Transcript of Are Birkins Better Investments Than the Stock Market? The Truth About Luxury Investing with Dana Auslander New

Lately I've been trying to travel more. I work too hard and life is too short not to enjoy myself. That's why I'm so excited about Chime's new perks for cardholders. Chime has added airport lounge access to its travel card, but that's not even the best perk. They offer the Chime Travel Concierge to help schedule flights, book hotels, and plan entertainment on your next trip. I can totally see how useful that will be as I explore the world. Chime is changing the way people bank. They offer the most rewarding fee-free banking. You're not just switching banks, you're upgrading to America's number one choice for banking with a Chime checking account. Chime is not just smarter banking, it is the most rewarding way to bank. Join the millions who are already banking fee-free today. Head to chime.com/ chime.com/mnn. That is chime.com/mnn. It only takes a few minutes to sign up.

Chime is a fintech, not a bank. Banking services for MyPay and Chime Card provided by Chime's bank partners. Optional products and services may have fees or charges. Stated annual percentage yield on cash back for Chime Prime only. No minimum balance required. Checking account ranking based on the J.D. Power survey published October 20th, 2025. For more information on APY rates, MyPay, SpotMe, and travel perks, go to chime.com/disclosures.

I'm about to head out on a trip for 10 whole days.

I'm actually not going far from my home in LA.

I wanted to minimize travel time and maximize leisure. I'm gonna put the out of office, up on my inbox, and retreat from the world to rest. I don't think I've ever gone away that long in my entire life, certainly not in the last 20 years. Honestly, it's a little scary. What will happen at work if I'm not always in my inbox and working on deals? As you can tell, I have a lot of anxiety about going and guilt. One thing that helps me feel better about taking a break is that I know I can list my space on Airbnb while I'm away. Instead of sitting empty, your space can generate some extra income and help offset the cost of travel. It's a simple, practical way to make use of what you already have. If you've got upcoming travel plans, it's the perfect opportunity to list your space. And now, hosting is easier than ever with Airbnb's co-host network. You can hire a vetted local co-host to take care of the details for you. A co-host can create your listing, manage reservations, handle guest communication, and even provide on-site support, so the stay runs smoothly even when you're away.

You get to share your space with someone traveling to your area while you're off making memories somewhere else. If you've considered hosting but need a little help, find a co-host at Airbnb.com/host.

Are Birkins better investments than the stock market? What would the average annual return actually be?

Per bag, it would probably be about 35 to 40% for our Fondelise.

Headlines like these about the Birkin beating the S&P 500 have gone viral, but are they real? Today I'm talking to Donna Auslander, who spent 20 years in investment management, and now she's onto her most fun project yet by far. Building Luxus. It's an alternative investment firm with a dedicated Birkin fund. So she tells me the truth about luxury investments.

Hermès is known as a Veblen good. A Veblen good is this economic philosophy where when the price goes up, demand goes up.

How to invest in a Birkin without actually buying one?

The only way to be able to invest in Birkins and Kellys, in my opinion, is through a fund, through a diversified portfolio of bags.

And the mind-blowing numbers behind it all.

It started, I want to say, at about a mil— not a million, $700,000. And I just wanted it to hit a million because then it would justify the investment thesis. And it just kept going and going and going. And, and finally it ended up with a Japanese reseller at $10.8 million.

I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand. It's time for some Money Rehab. Donna Auslander, welcome to Money Rehab.

Thanks for having me.

So excited to answer the age-old question— or I don't know if it's age-old question, the Instagram-old question or TikTok-old question— are Birkins better investments than the stock market?

Well, Hermès trades at 43 X of its valuation. So it's very expensive stock. The only way to be able to invest in Birkin and Kellys, in my opinion, is through a fund, through a diversified portfolio of bags. If you want to buy one for your personal collection, sure, you'll, you'll be able to sell it for a premium if you want, but you're not going to get— probably depending on what the condition of it is, you're probably not going to get what you hope for. And that's probably because the resale platforms take a big cut from the consignment fee, as we know.

Oh, that's for sure. I actually have been there. I sold a Birkin on The RealReal.

Yeah.

And it did have somewhat of a return, but the fee is where you actually break even or lose some money from retail.

Absolutely. And it's, it's, it's actually really, in my opinion, distorted the whole concept of it being an investment if you're single-handedly trying to just sell your Birkin.

Yeah.

Because what you're seeing online are all these charts that are like gross fees.

Yeah.

Huge, like Up and to the right, you know, but what would the average annual return actually be gross and then minus some of the platform fees?

So per bag, it would probably be about 35 to 40% for our fund, at least per bag gross. And then net it's around 25, 27% because of all the fees. And we've negotiated those fees down to barely anything. So for the average consumer, it would probably be I mean, it's still a really great return. So it's still— it would be somewhere probably I would say between 18% and 20% over its lifetime. Over its— its sale. Yeah, its lifetime. And if it's not like going to return something on an annual basis because it's just— it's like buying a real estate building, right? So it's just— it's just if you buy a bag and then you want to sell it, your ROI on it probably will be about 18% to 20% on the consumer side.

