i'm personally interested in
29:26
and i think you know where i'm really
29:28
excited to kind of see it evolve is you
29:30
know who are the artists in this space
29:31
in the way that we think about artists
29:33
like kind of after their time like who's
29:35
going to kind of be that trendsetter in
29:36
the nft world where they kind of
29:38
legitimize yar form they remember for
29:40
their culture significance as an artist
29:42
and um and and less of maybe kind of
29:44
these like cool collectibles like
29:46
penguins and and and monkeys and stuff
29:49
like that and that stuff is like kind of
29:51
cool but i feel like a lot of that stuff
29:53
too is um it's more about the vehicle
29:55
than the art form itself like a lot of
29:57
these projects are almost like
29:59
they are structured like supreme drops
30:01
if you will right so there's like this
30:04
heavy fomo element of like
30:06
super rare you know sells out in three
30:09
hours like is it about the art at that
30:11
point and and then they're relying on
30:13
things like we'll make a game out of it
30:15
or we'll make a netflix show out of it
30:17
and so like i i i'm curious to see where
30:19
that's gonna go but um when you maybe
30:21
project out in the future and you do see
30:23
these artists that do have cultural
30:25
significance and you know maybe they're
30:26
like exhibited in institutions or
30:28
they're collected by you know kind of
30:30
like the critics and collectors of our
30:32
time i think we're gonna look back at
30:33
nft projects in the same way we look at
30:35
kind of art and that's been made you
30:36
know historically over you know in in
30:39
history it's a genuine art form and um
30:41
people have great expressions and and
30:43
great you know statements to make about
30:45
their perspective on the world so i
30:47
think that's awesome yeah i think that's
30:48
a really great take and one thing you
30:50
know one mechanic i've always been
30:51
interested in with nfts and collectibles
30:54
is this idea of a
30:55
virtual showroom right you know i have
30:58
one of the 50 spider-mans of this
31:00
special edition you know i can show it
31:02
off in my virtual showroom i'd love to
31:04
know what you think about that idea and
31:06
if masterworks is going to get into hey
31:09
we'll provide you with the physical or
31:10
virtual showroom to to share the pieces
31:13
of the art that you own either
31:14
physically like come down to our
31:16
showroom or digitally through virtual
31:18
showrooms if you own
31:20
a piece of a banksy mona lisa you know
31:22
obviously in kind of today's coveted
31:24
world it's kind of hard to think about
31:25
events but you know one of the things
31:27
that we had you know when we first found
31:29
it is we worked out of an art gallery
31:32
so we the top floor was a gallery where
31:35
people could walk in off the street in
31:37
soho
31:39
and it's your sign and they come in and
31:40
check with the art and and you know some
31:42
we had an ipad set up where some of them
31:43
could actually invest i mean obviously
31:45
cobit happened and so having a physical
31:47
gallery didn't make much sense but um
31:49
we're in kind of a
31:51
fairly large office space now we are you
31:53
know building out this similar notion of
31:56
having a place where people can come
31:58
check out our i think for a lot of
31:59
investors like i was kind of hinting to
32:01
like a lot of it's like kind of
32:02
emotional and where they do have access
32:04
to a lot of different things and if you
32:05
do have access a lot of different things
32:06
you're just kind of investing what you
32:08
like you know so some people like this
32:10
art and it speaks to them and they want
32:12
to come see it and it's a way for them
32:14
to um you know if they want to fly to
32:16
new york and see it in person and make a
32:17
decision on it it's kind of a weird way
32:19
to kind of think about investing i mean
32:21
as a tech platform or startup like it's
32:24
still kind of old school right i think
32:26
the folks that are doing commercial real
32:28
estate i don't really want to see that
32:29
parking garage right i don't want to see
32:30
that multi-family i really care about
32:32
that it's an easier decision but people
32:34
are highly opinionated on our uh and
32:36
modern art can be very divisive a lot of
32:38
the
32:39
the works we have on the contemporary
32:41
side the abstract minimalist stuff
32:44
you know if you hear comments when
32:46
you're at the museum and my
32:48
five-year-old could make this right or
32:50
like i was painting this back in like
32:52
grade school right so um there's just
32:54
this weird kind of emotional
32:56
element that comes to investing art that
32:58
i don't think you see in too many places
32:59
um but i think having that presence like
33:01
it is important in that regard i'm
33:03
curious so right now you guys focus on
33:05
paintings is that correct that's correct
33:07
yeah do you do you plan to branch out
33:09
into other forms of art for example just
33:11
like sculptures
33:12
yeah totally you know we um
33:14
you know kind of throughout um when we
33:17
first started and we didn't really quite
33:19
zero in exactly on kind of um
33:22
you know what we want our sustainable
33:24
business model to be we definitely
33:25
consider sculptures you know i think
33:26
from a storage perspective sculptures
33:28
are just a little bit harder to think
33:29
about you know paintings are very easy
33:31
to store that's the nice thing right so
33:32
you could they go to the freeport you
33:34
know maybe move them like a 20-foot cost
33:36
statue like it might be a little more
33:38
complex i think we're open to all of
33:40
them be it you know digital paintings
33:42
