TRANSCRIPT
slava (00:02.738)
Hello and welcome to another episode of Smart Humans. I am Slava Rubin and I am very excited about today's guest. He is a philanthropist, an entrepreneur, an investor, and so many other things. We have Mark Gerson, who is co -founder and chairman of 3i members. And not only that, also co -founder and chairman of United Hatzala of Israel, as well as co -founder and chairman of African Mission Healthcare. Mark, thank you for joining us.
Mark Gerson (00:28.622)
So great to be here with you Slava, thank you.
slava (00:31.09)
So let's just start with a jacket. What is the jacket all about? You told me that you always like to wear it.
Mark Gerson (00:35.278)
Oh, oh yes, yes. So this orange is the, so it's an orange sport jacket. I have three of them and I wear them seven days a week. And the reason is this is, orange is the color of United Hatzalah of Israel. And the reason why it's the color of United Hatzalah of Israel is because United Hatzalah has 7 ,000 trained and equipped volunteer medics all throughout Israel whose mission is to get to the scene of effectively a 911 call, choking, bleeding, heart attack, stroke, sudden birth.
in the 90 seconds that someone needs when calling in for that emergency. And the safest color at night has been shown, which is important because when one of our medics gets on his medically equipped motorcycle, which might be at night, we want him to be safe, of course, the safest color at night is orange. So orange is the United Headstyle of color and I wear the sport jacket every day.
slava (01:28.626)
Amazing, thank you for sharing it. Yes, everybody who's listening, you are on the Smart Humans podcast and this is an investment podcast, but we wanted to make sure that Mark got a chance to talk about that and we're gonna have such a great conversation. So where we always like to start the conversation is how did you even get into alts? You obviously have such a long and successful career. Can you just kind of get us where did it all start and how did you land where you are today?
Mark Gerson (01:53.134)
It's a great question. I think my first alt investment was probably 05, 06 around that time. It was from my friend Mitch Jacobs. Mitch is the founder and was CEO of OnDeck Capital, which has since gone public and sold. In those days, Mitch was the founder and CEO and he had some kind of alt product.
And it's a specific contours. I can't remember because it was so long ago, but it was some kind of all product. And I remember thinking, this is so interesting. It's something I had never thought of before. It's a niche in the economy that when Mitch explained it made a lot of sense and it performed exceptionally well. I think the yields were something like in the low twenties or something like that. And, uh, it paid out regularly. I did everything Mitch said. So, uh, um, I, I owe my introduction and all to, uh, my great friend Mitch Jacobs and, uh,
his founding and stewardship of OnDeck Capital, which opened my eyes to this whole universe of investment possibilities.
slava (02:53.426)
But you're also an entrepreneur, right? Which is really the ultimate alt as well. Can you give us a background as to where you came from, how you got into entrepreneurial stuff, and how Mitch even thought of you to walk up to?
Mark Gerson (03:04.174)
Oh, sure. So I, I co -founded Gerson Lammer Group GLG in 1998. And it was then what it is now, which is a, a network of industry experts who educate investment professionals, professional service people, corporate executives so that they can make better investment business decisions. So we started that in 1998 and I met Mitch.
probably shortly thereafter and we became friends and that led to my first alt investment in the early 2000s. And then I've started, as you mentioned, United Hatsala of Israel. That's about 20 years ago. I started African Mission Healthcare where we partner with Christian missionary doctors at Christian hospitals in Africa to provide clinical care and related services to the poor. We started that in 2010. And then I started 3i members about two and a half years ago.
slava (04:02.418)
Amazing. And can you give the audience just an understanding of scale of GLG?
Mark Gerson (04:09.134)
Sure, so GLG is a global company with offices around the world, with experts in truly every category of human knowledge who are ready to consult with and educate business professionals about anything and everything and to help professionals no matter what they're looking at, no matter what they're considering to make a more informed business or investment decision.
slava (04:35.41)
Nice, and you've been doing, and you're still involved, this is like 26 years later.
Mark Gerson (04:39.406)
Yeah, 26 years later, we started in 98. Yeah, still on the board. Very much so.
slava (04:43.442)
That's amazing. What's it like? You know, Jeff Bezos has a saying, which is like, it takes like 20 years to make a dent in the world. You're now up to almost 30 years. You're obviously making a dent. What's it like to still be at that company?
Mark Gerson (04:54.99)
Oh, well, it's been a real, a great joy to be able to see the growth of the company, to be able to just see and hear about so many, genuinely countless examples of business people and investors we've educated of experts who've been really gratified to share their knowledge. And, you know, that's been going on for a long time now. And every single time I hear about it, it's the same feeling of gratification.
slava (05:20.53)
Amazing. So going back to your ALTS journey, it starts in 2005, 2006 with Mitch and now we're already up to 2024. And a few years ago, you even start 3i, which obviously gets exposure to a lot of great alternative investments. Can you just speak to the trajectory there between Mitch and 3i and today? You know, what did you get into? How did you evolve from one asset class to another, et cetera, et cetera?
Mark Gerson (05:42.798)
Yeah, of course. So Mitch and the on deck opportunity really educated me that there's just so much creativity in the American economy. And one of the manifestations of that comes through alts, which is that there are so many ways to achieve non -correlated, high yielding, dependable returns in areas that I had never thought of before. That sometimes I never knew existed before.