And Ted, Typically, how long is somebody gonna hold that bag then? 10 years, 5 years?

It depends. I mean, it really depends on per— like for us, for the fund, it really, we wanna sell it within 60 days of acquiring it because for us the sales velocity matters. We set up the fund not to really rely on the appreciation of a Birkin, but on the spread between the primary market and the secondary market.

And so wait, break that down in English. Okay, so if somebody doesn't know, how much is a Birkin?

A Birkin is 14— like, a 30 is $14,900, so $15,000. When I bought my first Birkin, it was €4,800 in 2005, and so Hermès has increased the price on it like substantially. However, Hermès Birkins and Kellys are known as quota bags, and the reason they're called quota bags is because they are not publicized. They are not marketed. They are not offered to people. You can't just walk into a store and buy a Birkin or Kelly. You have to have a spend history of about $25,000 to $50,000 a year on other Hermès goods to be able to even be eligible for a Birkin or Kelly. And then at that point, you can maybe get a leather appointment. And even if you get the leather appointment, you're probably not going to get the bag that you want. It really depends on what your sales associate wants you to have.

It's, it's crazy town. I mean, these are very, very, very high-class rich people problems to have to go buy a sandal or an accessory or something to make nice nice with the salespeople to maybe have the luxury or the privilege of dropping $15 grand on a bag that's maybe an ugly color.

It's manufactured scarcity, but it works, and the hype around it has only grown. I think the secondary market and really the invention of The RealReal back in 2012 was when all of it became sort of digital. You had Amazon and eBay obviously get into resale and auction well before, but it wasn't for luxury goods. And The RealReal was really the first time that luxury secondary market picked up. And since then you've had Rebag, you've had— what goes around comes around. You've had all these resellers hyping up Hermès, without any kind of feedback from Hermès. And, you know, Hermès just kind of stays away from all the resellers and the hype has just gotten crazy. And you have TikTok and Instagram, you have solopreneurs who just have fan accounts and are selling bags all day long. So the ecosystem around it has made the demand skyrocket.

I mean, I am partial. My best friend did start Tradesy, so we have to put them in the mix.

I'm sorry, there's too many to count.

Okay, so then let's follow the lifecycle of that bag if you're doing it just to be an investor, in which case you probably should leave it in the box, right? Like, don't take it around, don't dirty it up. But 60 days to get— for us, a double-digit return is insane.

Well, for us, that's what's important. And, you know, because we are a fund, so it's diversified, like portfolio of bags, just like you would in a real— invest in a real estate fund. And the idea is to return 2x of MOIC. MOIC is multiple on invested capital within the liquidity period. So the first fund that we launched was 15 months and we've already sold 25 out of 50 bags and we're probably going to return 1.5x. But Fund 2 that we launched last November when we got all the viral news media stuff, that is 30 months and we'll definitely be able to return 2x of MOIC. You're not going to get those kinds of returns in any other asset class right now. Even AI is questionable. I've seen you do a lot of shows on AI and that's all anyone's talking about. And those valuations are through the roof. This is a more modest but much, much more capacity constrained strategy.

Yeah, typically. And we've done videos breaking down how long it takes to double your money based on the investment return. So typically in the stock market, it will take you about 7 years. If you're thinking of a 10% year-over-year rate of return, it'll take you about 7 years to double your money. So you're saying it will take you 30 months, so 2.5 years.

Yeah.

Okay.

Because again, these are Birkins and Kellys and you know, there's a whole portfolio construction philosophy that goes into it. We're trying to buy new in the box bags, which to your point, have plastic still on them, receipts, orange boxes, and those are trading at a premium. And we also have pre-owned, which is what the Gen Zers and the millennials are buying. Pre-loved, pre-owned, the beater bags that have been made so popular by the Olsen twins that I personally also like. But for many, many, many people, especially millennials and Gen Z, the only entry point into a Birkin R. Kelly is going to be the secondary market. They're not going to be able to walk into Hermès and create the spending limit.

So that's really for boomers and the Gen Xers for right now and some lucky millennials.

But the secondary market is really, really become the place for the, the growth to explode.

So all of our activities, the fund's activities are happening in the secondary market.

Going back to what's become popularized is buying the actual bag. And we saw Jane Birkin, like the muse of the Birkin itself, her bag sold for $10.1 million.

Yeah, I was there. Oh, you room? Minute bidding war, and it was— where did it start?

Insane.

It started, I want to say, at about a mil— not a million, $700,000. And I just wanted it to hit a million because then it would justify the investment thesis. And it just kept going and going and going, and finally it ended up with a Japanese reseller at $10.8 million.

