WEBVTT - Facebook Is Real Business, But Google Is Better For Ad Exposure 0:00:05.800 --> 0:00:08.360 Welcome to the Bloomberg P and L Podcast. I'm Pim 0:00:08.400 --> 0:00:11.440 Fox along with my co host Lisa Abramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg P and 0:00:20.680 --> 0:00:32.519 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:32.520 --> 0:00:36.360 The shares of Facebook, they continue their decline to about 0:00:36.360 --> 0:00:40.360 a hundred and seventy five dollars right now. That drop 0:00:40.400 --> 0:00:44.320 being reflected because of the poor report that the company 0:00:44.360 --> 0:00:47.680 gave after the close of trading yesterday, surprising many analysts 0:00:47.760 --> 0:00:50.680 joining us now. Colin gillis Director of Research at Chatham 0:00:50.880 --> 0:00:55.920 Road Partners. Colin gillis always a pleasure if someone said 0:00:55.960 --> 0:00:59.160 to you, gee, I'm an analyst who covers Facebook and 0:00:59.200 --> 0:01:03.000 I just got by what they reported. What are you 0:01:03.120 --> 0:01:08.560 feeling right now? It's a painful day to watch Facebook shares, 0:01:08.959 --> 0:01:11.640 but a little bit of perspective is needed. Right the 0:01:12.000 --> 0:01:14.040 shares are just back to the level they were at 0:01:14.080 --> 0:01:16.840 in May. We knew that Facebook was going to be 0:01:16.840 --> 0:01:19.840 continuing to invest in security. We knew there's gonna be 0:01:19.880 --> 0:01:22.640 some concerns around the g d p R, right, the 0:01:22.680 --> 0:01:26.840 General Data Protection Regulation that's happening in Europe. So the 0:01:26.920 --> 0:01:31.520 magnitude of the pullback is severe. But this is still 0:01:31.560 --> 0:01:33.840 a real company, and it's still a real business, and 0:01:33.880 --> 0:01:37.160 it's still in an area where we're gonna see material growth. Alright. 0:01:37.200 --> 0:01:41.440 So Colin, is this a buying opportunity? You know it is. 0:01:41.800 --> 0:01:44.520 But what I always tell people is, if you're looking 0:01:44.520 --> 0:01:47.800 at the space right and you want to have exposure 0:01:47.840 --> 0:01:52.400 to know Internet advertising, why not just own Alphabet You've 0:01:52.400 --> 0:01:55.720 got a very similar type of company, the same revenue stream, 0:01:56.000 --> 0:01:58.520 but you've got a more diversified suite of services, right, 0:01:58.520 --> 0:02:02.920 you know, Alphabet a A Google has eight platforms with 0:02:03.040 --> 0:02:08.120 a billion users, right, whether it's Gmail, Chrome, Maps, YouTube, Android, 0:02:08.240 --> 0:02:11.160 the play Store, and Google Drive. So they have a 0:02:11.240 --> 0:02:15.160 much broader diversity of products, whereas Facebook really just has 0:02:15.720 --> 0:02:19.680 their core platform and Facebook and to a separate degree, Instagram. 0:02:20.400 --> 0:02:22.840 When does the bleeding stop in terms of the stocks 0:02:22.880 --> 0:02:25.720 sell off at Facebook? Do you believe right that that 0:02:25.720 --> 0:02:28.280 that's the number one question that's being asked, and you 0:02:28.320 --> 0:02:31.200 know it's gonna take several days to shake out. Um, 0:02:31.280 --> 0:02:34.200 you know, the concern is the forward guidance. Right, we 0:02:34.280 --> 0:02:36.920 are going to see revenue decelerate and we are going 0:02:36.960 --> 0:02:39.440 to see expenses likely to tick up, but it may 0:02:39.480 --> 0:02:42.520 not be as bad as people are expecting. So, just 0:02:42.680 --> 0:02:45.680 like what we saw with the March quarter results, right 0:02:45.720 --> 0:02:48.799 where people were expecting the worst, it didn't come in 0:02:48.880 --> 0:02:50.880 quite as bad. And that's why they bit it back 0:02:50.960 --> 0:02:53.600 up to these record levels. You know, let's let it 0:02:53.720 --> 0:02:57.040 settle down for a little bit. I do think that 0:02:57.440 --> 0:03:00.280 Facebook is a real business. I think the advertise users 0:03:00.320 --> 0:03:02.680 are not going to disappear, and I do think that 0:03:02.760 --> 0:03:04.919 people are still going to continue to use it. Right, 0:03:05.440 --> 0:03:08.720 there is some saturation that's happening. They have total about 0:03:08.720 --> 0:03:11.560 two and a half billion users across all their platforms. 