And so not only was it, uh, were they commercially good from an investment point of view, but they're really interesting because every exposure to an alt and, uh, just was an education in something entirely new and education into a niche and education into something that was often esoteric, but always had an underlying logic to it that could be understood. And this is when they were good and when they worked out and, you know, when I invested, but, uh, they always were esoteric niche and had a logic that could be understood.
And all this rolled up into a really interesting educational process in addition to being a really compelling commercial opportunity. And so what I saw about alts from the day Mitch introduced me to him to today is just, you can't categorize them because the category is everything. I mean, basically, seemingly, every category of the American economy yields alternative investment possibilities, which are.
interesting and compelling and there are so many of them. They're thinly or not at all marketed and the challenge and really the opportunity is getting the access and the education so that one both has the opportunity as an equip and is equipped to make the best possible decision about it.
slava (07:27.602)
You sound very curious as a person. Were you curious when you were younger? Are you still curious? Has that only increased or decreased? Speak to me about that.
Mark Gerson (07:36.366)
Oh, what a great question. No, I mean, and I appreciate the question. No, I'm always very curious. And, you know, we're actually approaching the Passover holiday right now. It'll be a week from today. And one of the great lead -ins in the Bible is the Passover holiday is when Moses says, when your children ask you. Now, it's very interesting, because he didn't say if your children ask you. He said when your children ask you, because his presumption,
is that all children are curious. And the great challenge and opportunity is maintaining that curiosity through one's adulthood. So I've been fortunate to be able to do so and ALTS is certainly one way to do it.
slava (08:19.602)
Amazing. So on this show, we try to cover all the various categories of alts, which is, as you said, hard to define. We simplify it down to kind of six major categories, that being real estate and private credit in the yield orientation, venture and private equity, as well as crypto, as also the collectible side of art and collectibles. So when you hear those, let's call it six major asset classes,
Mark Gerson (08:26.734)
Right.
slava (08:49.394)
Are you in all six? Do you avoid four of them? Can you speak to your perspective on each of them and if you have any exposure in them? And I'm happy to go through them one at a time if you'd like.
Mark Gerson (08:58.35)
I think I'm in all six. Right, right. No, I'm happy to be here. Yes, absolutely. I'm in all six and no, I wouldn't avoid anything. I mean, maybe a couple of things on principle, a couple of things, but by and large, these categories, each of the six categories that you list, there are interesting, compelling, lucrative and dependable opportunities in each one. And.
slava (09:00.402)
All right, nice. You're on the right show.
Mark Gerson (09:27.31)
in sub -sectors of each one. And so, and you made the point before Slav about curiosity. So I think someone who's curious and looks at each of the six categories that you mentioned will find lots of opportunities and there are no grounds for ruling any of them out and lots of reasons to include all of them.
slava (09:47.922)
So the classic view on a portfolio is 60 -40 stocks and bonds. We obviously don't really believe in that. We believe there's a need for having a portion of that be in these alts. We always love to hear how people think about their portfolio mix and what percentage do you think alts is of your net worth?
Mark Gerson (10:08.078)
Yeah, it's a good question. I don't know what percentage is a net worth. And of course, like everything in life, there are definitional issues. What exactly is an alt? You define it broadly. So therefore, it would be a greater percentage. So asset allocation is a very interesting question. And I think it derives from one's age, from one's risk tolerance, and from one's financial obligations. And I think the...
exposure to alts and the ability to be educated about alts and to have confidence in alts will lead one more towards that kind of asset because alts provide opportunities for things that are non -correlated, for things that are high yielding. And those are the characteristics that people usually look for in non -stock environments. Fine, but you can get them through alts, at least several varieties of alts and get the yield that people look for in stocks.
slava (11:07.698)
Nice. Within the alt bucket, if it was its own pie chart, how do you think your pie chart breaks down since you're in all six? Usually it's heavier in real estate and private equity, i .e. venture. Is that how you would be as well?
Mark Gerson (11:25.806)
I'm certainly exposed to all three, but now I'd have to say crypto.
slava (11:30.258)
Oh, so a lot of crypto as well.
Mark Gerson (11:32.718)
Yeah, absolutely. Absolutely. I mean, probably of all six, I'm probably highest exposed to crypto or not. Probably, certainly highest exposed to crypto.
slava (11:34.226)
I love it. What do you...
slava (11:40.69)
Amazing. We don't hear that every day on this discussion. So tell us more. So that pie chart, what would you say is the breakdown of those six slices?
Mark Gerson (11:49.87)
At this point, I'm significantly exposed and happily exposed to Bitcoin, Ethereum, some Chainlink. I think it's a very compelling asset class for a variety of reasons and it's come up a lot even recently at 3i members events and we had a dinner dedicated to it last week and there were several members who were making some highly informed and rigorously construed
points about the asset class, which were just very compelling and validated the decision of anyone who is significantly exposed, whatever that means for anybody, to Bitcoin, Ethereum, Chainlink, or any of the other at least major cryptocurrencies.
slava (12:36.338)
So at the moment, you'd say your stack ranking is crypto first, and then would it be venture or real estate?
Mark Gerson (12:43.982)
Probably, it depends how you define the venture private equity mix, but certainly venture private equity and then real estate. Probably collectibles last for no good reason, by the way. There are great opportunities in collectibles, so no good reason, just happens to be. Maybe I haven't paid enough attention to it, but maybe I should have. But no, so I'm in all of them, but crypto the most, certainly private credit, certainly venture, certainly real estate, certainly private equity and some collectibles.
slava (13:11.026)
Maybe you should be running this show. You have all the right exposures to be on this.
