00:00It's just like a real estate fund. I mean, we're buying brand new Birkins and Kellys.
00:04We are, you know, putting them in a portfolio. We have a whole portfolio construction methodology.
00:10We're using most of the bread and butter bags that are flipping over fast.
00:14And we're then selling them. And we're selling them both on digital marketplaces.
00:18So Sotheby's, First Dibs, My Gemma, Christie's just did an auction of a pink crocodile.
00:24And we're also selling them in real life experiences. Experiences are all the rage now.
00:30So people want to learn more about Hermes and the bags themselves.
00:34So it's that's interesting. So I thought I've been excited about this since I heard about it, too, because I have some friends who have started funds where they buy classic cars, for example.
00:43But they just then store the cars and like never use them.
00:47You're actually trading essentially handbags. And I guess you're not going to Hermes to buy them new.
00:54Right. You're buying them. We're not buying them directly from Hermes.
00:58But we are using the resale industry. And there's so much pent up supply in the entire range of bags.
01:05So brand new in the box with plastic still on all the way down to the beater bags, which are very popular with the Gen Z's.
01:11So it's really been interesting to see what is popular now versus what was popular 10 years ago, 15 years ago, 20 years ago.
01:18And a bag sells every 48 hours. Give us the price ranges.
01:22We're looking at some bags here. What's that? Celine there.
01:24They're all there. That is a joke.
01:27I guess I have no idea. What are we talking about in terms of bags?
01:31They're just Hermes, Birkins and Kellys. It's a concentrated portfolio and anything between, I would say, 25,000 to 32,000.
01:39And that gold one, which is the brown, is our bestseller.
01:43We've already replenished it three times. And it's really fun.
01:46It's been really great to watch it thrive so much.
01:49Fun 2 was 5X oversubscribed.
01:52So we're going into 2026 with big plans.
01:55Forgive my fragile sensibilities when Matt looks at, like, an iconic Birkin bag and asks if that's his name.
02:01No, but OK, this is not to pick on you, Matt.
02:04But I wonder how much that plays into this.
02:06Because to Matt's point, people have started funds around cars.
02:09They've started it around watches.
02:11And a lot of people would be surprised to know the kind of premium these bags build.
02:15And when I say a lot of people, I mean a lot of men.
02:17How much of the advantage here is just that this is an ignored asset class by 50% of the population?
02:23Well, nobody's ever done a fund like this before.
02:26And when they've done the watch and the car funds, it's usually people from those industries.
02:30It's not asset management people like myself.
02:33So it's been, you know, they don't know about asset liability mismatches.
02:37And they don't know how to price them.
02:38And they don't know how to structure them.
02:40So we're really excited about this fund because it's been really well thought out.
02:44And we have mostly men as LPs, including some of my Blackstone colleagues.
02:49So it's been really interesting to see.
02:51We have two women in fund, too, but everybody else is a guy.
02:55Yeah, come on.
02:55No one knows more about handbags and women's shoes than Tom Keen, right?
02:59He's an expert on these things.
03:01You mentioned your background in asset management.
03:04Yes.
03:04Where did you work before and how has that really prepared you?
03:08Yeah, I'm a Schulte lawyer from the late 90s.
03:10I've been in the hedge fund world for almost 30 years.
03:13I was at Blackstone for close to 10 years on the product development side in BAM.
03:18And I've been in the hedge fund.
03:19I know all the hedge fund guys.
03:21Many of them are invested either in Luxus or in the funds.
03:23So my superpower is to be able to structure alternative investments.
03:29So being able to do that for assets that I actually enjoy buying for myself has been a real joy.
03:35To that point, because it's this moment where when putting together a portfolio, people don't know whether bonds have the hedging power they once did.
03:43Gold looks ridiculously expensive and everyone is so worried that that doesn't have much further to run.
03:48How much of the interest in your fund has also just been that, that people don't know how to diversify right now?
03:52Exactly.
03:53It's a great diversifier.
03:54It hasn't been done before.
03:55So the returns are there.
03:57Fund one is up 38% gross, 28.9% net.
04:02Fund two has already had two exits.
04:03We're still closing it.
04:04So I think it is really exciting because it's very much, I'm very inspired by the real estate investment community and those asset management products.
04:13So we're doing that.
04:15Obviously, these are not free generating assets yet, but they might be.
04:19What would that look like?
04:20Well, I mean, look at all the Netflix shows and the Apple shows about wealthy people and escapism like White Lotus and your friends and neighbors.
04:28And you're seeing Birkins and Kellys displayed alongside watches and cars and everything else.
04:34So there's an opportunity to maybe rent the portfolio or at least sell the portfolio to the studios.
04:40And we're excited to work with them on that.
04:42By the way, that brings up a question we were batting around in the editorial meeting this morning.
04:47Where do you keep these?
04:49Do you have like a bonded warehouse or are security guards hanging around your office?
04:53And can you take one out to lunch if you need a nice bag?
04:57No, I haven't even seen most of them.
04:58They are all being stored at My Gemma, which is our operational partner.
05:03They're being authenticated and evaluated and appraised by Graham Wetzberger, who is the OG and the best in this business.
05:12And we're taking it very seriously.
05:14It's the first institutional product.
05:15So we're trying to make sure that we're all set with everything.
05:19Well, again, these bags have just have so much lasting quality and the value.
05:24Can you talk about the beater bags?
05:27Because I think that's really interesting.
05:28The idea that younger people like a Birkin that looks beat up, that looks very well used.
05:33Yeah.
05:34Gen Z really likes the beater bags.
05:36I call it the Olsen effect.
05:38And they have been trying to get all the resellers to source them.
05:42Because up until now, the resellers wanted to just source brand new bags or at least excellent condition.
05:47And now, all of a sudden, they're being asked to do the beater bags that are being sold for around $6,000 to $9,000, which is a much more acceptable entry-level price.
05:57And I personally love the beater bags.
05:59All of mine are as old and as beat up as could be.
06:03You talked about, during the commercial break, how you got one with a bonus at a previous firm.
06:09And you still have it.
06:1020 years later, do they hold up?
06:15Oh, yeah.
06:15It's the same style that they're still selling today that is going super fast.
06:20I got the first bag at Blackstone in 2005, so 20 years ago, with my VP bonus.
06:25And when I walked into the office with it, everyone was like, how did you get one?
06:29And so it's been a real, and they all remember the story still to this day.
06:33And it's been really fun for me to put together a fund around that.
06:38Yeah, just because they're so difficult and so coveted, it is just like this magical thing, which I hear you might have, you do, you might have a podcast about first bags coming out.
06:45Yeah.
06:45Which I think we should plug, because that's so interesting, too.
06:48I just wonder, as you think about the growth of Luxus, how much capacity does this have?
06:53How much can you grow it?
06:55And how much money do you think that can be managed under a strategy like this?
06:58Well, for us, it's going to be about horizontal integration.
07:00So doing the same model with watches, with cars, with wines and spirits is really important.
07:05Next year, though, we're just focusing on this and going global.
07:08So we're going to plan some fun things with Christie's, both in the southeast of the U.S. and in the Middle East region, where they are really, really top notch.
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