Oh, $10.8? Damn, it's crazy.

Does a bag like that also experience the annual rate of return that Well, that's a provenance bag. So that's only— you know, Jane Birkin only had 4 bags, 4 Birkins or 5 Birkins. The other one, a second one, was sold off by Sotheby's also in Abu Dhabi for $3 million in December of last year. I was there for that too. And then the other 2 are her daughters and will probably get passed down to her grandkids. But yeah, she was the muse of the Birkin bag, as you know, and it's created a complete frenzy around, around that.

It was the second highest achieving fashion item in auction, the first one being Dorothy's red slippers.

Oh, wow.

That went for, I think, $30 million. Wow.

What drop all this money on a Birkin. We're going to talk about how to invest in the Birkin without actually buying it itself. But I want to step back and Chanel, for instance, and I love Chanel. Chanel has raised its prices by almost 90% since COVID and it's turned a lot of the consumer sentiment off a little bit, although they are having a great comeback right now with Mathieu Blasé. And but it's shoes. It's their shoes.

I don't even know who that is.

The new creative director. The new creative director. The only, in our opinion, the only investment-grade handbag is the Birkin or the Kelly. But hold on.

If they raise their prices 90%, that would be an appreciation. So if you bought it before that price hike, you would have made that if you sold it.

Yeah, but then the secondary market premiums haven't been keeping up with that. So Hermès is known as a Veblen good. A Veblen good is this economic philosophy where when the price goes up, demand goes up. And Hermès, Patek, and Ferrari are kind of the only three luxury goods that fall in that category. Chanel doesn't. If you went and you wanted to buy a flap bag from Chanel and you paid $8,500 for it and you wanted to give it to The RealReal, you're likely going to get the listing price will probably be less than the price you bought it for.

Right. So you touched on a really important point that the Birkins and maybe the Kellys, I would say, but the Hermès bags and the Patek Philippe—

it's a watch.

I know, I know what it is, but I can never say it because I don't have one. And the Ferraris, right? Like these really high, high luxury brands rely on supply and demand. So like really little supply big demand, and then that's why you can resell them for so much higher because they're so much harder to get in the first place.

Yeah. And, you know, the whole concept of a Veblen good is when you raise the price, there's this psychology that the consumer wants it even more. And so demand skyrockets. So fine.

The Chanel flap bag that the internet says is also an investment-grade bag is not, according to my opinion.

It's not.

Okay. So if somebody is buying a Birkin, they're like, okay, I, I get to hold the Birkin, I get to touch the Birkins, maybe smell the Birkin. I don't know what you do with the Birkin instead of buying Nvidia shares, let's say. And that's a big draw because they'll actually have a tangible good. Do you have to go into this purchase thinking like, I'm going to use this as a consumer or I'm going to use this as an investment?

I think you have to go into it thinking that you're going to use it as a consumer. That would be my mentality. I would never— I have 7 Birkins. I would never sell any of them. I am attached to them. They mean— they represent certain milestones in my career. I got my very first one with a Blackstone bonus that I received in 2005. I had to go all the way to Paris to get it. So I would just say, if you buy one, don't have a view to flip it. Also, Hermès will not be happy if you do do that.

Well, don't tell them.

Yeah, right. They'll find out.

I don't know. So, Donna, we had Kevin O'Leary on the show and he said the same thing about his Le Boubou. And I was like, Kevin, $5 million for your Louboutin, $10 million for your Louboutin. If I said to you, I'm going to give you $5 million, you wouldn't sell any of your Birkins?

I mean, I don't know. I don't think I— that would never happen. But I, you know, they mean something to me. I mean, that every single one of them has a story. And, you know, I love walking around with them. I love carrying them. For me, they really, you know, I love Carolyn Bessette. And, you know, Love Story is happening right now on Fox. And I remember when I was 28 or 29 and a VP, I really wanted to have the exact same Birkin that she did, that she walked around the streets with. And so I bought it and I called— at that point you could call Hermès and say, I wanna get this bag. How long is it gonna take? And they say, 2 months, 3 months, come to the store and pick it up. And then they call you and you go and get it. It's completely different now. You can't get it anymore. So, so that's really what's changed.

You can't bribe the salespeople.

No.

Have people tried?

They don't get commission. No, they don't get, they don't get commission. They don't get commissions on the, on the Birkin, on the quota bags.

So what are their salaries? They must be high.

They are. They're high. And I think they do get commissions on like homeware and, and other— and clothes and shoes and belts. But I don't think— they don't— definitely don't get commission on the quarterback.

So there's no incentive. There's no way to game the system.

They also like— you don't even know how many Birkins and Kellys will end up at each Hermès store. So it's— if they do end up there, it's usually up to the salespeople to decide who gets them. And it's a whole ceremony. And I'm sure you've seen it. I'm sure you've seen— I mean, I've never done it, but I mean, it's—

it's—

you see it on TikTok, like there's unboxings. Social media has really amplified all of this.