0:03:11.639 --> 0:03:14.720 There's only three billion people who have access to the internet. Okay, 0:03:14.880 --> 0:03:17.680 but Colin, you know some people could say, as you said, 0:03:18.080 --> 0:03:20.880 this is a real business. They still can count more 0:03:20.880 --> 0:03:24.280 than two billion people. You know, this is a huge 0:03:24.280 --> 0:03:28.840 proportion of the globe that uses the platform. So perhaps 0:03:28.840 --> 0:03:32.560 the flaw lies with the management, the executives who didn't 0:03:32.840 --> 0:03:36.320 guide the market better, who didn't basically indicate, look, things 0:03:36.360 --> 0:03:39.720 are slowing down, just hold your horses and and sort 0:03:39.720 --> 0:03:42.920 of and provide better expectations for what's to come in 0:03:42.960 --> 0:03:45.320 real time. Yeah, you could say that, and you could 0:03:45.360 --> 0:03:47.920 also say that they did try to, you know, give 0:03:48.000 --> 0:03:51.119 certain signals right that that this was was coming um 0:03:51.160 --> 0:03:52.960 and that the market did not pay any attention to 0:03:52.960 --> 0:03:55.160 those signals, right, And that's why we're getting the reset 0:03:55.200 --> 0:03:59.600 that's happening today. Colin tell us about Amazon, Right, So, Alexa, 0:03:59.720 --> 0:04:03.800 which company will become the trillion market cap first? And 0:04:03.840 --> 0:04:07.000 we're going to find that out today after Amazon print. 0:04:07.320 --> 0:04:10.839 And you know, Amazon is one of these companies that 0:04:11.000 --> 0:04:14.280 has built this incredible ecosystem right around their their prime 0:04:14.320 --> 0:04:18.200 member systems, and it is a strong contender to become 0:04:18.600 --> 0:04:20.800 the first company to rease that trillion dollar market cap. 0:04:20.880 --> 0:04:26.599 So again, an unbelievable run into this earnings print today, right. Uh, 0:04:26.640 --> 0:04:29.719 you know, we're looking at something a fifty year to date, 0:04:29.960 --> 0:04:32.440 So I wouldn't be necessarily surprised if there is, you know, 0:04:32.640 --> 0:04:35.359 as a hiccup because expectations are so strong. But that 0:04:35.440 --> 0:04:38.359 being said, for the for the longer term, for the 0:04:38.400 --> 0:04:42.560 longer term view, Amazon is an incredible opportunity to own. 0:04:42.760 --> 0:04:45.720 So Amazon is sort of this interesting company because they 0:04:45.760 --> 0:04:51.200 don't see incredible margins, they actually aren't as profitable as 0:04:51.279 --> 0:04:54.520 their dominance would suggest, because that's their whole business model, right, 0:04:54.560 --> 0:04:57.760 basically to offer the lowest price uh in order for 0:04:58.240 --> 0:05:01.680 bigger market share. So what two investors have to see 0:05:01.960 --> 0:05:04.920 to keep that going to the one trillion to our valuation, right, 0:05:05.000 --> 0:05:07.479 And what they do is is it's the degree of 0:05:07.640 --> 0:05:12.520 leverage that is baked into that Amazon business model. And 0:05:12.520 --> 0:05:14.840 when when you look, when you play around and you see, 0:05:15.120 --> 0:05:19.720 you know what a small decrease in marketing spend UM 0:05:19.880 --> 0:05:22.479 or you know some improvement in shipping costs or you 0:05:22.480 --> 0:05:25.960 know a tick up UH in in AWS. Right. You 0:05:26.000 --> 0:05:30.159 know services that UM are not physical goods, right, but 0:05:30.279 --> 0:05:33.200 more digital goods. Right. That's the area where people want 0:05:33.200 --> 0:05:36.200 to be focusing in on to to to see that profitability. 