WEBVTT - Nvidia Soars to Record as AI Boom Fuels Chips Demand 0:00:01.360 --> 0:00:05.720 This is Bloomberg business Week Inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:20.600 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:21.680 --> 0:00:24.560 Nvidia is off and flying this year. Ian King is 0:00:24.640 --> 0:00:26.800 US semi conductor and networking reporter at Bloomberg News. He 0:00:26.880 --> 0:00:31.600 joins us on Zoom from San Francisco. Ian and Video 0:00:31.680 --> 0:00:34.520 is up another twenty six percent today. It's up about 0:00:34.520 --> 0:00:36.680 one hundred and sixty four percent so far this year. 0:00:36.720 --> 0:00:38.400 It's the number one perform in the S and P 0:00:38.520 --> 0:00:41.320 five hundred this year. We talk about it a lot, 0:00:41.440 --> 0:00:45.920 especially when it comes to AI. Is the euphoria over 0:00:46.200 --> 0:00:49.000 Nvidia and its connection to AI justified? 0:00:50.640 --> 0:00:51.839 There are a couple of ways to look at this, 0:00:51.880 --> 0:00:54.560 and obviously we've had conversations on this over the last 0:00:54.640 --> 0:00:57.720 few days. And you know, the big question was is 0:00:57.840 --> 0:01:02.120 anybody actually making money out of AI? We're talking about it, 0:01:02.200 --> 0:01:05.919 Is anybody making money out of it? Yesterday's announcement showed 0:01:05.920 --> 0:01:10.160 that this company really is. Valuations that's another question, right 0:01:10.240 --> 0:01:13.200 We're looking at what one hundred and eighty times current innings. 0:01:14.240 --> 0:01:18.199 You can decide whether that to represents value for money 0:01:18.240 --> 0:01:22.680 or output. They are putting up numbers that justify some 0:01:22.760 --> 0:01:24.360 of the hype. That's certainly true. 0:01:24.800 --> 0:01:28.880 Yeah, so the forward PE is fifty four fifty five, 0:01:30.319 --> 0:01:32.560 which you know for a normal company would still be 0:01:33.760 --> 0:01:37.440 very rich valuation. But it's yesterday. This time it was 0:01:37.480 --> 0:01:42.000 like sixty five, So the e has really come up 0:01:42.680 --> 0:01:45.640 in terms of you know, what analysts expect. I heard 0:01:45.680 --> 0:01:50.440 a great stat yesterday ian from some novas that sixty 0:01:50.520 --> 0:01:55.160 five percent of the chips they sell for server use 0:01:55.800 --> 0:01:58.800 are used in deep learning, are used in you know, 0:01:58.960 --> 0:02:05.320 AI generative language models. So it's really about AI, right, 0:02:05.360 --> 0:02:07.720 It's not just a fad. They haven't just slapped AI 0:02:07.840 --> 0:02:11.280 on the name. It really is being used the bulk 0:02:11.400 --> 0:02:14.360 of their product in this new technology. 0:02:15.400 --> 0:02:15.600 Yeah. 0:02:15.600 --> 0:02:18.000 I mean, you know that there are all kinds of 0:02:18.040 --> 0:02:20.920 stats floating around at the moment that add to this, 0:02:21.040 --> 0:02:23.400 and you know they're incredible. Another way to look at 0:02:23.400 --> 0:02:26.080 it would be I saw another report that said in 0:02:26.200 --> 0:02:29.920 video currently has north of eighty percent market share in 0:02:29.960 --> 0:02:33.960 this particular segment. And guess what, during the last three months, 0:02:34.320 --> 0:02:38.520 one hundred percent of the installs of this type of system. 0:02:38.880 --> 0:02:41.680 We're on in video system, we're on in video equipment. 0:02:41.760 --> 0:02:45.480 So it's got a strong market share and it's getting better. 