Mark Gerson (13:16.814)
Well, I should just buy more Elvis collectibles because that's my hobby and that would increase it. But unfortunately, the market's pretty thin.
slava (13:24.53)
Tell us more.
Mark Gerson (13:25.902)
Well, we're big Elvis fans in our family. We've been to Graceland twice and we love Elvis's music, Elvis's life, the whole culture around it. And there is a collectibles industry around Elvis, but of course that's just one small part of collectibles and collectibles is so much more. And it's such an interesting and compelling category. And getting to your point, Slava, if I had done it 20 years ago, I mean, I think the category has done spectacularly well over 20 years. Particularly in, now this is interesting because particularly in subcategories that everyone kind of...
slava (13:50.578)
That's.
Mark Gerson (13:55.022)
wrote off 15 years ago, like baseball cards.
slava (13:57.746)
Oh yeah. Sports cards are doing incredible in, in, especially baseball cards, but also some of the other sports automobiles are doing incredible. Oh yeah. Um, I mean, there are just massive gains, uh, to be had. Now, some of that was a COVID pop, uh, and some of it they drop back, but if you're into the very rare assets, which I'm guessing you're looking at with Elvis, trying to find those, let's call it one of ones, that thing that no one else can have.
Mark Gerson (14:07.278)
Oh, is that right? Yeah.
slava (14:26.994)
you seem to be a very curious, you know, competitive guy, you might be onto something that could be 10 or a hundred X -ing in the years to come.
Mark Gerson (14:34.51)
Well, it's interesting about sports cards, because I remember 15 years ago or so, I remember people saying it was just over and dead. I didn't pay much more attention after that. And then, you know, our first child was born 15 and a half years ago. And then, you know, we started paying a little more attention to it when our second child was getting into it and they weren't dead at all. Or maybe they were for a short period of time, but then dead wouldn't be the right analogy. Maybe they were dormant for a little while. But then cards really came back as a category. And it seems, and perhaps this is true about all collectibles, I don't know, but it seems that...
that the specific cards that have done well are the ones that would have been predicted to do well. In other words, it's not the long tail. It's the fat tail of cards have gotten all the value. And...
slava (15:18.226)
Yeah, I mean, the key is really scarcity. Like in all things, it's about supply and demand. And the less there is of one of these things, the more that other people want it. And when it's the rare iconic one, there's only so many homes that are right on Central Park, right? And there's only so many Babe Ruth rookie cards or Mickey Mantle 1952 PSA 10s, which I think there's only three of which.
Mark Gerson (15:40.686)
Right.
slava (15:41.01)
one sold for over $10 million already, which no one ever thought of could even happen because it used to be just a few years ago that $1 million was a massive number. So now you see automobiles selling for nine digits over $100 million when people used to think that $20 million was the cap for an automobile. So it is all fascinating. It's amazing that you go from Elvis collectibles to talking about Chainlink and BTC.
or obviously talking about real estate and ventures. So.
Mark Gerson (16:12.814)
Well, you know, it's interesting, but so I think there's something we can learn from the durability of the sports card market when we think about crypto, which is how many people over the years, and probably even when we were kids, not that we cared or were paying any attention, but said, why would anyone pay so much for a piece of cardboard with a picture of a 24 year old on it? Right? And the answer you just said, the Mickey Mantle cards are now going for over 10 million. And there are.
other cards which are going for seven, perhaps eight figures as well. And so people give the same criticism to crypto. Like it doesn't really exist, it's all vapor, it's all ether, this kind of cynical criticism. Well, it's the exact same thing that was leveled to sports cards, which have shown their durability for more than a hundred years.
slava (17:01.138)
Yeah, I would completely agree. And the other thing that I like to mention is, you know, you always have to think about the fraud and the negative and sports cards have been through a hundred years of potential fraud and more safety and infrastructure getting put in. And crypto is obviously much younger being only approximately 15 years old. So the fact that it's already so advanced in fraud detection and security only speaks to the potential. If you put it on the same timeline, a hundred years from now or 85 years plus 15,
Mark Gerson (17:23.566)
Great point.
slava (17:30.642)
You know, for crypto, God only knows where crypto is going to be in regards to the asset class being more institutionalized and being more taken on as a regular asset, right?
Mark Gerson (17:39.086)
Well, I think you just made a really important point, institutionalized. So the state of Arizona recently announced that they were conducting a study as to whether they should include crypto as a part of the pension. Now, if the study comes back with a yes, and the answer is we should invest, I don't know, 0 .2%, 0 .5%, 0. anything percent in crypto, it's an enormous catalyst for crypto because Arizona is not going to be alone. Other states are going to follow. And then if it becomes a thing that
Responsible institutions just do, which is have a very small allocation in crypto. It's a huge catalyst. That came up at a three -eyed dinner the other night and it's just, there are so many other catalysts like that. I mean, it's, people have said there was at various points in history, you know, there's a bubble in sports cards or okay. Well, there's now they're doing better than ever. No, people say there's a bubble in crypto. Well, no.
bubble has ever burst and come back. And crypto has had something like nine or 10, 80 % drops. And if it's a bubble, it wouldn't have had any comeback. Tulips didn't come back. The companies that went down 25 years ago in the internet bubble, they never came back. Now, Amazon was never part of the bubble, but...