0:05:36.400 --> 0:05:38.880 And quite honestly, right, you know they've run the core 0:05:38.920 --> 0:05:41.320 business at break even, right. All the profit is coming 0:05:41.320 --> 0:05:44.360 from AWS to to get that market share. But you've 0:05:44.360 --> 0:05:49.200 got one million prime customers. They are winning the entire 0:05:49.240 --> 0:05:55.040 retail battle, and um, that profitability will come just quickly. Colin, 0:05:56.000 --> 0:05:57.960 is there any other company that you need to own 0:05:58.000 --> 0:06:02.880 other than Amazon and Alphabet? It wouldn't be Apple in 0:06:03.160 --> 0:06:05.479 my mind right, you know, certainly you know Apple prints 0:06:05.520 --> 0:06:09.360 next week. Um, they're lagging so far behind in my view. 0:06:09.640 --> 0:06:12.520 You know, there's the thesis is is that services will 0:06:12.560 --> 0:06:16.080 will make up for a saturated smartphone marketplace. But I 0:06:16.120 --> 0:06:19.600 don't see Apple having the chops in AI. I see 0:06:19.600 --> 0:06:23.440 Siri lagging behind Alexa and Google, and so I'd be 0:06:23.440 --> 0:06:25.919 concerned about that. Colin Gillis, thank you so much for 0:06:26.040 --> 0:06:28.800 joining us today. Colin Gillis is director of research at 0:06:28.839 --> 0:06:43.080 See our partners take a look at small and mid 0:06:43.120 --> 0:06:46.560 cap stocks with Davils and Blubertocks editor, columnist and blogger 0:06:46.560 --> 0:06:49.880 at M Live. Go on the Bloomberg. The Russell two 0:06:49.920 --> 0:06:53.840 thousand is up, even though you are seeing some turbulence 0:06:53.880 --> 0:06:57.440 in the broader indices. Oh, absolutely, Lisa, and the Russell's 0:06:57.480 --> 0:07:00.360 gain amounts to nine tents of a percent, quite a 0:07:00.360 --> 0:07:03.600 contrast with the SMP five hundred, which is lower by 0:07:03.640 --> 0:07:07.080 a tenth of a percent. The Russell's sharpest game by 0:07:07.120 --> 0:07:11.280 far belongs to Supervalue, whose ticker is s VU. The 0:07:11.360 --> 0:07:17.000 grocery wholesaler and supermarket owner has risen sixty four and 0:07:17.080 --> 0:07:20.160 a half percent after agree to a two point nine 0:07:20.160 --> 0:07:23.600 billion dollar takeover by United Natural Foods No Supervalue, had 0:07:23.600 --> 0:07:26.880 been under pressure from activist investor Blackwell's Capital to consider 0:07:26.880 --> 0:07:32.120 a sale United National Their ticker U and f I. 0:07:32.200 --> 0:07:35.200 That stock has one of the Russell's biggest losses in 0:07:35.320 --> 0:07:39.640 response to the deal. It's down thirteen and a half percent. Now. 0:07:40.160 --> 0:07:44.040 Another stock lifting the index is Annika Therapeutics tooker a 0:07:44.360 --> 0:07:47.960 n i K, the maker of orthopedic products, is up 0:07:48.000 --> 0:07:52.240 twenty two percent. Anaka's second quarter earnings were more than 0:07:52.320 --> 0:07:55.480 twice analyst average estmate in the Blueberg survey, and sales 0:07:55.520 --> 0:07:57.960 beat projections. And you've got an even bigger gain in 0:07:58.080 --> 0:08:00.880 John Bean Technologies ticker j A b T. It's up 0:08:00.920 --> 0:08:05.200 almost twenty five The food and beverage technology company posts 0:08:05.200 --> 0:08:07.880 a second quarter profit in revenue. Of the top Deestmates 0:08:07.920 --> 0:08:11.960 and UH, the Russell's steepest decline belongs to l s 0:08:12.120 --> 0:08:15.360 B Industries ticker l x U, the chemical companies, down 0:08:15.800 --> 0:08:19.080 fourteen and a half percent. LSB had a wider second 0:08:19.120 --> 0:08:23.239 quarter loss than analysts expected. Thank you very much, Dave Wilson. 0:08:23.280 --> 0:08:25.560 Remember to send Dave an email at d Wilson at 0:08:25.600 --> 0:08:27.960 Bloomberg dot net to sign up for his daily free 0:08:28.040 --> 0:08:31.280 email newsletter. Well, you know, Lisa, we've been talking on 0:08:31.320 --> 0:08:34.480 a regular basis about the high cost of real estate 0:08:34.520 --> 0:08:38.680 in places such as Seattle, Silicon Valley as well as Austin, Texas. 0:08:39.520 --> 0:08:43.280 But it appears that there might be a slowdown on 0:08:43.320 --> 0:08:45.240 the way. And here to tell us more about it 0:08:45.280 --> 0:08:49.480 is Pressant Gopal, us real estate reporter from Bloomberg News, 0:08:49.960 --> 0:08:53.120 joining us from our one oh six one Boston Newberry 0:08:53.559 --> 0:08:57.440 Studios in Boston. And you can follow Pressant on Twitter 0:08:57.600 --> 0:09:02.480 at Mr Gopal and are god Paul? Alright? Mr Gopaul? 