00:00Inventure firms are just piling in into any AI story they can.
00:07And the valuations for these young companies that we're seeing are astronomical.
00:11The FOMO of being in any AI deal as early as you can in the private markets is pretty remarkable.
00:19And that was Toma Bravo founder Orlando Bravo doubling down on the idea that AI FOMO is driving private markets activity.
00:27Our next guest tracks how these elusive markets are opening up to retail traders as head of his leading alternative investment platform.
00:35Joining us now, I'm pleased to say, is Willow Wealth CEO Mitchell Kaplan, also the former CEO of E-Trade.
00:41Mitchell, it's great to see you in person.
00:43Great to be here. Thanks.
00:44I actually want to start there because I'm taking a look at your notes and you make the point that what we're seeing right now when it comes to private markets and this expanding access,
00:53that it really resembles the early days of online investing.
00:56And I would love to go back in time because there's a lot of skepticism.
01:00There's a lot of pearl clutching right now about whether or not retail investors really belong in private assets.
01:06And I wonder if there was sort of echoes of those same worries back in the 90s.
01:11100%.
01:11Yeah.
01:12So I ended up at E-Trade, actually.
01:14I built the first sort of what was the first branchless bank in the U.S.
01:18and ultimately became the largest internet bank.
01:20Same thing.
01:21People were, like, skeptical around the idea of being able to work with banks in a branchless way, right?
01:28Ultimately, we merged it into E-Trade.
01:29It was the same thing.
01:31Do people really understand what it means to online trade?
01:33Do they really understand what it means to online invest?
01:36And the thing that made us successful was just education, right?
01:40And ultimately, I think that's the path forward for private markets as well.
01:44That's interesting because that was going to be my next question.
01:46I mean, how do you translate that experience that you had with E-Trade into what you're doing with Willow Wealth?
01:52What takeaways apply to today?
01:54Yeah, it's a great question.
01:55So ultimately, when I think about what we're trying to do, and again, our model is direct-to-consumer.
02:01So rather than going through the advisory channel, we're going direct-to-consumer exactly as we did at E-Trade.
02:06And I feel like our first job is not even why private markets.
02:10Our first job is what are private markets?
02:13Because there's, I think, a disconnect for some people around what it really means to be in private markets.
02:19Then our next job is why private markets?
02:21How do they help really create a diversified portfolio for you?
02:25And then why should Willow Wealth be in the considerations?
02:28The idea that you're going direct there, I mean, I certainly understand it.
02:31But then it's like every other person that's sort of creating sort of these retail private products is basically going through the RAA channel.
02:38And I am curious as to whether there's any regulatory issues that you've had to jump over that maybe those other folks didn't have to.
02:44Yeah.
02:45So I think absolutely.
02:47First of all, we're both a registered investment advisor and a broker-dealer, so we're highly regulated.
02:52But I think even more importantly, it's the idea of really understanding that it is you have this responsibility toward education, right?
03:01And that because you're actually going directly to the consumer as opposed to through the advisor, you have more control of what you're actually saying.
03:09You know the message and the education that you're providing is being absorbed by the customer.
03:14I do have to ask you, though, about some of the concerns.
03:17And one of the concerns is that there are a lot of private capital companies that, in theory, might just be trying to dump a lot of slop onto the individual investor in a way that they wouldn't have done on the institutional investor.
03:28A, what are the folks on your platform, meaning the types of private assets, are they looking for?
03:32And two, is there enough transparency around those assets that you can appropriately educate them on it?
03:40Yeah, so it's a great question.
03:41I would say, first of all, I do believe we can educate.
03:46Again, you're really spending time with them on our website.
03:50So it's a digital experience, but you can provide them with education in a way they can really absorb it and understand it.
03:56So I think that helps.
03:57The other thing is our business model really focuses on people who are in the emerging wealth, so emerging high net worth.
04:04So it means they're really outside of, above mass affluent, below high net worth, ultra high net worth.
04:10They're qualified purchasers.
04:12They're accredited investors.
04:13So by definition, we're focusing on people who have a higher level of sophistication.
04:17It doesn't mean that education is important.
04:20It just means it's something you actually, through our model, really focus on.
04:24And what exactly do they want when it comes to the private markets?
04:28Because that can mean a lot of different things.
04:30I mean, it can mean, you know, alternative assets, real estate, et cetera.
04:33It can mean private credit or it can mean private companies.
04:38And certainly, I mean, I spend a lot of time in the ETF world.
04:40And how to fit private companies into these retail-friendly wrappers is one of the big thought exercises going on in that industry.
04:49But what demand are you seeing for specific types of assets?
04:52So remember, Willow's been in existence now for about 10 or 11 years.
04:56So when it first began, it was really sort of a pioneer in trying to create the access to private markets in an addressable way at a price point of $10,000, not $500,000 or a million.
05:08And so what we have seen over our operating history, and I got involved when our family office led the investment in the Series C.
05:16That's ultimately how I got to Willow Wealth.
05:18And when we did, what we saw was consumers wanted different things at different times.
05:23So macro controls some of it, micro controls some of it.
05:27Interest rates move up.
05:29When people are more focused on, they tend to be focused on shorter duration, higher coupon.
05:33The opposite is true when you get into a bullish market.
05:37And so a lot of the macro controls it.
05:39But then you have micro, people who are trying to build wealth.
05:42They need to achieve certain goals so there are specifics that are relevant to them.
05:47So they're picking, and we're helping trying to educate but also curate.
05:52We're trying to create a host of products in the form of whether it's an interval fund, a drawdown fund, you know, ultimately a single asset deal.
06:00It could be a co-invest in a way in which we're really curating for them the experience and making it easier.
06:06I'm curious, though, about that curation, too, and how this stuff gets packaged.
06:09Are people looking for maybe singular investments, meaning a singular asset, or do they want that collection of assets, you know, structured in a way that addresses the issues, liquidity concerns?
06:19So the answer to your question is yes.
06:21Okay.
06:21All right.
06:22That's true.
06:23Yeah.
06:23So what do you think is going to dominate most?
06:24So one of the things that we developed in the last year was we built a product within Willow that we call Willow 360.
06:31It was effectively the first robo-advisor for private markets.
06:35So we actually hired Willow to act and oversee three different funds, Carlisle, Goldman, and Stepstone, and the allocation among those three funds is driven by what our customers' goals are.
06:47So it's really a set it and forget it in a way that they have access but can build wealth for the long term.
06:53There's real demand for that.
06:54At the same time, there's equal demand for some of our single asset deals as well as our funds.
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