0:02:45.639 --> 0:02:48.480 And now this is by far the company's largest source 0:02:48.520 --> 0:02:51.399 of revenue. I mean, you were talking about, well, why 0:02:51.400 --> 0:02:53.920 would you sell out the stock? Remember last year and 0:02:53.960 --> 0:02:55.960 this year have been a terrible year for the company's 0:02:55.960 --> 0:02:58.919 overall innings. It's in the PC business that's horrible. That's 0:02:58.960 --> 0:03:03.040 why you sold out, not really knowing just how strong 0:03:03.080 --> 0:03:05.760 this AI search could be. And now we're seeing it. 0:03:05.800 --> 0:03:08.280 Well, we don't know, but Kathy Woods supposed to know, right, 0:03:08.360 --> 0:03:10.880 She's the future guru, you know, she is the one 0:03:10.880 --> 0:03:13.000 who's making the big bets on these things they're gonna 0:03:13.000 --> 0:03:14.040 happen later on in life. 0:03:14.160 --> 0:03:17.160 Well, look at it this way, to be fair to her, right, 0:03:18.240 --> 0:03:21.960 Nvidia gave a projection that was fifty three percent higher 0:03:22.400 --> 0:03:27.160 than the average analyst estimate here. So so nobody got 0:03:27.200 --> 0:03:30.400 embarrassed Wall Street. Right, they embarrassed Wall Street, never mind 0:03:30.720 --> 0:03:32.320 one particular fund manager. 0:03:32.680 --> 0:03:36.280 So I guess what I'm wondering is basically this ramp 0:03:36.360 --> 0:03:40.400 up where Nvidia is benefiting ian is this just as 0:03:40.720 --> 0:03:45.280 companies are exploring what they can do with AI, this 0:03:45.520 --> 0:03:49.480 version or this higher you know, learning formula of AI, 0:03:50.160 --> 0:03:53.520 and they're trying to figure out how they basically benefit. 0:03:53.680 --> 0:03:56.080 Is that what this is kind of an exploratory phase 0:03:56.120 --> 0:03:58.840 and that we're not quite yet at the Hey, here's 0:03:58.880 --> 0:04:00.920 what really works and is going to pay off fees. 0:04:01.880 --> 0:04:04.360 No, I think you're picking it as something which is 0:04:04.400 --> 0:04:07.000 really important and something which was a major topic on 0:04:07.120 --> 0:04:10.560 the conference call that they did yesterday, and that was like, look, hey, 0:04:10.760 --> 0:04:13.080 you're selling to Microsoft, you're selling to Google, you're selling 0:04:13.120 --> 0:04:16.400 to AWS. That's fantastic, but guess what those guys want 0:04:16.440 --> 0:04:18.920 to do their own chips and if they're the only 0:04:18.960 --> 0:04:21.080 customers in town, sooner or later they're going to find 0:04:21.080 --> 0:04:23.039 somebody else so they won't need you as much. What 0:04:23.040 --> 0:04:24.760 are you going to do about it? And in really 0:04:24.880 --> 0:04:27.000 was like, you really haven't been listening to us. We 0:04:27.160 --> 0:04:31.240 believe that AI is going to be used everywhere, right, 0:04:31.320 --> 0:04:33.839 and in order for that to happen, here are these 0:04:33.880 --> 0:04:36.400 products that we've already put out there. They've done software 0:04:36.480 --> 0:04:39.960 for pharmaceutical, software for all of the you know, for automotive, 0:04:40.000 --> 0:04:42.880 for all of these different industries that wouldn't have these 0:04:42.920 --> 0:04:47.120 genius computer scientists who can then buy some of the 0:04:47.160 --> 0:04:51.279 service or even buy some of invidious products and use 0:04:51.360 --> 0:04:55.120 AI for themselves. So you know, they at least had 0:04:55.160 --> 0:04:58.320 an answer to a very very important question about where 0:04:58.400 --> 0:04:59.719 this all goes. 0:05:00.720 --> 0:05:04.040 They don't and Vidia doesn't need a Microsoft or Google 0:05:04.200 --> 0:05:06.520 ultimately longer term because they can tap into all these 0:05:06.520 --> 0:05:08.040 other areas or TVD. 0:05:08.200 --> 0:05:11.480 I mean, it's a it's how do they put it 0:05:11.640 --> 0:05:16.200 a frenemy relationship right now in Microsoft needs in videos chips. 