For sure.

There's a moment every NFL fan lives for when the whole team is locked in, when the play unfolds exactly as it was drawn up. Every single person on that field showing up for each other at exactly the right time. And even for those of us who are very off-field, you know that moment. Everything coming together all at once. Practice making progress. And the best part? Nobody got there alone. That's the feeling US Bank Smartly Checking and Savings was built around. Because your financial life shouldn't be a juggling act. It should work like a team. Your checking and savings working in sync, tracking your spending, building your balance, and unlocking more rewards the more you use them together. That's why US Bank Smartly Checking and Savings are designed to do exactly that— work together for you so we can reward you more. Because the best teams are built to win together. That's the power of us. Official bank sponsor of the NFL. Visit usbank.com to learn more. Member FDIC. Copyright 2026 US Bank.

And you know, generally in entertainment right now, everybody's talking about live streaming and live shopping. That's a huge and growing category. How do you think the, the popularity of that has impacted live sales?

It's enormous.

Like you're not gonna see, you know, the, the videos that are going around of how fast they do it in some of these live shopping shows. Like I'm assuming a Birkin is not gonna go in that.

We have our first live selling event tomorrow with eBay. And they are putting all of their eggs in the luxury basket now. And so Mo Higgins, who is in Traders, is the host of the live selling event. And our bags and all the bags from the portfolio will be there. Not all of them, but a select. And they're dropping a Birkin every hour on the hour for a dollar. And as a start off point. Sure. And don't worry, we've, we've, we've handled the economics behind the scenes. But we are— it's crazy to see how many people tune into those and buy them. And how much celebrity has played into this.

What's the lowest an auction or a secondary site has had a Birkin?

I mean, I think they usually do go— unless they're really beat up, they'll go for a little bit above retail. So they'll, you know, will probably end up somewhere between 10 to 15% premium on the live selling for a pre-owned bag. New in the box commands a very high premium because it's brand new and people really, really want the the brand new bags. I think it's also important to note that COVID created a real distortion in the market. People really, really started buying Birkins and Kellys en masse during COVID during the lockdowns. So the prices in the secondary market skyrocketed. They've come down a little bit. There's been a correction. But Sotheby's says that, you know, it's usually within 2x of the price of the Birkin. So Birkin A brand new Birkin with the orange box receipt, everything went for 2 times its price at the height of the COVID pandemic, and now it's gone down to about 1.8, 1.9.

Really? That's crazy. I was on the other side of that trade. I was so scared during that time. Yeah, I got to get rid of this. I know, Birkin. But I guess I didn't participate in that massive upside. That's odd to me because the luxury market, when the stock market goes down or we're seeing, you know, huge global events like that, you would think that people aren't buying luxury goods.

It's the K-shaped economy really at play here. I mean, you've got the, the very, very wealthy just getting wealthier and wealthier, and what they're spending their money on is mostly cars and watches and Birkins and experiences. And women, I mean, this is, that's the one luxury good that women really care about. And every guy who's making a lot of money in the K-shaped recovery has a wife or a mom or a sister or someone who really Everyone wants a Birkin.

Counterfeits are so good.

So good.

How has that affected the market?

It's really, really going to be a problem. I think there's a couple of AI-focused apps that tell you whether or not a Birkin is authentic. One is called Entropy. And but, but it's the fakes have gotten so good. It's a non-negotiable for us. We have 3 points of clearing the authenticity of the bags, but the manufacturing in China and in Asia has become really, really good. And you have to be very, very careful. With what you buy. In my opinion, I— again, all of my 7 Birkins have been bought directly from Hermès, so I know they're real. But I think it's really scary what's going on out there.

Well, even there was an article about The RealReal that there were some fakes that got through the system.

It's impossible for something not to get through the system. They're that good. And there's so much volume going through. There's, there's so much volume of Birkins and Kellys running around all over the world right now, from Asia to the Middle East to Europe to here. This is still the biggest market here in the US. But the K-shaped economy, economic recovery has only made demand accelerate.

Explain the K-shaped economy for somebody who's trying to visualize.

Well, the case is a lot of letters. The K-shaped economy, the one, what I'm thinking of is the, is that the ultra-high net worth, the family office money is just multiplying and becoming even wealthier, whereas the average consumer is not spending anymore. And so it's taken out the aspirational consumer. So people aren't really buying unless they absolutely have to. If they don't have a lot of money still to spend. However, the ultra-high net worth and the people who are making a lot of money on the top side of the K, this is what they're mostly buying. This experiences cars, watches, art. That market's doing pretty well.

What's the telltale sign of a fake?