works on canvas sculptures i mean i i
33:45
think at some point you know we'd love
33:46
to be more representative of this kind
33:48
of art in general right um international
33:50
art you know a lot of the eastern market
33:52
is and kind of these artifacts and and
33:55
ceramics you know i think that's
33:56
interesting for us as well if we can
33:58
kind of keep keep kind of growing and
34:00
growing the the platform and just
34:01
getting more interest in art in general
34:03
democratizing fine art isn't something i
34:06
think people even thought of as early as
34:08
20 years ago right bitcoin i think kind
34:11
of happened before this idea of like i
34:13
want to buy a picasso for most people
34:15
right like yeah i actually think you're
34:17
not even 20 years ago i think even like
34:18
i said kind of five years ago i think a
34:19
business like this would have been
34:20
really hard to get off the ground i i
34:23
think there wasn't quite the groundswell
34:25
for
34:26
looking i mean investing school it's
34:28
kind of very top of mind for younger a
34:30
younger a group of people who things
34:32
like the 60 40 portfolio are just kind
34:34
of boring right like why do you want to
34:36
just kind of put your money somewhere
34:38
and park it and
34:39
um just kind of wait 20 30 years so
34:41
people kind of they're looking for kind
34:43
of new exciting ideas and crypto is like
34:45
a perfect vehicle at the right time
34:47
there's a lot of overlap i think between
34:48
people that are interested in something
34:50
like are interested in something like
34:51
crypto i think the important thing is to
34:53
like you know kind of like we're
34:54
touching on like
34:55
everything kind of has this right kind
34:57
of strategic value in the portfolio and
34:59
the right type of allocation
35:02
i think there's a lot of overlap with
35:03
crypto but i think definitely you
35:05
shouldn't think about investing you're
35:06
not saying anything but investing in
35:07
crypto right like i i don't know how
35:09
people think about investing in crypto
35:10
you're right people are getting a lot
35:11
smarter on not just thinking about
35:13
stocks and bond 60 40 but also hey how
35:16
do i really want this portfolio to
35:18
represent
35:19
me as a person right there's ethics
35:21
considerations there's all these like i
35:22
really believe in elon musk and queen
35:24
energy that's why that's a valid reason
35:26
to hold tesla and i think
35:29
for art it's kind of the same way it's
35:30
i'm not just going to choose a random
35:32
painting to decorate myself from the
35:35
market i'm going to choose a painting
35:36
that speaks to me
35:37
and even if it's not going to be the
35:39
highest raising painting you know from
35:41
when i buy it to when it gets sold it's
35:43
it's a piece it's an asset that really
35:46
speaks to me that belongs in the
35:47
portfolio of my life not just you know
35:50
my wallet so to speak yeah you know i
35:52
think that you know that's super
35:53
fascinating to think about really
35:54
because obviously you know we here at
35:56
massworks you know we hear a lot from
35:58
our investors a lot of them are into
36:00
crypto lover and nfts and they're both
36:02
brand new concepts right and and you
36:04
kind of touched on them but like you
36:05
know when you tell someone that
36:06
investing r is a thing it's a totally
36:08
brand new 2021 2022 concept where you
36:12
know the notion of it it just feels so
36:15
just new right but the reality this is
36:17
like art is literally the second oldest
36:19
asset class right like it's been around
36:21
for thousands of years essentially right
36:23
like right after we lived in caves we
36:25
painted in the caves
36:27
right and if you think about that as
36:28
essentially like the the first medium of
36:31
people having an expression right like
36:33
it predates like written word so it's
36:35
really been around for like tens of
36:37
thousands of years it's right after real
36:39
estate when you think about like what
36:40
are literally all those asset classes
36:42
but you know people definitely think of
36:43
it as like a new totally unique totally
36:46
kind of fundamentally revolutionary idea
36:49
to think about um it's just it's a
36:51
fascinating overlap to me right because
36:52
crypto's literally the newest outside
36:54
class
36:55
you know like it there's trillions of
36:57
dollars in assets now in crypto and it
36:59
literally didn't exist like 10 years ago
37:01
there's nothing else out there that just
37:02
created so much market value so a lot of
37:04
overlap i think on the front end but
37:06
then if you kind of think about the
37:08
history of things like they couldn't be
37:09
further apart yeah that's a great point
37:11
do you think masterworks like what's
37:13
next for masterworks will you guys have
37:15
a crypto offshoot or do you think you'll
37:17
ever get back on the blockchain or it's
37:19
hard to hard to say like i think it's
37:21
hard to predict i think crypto markets
37:23
in general and and where um
37:25
that industry is going i mean we're
37:27
definitely open to it you know it's as
37:28
for maths where it's like i think we're
37:30
we're good at art in general right we're
37:33
good at securitizing our good and
37:34
picking our pieces and you know
37:36
hopefully you know we could stay
37:38
relevant in terms of delivering
37:41
value for our investors so we're going
37:42
to just keep aggressively scaling the
37:44
platform you know this year you know we
37:46
hope to buy over a billion dollars a
37:47
buyer this year you know just kind of
37:49
off of that alone that makes us the
37:51
largest buyer in the art world like
37:53
maybe kind of by far
37:55
um it's a hard challenge right but we've