There were plenty of companies that had extremely high valuations, were not based on anything fundamental or anything real. That was a bubble. They never came back. So therefore crypto can't be a bubble because when bubbles burst abstractly, like we're talking about, and obviously physically, they don't get reconstituted. And so therefore crypto can't be a bubble. It's something else, but it's not a bubble.
slava (19:20.388)
It's a volatile ride. And, you know, speaking to your Arizona point about adding it to their institutional investments, I'm sure you know, but Larry Fing from BlackRock mentioned that they're going to look to add 1 % into 1 % of Bitcoin ETF into their income fund, which is obviously, I believe, one of if not the largest fund in America in regards to putting all kinds of investors money into the market. So,
Mark Gerson (19:21.806)
Exactly.
slava (19:48.626)
It is a fascinating time to be navigating the crypto roller coaster. Since you're so bullish.
Mark Gerson (19:53.134)
Yeah, and I like to think about it in terms of expected return. Like, let's say, and I don't believe this for a second, like, let's say there's a 50 % chance that Bitcoin goes way down, way down. I think it's much lower than that. But let's say it's 50%. The other 50 % is not a 2X. The other 50 % is a 10, 100 more X, right? So, however one accounts for the risk of a significant and permanent decline, what's the opportunity of a significant and growing
incline, it's just a great expected return. I mean, someone did the expected return math. It would seem to me to be the best expected return in the economy.
slava (20:31.25)
Yeah, I would agree with you. And just to try to put some math into that for the listeners, you know, a lot of people are scared to put in money into highly volatile assets. But like you said, you can only lose your money one time, but you could actually make your money many times. So to put that into math, if you have a hundred dollars and you put $2 into, let's call it crypto, the most you're going to lose is $2 and you still have $98. But if you're $2, actually 50 X's, which could happen and has happened for many people.
Mark Gerson (20:41.358)
Right.
Mark Gerson (20:54.638)
Right.
slava (21:01.202)
You just doubled your net worth on only $2 worth of risk.
Mark Gerson (21:04.878)
Right, exactly. And, and, uh, yeah, and it has happened and there are lots of logical reasons as to why it will. Um,
slava (21:14.354)
Nice. So since you're so bullish and we'll end this part of the conversation on crypto, give me a dollar amount as to what you think it's going to hit in what time horizon. So give me some sort of a prediction.
Mark Gerson (21:28.046)
Yeah, it's a good question. I mean, at this point, it would only be obviously a guess because look, the critics are right that there's no like dividend flow that you could actually, you know, put a historically agreed upon metric on. Fine. So it's hard to, it's hard. Look, if it's, if crypto as of, as we're speaking today is around Bitcoin, as we're speaking today is around 65 ,000. I mean, we're now in April of 24, it's 65 ,000. Um, I would, I would, I would put an over under of a hundred thousand at the end of the year.
and I would take the over. And I would take the over.
slava (22:00.242)
Nice, we'll make sure to get back to you on that. Give me your more long -term, give me your 10 -year horizon from now.
Mark Gerson (22:03.214)
I mean, I'll give you, you know, I was...
Mark Gerson (22:10.606)
Well, I'll tell you, so I totally agree with this person. Howard Morgan, really one of the great, most well -respected venture capitalists of all time, right? And so Howard has been, he's also one of the original venture capitalists. And I was at a conference with Howard last year and I don't remember exactly what Bitcoin was last year. And Howard just said that this is an obvious, easy 10X. He said, probably a lot more, over 10 years.
So I would, I'll go with Howard on that. I mean, I would say, you know, even from here, I'll go with Howard. Now it was lower when Howard said it, but he's probably say the same thing now. So I would say, yeah, I would say here, it's just a matter of, it's a matter of time. I mean, how much time nobody really knows. But you know, are we talking bitcoins at a half a million dollars 10 years from now? I would not be surprised. In fact, I'd predict it. That might be my over under. The over under of Bitcoin in 10 years might be half a million and I probably take the over.
slava (22:57.202)
Nice.
slava (23:06.322)
Perfect. And then in today's market, is there anything you're trying to avoid for this year, next year, et cetera, of those asset classes we've talked about?
Mark Gerson (23:16.558)
No, there's nothing I'm trying to avoid. And for the reason that there are compelling opportunities within each one of them.
slava (23:24.114)
Nice. What do you think about just the general market? Ignore crypto specifically, all specifically. You know, obviously it's a dynamic time in regards to interest rates, geopolitical issues. There's always things going on. You have such an interesting perspective, founding GLG, connected to so many smart people, you know, filtering in so much interesting information into that brain of yours.
So just give us an overview as to where you think the market's at and you can take that wherever you'd like, public, private, anything.
Mark Gerson (23:55.214)
Right. Well, let's take public. I mean, there are always very smart people who say the world's going to end and the market's going to crash, or even just the market's going to crash. There are always very smart people say the market's going to crash and very smart people have by definition intelligent reasons. That being said, I think with at least a medium or long -term perspective, they're completely wrong. America's not only the greatest country on earth, it's the greatest country.
in the human imagination. And one of the many things that make this such a great country that's so deserving of our enduring gratitude is the dynamism of the economy and the way it enables creativity to be channeled towards such economically productive ends. And therefore I'm an enormous bull on America and an enormous, I don't have short -term views, but I'm an enormous medium and long -term bull on the American stock market and all that derives from it.