0:09:03.120 --> 0:09:06.760 Tell us about the potential slowdown in these pretty hot 0:09:06.800 --> 0:09:09.920 real estate areas well. I guess you could say it 0:09:10.000 --> 0:09:12.800 was bound to happen, right, So, prices have just been 0:09:13.280 --> 0:09:18.320 um rising at a very rapid pace for for years now. Uh, 0:09:18.360 --> 0:09:22.199 they're out pacing uh income growth. It's, you know, more 0:09:22.240 --> 0:09:25.880 than twice income growth right now. So um, and then 0:09:26.120 --> 0:09:28.920 you throw in the increase in mortgage rates, and you 0:09:28.920 --> 0:09:32.440 could see that people who are stretching can only stretch 0:09:32.480 --> 0:09:36.080 so much. All right, So here's what I'm struggling to understand. 0:09:36.360 --> 0:09:40.160 Mortgage rates haven't gone up that much. Uh, and you 0:09:40.280 --> 0:09:43.319 have seen a dearth of inventory in recent years. That's 0:09:43.320 --> 0:09:46.200 what people say. People aren't actually selling their homes. So 0:09:46.840 --> 0:09:48.960 how is this sort of how do you how do 0:09:49.000 --> 0:09:50.680 you sort of prove that it really is mortgage rates 0:09:50.679 --> 0:09:54.360 that's causing the slowdown. Well, I mean it's it's the 0:09:54.400 --> 0:09:56.959 one thing that has changed. But if you think about it, 0:09:57.120 --> 0:10:00.240 mortgage rates. You know, the prices that we had, you 0:10:00.320 --> 0:10:03.080 had the low mortgage rates baked in so on a 0:10:03.440 --> 0:10:06.160 you know, percentage basis percentage point. You know, if you 0:10:06.160 --> 0:10:08.680 look at the how much mortgage rates increased in terms 0:10:08.720 --> 0:10:12.840 of what it's done to UM monthly payments, it is 0:10:12.880 --> 0:10:18.040 somewhat significant. And then throwing in the uh, these home prices, 0:10:18.440 --> 0:10:20.720 you could you know, people, especially on the bottom end 0:10:20.720 --> 0:10:23.600 where prices are rising the most, UM, are starting to 0:10:23.640 --> 0:10:27.560 feel that, you know, homebuilder today, UM Politic Group just 0:10:27.600 --> 0:10:30.400 had their earnings and they actually, uh, they had a 0:10:30.480 --> 0:10:34.880 drop in orders and UM they blamed the increase in 0:10:34.880 --> 0:10:38.840 in mortgage rates UM and they said it was that 0:10:38.880 --> 0:10:40.959 they were seeing a slowdown, especially with the first time 0:10:40.960 --> 0:10:45.520 buyers pre Shan. We spoke earlier today with Doug Duncan, 0:10:45.720 --> 0:10:49.560 economist at Fannie May. He said houses that have yet 0:10:49.600 --> 0:10:52.839 to be built are already being purchased that you can't 0:10:52.920 --> 0:10:57.360 find a home. What are your thoughts? Uh, Well, you know, 0:10:57.400 --> 0:11:00.400 there's there's some truth to that. So there is a 0:11:00.440 --> 0:11:04.079 real shortage of inventory. So you know, it sounds like 0:11:04.600 --> 0:11:07.200 it conflicts with what I've just been saying. But you know, 0:11:07.320 --> 0:11:11.720 the inventory levels are very low historically. They're just starting 0:11:11.720 --> 0:11:14.679 to rise now from that very low level. So it's 0:11:14.760 --> 0:11:17.520 kind of like, um, you know, maybe we're on the 0:11:17.600 --> 0:11:21.800 cusp of a turning point um where you know, things 0:11:22.040 --> 0:11:26.240 still remain strong, but you know they're they're not uh, 0:11:26.640 --> 0:11:30.520 you know, prices aren't accelerating. Price coross isn't accelerating anymore 0:11:30.520 --> 0:11:34.360 in inventories which have been just dropping um month after 0:11:34.440 --> 0:11:38.480 month or now starting to rise, especially in the UH 0:11:38.520 --> 0:11:41.760 in the hottest markets. So one thing that I think 0:11:42.000 --> 0:11:46.079 is sort of underlying this discrepancy, maybe we could call it, 0:11:46.160 --> 0:11:48.040 is that there seems to be a two tier market, 0:11:48.080 --> 0:11:51.680 which is affordable homes for people who perhaps are first 0:11:51.720 --> 0:11:55.240 time buyers or who are starting families, and homes that 0:11:55.280 --> 0:11:57.880 sell for more than a million dollars and are in 0:11:58.120 --> 0:12:02.120 urban areas um. And that there seems to be plenty 0:12:02.160 --> 0:12:06.479 of the higher end homes for sale, but the inventory 0:12:06.559 --> 0:12:10.160 of lower end homes, isn't there Is that an accurate 0:12:10.200 --> 0:12:13.480 assessment of what's going on. Yeah, you