0:05:16.960 --> 0:05:20.159 In Vidia has put some of these services it's hoping 0:05:20.279 --> 0:05:23.360 to sell to these companies in the cloud hosted by 0:05:23.880 --> 0:05:27.599 Microsoft as you or Amazon a WUS. But down the 0:05:27.680 --> 0:05:30.120 road and an ideal world in video is going to 0:05:30.120 --> 0:05:32.720 be selling directly to some of these companies if they 0:05:32.720 --> 0:05:35.640 can acquire that kind of expertise, or if Nvidia can 0:05:35.680 --> 0:05:36.480 make it easy enough. 0:05:37.360 --> 0:05:41.680 You know, Paul Sweeney, who in his former life was 0:05:41.680 --> 0:05:45.520 an investment banker, his immediate thought goes to taking advantage 0:05:45.560 --> 0:05:47.839 of this situation. Right if your stock pops like this 0:05:48.000 --> 0:05:50.239 and you are the it stock, I mean, right now, 0:05:50.960 --> 0:05:53.720 you want to own Nvidia and you want to tell 0:05:53.760 --> 0:05:55.480 your friends that you own in Vidia because you're the 0:05:55.520 --> 0:05:59.279 smart guy who's into AI. That could last a month, 0:05:59.320 --> 0:06:01.599 it could last three months, maybe it lasts a year, 0:06:01.640 --> 0:06:04.920 but probably not much longer. Are they going to raise capital? 0:06:05.080 --> 0:06:08.080 Are they going to buy something with these shares? Because 0:06:08.120 --> 0:06:10.040 they should really take advantage of this situation. 0:06:11.400 --> 0:06:15.640 Yeah, I think that's I mean, knowing their CEO and 0:06:15.680 --> 0:06:17.760 knowing the way that they look at things, that's very 0:06:17.839 --> 0:06:22.479 much a throwback view of of Silicon Valley and of 0:06:23.080 --> 0:06:26.479 you know, the way that the markets work. They believe 0:06:26.520 --> 0:06:29.880 they're a technology company. They believe they have everything in 0:06:29.960 --> 0:06:32.320 place that they need. As you remember, they did try 0:06:32.360 --> 0:06:35.239 to buy ARM and regulators around the world said, nope, 0:06:35.279 --> 0:06:37.600 you're too big, we don't like this. So they've learned 0:06:37.600 --> 0:06:40.120 that lesson. Why would they go off on something that 0:06:40.160 --> 0:06:42.560 they're probably not going to get So that's probably the 0:06:42.560 --> 0:06:43.520 way they're looking at it. 0:06:43.600 --> 0:06:45.720 So who competes with them ultimately. 0:06:46.680 --> 0:06:52.080 Well, I mean Intel, but investors don't believe them Intel. 0:06:52.279 --> 0:06:54.280 Just Matt and I you know, Ian going into this, 0:06:54.320 --> 0:06:56.120 We're like, did you look at Intel's marka cap and 0:06:56.160 --> 0:06:58.080 did you look at nd videos mark Like it's just 0:06:58.440 --> 0:06:59.680 hard to get my head around it. 0:07:00.120 --> 0:07:03.159 No, And it's I mean AMD stock went up today, 0:07:03.240 --> 0:07:06.000 right because they do similar things. They're nowhere near as 0:07:06.040 --> 0:07:09.920 far and advanced into this marketers in videos and in theory. 