So I think everybody should have a significant percentage of their asset allocation in American stocks.
slava (25:03.986)
What's the time horizon between short -term and medium -term view? Is that one year, three years, five years, ten years?
Mark Gerson (25:11.95)
Oh, I would say, you know, I have no idea what things are going to do in the next day, week, even month, but just, you know, when we think, when we can say looking back and no one ever says looking back like a month ago, or rarely, right? Normally when you say looking back, you're talking about some period of time, you know, six months, a year off, usually much longer, you know, so whenever one can say looking back, I think one would be happy to have bought stocks at whatever that time is. And
You know, one of the interesting, one of the many interesting things about alts is, um, is that many of them do correlate to the stock market. So, um, you know, the same conversation that we're having about stocks could be applied to alts. I mean, you know, venture and private equity are probably precisely correlated to the stock market. Uh,
slava (25:53.17)
Sure. And are you a stock picker, meaning individual public stocks, or do you like to just expose into the indexes?
Mark Gerson (26:01.614)
Just given who I am and what I do, I just generally do the indices.
slava (26:05.554)
Okay, perfect. So now let's transition to 3I. And this started in the early days of COVID, is that right?
Mark Gerson (26:13.582)
Uh, we conceptualized 3i, uh, yeah, in late 2020 and, um, and launched it, uh, about a year later.
slava (26:21.106)
So not everybody has heard of 3i and obviously we want to learn more. So can you just tell us what is 3i and tell us how people can get involved?
Mark Gerson (26:28.654)
Sure, so the name 3i actually means the Interesting Investment Institute. It just got shortened to 3i members. But the idea was my co -founder and I were saying, where did the most interesting and compelling investments that we had done in the previous several years come from? And we were specifically excluding angel investments where we got lucky once in a while and lost most of the time. And we're focusing on those kinds of opportunities that...
promised a 20 to 25 % yield and delivered really exactly as projected, no better, no worse. You know, just the reliable 20, 25, sometimes even into the 30s, percent yield. So we had done these, but we asked jobs where did they come from? And the answer was, they always came from somebody else, but the process of getting them from somebody else to us was totally random. It was a function of who we had seen recently or who was thinking about us for whatever reason at that moment and thought to call us.
And then we did some looking into it and either invested or didn't. So we said, well, this is not an efficient or an effective way to go about getting access to the kinds of investment opportunities that we seek. So there must be a better way. What must that way be? So we said, the best alternative investments are all in the same place, which is in the portfolios of the best alternative investors. So we said, if we create a community of the best alternative investors,
people who, to your point, Slava, are intellectually curious, people who are rigorous, people who have access to these opportunities, and people who want to pursue them in fellowship with others. We said, if we can create a community out of these people, everyone in the community will have consistent and reliable access to the kinds of opportunities that we now only have sporadic access to. So that's what 3I members is. We created this community of...
individuals, all of whom invest significantly, eclectically, are intellectually curious and are nice people. And this community gets together formally, once a month, informally, hundreds of times a year, and to do a variety of things at this point. But the core of what we do is to access and consider, in fellowship with others, alternative investments. And in fellowship with others is really important because...
Mark Gerson (28:52.686)
Alternative investments are very often going to be niche and Esoteric and therefore difficult for any one person to analyze or understand on his own But when one joins a community we found and we created and one joins a community There are always people who have the experience the knowledge and the insight to that that make it easier to make the kinds of investment decisions that make people comfortable so I
3I members now has a little over 430 members. Everyone's either a founder, runs a family office, runs a fund, or is a professional athlete. And the community comes together to surface the deals and to consider them with the benefit of the advice and input of others.
slava (29:40.818)
Amazing. So for the benefit of the listeners, I'm not a member yet and would love to learn more right here so everybody can learn. So what does that mean exactly? So do I need to be invited? And do I need to be accepted? How much does it cost? What do I need to input as part of the community or do I get kicked out? How can I invest or not invest? Do I get access to the deals, et cetera? So can you just run with that a little bit?
Mark Gerson (30:09.838)
Yeah, absolutely. Yeah. Yeah. All good questions. Um, uh, three I members is almost all by referral. So everyone in the community was either referred by someone in the community or knows someone in the community. Um, and, uh, uh, it's the simplest business model ever, which is everyone just pays right now, $15 ,000 a year, which means no fees on anything else. And, uh, that enables people to just, uh, uh,
slava (30:10.066)
Meaning like you're talking to me.
Mark Gerson (30:39.118)
We want people considering ideas together and we want people educating each other as to why they're investing and why they're not investing. We find it just as valuable when members really convince each other not to do something as when they convince each other to do something. We just want people helping each other make the best decisions for them. So everyone just pays $15 ,000 a year and just at the end of the process and there are two to three deals presented every month and then a series of follow ups where people.
come together and consider these opportunities with each other. Then if someone wants to invest, they can do so and they do so in their own name.
slava (31:17.81)
Nice, so let's say there's some AI deal that's super hot. Will I quote unquote automatically have access to it or could I maybe be, I'll lose out on it because I didn't move fast enough and the allocations are gone.
Mark Gerson (31:28.814)
No, no member would ever lose out on something because it went too fast. There's always a pretty rigorously defined time horizon as to when decisions have to be made. And then everyone in the community will have an opportunity to invest in anything presented on the platform. And everything on the platform, in order for something to get on the platform, so there's no expectation that any member will bring any deal. In fact, we have now over 430 members and we're doing two to the...