know, it's actually 0:12:13.520 --> 0:12:15.959 even within the markets, right, So if you look at 0:12:16.400 --> 0:12:21.600 some of those price your markets, Uh, there's a shortage 0:12:21.600 --> 0:12:24.679 of starter homes in those markets. Um. You know, there 0:12:24.720 --> 0:12:26.960 may be more expensive homes in the markets, but there 0:12:27.000 --> 0:12:30.439 aren't as many of the entry level homes. And that's 0:12:30.679 --> 0:12:34.600 sort of what's making it really hard for folks to 0:12:34.600 --> 0:12:38.440 get into, um the housing market. Uh. And prices you 0:12:38.480 --> 0:12:40.920 know are rising much faster on the bottom of those markets, 0:12:40.960 --> 0:12:43.240 you know, the lower end homes those persons rising much 0:12:43.280 --> 0:12:46.599 faster than they are for the for the more expensive homes. 0:12:46.600 --> 0:12:48.480 Not just real quick, here are we heading for another 0:12:48.520 --> 0:12:51.840 housing crash? Huh? You know, I wish I had my 0:12:51.880 --> 0:12:56.040 crystal ball, I spend it out. Well, I'm not hearing 0:12:56.080 --> 0:12:57.680 that from a lot of people, so I think a 0:12:57.679 --> 0:13:00.360 lot of at least you know, they were wrong the 0:13:00.440 --> 0:13:03.600 last time, of course, but uh they're saying that, you know, 0:13:03.640 --> 0:13:07.360 we have a still a strong economy, and um, this 0:13:07.440 --> 0:13:10.560 is just all an affordability problem. And if prices actually 0:13:10.640 --> 0:13:14.760 fall a little bit, it actually helps because people will 0:13:14.800 --> 0:13:17.240 be able to get back in you might see more 0:13:17.280 --> 0:13:21.000 sales as a result. Prosianco Paul, thank you so much 0:13:21.040 --> 0:13:22.959 for being with us. Always a pleasure to speak with 0:13:23.000 --> 0:13:25.400 you in your story today on the Bloomberg was really 0:13:25.440 --> 0:13:28.440 good on this issue. Proshanko Poul's US real estate reporter 0:13:28.559 --> 0:13:47.760 for Bloomberg News. Marijuana is a growing business and a 0:13:47.760 --> 0:13:50.680 growing number of professionals are entering the field in a 0:13:50.760 --> 0:13:54.280 host of very traditional ways. And here joining us now 0:13:54.360 --> 0:13:57.920 is Richie Gautam. He's executive chairman of M. Harden Group, 0:13:57.960 --> 0:13:59.720 which is based in Denver. He's here with us in 0:13:59.720 --> 0:14:03.240 our and three studios in New York. RICHI, Um, you 0:14:03.600 --> 0:14:07.080 worked at Goldman Sachs, you managed money with a private office. 0:14:07.160 --> 0:14:09.319 You're at the original investor four years ago with M 0:14:09.360 --> 0:14:14.200 Hardin Group. Why did you get into this business? So 0:14:14.280 --> 0:14:16.400 as an investor, we were attracted to the market four 0:14:16.480 --> 0:14:18.760 years ago. It was such a new market and a 0:14:18.800 --> 0:14:23.000 developing market within the US, and we had an existing 0:14:23.640 --> 0:14:26.000 relationship with one of the founders of M Hardin who 0:14:26.080 --> 0:14:29.280 brought us into uh into the industry to really understand 0:14:29.840 --> 0:14:32.920 the marketplace and how it was so fragmented from state 0:14:32.960 --> 0:14:34.720 by state that we wanted to take advantage of the 0:14:34.720 --> 0:14:37.160 opportunity by creating what is now known as M Martin 0:14:37.240 --> 0:14:41.960 the management company, and the industry being marijuana mostly medical 0:14:42.080 --> 0:14:46.520 or everything predominantly medical. Today it's obviously changing with more 0:14:46.560 --> 0:14:50.800 recreational coming online, but our business today over is focused 0:14:50.840 --> 0:14:53.640 on the medical market. Tell people about your business, what 0:14:53.760 --> 0:14:56.760 actually do you do. M Martin's a management company. So 0:14:56.800 --> 0:14:59.920 we started the business managing cannabis assets on behalf of 0:15:00.040 --> 0:15:02.720 license owners. So anyone who came into the industry and 0:15:02.760 --> 0:15:05.160 got a license, whether it was Colorado or other states, 0:15:05.720 --> 0:15:09.160 frankly didn't have the operational background to run a cannabis asset. Really, 0:15:09.160 --> 0:15:11.480 no one had that background coming into the space in 0:15:11.520 --> 0:15:14.280 the legal framework. So M Hardan set up a management 0:15:14.280 --> 0:15:17.080 company to come in and operate the assets turn key 0:15:17.200 --> 0:15:19.840 on behalf of the license owner. So not too dissimilar 0:15:19.880 --> 0:15:22.840 from a real estate owner hiring a Marriott or Starwood 0:15:22.840 --> 0:15:25.360 to come in with a flag and operate a turnkey hotel. 