0:07:09.960 --> 0:07:12.080 Intel is there as well. Intel has been the heart 0:07:12.080 --> 0:07:15.360 of the data center for you know, twenty thirty years. 0:07:16.040 --> 0:07:18.760 Investors just aren't buying that they have a way forward here. 0:07:19.080 --> 0:07:22.080 Even though Pat Gelsinger Intel has been talking about his 0:07:22.160 --> 0:07:25.960 new products, his accelerators, data center products and all of 0:07:25.960 --> 0:07:29.320 these things he's going to bring to market, Investors just 0:07:29.320 --> 0:07:30.160 just don't believe that. 0:07:30.280 --> 0:07:34.640 Right now, Intel is worth less than an eighth an 0:07:34.720 --> 0:07:37.800 eighth that's crazy of video right and Video's trading right 0:07:37.800 --> 0:07:41.720 now market cap nine hundred and fifty billion. Intel is 0:07:41.720 --> 0:07:43.280 one hundred and fifteen million. 0:07:43.600 --> 0:07:46.560 In Vidia added more market cap today than Intel is 0:07:46.640 --> 0:07:47.480 worth in total. 0:07:48.240 --> 0:07:50.440 Wow, that's a very that's a very strong point. 0:07:50.520 --> 0:07:52.920 So thirty seconds left here, Come on, and you've been 0:07:52.960 --> 0:07:54.920 following I know, I asked this all the time because 0:07:54.920 --> 0:07:57.640 your perspective is really valuable because you've studied this sector 0:07:57.680 --> 0:08:00.000 for so long. Does that make sense to you? 0:08:01.680 --> 0:08:04.280 I mean, if you believe what Jensen Lang said, which 0:08:04.320 --> 0:08:07.320 is there are trillion dollars of data central equipment that 0:08:07.440 --> 0:08:10.440 needs to be replaced right now, they're in the lead 0:08:11.520 --> 0:08:15.000 as to whether an absolute valuation makes sense in those terms. 0:08:15.040 --> 0:08:15.600 I don't know. 0:08:16.400 --> 0:08:19.560 It's just interesting world. We're eleven in Ian, Thank you. 0:08:19.640 --> 0:08:21.080 I know we go round and round a lot on this, 0:08:21.200 --> 0:08:23.200 but it seems to be the topic that everybody wants 0:08:23.240 --> 0:08:25.920 to talk about, either AI and or the chip sector, 0:08:26.080 --> 0:08:28.280 and you really just put it in such great perspective. 0:08:28.320 --> 0:08:31.520 Ian King. He is US Semiconductor Networking report at Bloomberg 0:08:31.560 --> 0:08:33.880 News on zoom from San Francisco. Check out his work 0:08:34.240 --> 0:08:36.240 on the Bloomberg at Bloomberg dot com and also on 0:08:36.280 --> 0:08:37.800 Twitter at Ian M. 0:08:38.160 --> 0:08:38.360 King. 0:08:38.440 --> 0:08:39.640 Pretty amazing stuff. Huh. 0:08:39.800 --> 0:08:43.360 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:43.400 --> 0:08:46.760 live weekday afternoons from three to six Eastern Listen on 0:08:46.800 --> 0:08:50.839 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 0:08:51.120 --> 0:08:53.400 or watch us live on YouTube. 0:08:54.160 --> 0:08:55.760 All right, let's get to it, because we want to 0:08:55.800 --> 0:08:58.400 talk a little bit about the cannabis industry. I don't know, Matt, 0:08:58.440 --> 0:09:00.400 if you saw there was a Bloomberg News story earlier 0:09:00.480 --> 0:09:03.640 this month, and you know it talked about cannabis basically 0:09:03.679 --> 0:09:06.800 facing financial and regulatory malays in the US, but it 0:09:06.880 --> 0:09:10.959 isn't affecting the perceptions of consumers who increasingly approve of it. 0:09:11.640 --> 0:09:15.360 I know, and the sales numbers are very strong. State 0:09:15.400 --> 0:09:17.240 by state, of course is where we see that. But 0:09:17.320 --> 0:09:21.240 it's billions and billions of dollars in revenue, and that's 0:09:22.600 --> 0:09:26.120 runs the gamut from you know, medical use, prescribe medical 0:09:26.240 --> 0:09:29.200 use to recreational like at a dead show. 0:09:29.240 --> 0:09:29.520 All right. 