37:57
interjected a billion dollars into the
37:59
art industry that didn't exist before
38:01
that or um it's still kind of a small
38:04
part of like the overall art industry
38:05
but i think you know it's interesting
38:07
opportunity in a very interesting space
38:09
sure yeah i think one of the other
38:11
opportunities you know i i've actually
38:13
spent a lot of time producing
38:14
masterworks by now i'd love it if you
38:17
guys actually did an offshoot into art
38:18
education just educating people on a lot
38:21
of the basics of even what you covered
38:23
in this interview hey this is one of the
38:24
oldest asset classes here's who it was
38:26
for and who it's for now here's how it
38:28
is similar to crypto and how it's
38:30
different why you should be thinking
38:32
about both in your portfolio you know
38:34
but also history on some of these
38:36
artists and galleries digital galleries
38:38
like i feel like there's all these
38:40
peripheral great opportunities for
38:42
masterworks as the biggest art buyer in
38:44
the world have you guys thought about
38:46
anything like that yeah definitely you
38:48
know we um
38:49
you know i think we the company has kind
38:50
of grown faster than
38:52
you know we're probably all anticipating
38:54
and so right now it's really just kind
38:56
of catching up to all that growth and
38:57
servicing our investors but something
38:59
that we used to definitely think about a
39:00
lot
39:01
more early on was kind of the
39:03
educational and the community aspect of
39:05
our because yeah like it like said
39:06
introducing kind of like all this
39:07
capital and so market didn't exist like
39:09
you have to educate folks um people
39:11
don't really
39:12
know to think about investing in art and
39:14
people don't know about i think art in
39:16
general right like you know some people
39:18
look at things and it's like this is the
39:20
blob like
39:21
why is this valuable who's the artist uh
39:23
why is his artist important you know um
39:26
so it's definitely something that like
39:27
we definitely want to kind of focus a
39:28
lot more on and i think in today's day
39:30
and age too like
39:32
it's not just about peer returns right
39:34
because
39:35
like returns are kind of
39:37
cold if you if you think about it
39:38
there's it's like just a binary thing
39:40
like it either works out or doesn't work
39:42
and i and i think the the platforms and
39:45
kind of the projects that are going to
39:46
become more successful like are the ones
39:48
that really build a sense of community
39:50
and you have to have a reason for people
39:51
to keep coming back so something that
39:53
we're definitely thinking about this
39:54
year how do we do things like more
39:55
things like events we used to have more
39:57
events kind of pre-covered having the
39:58
works on display i don't know if you've
40:00
ever been like an art opening or art
40:02
galleries but like they're pretty common
40:03
in the art world so just being able to
40:04
kind of go and see the art and then just
40:06
sponsor more world events we used to
40:08
sponsor some of the bigger shows in new
40:10
york so i'd like to get back to that as
40:11
well that's all awesome i i think you
40:13
guys are gonna grow in all the right
40:15
directions i'm excited that you're a
40:16
sponsor of this channel um and i'm
40:19
really grateful that you took the time
40:21
to talk to us especially the investors
40:23
in the audience who are really curious
40:25
about art i get all sorts of questions
40:27
about you know masterworks how i chose
40:29
this art platform as a sponsor instead
40:31
of going with like a robin hood so and i
40:34
think a lot of what you said is exactly
40:36
why you know it's this great way to
40:38
diversify your portfolio it's a great
40:40
way to add a little personality to your
40:42
investments to think about things
40:44
instead of just a pure risk return basis
40:47
i think you know working with more folks
40:49
like yourself and be able to like kind
40:50
of educate people in the art market this
40:52
is kind of you know in our ways right
40:54
now of like helping with kind of that
40:57
educational and the knowledge aspect so
40:59
it's not exactly kind of like we're
41:00
responsible for but working with kind of
41:02
folks like yourself and creators like
41:03
yourself definitely putting the word out
41:06
um super helpful super useful for kind
41:08
of
41:08
you know the movement in general so
41:10
whether or not you're interested in
41:12
different asset classes i hope you found
41:13
this conversation about art as an
41:15
investment and strategic risk management
41:17
engaging and useful according to a
41:19
recent report by citibank fine art had
41:22
the lowest correlation to the stock
41:23
market of any major asset class so while
41:26
stocks and cryptocurrencies are
41:28
definitely worthwhile investments fine
41:30
art could be a great way to diversify
41:32
your risks without sacrificing potential
41:34
performance that used to be something
41:36
only the super wealthy could do but
41:38
masterworks has made fine art accessible
41:40
to everyone that's why i asked them to
41:42
sponsor the channel and why i think they
41:44
have such a long wait list so if you're
41:46
interested in investing in fine art buy
41:48
artists like picasso and banksy and you
41:51
want to skip their wait list masterworks
41:53
dot io is giving my audience vip access
41:55
to their latest offerings right now you
41:58
can find a link to that offer in the
41:59
description below either way stay long
42:02
stay strong and thanks for watching
42:04
until next time this is ticker symbol
42:06
you my name is alex reminding you that
42:09
the best investment you can make is in
42:11
you