The stitching. For me, it's the stitching. I can really tell if I see like something off on this, on that. There's blind stamps that Hermès puts on the bags that are, if they're, if they're put in the wrong place, somebody that will know is, will really understand authenticity will be able to tell right away. Sometimes you can smell a fake. You can do all sorts of things to be able to detect them. Again, I'm not an authenticator. However, we do have them on staff and with the partners that we work with, but they're just getting better and better.

What's a blind stamp? It's like an invisible stamp. Yeah.

I also think that there's going to be an interesting digital passport situation happening in Europe with Hermès. Chanel has already implemented it where I think by '28 or '29, every single consumer good that's coming out of Europe will need a digital passport to prove authenticity.

What does that mean? Like a token?

That's a good question. I mean, you know, yeah, it's It's, it's, it's, it's, is it invasive? Is it non-invasive? Chanel has a card that goes with the bag, but Hermès so far hasn't done or said anything about this. So we'll see what, what, what they're going to have to do. They're going to have to comply somehow, but I don't really know how they're going to do it.

I mean, when Liberation Day came around, there were a bunch of videos from China in particular saying that they make the Birkins and they would sell directly to a consumer.

Did you see that? Yeah, but all, all Birkins and Kellys are made in France. Nothing is made out of France.

And so all because they look so believable, these people that were like, they tell you that it's made in France, but really it's made here. No way. No, no, no validity.

There's no way. No, no. I mean, I think I would recommend that you listen to the Acquired podcast on Hermès. It's a 4-hour deep dive. It's fascinating what Hermès has done and how they continue to grow. They've been around for 188 years and this manufactured scarcity around those two bags styles has been unbelievable.

And if you buy a Birkin or, you know, buy a secondhand Birkin, how liquid is the next market, whether it's second or third?

It's pretty liquid. It's for a Birkin or Kelly, especially in the desired styles and colors. It's pretty liquid. I would say it depends on sort of what's going on in the market. In the secondary market, but we sell probably about 3 to 4 bags a week. So, you know, technically a bag should sell every 48 hours. So it's relatively liquid. However, there's a lot of friction if you're a consumer trying to sell a bag, as we just talked about.

That makes sense. And where would the best options be if you're trying to go to a secondary market and not get screwed on the fees?

It's tough. I mean, there are so many resellers and they'll all give you some, some kind of a deal. I would say don't settle for anything under 15% if you— for a Birkin or Kelly. In other words, don't pay— sorry, don't pay more than 15% commission on it.

But what I found out is that that commission's negotiable too.

Yeah, 100%. But they usually won't go below 15%. We do— we get like— it took— even with the first institutional check here, and we basically get 10, 5 to 10%. It's hard. It's hard to get the commissions because it's, it's how these guys are making their money, the resale platform.

Well, so let's dig more into Lexus and how to get exposure into the asset class without actually buying the Birkin itself. Can you explain how and why you started the first ever Hermès dedicated investment fund?

Sure. So I'm a longtime private equity and hedge fund executive. I'm a lawyer. I did fund formation for years at Shilte Roth. I worked with Citadel and Lone Pine and those guys when they came out. And then I had— I headed product development and structuring at Blackstone in the hedge fund group for close to a decade. And afterwards I left and worked with a bunch of credit guys. But in the, in the time that I did that, I started collecting jewelry. And I really love the Los Angeles jewelry designers, Anita Ko specifically. I was one of her first clients. And I always wanted jewelry at least to get sort of the treatment of an investment versus just a consumer good that people wore around. But I left it, went back to hedge funds, and during COVID during the pandemic, someone sent me a prospectus for art, for fractional investment in art, in a Basquiat. And I was like, I can do a way better job structuring this than they have, and I've been doing this my entire life. So I started Luxys in 2021. It was when venture financing was flowing and crypto and NFTs and metaverse were all the rage, but it was never really comfortable for me.

I really like the world of accredited investors and qualified purchasers. I, I liked the institutionality of it all. So I always try to create those investment opportunities around institutional concepts. So we got Christie's on our cap table, Christie's Ventures. They are sort of the number one auction house in my opinion. Uh, and, uh, it was really, really great having them on board. And I said, why don't we create investment opportunities communities, fractional investments at first, but then we quickly pivoted to buy side, to fund investments. And we started with gems and jewelry, fancy color diamonds at first. And then we found really great product market fit with family offices. And my thesis was always that the investor and the collector are the same person. So you've gotta treat them the same way. And I had spent so many years doing investor relations and worked with investors. but now I was also able to see them from the collecting side too. So you've got many hedge fund managers who are, have art collectors or car collectors or wine collectors. And I said, wouldn't it be cool if we figured out a way to kind of combine this?

