#112 Yieldstreet: Building the Alternative Investment Platform of the Future Across Income, Equity, and Real Estate | Milind Mehere, Co-Founder & CEO

About Yieldstreet

“I think we talk a lot about spending; we should talk an equal amount about earning.” – Milind Mehere

Milind Mehere is co-founder and CEO of Yieldstreet. Yieldstreet was founded in 2014, and over the last eight years has built one of the largest private investment platforms in the world. To date, they've brought on over 377,000 members to invest more than $1.5 billion, and they've paid out over $196 million in interest on income producing investments alone, not including principle. What started out as a far-fetched idea in 2014 to build one of the world's first private market investment platforms, initially focused around producing income investments like credit, hence the name Yieldstreet, has become one of the largest investment platforms in the world alongside companies like AngelList and Republic.

In this episode, we explore why alpha has evaporated from public markets with the rise of indexing, ETFs, and automated investment strategies over the last 20 years, why private equity, venture capital, real estate and private credit have exploded in that same timeframe, why the classic 60/40 portfolio is dead and how investors should rethink their approach to investing across public and private markets going forward. We also discuss how Yieldstreet built one of the world's largest investment platforms, bringing on investment managers and investors at the same time, and why Yieldstreet's focus has been on building what they call distribution infrastructure for investing. Finally, we cover why Yieldstreet built a horizontal business straddling many smaller verticals instead of focusing on just one aspect of private markets. This episode is our definitive guide to private markets and building a private market investment platform.

For more, explore the transcript of this episode.

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Chapters

This episode is our definitive guide to private markets and building a private market investment platform. In it we cover:

00:00:00 – Introduction
00:02:22 – From tech entrepreneur to creating an investment platform
00:08:44 – The entrepreneurial spirit
00:12:07 – How public markets have shifted, and why you should invest in private markets
00:16:09 – Changes in consumer behavior that affect how we should invest
00:20:30 – Recommendations on how to allocate your investment portfolio
00:23:07 – Building a rolling portfolio of liquidity
00:27:06 – Retail investors and a generational wealth transfer
00:31:55 – The investment environment in Yieldstreet’s early stages
00:35:43 – How an ongoing bet between co-founders propelled Yieldstreet forward
00:37:41 – The extreme need for trust and credibility in money management
00:41:43 – Distribution infrastructure and a two-sided marketplace in Yieldstreet
00:51:36 – Founders: learn from feedback, find the right team, and be well-capitalized

Listen to the episode on Apple Podcasts, Spotify, Overcast, Google Podcasts, Amazon Music, Castbox, Pocket Casts, Player FM, Podcast Addict, iHeartRadio, or on your favorite podcast platform. You can watch the interview on YouTube here.

Our Favorite Quotes

Here are a few ideas we'll be thinking about weeks and months from now:

“Our belief is that by 2025, consumers should have at least 25% in private market allocation. Whether it's 20, 25, 30%, that really depends on who you are as a consumer, but if you apply that, then you're 60/40 naturally has to change to 45/25/25 or something like that.”
“It's like we all live in this world of instant gratification, and so in some ways, startups kind of give you that dopamine of – you can actually have an impact. The things that you think about, you could translate very quickly. And of course that's the good part. Obviously there are lots of dark days and stressful days, but that's what gets me coming back to it.”
“I think we are sitting on a generational wealth transfer. So $60 trillion is going to be transferred from baby boomers to generation X, Y, Z. People who are older than 55 are going to transfer $60 trillion to people between 20 and 55. So all of us are going to be recipients of that.”
“That's the beauty of two-sided marketplace. You've got to keep supply and demand in balance to ensure that you're bringing the right product to market.”
“If you're in money management, wealth management, there is an extreme need for trust and credibility.”
“I don't believe in MVPs, but I believe in something called MEPs: Most Effective Product. Most viable product means that, hey, I can cut corners, I just want to get something out. Effective – is it effective in the marketplace?”
“You have to take the product to the market quickly so that you can actually get real user feedback.”

5 Ways to Dive Deeper

Building a $6B Hedge Fund in Crypto with Joey Krug of Pantera Capital on Outlier Academy: Joey Krug is Co-CIO at Pantera Capital and Cofounder at Augur and Eco. In this episode, Joey and Daniel discuss investing in volatile markets, perspectives on risk, and the future of prediction markets. (53 Min)
Public to Private Equity in the United States: A Long-Term Look: This white paper from Morgan Stanley covers the shift in U.S. equities from public to private markets. (2.5 Hr)
McKinsey’s Private Markets Annual Review: This annual paper from McKinsey covers private equity, real estate, debt, infrastructure, and natural resources. (31 Min)
Investing in Private Markets: This is a great guide to investing in private markets, including some perspectives on questions such as “How much should one invest in the private markets?”—to which their answer is at least 5-10% of your overall portfolio. (15 Min)‍
Capital Allocators: How the world’s elite money managers lead and invest by Ted Seides: This book by the founder and host of the Capital Allocators podcast explains how “the world’s elite money managers lead and invest across public and private markets.” (4 Hr 46 in Min)