The membership gets presented two to three a month. So if everyone had one, we'd be in trouble. We only have time and space for like 30. So I, I.
slava (32:06.802)
It sounds like a full -time job just managing the deals.
Mark Gerson (32:09.454)
Well, it's all crowdsourced. I mean, our insight here is that the surfacing and evaluation of alternative investments is like the perfect application of crowdsourcing so long as the crowd is right, which our crowd is. And so members produce the opportunity for an opportunity to be considered. A member has to have invested and said, I've been investing with this person or with this person and in this strategy for X amount of years.
I put, if they want to disclose why amount of money into it and it's done very well for me. And now I'm just happy to share this opportunity with no benefit to myself, with the other members of the community. And so that's how, and then, and then members of the community will decide which opportunities get presented to the whole membership. And then the group again comes together, really a sub group of those who are interested in the opportunity come together to really assess it in fellowship.
And then everyone makes their own decision. But it's really an application of crowdsourcing on the premise that a group of people who are founders, people who are family office professionals, people who have invested significantly, eclectically, rigorously, will have both access to the kinds of deals everyone wants and the ability to help others rigorously assess them.
slava (33:32.53)
I am a big fan of crowdsourcing, having founded Indiegogo and helped pass the jobs act. So I'm a massive fan of this application, so super interesting. And the idea that any one person might have a good investment in their pocket is a great idea, but to try to aggregate them all together really brings all those small percentages much higher together.
Mark Gerson (33:53.262)
Yeah, your insight is so right. And it's all about small percentages. I mean, you know, Slava, if you or I have a 0 .1 % chance of having a truly compelling alternative investment in any given month, then you bring 430 and growing every day. You know, you have that 0 .1 % moves to an 100 % certainty of something that's interesting, compelling, and at least worthy of taking a serious look at.
But you're right, it's all in the small percentage chance that we each have of having a really compelling opportunity at any one given point quickly becomes a certainty once you have a certain number of people together. And then, so every month there are genuinely interesting and compelling opportunities presented and then each member has to make the decision in consultation, in fellowship with others as to what he or she wants to invest in or not invest in.
slava (34:44.402)
Amazing. I know it's only been a few years, but do you have like a case study or two of, you know, one of those investments that came out of 3I members that has already had some results positive?
Mark Gerson (34:54.606)
Yeah. I mean, a lot of the, a lot of the, um, opportunities that are being presented now, uh, well, they all derive from what members want and what members want now is what one of our members in, uh, San Francisco, he said, I just want non -correlated high yielding income streams. I said, that's it. That's what people want. He defined it perfectly. Non -correlated high yielding income streams. And, uh, and therefore the, and of course that might change when the economy changes. So we'll, will we be saying that in a year and a half? I have no idea. But, uh,
That's what people want now, at least people collectively know individually, people may want, and they do want all kinds of other things as well. But that's what the group collectively seems to all want. It's one thing that all members seem to share. And, uh, and these opportunities, you know, back to what we were saying before, um, they're esoteric, they're interesting, and they're often in pockets of the economy that no one existed before. Like, uh, one deal we did, which was brought by a member who made his fortune in the, um, uh, aviation industry. He said, this team is the best team I've ever worked with.
And now they have an opportunity where they buy airplane engines. They, and they do one of two things with them. Either they lease the engines to a major carrier. And in that case, you know, exactly what the yield is going to be. Cause the ma and the major carrier is not going to go, go under. Um, or he said, they, he said an airplane engine has, and he gave the number some very high number of component parts, I think in the thousands. And he said, this team knows exactly how to take apart the engine.
knows exactly what each part is worth and knows exactly who to sell it to. So it adds up to something far more than the cost of the engine. And that's, that's one we did. And, and we've done, so we didn't know who in the group, well, this member in Texas knew, but I didn't know. Like I never thought about airline engines before. I mean, he spent his career in them, but it was interesting to me. I did that one. And, uh,
slava (36:42.898)
When was that? How long ago?
Mark Gerson (36:45.966)
We've actually done two with these guys now. One was over a year, one was probably maybe almost 18 months ago now, and one was more recent.
slava (36:53.426)
So the 18 -month -ago one already has been doing well?
Mark Gerson (36:56.782)
It's doing great. I mean, it already returned the capital, maybe at this point more than the capital and it's still yielding every month. Yeah, so everything from that to music royalties, to loans to government contractors. I mean, a real diverse array of opportunities get presented and get invested in and members have the benefit of the community to really help understand and assess these things. And in the process, members have just become...
slava (37:03.25)
I mean, amazing.
Mark Gerson (37:25.422)
really good friends and often colleagues with each other on all kinds of things. Cause they build this respect in the community through how people think about or are interested in these kinds of alternative investments and that kind of respect and trust, which is also cultivated at the, we're doing like 200 events a year now at these events and other forums. People end up just doing all kinds of things together, both on and off the platform.
slava (37:51.41)
And is this retail investments, accredited only investments, qualified investments? I only ask this for the sake of the audience looking to try to reach out to get a referral, et cetera.
Mark Gerson (38:02.478)
Well, yeah, I mean, so these are the kinds of investments that people are making. The minimums are typically, but really always 100 ,000 or more. And.
slava (38:14.13)
Got it.
Perfect. And outside of the actual investments and the investment conversations, what are the other interactions that are happening of how people are getting to know each other or the physical events or digital events or other touch points?