0:09:29.520 --> 0:09:33.480 In the meantime, our next guest is in. It also 0:09:33.520 --> 0:09:36.160 has a personal story around it. We welcome Morgan Paxia, 0:09:36.320 --> 0:09:40.160 co founder and managing partner of Poseidon Investment Management, keeper 0:09:40.200 --> 0:09:44.119 of the advisor shares Poseidon. 0:09:42.880 --> 0:09:44.400 Poseidon, Poseidon like king. 0:09:44.520 --> 0:09:47.760 I know it's that coming out right, Poseidon ETFs on 0:09:47.840 --> 0:09:51.640 zoom and here York City. Sorry it's been a rough week, Morgan. 0:09:51.679 --> 0:09:53.960 Good to have you here with Matt and myself. First 0:09:53.960 --> 0:09:57.120 of all, tell us about your how you got into 0:09:57.200 --> 0:09:59.720 all of this because it is a personal story. 0:10:00.559 --> 0:10:03.000 It is like so many of us that have gotten 0:10:03.000 --> 0:10:06.280 into the cannabis industry. Usually starts for a lot of 0:10:06.360 --> 0:10:09.400 us with a family event. For us, we lost our 0:10:09.400 --> 0:10:11.760 parents to cancer at a very young age. I was 0:10:11.800 --> 0:10:14.360 twelve with my dad passed in eighteen. When my mom 0:10:14.880 --> 0:10:18.000 and I started the business with my sister Emily, just 0:10:18.000 --> 0:10:21.439 about ten years ago now, but they were both believers 0:10:21.480 --> 0:10:24.280 in ending the war on drugs. They thought it was 0:10:25.120 --> 0:10:27.800 you know, unjust and but really what was a clear 0:10:27.840 --> 0:10:29.920 moment for us was when our dad was in hospice care, 0:10:30.559 --> 0:10:32.920 a nurse actually offered him some cannabis, just trying to 0:10:32.920 --> 0:10:36.160 help him find some peace in the final days or 0:10:36.200 --> 0:10:38.520 just some comfort, you know, being on all those opioids. 0:10:38.640 --> 0:10:41.920 Wouldn't do it because of the stigma because it was illegal. 0:10:41.960 --> 0:10:45.880 Didn't want to have any kind of tarnished kind of 0:10:46.000 --> 0:10:49.840 sentiment back with family or anybody around us. And obviously 0:10:49.880 --> 0:10:52.160 we've thought that was very wrong. I was young, but 0:10:52.520 --> 0:10:55.040 as we say, it planted the seed for our future, 0:10:55.559 --> 0:10:57.640 and so we've been so. 0:10:58.080 --> 0:11:03.280 You are, so you Morgan and your sister Emily. What 0:11:03.400 --> 0:11:05.679 started this ETF? But how did you get into it? 0:11:05.720 --> 0:11:06.319 To begin with? 0:11:08.200 --> 0:11:10.800 Our first fund, we launched in January of twenty fourteen, 0:11:11.559 --> 0:11:13.480 was it's actually a hedge fund. It still runs today, 0:11:13.960 --> 0:11:17.080 but we invested in much like a hybrid strategy where 0:11:17.080 --> 0:11:20.360 we were doing private, early stage investments because everything was 0:11:20.440 --> 0:11:22.960 private and early back then, but it had the ability 0:11:23.040 --> 0:11:26.800 to also invest in companies that were public or would 0:11:26.840 --> 0:11:29.840 become public companies. So it really gave us the full gamut. 0:11:29.880 --> 0:11:32.440 We launched our ETF in November of twenty twenty one 0:11:33.320 --> 0:11:37.200 thinking that a lot of the bear market cycle had corrected. 