And we started doing experience around all of, uh, cuz you can really experience luxury, right? You can drink the wine, you can drive the car, you can touch the Birkin technically. And that category just kind of skyrocketed. I ended up wanting to do Hermès when Trump was elected, literally the week of— so November 2024. And I had just listened to the Acquired podcast, which was brilliant. And I'd known Hermès for 20 years and I was like, you know what, in this kind of an economy, the only thing that's going to do well is gold. And I'm in the world of luxury. We're venture-backed, we have Christie's, we have a lot of hedge fund money. So what's going to be the one asset class that I think is going to do well in this economy? Our mess. So put our head down, did a lot of R&D, and we launched a proof of concept product for $1 million in May of 2025. So last year, and we worked with a reseller in the, in the, in the space, and we bought and, and immediately sold a whole bunch of Birkins and Kellys. At the time, it was just new in the box.

And I know you're gonna ask, how do you source?

And I mean, I'll tell you that, but, but, uh, where do you store them? Where are these?

They're all in New York. They're all in, in, in the showrooms of the resellers. So they're all in insurance, in temperature-controlled safes and vaults. And it was a huge hit. I mean, people really loved it. We started doing experiences in the Hamptons and in the city educating women about financial literacy, but also explaining the history of Hermes, because a lot of people just don't know it. And because the company's been really, really opaque, publicly listed, but it's very, very, very difficult to get any information out of them. Uh, the stock is very expensive and, but they're running great numbers. I mean, they were up 10% in 2025 and it's just, it's an incredible story. Uh, so we launched the second share class, if you will, uh, for $2 million. And I did a little bit of press just so that we could get the bag sold because for us, the thesis is the spread. It's not necessarily the appreciation in the secondary market. It's, We buy low, we sell high. So how are we able to get these bags at really great prices, market them, figure out who the right exit channels are, and then exit the bags and immediately buy new bags and then continue the turnover period just like stocks or commodities or anything else.

So that's the story of the fund. And so we launched a $2 million share class last year for a total of $3 million. It's up on deployed capital. Both funds are up 26% net, 35% gross, and we're launching Fund 3 in the summer for $10 million. So these are tiny dollars to you, but in this kind of a strategy, it's a lot of money.

That's not tiny dollars to me. Those are many dollars to me. But then how does somebody invest in that fund?

Just like you would invest in any private fund. We have an administrator. You get— you sign a subscription document, It's open only to accredited investors and it's a high minimum investment. It's $100,000 that we're probably going to raise to $250,000 because there's so much demand. So it's been great to kind of see demand for something other than a data center. But, you know, here we are. And then, you know, what we do is we buy the bags and then we immediately list them on Sotheby's, on The RealReal, on 1stdibs. EBay, and they sell.

So you don't actually ever take possession of them. You say they're at these secondary retailers.

So, you know, we do take— I mean, they're owned, it's their portfolio. So we own them. They get bought from all over the world. But really, the first couple of— were the first two funds were in the US only. They're shipped to New York. They are authenticated. They're inspected. They're cataloged. They're all being photographed. They are the star of the show. And then they're uploaded to all the different marketplaces. And Shopify has made life a lot easier for the resale world. And so they are cross-listed on a bunch of platforms, and they also make their way to a bunch of events. They'll be here at Milken. At least 10 or 15 of the bags will be.

They're on tour.

They're on tour. We're also, we're also generating passive income with them by renting them out to the movie studios around here.

And be careful.

No, no, well, those— only the pre-owned, the pre-owned ones.

Oh, I see, I see.

Yeah.

So being an accredited investor just basically means you self-attest that you have a certain amount of money, which is what, $200,000?

$200,000 person, and I think $300,000 couple.

And basically it's, you know, a self-attestation. You should tell the truth and it shows that you are comfortable with this level of risk and that you would be okay if you lost all of this money, essentially. Yes.

And we also screen people. I mean, this is still an emerging asset class, so we want to make sure that everybody that's invested is really aware of the risks. And there are many. I mean, this is, you know, technically illiquid. The authenticity risk is real. You have counterparty risk with the resellers, believe it or not. So, so we wanna make sure that everyone who is invested is really part of the LP community that enjoys, you know, both making money and spending it and also experiencing it.

So regular people can't invest, or have you allowed like an SPV, which is a—

so far, no. So far it's been family offices and ultra high net worth.

Um, let the people in, Donna.

Yeah.

Let the ladies in.

We're still small. We're a small little—

one day.

Yeah. One day.

But, you know, a year ago, a lot of people started arguing that investing in Tesla was like a proxy. You got exposure to Elon's private companies, you know, whether it was The Boring Company or Neuralink or, you know, XAI at the time. Is buying a Birkin like a proxy for investing in Hermès or—

No, because Hermès does trade at a 40— like, well, now it's 43x premium, so it's expensive.

Buy just the stock.

The stock, it's, it's listed on Euronext. I want to say that it's about €1,800 a share, but it's, it's, it's down 20% this year. So if you do want to invest in Hermes, the company, this is a good time to buy.

It's on sale.

I mean, the equity, right? The equity is stuck. Yeah, because of the war.

How would your fund relate to the price of the stock, if at all?