Mark Gerson (38:27.758)
Yeah, we do about 200 in -person events a year in the cities where we have a significant presence, which is everywhere from New York to Miami to London to Chicago and many others. And the events can be everything from a small dinner focused around a specific topic, like we did a crypto one last week, to a trip to Israel, to a trip to the Berkshire Hathaway Conference. So it's everything from just a small gathering around a topic.
Sometimes about that topic, sometimes it might be a poker night, a cigar night, really just a way to get people to know each other and like each other and then think about each other a lot because then they'll do more things with and for each other. So we do all those events and the community has also really come together very powerfully around philanthropy. I mean, after October 7th, the 3I members community raised something like $15 million for United Hatzalah.
slava (39:23.282)
Amazing.
Mark Gerson (39:24.206)
Yeah, it's just the community just comes together for all things commercial, philanthropic, social. I mean, people are hiring each other's kids as interns, setting each other's kids up on dates. I mean, anything you could think of. And yeah, I mean, it's just become a community of great friends. And you know, every community's got to be about something, right? So this community is about really alternative investments. But...
slava (39:36.402)
setting each other's kids up for dates. I love it. I love it.
Mark Gerson (39:49.166)
but it's a community of people and really good people. And I say good people, that's actually really important because we also have an important function within the company, which is that when one member reaches out to another member with a question about anything, it could be anything, could be I'll be in Munich next week, anyone I should have dinner with to I'm selling my companies or anybody I should talk with about the various structures I might want to use, it could be anything.
We want another member who can help to raise his or her hand and be excited and enthusiastic to say, I'm excited to help, not, I don't know who this person is. So all the members are really community focused and pro -social and always eager to help each other with whatever anyone's working on or thinking about.
slava (40:33.202)
Amazing. There's quite a few of these platforms I would call networks that have popped up since COVID. Why do you think that happened at that time?
Mark Gerson (40:43.15)
Yeah, it's a good question. I mean, I don't really know about many of them except 3i members.
So I don't know if it's only since COVID. I mean, you know, de Tocqueville and really the greatest book about America ever written, Democracy in America, you know, as you get older, you just marvel at how he wrote this at age 25 and 26, but he did. You know, he talked about how America is really a nation of joiners. And he was comparing it to what he knew and had observed in France. And he was kind of stunned by how Americans love to associate with one another. I think that was a word he used. Americans love to associate with one another.
And they, and associates with one another formally in groups and organizations. And, uh, and it was so true in Tocqueville's day in 1825 or 26 that, that he, uh, that, that it became a major observation of his when he came to America. And, um, it's just been a sustaining feature of the American character and culture is that Americans love to associate and do things in fellowship. And I think, uh, one of the reasons why, um,
this is such a great country is because of the truth of Tocqueville's observation. So I don't think this would have been a post -COVID phenomenon. I think it's an American phenomenon that Americans love to associate and truly good and great things can derive from the right kinds of association. And I think 3I members is one manifestation of that.
slava (42:09.362)
Perfect, so our guests are curious too, sorry, our listeners are curious too, they wanna be as smart as you if possible. So what are you listening to, what are you watching, what are you reading that makes Mark Mark?
Mark Gerson (42:21.07)
Oh, well thank you. So, well, I study the Bible every day. So, and my study is basically just Genesis through Deuteronomy. And I have an addiction to exercise. I have to, I run six miles every morning. I've not missed a day in like 20 years. It's an addiction. And on the treadmill, and I study the Bible on the treadmill. So I do it in double speed, so it's really two hours.
two hours each morning, so an hour in double speed. And so I study the Bible, and the reason why I study the Bible is I think all of life's great questions, all of life's most practical and enduring and current questions are asked and answered in this awesome ancient document, which is ours to read and to study. So the more I study the Bible, the more I realize how much more there is to learn and to know, and the more I want to study. So I...
Fortune be able to do it every day.
slava (43:21.81)
Nice, so just to confirm, you're reading the Bible at double speed while running six million miles. Is that right? For an hour.
Mark Gerson (43:28.27)
Yeah, I can't read. I'm either listening or watching. But yeah, yes, yes. So, yes, and there's, and you know, this is one of the, like many gifts of the internet, right? Like who would have imagined, almost any 15 years ago, 20 years ago, of course, more than that, that this would be possible. But yeah, there's so much really profound and interesting and compelling, and I only speak English and English language, biblical commentary that's totally accessible to anyone.
slava (43:32.05)
Okay, got it.
Mark Gerson (43:58.19)
who can get on an internet browser. So you put an iPad up on the treadmill, hook in the headphones, I guess I could use Bluetooth, and you have basically two hours of really compelling study. And the more you do it, the more you realize that whatever anyone is thinking about or wrestling with on any given day, the biblical author has thought about, wrestled with, and guided on the exact same question.
slava (44:19.858)
So are you using Audible or what kind of version of this content are you listening to?
Mark Gerson (44:23.95)
A lot of those great, but I'm typically doing podcasts. So, you know, there's, there are lots of good Torah podcasts. Rabbi Ephraim Goldberg's Parsha Perspectives is terrific. Ephraim runs the Abokar Rattan Synagogue in Abokar Rattan. And he has, you know, every week he has an hour long presentation of the Parsha, which is the Torah portion that we study.
slava (44:32.338)
Give me one.