0:11:37.280 --> 0:11:40.360 We were wrong or early with that, but also waiting 0:11:40.400 --> 0:11:42.719 patiently for the market to get a little bit more 0:11:42.720 --> 0:11:46.000 mature before we had a product such as an ETF. 0:11:46.000 --> 0:11:48.400 But we thought the ETF was a great addition to 0:11:48.480 --> 0:11:53.040 the Poseidon investment universe where we could have a product 0:11:53.080 --> 0:11:55.000 that anyone could buy, you know as a hedge fund 0:11:55.040 --> 0:11:58.240 and our two sub subsequent venture capital funds, those are 0:11:58.240 --> 0:12:03.920 only eligible for credited investors or institutional like investors versus 0:12:03.960 --> 0:12:05.160 an ETF anyone can buy. 0:12:05.640 --> 0:12:07.360 So how do you I look at the price, right, 0:12:07.400 --> 0:12:09.079 and as you pointed out your early so you came 0:12:09.120 --> 0:12:10.640 out at ten bucks and it's now down at a 0:12:10.679 --> 0:12:14.280 dollar fifteen. And if I look at the holdings, you 0:12:14.440 --> 0:12:18.840 have green thumb, cure a leaf, true, leave, cresco. I 0:12:18.880 --> 0:12:22.320 mean basically the usual suspects for the most part, right, 0:12:22.800 --> 0:12:24.640 and they all their stock in charts look the same 0:12:24.679 --> 0:12:25.720 as your TF. 0:12:26.160 --> 0:12:27.360 What that's right? 0:12:28.200 --> 0:12:32.120 What can you do differently than another fund or ETF? 0:12:32.160 --> 0:12:35.439 That's investing in in marijuana in order to get a 0:12:35.480 --> 0:12:36.280 little bit of alpha. 0:12:37.840 --> 0:12:41.280 Yep, we're unconstrained, so we can invest globally. We can 0:12:41.320 --> 0:12:43.880 be you know, in Canada or in Europe. Really there's 0:12:43.880 --> 0:12:46.040 not too much in Europe yet, but it is an 0:12:46.120 --> 0:12:49.640 unconstrained strategy from a whether or not we're investing in 0:12:50.120 --> 0:12:54.960 US operators or technology companies. So that's one unique feature. 0:12:54.960 --> 0:12:58.240 We're not tied to any benchmarks. It's really just at 0:12:58.240 --> 0:13:02.520 our discretion. And then we also have a dynamic leverage capability, 0:13:03.000 --> 0:13:05.000 so we can be anywhere from eighty percent, so we 0:13:05.000 --> 0:13:06.640 can be unlevered, or we can be up to one 0:13:06.720 --> 0:13:09.640 hundred and fifty percent leverage, and we can dial that 0:13:09.720 --> 0:13:12.920 up and down. And as is a good example, for 0:13:12.960 --> 0:13:15.200 the most part of this year, we were atzero point 0:13:15.280 --> 0:13:18.959 nine five times, but then as some of this safe 0:13:19.000 --> 0:13:22.240 banking initiative started to come back with regular order in 0:13:22.240 --> 0:13:25.120 the Senate, there's some other things in the works. We 0:13:25.520 --> 0:13:28.680 have slowly taken leverage up to one hundred and ten percent, 0:13:28.760 --> 0:13:32.000 so we're just modestly leveraged today, but believing that there 0:13:32.000 --> 0:13:35.320 are some potential progress. So we saw regulatory change, but 0:13:35.360 --> 0:13:38.360 also the fundamentals of the industry have been improving over 0:13:38.440 --> 0:13:41.520 subsequent quarters, So we like that the fundamental support is 0:13:41.559 --> 0:13:44.360 there and any kind of regulatory progress would generate some 0:13:44.440 --> 0:13:47.760 nice upside return. But predominantly focused on good companies. We 0:13:47.800 --> 0:13:51.160 want to see companies that are have gross margins, have 0:13:52.000 --> 0:13:55.080 nice evadam margins, have either the ability of generating free 0:13:55.080 --> 0:13:58.160 cash flow or are already generating free cash flow. And 0:13:58.200 --> 0:14:00.640 so that's what our portfolio looks like today. Really trying 0:14:00.679 --> 0:14:02.079 to focus on quality. 