0:15:25.840 --> 0:15:30.280 So our hotel flag was the original genesis of the business. So, 0:15:30.400 --> 0:15:34.480 for example, you have actual workers that are employed by 0:15:34.680 --> 0:15:38.760 M Hardan that are working in green houses, that are 0:15:38.840 --> 0:15:42.680 working in retail establishments. There's three D sixty two employees 0:15:42.720 --> 0:15:47.240 across the US managing cultivation, processing, and retail facilities and cannabis. 0:15:47.480 --> 0:15:51.880 And for cultivation it's indoor grows, outdoor and greenhouse facilities. 0:15:52.640 --> 0:15:55.720 How big do you think the marijuana industry could become 0:15:55.720 --> 0:15:59.800 in the US if the recreational aspect is legalized? So 0:16:00.040 --> 0:16:02.760 the numbers point to a seven billion or so industry 0:16:02.840 --> 0:16:05.760 size today in the US that's growing to billion over 0:16:05.760 --> 0:16:08.240 the next few years. We also have exposure to Canada, 0:16:08.280 --> 0:16:10.680 which is about a half a billion dollar industry today 0:16:10.680 --> 0:16:14.320 growing to six or seven billion. That growth is really 0:16:14.360 --> 0:16:17.520 predicated by the opening of the recreational market in those 0:16:17.600 --> 0:16:20.560 in those states and jurisdictions. So so long as recreational 0:16:20.680 --> 0:16:22.400 opens up the way that we expect it to, you'll 0:16:22.440 --> 0:16:25.560 have that lift. So one big question is, once you 0:16:25.640 --> 0:16:29.280 do get a legalization, what stops the Philip morris Is 0:16:29.320 --> 0:16:32.680 of the world from plowing right into this field and 0:16:32.800 --> 0:16:37.280 using their vast distribution and cultivation networks to blow everybody 0:16:37.320 --> 0:16:38.920 else out of the water. And what would you say 0:16:38.960 --> 0:16:42.360 to that Philip Morris doesn't grow cannabis, And growing cannabis 0:16:42.400 --> 0:16:45.000 is a real specialty commodity. It takes a lot of 0:16:45.040 --> 0:16:49.520 experience and and efficiencies to bring product to market. So 0:16:49.560 --> 0:16:52.480 many folks outside looking into this space really think it's 0:16:52.520 --> 0:16:55.160 just a plant, you grow it, and really don't put 0:16:55.160 --> 0:16:57.320 a quantum of risk on on what it takes to 0:16:57.360 --> 0:17:00.840 bring product to market. We have mastered that says of 0:17:00.920 --> 0:17:05.400 bringing legal cannabis to the market, passing health standards, optimizing 0:17:05.440 --> 0:17:08.639 space capture, and all of these production facilities. Our business 0:17:08.680 --> 0:17:11.159 has produced and sold. Our license facilities are produced and 0:17:11.200 --> 0:17:14.240 sold over one hundred thousand ms of this product since 0:17:14.280 --> 0:17:16.399 we started. That's a number that no one can match. 0:17:16.960 --> 0:17:21.040 And that includes Philip Moore's. Now you've got the different segments, right, 0:17:21.040 --> 0:17:25.720 you have cultivation, yes, processing, and then ultimate retail sale. 0:17:26.560 --> 0:17:32.520 How do you scientifically or technically offer consistency across all 0:17:32.600 --> 0:17:36.080 that are there testing facilities or like in any kind 0:17:36.160 --> 0:17:38.680 of let's say drug you know from the pharmaceutical industry, 0:17:38.680 --> 0:17:40.520 you want to make sure that what you're buying from 0:17:40.720 --> 0:17:44.520 one pill bottle is the same as you're getting from 0:17:44.520 --> 0:17:46.760 another pill bottle. All right, that's a great question. So 0:17:47.160 --> 0:17:49.560 the genesis of our businesses on the cultivation side, we 0:17:49.600 --> 0:17:52.639 were cultivators first. We we had we bolted on the 0:17:52.680 --> 0:17:55.800 processing expertise, and we bolted on the retail management side 0:17:56.080 --> 0:17:59.640 over the years. Cultivation is the driver of the consistency, 0:18:00.160 --> 0:18:02.959 and our facilities that we've stood up, whether it's in 0:18:03.000 --> 0:18:07.480 Hawaii or in Halifax, have a very standardized approach to operations, 0:18:07.480 --> 0:18:11.719 to production and ultimately the consistency of the product. Folks 0:18:11.800 --> 0:18:13.919 right now have more of a niche approach where you 0:18:13.960 --> 0:18:17.719 have one particular facility type in California another in Colorado. 