Mark Gerson (44:50.702)
David Wolpe who was the now he's the rabbi emeritus of temple Sinai also another great English language Torah commentator Jonathan Sachs the late Jonathan Sachs a why you Torah is a great source with just so much really profound Accessible English language commentary rabbi riskin. I mean there's really um There's so much and it's so accessible to anyone with access to an internet browser and and it's so practical
I mean, the Bible announces its purpose in Deuteronomy when Moses says, this is for your benefit. In other words, what Moses is saying is this is a self -help book. So no self -help book is complicated. Every self -help book is practical and can be understood easily by anyone who reads it. And that is absolutely the case with the Bible. And so I would highly recommend biblical study and engagement to anyone who's just asking and answering.
any questions in their lives from the most profound questions to the most mundane questions. And very often one realizes that the mundane and the profound questions are one and the same.
slava (46:02.578)
and any other content that makes you for reading or watching.
Mark Gerson (46:10.158)
In terms of, you know, yeah, what newspapers do I read? I mean, I read the New York Post every day, the Wall Street Journal, the New York Times. Those are the three things I read every morning.
slava (46:11.378)
And you can...
Mark Gerson (46:21.198)
And then what else? The Jerusalem Post. Yeah, so those are really the four things I'll read every day.
slava (46:26.994)
All right, last question. So we like to put our guests on the spot. Three years out, what is one investment today that you can recommend or suggest? And obviously this is not investment advice, but this is just something Mark believes in that three years from now that we'll do exceptionally well. And try to be as specific as possible. You already told us Bitcoin, so you can't tell us that one again. I'm ahead of you.
Mark Gerson (46:46.67)
Oh, I was gonna say that. Right. Okay. Well, all right, Bitcoin, but I, um, uh,
Okay, so, well, a 3i member was the one who about a year and a half ago was pounding the table for Chainlink, which I didn't know anything about. But then a bunch of members got together and a couple explained on how Chainlink is necessary for international banking transactions. And so I bought Chainlink at this 3i members recommendation. And I checked in with him a couple of weeks ago and he said it is not even gotten started. So again, that's secondhand. But...
If I can't do Bitcoin, I'll do that. But Bitcoin, absolutely. I just think there are so many catalysts and the fact that it has a limited supply of 21 million is actually less than that because some of them are lost. And Slobity is your example of what BlackRock just said about how it needs to be in the income allocation. You got to go with that. And also, I would say getting to your category in general, there are so many compelling opportunities in alts that people who have...
intellectual curiosity and they're willing to invest in accordance with their intellectual curiosity will find such a diverse array of opportunities that they want to consider and probably invest in some of them. And so I would say that your asset class in particular is just has so many of these kinds of opportunities. But if I had to pick one in particular, it would be Bitcoin. If I had to pick a 10 -year, it would be Bitcoin and the American economy.
slava (48:27.89)
Perfect.
Mark Gerson (48:28.75)
Now the American economy has not an alt, of course, but the American economy is manifested commercially, of course, in the U .S. stock market. So, you know.
slava (48:37.586)
If you go back 250 years, it's the ultimate startup. So it is an alt. In biblical times, it's just, you know, in precede seed stage. So we're.
Mark Gerson (48:40.878)
Dr. Justin Marchegiani That's right.
Mark Gerson (48:46.318)
That's right, that's exactly it, that's the truth.
slava (48:48.978)
Um, well, thank you, Mark. This has been absolutely incredible. Uh, we have covered so much content across so many topics. We could thank Mitch Jacobs in 2005, 2006 to getting you into alts, but obviously you were already on your own journey with GLG in 1998, having crushed it with such an amazing company, founded other incredible companies. Um, you really told us that, you know, at the Passover Seder, when, you know, when your children ask you and having that curiosity is so important.
Mark Gerson (49:01.07)
Thank you.
slava (49:17.906)
For you, an alt is about having a non -correlated, high -yielding, dependable asset, which is super interesting. You have a lot of exposure into alts. You love covering all of the various alt categories. You're even into your Elvis collectibles, had some cards, and now into crypto quite a bit. You juggle across all the various categories. You do believe that BTC is on a potential huge bull run, if you think long -term.
potentially 100 ,000 by the end of the year and even 500 ,000 for a decade from now. A great quote where America is the greatest country of the human imagination. I love that. You're an enormous bull of America, which is awesome. 3i, the i stand for Interesting Investment Institute. And the ideas always come from someone else. So if you could just expand your network, formalize that, that's really the essence of 3i. You now have over four, you have 430 members, incredible members.
founders, family offices, sports folks and others. It's only by referral. So everybody should now try to figure out how to get in. There's lots of deals that are crowdsourced and you guys are doing already incredible work. I love your example, aviation engines, being able to lease them, break them down for parts and sell them for more than it's worth, music royalties, et cetera. People should think about 100K as investment as a minimum. So know what you're getting into. Tons of in -person events. So you could build beyond just.
You know investments you can actually build your network which can be so important for life Democracy in America the whole idea of a nation of joiners I've never heard that one before and you're the first person who mentioned studying the Bible every day and you're definitely the first person who said studying the Bible every day on the treadmill which I think is the essence of Mark being Mark now that I've done You know 50 minutes with you giving us, you know a whole slew of Torah podcasts Which we'll have to check out and right after you listen to the Torah podcast. There's the American economy
BTC and Chainlink, we have you on the spot to be able to see those investments. Thank you so much, Mark.
Mark Gerson (51:15.854)
Slava, thank you so much.