It's not really correlated because ours are physical assets and we actively manage them, just like a real estate manager would actively manage a real estate fund. We, you know, buy very intentionally, uh, the styles and the colors and the conditions that I know, we know people want. We use data to verify all of this. We're gonna be actually the first fund to work with Knight Frank on the handbag, the luxury handbag report that's coming out April 23rd. Yeah. So we're creating a whole market, a brand new asset class. We're defining it, you know, so when we buy the bags, First of all, the price has to be right. The styles have to be right. The conditions have to be right. And then we also carefully manage the exit. So is this the right bag for Sotheby's and their clients? Is it the right bag for eBay and the live selling stream? Is it right for— we just partnered with Julian's Auctions on Gwyneth Paltrow's auction, and we sourced the same bag that Margot Tanenbaum had. So, you know, trying to create narratives and storytelling around an investment, but also a consumer good at the same time.

I mean, vast majority of people aren't able to buy a Birkin outright. You talked about this idea of fractionalizing art, and that's become, you know, of course, very popular over the years. If somebody wants to go in together, as this trend has happened more aggressively with real estate and the real estate market, like going in with friends to co-buy a Birkin, Would you suggest?

Yeah, I mean, you could. It's how would you get it though, and at what price? That's the issue. You're not going to get it from Hermès. So, you know, you would have to go to the secondary market, pay their 35% premium or whatever they want to impose on it, and then hope that you can resell it for a price even higher than that. So it's just margin upon margin upon margin. So you really have to be careful because The acquisition price really matters here, and that's really how you're gonna make the money. And for us, it's the most important part of the thesis is at what price do we get in and how can we secure it at scale?

So how do you buy low, or is this the same?

Well, we're the first institutional check, so we have to tap into a whole lot of private network dealers on WhatsApp that have been doing this for the last 10, 15 years.

On WhatsApp?

We don't do it. We don't, yeah, we don't do it directly, but We work with the resellers. We have partners both on the acquisition side and the disposition side who have been cultivating buying networks for years now. I mean, literally for 10, 15 years and are able to buy the bags, uh, either new in the box or pre-owned or whatever. And we then buy them, we store them, we photograph them, and then we sell them right away.

So this is not a like try it at home. No situation.

No, no, no, no, no. A lot of work goes into this. Every bag, we have 80 bags now between Fund One and Fund Two. We'll have 800 by the end of the year. Every single bag and every purchase we make has to have an intentional exit. It's a lot.

So for someone who's a complete newbie investor, can you talk more to the idea that luxury— you mentioned it briefly earlier, uh, is uncorrelated with the stock market? So we see, and you mentioned the war right now, and the stock market is in the pooper, But luxury, not necessarily Hermès stock, but the private market is still holding. Why does that happen?

Well, I mentioned the K-shaped economy before, but luxury also is, first of all, the experience economy's taken off big time and the luxury companies have leaned into it quite, quite, and that's paid off. But luxury's also coming off of a little bit of a slump for them. LVMH has been under a lot of pressure. Kering, which is the owner of Gucci, has been under a lot of pressure. And I think because during COVID there was this push to democratize and to have these entry points in luxury for the people that weren't exactly more aspirational than super, super ultra high net worth. And that's backfired. You can't be all things to all people. The luxury companies that have done really well are Richemont, which is the, the owner of Cartier and Van Cleef, Prada, which now owns Versace, but also Miu Miu. Miu Miu has done really, really well. And Hermès, Hermès actually has done really well compared to LVMH and caring, but they're all starting to— they all bet big on the Middle East. They built stores there. The Dubai Mall, as I'm sure you know, is one of the largest malls, if not the largest mall in the world.

And there's no tourism there right now. And so their big growth plans— and we listened to all the quarterly calls that happened right before the war started— the biggest plans were to expand in Dubai and Abu Dhabi and Riyadh, and all that's been scrapped. So the equities have taken quite a hit.

So it's uncorrelated to the overall stock market.

Yeah, I mean, it— again, it depends. The single brand, the single name brands like Brunello Cucinelli, Prada, Richemont, even though that's really 3 brands, have done really well because they've just focused only on the ultra high net worth. It's the, it's the, the luxury equity names that have tried to become aspirational, like LVMH, Louis Vuitton, and Kering. That have taken more of a hit.

Coach.

Coach. Well, Coach, yeah.

If you're getting the bag, it's not an actual hedge in the intrinsic value, right? Like, you have a beautiful Birkin on the floor right now, a red Birkin. Like, the, the value of that material is manufactured scarcity.

Yeah, it's not—

there's like, unless it's gold, made out of gold.