0:18:17.960 --> 0:18:21.160 We've standardized the process of bringing product to market, which 0:18:21.240 --> 0:18:26.080 ultimately will yield to pharmaceutical products with consistency, recreational products 0:18:26.119 --> 0:18:30.119 with consistency across multiple jurisdictions. So you're planning currently in 0:18:30.160 --> 0:18:33.000 initial public offering and you've raised money, certainly in the 0:18:33.040 --> 0:18:35.920 debt markets. I'm just wondering, does the fact that you're 0:18:35.960 --> 0:18:41.720 dealing with a currently mostly illegal substance complicate your fundraising abilities? 0:18:42.280 --> 0:18:45.520 Not necessarily complicated. And we've been obviously as an investor 0:18:45.560 --> 0:18:48.440 in this business four years ago and understanding the nuances 0:18:48.480 --> 0:18:51.120 of the industry. What we've done is take the knowledge 0:18:51.240 --> 0:18:54.600 of how to raise capital in general from prior experiences 0:18:54.640 --> 0:18:57.399 and other industries and just a general landscape of capital 0:18:57.400 --> 0:19:00.920 sources today and we've really focused are in tris in Canada. 0:19:01.000 --> 0:19:03.960 Canada is where we're going to list. Canada is our 0:19:04.520 --> 0:19:06.800 h for all intents and purposes are booking center and 0:19:06.800 --> 0:19:08.760 the booking center for many of these cannabis companies that 0:19:08.800 --> 0:19:11.320 are public today. So we've spent the last year and 0:19:11.320 --> 0:19:15.880 a half um putting together our Canadian capital market strategy. 0:19:16.200 --> 0:19:19.280 Of our company today is owned by Canadian institutions long 0:19:19.359 --> 0:19:23.560 only money that have really had limited experience in the cannabispace, 0:19:23.640 --> 0:19:26.639 but they bought our opportunity because it's a managing company. 0:19:26.680 --> 0:19:30.840 We have actual revenue, actual earnings, actual operational experience. So 0:19:30.880 --> 0:19:34.120 we've already planted an institutional shareholder base in our company. 0:19:34.359 --> 0:19:37.000 We've already planted the Canadian landscape there and that's where 0:19:37.000 --> 0:19:39.560 the source of capital has come from, and that's where 0:19:39.680 --> 0:19:41.880 we will be listed. RI should just give you about 0:19:41.920 --> 0:19:45.160 twenty seconds here. What's the biggest mistake people make when 0:19:45.160 --> 0:19:48.280 they hear about investing in the cannabis industry and they 0:19:48.280 --> 0:19:51.520 want to get into it understanding that there's a difference 0:19:51.520 --> 0:19:54.600 between a license owner and an asset manager. So there 0:19:54.600 --> 0:19:57.160 are plenty of companies out there that own licenses. Very 0:19:57.160 --> 0:20:00.280 few of them actually have the operational expertise to scale 0:20:00.320 --> 0:20:02.320 their businesses, and that's what we have. I want to 0:20:02.359 --> 0:20:05.399 thank you very much for joining us. Richid is the 0:20:05.440 --> 0:20:08.719 executive chairman of m hard Dean Group. They are based 0:20:08.800 --> 0:20:13.440 in Denver, giving us details about raising capital and the 0:20:13.480 --> 0:20:31.359 intricacies of the legal cannabis industry. A rocky period for 0:20:31.440 --> 0:20:36.720 the automobile industry. There has been widespread disruption on a 0:20:36.800 --> 0:20:40.760 variety of levels. We have tariffs, we have the peak 0:20:40.880 --> 0:20:44.080 Auto sort of meme that's been going around here to 0:20:44.119 --> 0:20:47.119 talk about all that is. Scott Painter, founder of Fair 0:20:47.520 --> 0:20:52.080 f a i R. Based in Santa