Yeah, but it's not. Yeah, it's not, it's not a, it's not a precious metal. It's not a scarce diamond. It's just manufactured scarcity, but it is a Birkin or a Kelly. That's why we, for the funds, we had to really narrowly define the category. That's important. You can't really go outside this narrow definition because it just applies to these two styles, the Birkin and the Kelly. Can't even get an Evelyn. An Evelyn is another bag, a Constance. It's another Hermès bag. Those are not quota bags. And so this is manufactured scarcity. It's completely imposed by Hermès via its store policy. And that's really what we're leveraging.

And you don't think that manufactured scarcity ever goes away?

I don't think it'll go away in the next, I would say, 5 to 10 years. And at that point, we'll already expand because what we're doing right now is we're still a wealth— we're a wealth tech company. So what we're doing is we're just doing Hermès first and then we're going to move over to watches, to wines and spirits, to jewelry. So we're just testing these. This thesis out now and then moving on to other categories in a horizontal integration. I don't think Hermès is going to change its— it hasn't changed its policy in 47 years since the Birkin was created. I don't think it's going to change it anytime soon.

So Gen Z, Gen Alpha, typically they don't love the labels as much. But what you see on social media is that They love a Birkin. They still love a Birkin.

But their entry point isn't Hermès anymore. It's, it's The RealReal, it's eBay, it's First Dibs. It's— that's not their entry point. And I think that's going to be a really interesting thing to watch because the people who are the Hermès clients are the Gen X and the boomers. And I'm not sure how well-cultivated the Gen Z and the millennials and the Gen Alpha community is.

Well, there's a big wealth transfer. On the horizon. A lot of Gen Z will be getting a bunch of bags, no doubt. So can we— if you're gonna continue to go horizontal across luxury, will you just rate these asset classes for us? So watches, 1 to 10, good investment?

The crypto market interfered with watches because so many crypto bros bought watches, and then when FTX happened and they lost all their money, they sold them. So it caused the watch market to kind plummet a little. Rolex especially was hit, but I still think it's a— if you narrowly define the category, it's a good investment. Uh, it just depends what watch.

So a 7.

7. Yeah. Art, again, post-war contemporary is like a 9, and then I would say other genres are more a 5 or a 4. The art market's coming out of a little bit of a slump now also, but it's, it's always— blue chip art's always going to do really, really well.

Wine.

Wine's in like a 2 or 3 because Gen Al— Gen Z, Gen Alpha, and the younger folks aren't drinking. So the sales have gotten very, very, very tepid and there's a lot of inventory sitting out there. I love my Château Margaux personally, so to me it's gonna be a passion project that I'm definitely, definitely doing a wine fund. But you also, the introduction of GLP drugs also has made people not wanna drink as much. So the beverage industry has been hit. And I think that's one of the reasons you see LVMH's stock struggle is because so much of it is spirits and beverages.

Yeah, wine has always been a weird one.

Yeah.

When I was at CNBC, I did like an alternative investment series and the wine one was— there's a Vinfolio, as you know, like an index that tracks it.

I have not looked at the Vinfolio recently, but it's really taken a big hit. Like it's— yeah, I'm sure it's taken a big hit. So anyway, we'll see.

Okay. What about jewelry, which is where jewelry I love?

I mean, it's my, it's my, it's my passion. I think vintage jewelry from the '30s and the '40s, Cartier, Bulgari, Van Cleef, will always do really, really well. Collectors love that and they flock to it. I think newer jewelry has been also in a weird situation because of the price of gold and silver and the volatility within that. So when you're trying to make a piece of jewelry and you're Anita Ko or Irene Neuwirth or Jessica McCormick. One day it'll be too expensive to create a piece and the next day the price will like plummet. So I think the volatility of precious metals has really kind of rocked that world, but it's still a 9 out of 10 for me. So if somebody is thinking about investing in the stock market or getting a Birkin, I still think that it depends when in the stock market, but I still think getting a Birkin, if you can get it from Hermès, At retail, you always get the Birkin.

How do you win a relationship with your significant other over this? What do you say from an investment standpoint? Give the ladies a tip.

Yeah, give the— I mean, listen, it's, it's a, it's something that you're going to have forever and ever. You will pass it down to your kids, to your grandkids. The same styles that were selling out so well 20 years ago when I got my Carolyn Bessette one are the ones selling out the best now. So it never goes out of style. It's not trendy. It's institutional. The other brands are— I'm a Celine girl personally. Also, I love Celine, but I do think that Hermès is just timeless. There's— it's just— it's always going to be there.

Donna, we end our episodes by asking all of our guests for a tip that listeners can take straight to the bank. What would you leave them with?

The financial literacy for women piece. I think it's so important for women to own their story and to own the narrative and to be able to invest in equities and credit and alternatives. And really figure out how to navigate the financial advisory relationships and their asset managers. And I've been talking to so many women who are doing this, and to me it's become sort of a passion project and really important. So seek, seek out all financial literacy programs for women and become the master of your own story.

That's right. Buy your own Birkin. You don't need to convince somebody else.

Yeah.