Monica, California. Um, Scott, 0:20:52.119 --> 0:20:55.320 you are the former chief executive and founder of True Car. 0:20:55.600 --> 0:20:57.600 Can you just tell us before we get into a 0:20:57.640 --> 0:21:01.360 wood summer calling Carmen Geddon which was yesterday, UM, can 0:21:01.400 --> 0:21:04.960 you just explain what is fair? Sure? Fair is an 0:21:05.000 --> 0:21:08.520 app that represents a completely new form of ownership. It's 0:21:08.520 --> 0:21:10.560 a way to get a car on your phone, and 0:21:10.600 --> 0:21:12.760 you subscribe to it in the same way that you 0:21:12.760 --> 0:21:17.119 get your your data, your content, your music, your movies. 0:21:17.240 --> 0:21:20.560 But there's no long term commitment. You just simply download 0:21:20.560 --> 0:21:23.280 the app, scan your driver's license, link a form of 0:21:23.320 --> 0:21:26.520 payment shop and you can sign with your finger. So, Scott, 0:21:26.520 --> 0:21:28.639 the reason why I wanted to start with the model 0:21:28.760 --> 0:21:32.479 of your business is because it sort of points to 0:21:33.200 --> 0:21:37.520 a real seismic shift in the automobile industry. Do you 0:21:37.560 --> 0:21:40.160 think that the weakness that we're seeing today, certainly led 0:21:40.200 --> 0:21:43.840 by Ford, but also in GM and Chrysler, do you 0:21:43.840 --> 0:21:47.640 think that the weakness really comes as much from this 0:21:47.840 --> 0:21:54.120 changing model of car ownership as it does from tariffs. Well, 0:21:54.160 --> 0:21:55.960 I think that this is a really interesting time to 0:21:55.960 --> 0:21:58.359 be in the auto industry. If you're an incumbent automaker, 0:21:58.400 --> 0:22:00.919 you're certainly thinking about how do you regain the trust 0:22:00.960 --> 0:22:04.120 and the relationship with modern consumers who have almost binarily 0:22:04.160 --> 0:22:06.240 said they don't want to go into a dealership and 0:22:06.280 --> 0:22:08.719 do battle. They don't want the long term commitment. So 0:22:08.760 --> 0:22:13.119 I think you're seeing all sorts of new business models arrive, arise, 0:22:13.280 --> 0:22:16.480 and you've got a lot of diversification happening, happening. I 0:22:16.520 --> 0:22:19.040 think most of the carmakers at this point are almost 0:22:19.080 --> 0:22:22.640 invested in just about any new ownership model that comes 0:22:22.680 --> 0:22:25.439 up on the horizon. Just recently we saw you know, 0:22:25.560 --> 0:22:27.480 GM in er the peer to peer market as well, 0:22:27.640 --> 0:22:30.040 which is, you know, sort of a big question mark 0:22:30.080 --> 0:22:31.639 as to whether or not customers are going to go 0:22:31.680 --> 0:22:34.200 for it, but it does show that they are willing 0:22:34.240 --> 0:22:36.920 to be flexible and explore options that they never would 0:22:36.920 --> 0:22:40.760 have before. Now you have been in the autumn more 0:22:40.800 --> 0:22:43.359 of connected to the automobile industry in one way or 0:22:43.359 --> 0:22:47.199 another since you were fourteen years old, correct, You know, 0:22:47.280 --> 0:22:51.000 I think that great entrepreneurs and great companies solve real problems. 0:22:51.000 --> 0:22:54.040 I think the problem of buying and owning a car 0:22:54.240 --> 0:22:57.919 is something that really technology can offer a great solution for. 0:22:58.040 --> 0:23:00.000 And I do think that, you know, it should be simpler, 0:23:00.119 --> 0:23:02.600 it should be more accessible, and I think you know, 0:23:02.640 --> 0:23:06.879 technology can offer that and delivered incredible savings. All right. 0:23:06.920 --> 0:23:08.840 What I was going with that is, do you believe 0:23:08.840 --> 0:23:12.560 over the course of your career that the large automobile 0:23:12.600 --> 0:23:16.679 manufacturers such as four GM and now Fiat Chrysler, have 0:23:16.920 --> 0:23:20.119 they been leaders or are they followers when it comes 0:23:20.520 --> 0:23:24.679 to connecting with customers. Well, I think historically they have 0:23:24.800 --> 0:23:26.840 not been leaders. I think that right now though, they 0:23:26.880 --> 0:23:31.200 are absolutely leading and innovating and doing almost anything they 0:23:31.240 --> 0:23:34.800