0:14:01.880 --> 0:14:03.520 Right Morgan, I feel like we've seen a lot of 0:14:03.520 --> 0:14:05.800 cycles already when it comes to the cannabis sector, to 0:14:05.920 --> 0:14:08.720 be fair, and is it just a case of the 0:14:08.800 --> 0:14:12.920 industry really can't get going until the Safe Banking Act 0:14:13.200 --> 0:14:15.000 is past. I mean, they need to be part of 0:14:15.040 --> 0:14:19.600 the financial system. It's been the one thing that's really 0:14:19.640 --> 0:14:20.120 been holding in. 0:14:20.200 --> 0:14:22.640 And explain to us, if you could the you know, 0:14:22.720 --> 0:14:26.600 to the Secure and Fair Enforcement Banking Act, what is 0:14:26.600 --> 0:14:27.680 that going to allow you to do. 0:14:29.800 --> 0:14:30.120 Well? 0:14:30.320 --> 0:14:32.880 The way we look at it is it's first and foremost, 0:14:32.960 --> 0:14:37.920 it's helping small business in cannabis. It's providing safety to communities. 0:14:38.240 --> 0:14:41.160 We are largely a cash based industry, so if you're 0:14:41.360 --> 0:14:44.520 a retailer, you have a lot of cash in your store. 0:14:45.440 --> 0:14:49.240 That's that's trouble, right, and we've seen a significant increase 0:14:49.440 --> 0:14:52.400 in crime around that because there are people being advantageous. 0:14:52.400 --> 0:14:54.240 So that's in banks, right. 0:14:56.400 --> 0:14:58.640 You sort of CANBA is very limited, so safe WUL 0:14:58.680 --> 0:15:01.600 help recognize that we are on the same playing field 0:15:01.640 --> 0:15:04.600 as every other industry with the ability to deposit. Why 0:15:04.640 --> 0:15:09.480 you're working lines of capital, so that will help. And 0:15:09.600 --> 0:15:12.680 also if we do get capital markets included, which is 0:15:12.680 --> 0:15:15.360 being discussed, and the minority groups are actually supporting this 0:15:15.520 --> 0:15:19.000 understanding that if you're going to have a federal reformer 0:15:19.080 --> 0:15:21.320 on banking, it should be all of banking, and we 0:15:21.360 --> 0:15:23.400 think that's that's actually a really smart way to think 0:15:23.440 --> 0:15:24.760 about it. We support that as well. 0:15:24.800 --> 0:15:25.240 We know the. 0:15:25.200 --> 0:15:28.640 Exchanges believe that too, and to your point that we 0:15:28.680 --> 0:15:31.040 think that will help move money again in this space, 0:15:31.080 --> 0:15:34.000 it's it's largely slowed down considerably. Custody is very hard, 0:15:34.440 --> 0:15:38.040 so banking reform is needed and that's how DC functions. 0:15:38.080 --> 0:15:40.400 You know that the industries move forehead and now we're 0:15:40.400 --> 0:15:42.320 looking to DC to catch up with us on this. 0:15:43.840 --> 0:15:46.560 This first up, I mean, what what is your expectation 0:15:46.720 --> 0:15:50.360 for the safe right now, I mean, and the problem 0:15:50.360 --> 0:15:53.120 is it doesn't function right. So what's your expectation, Morgan 0:15:53.240 --> 0:15:56.600 for Congress to actually move on this legislation. 0:15:58.400 --> 0:16:00.760 It's actually looking like the scent it could get this 0:16:00.880 --> 0:16:04.200 done as long as safe stays in a pretty targeted way. 0:16:04.480 --> 0:16:07.680 From a banking reform perspective, it sounds like we have 0:16:07.840 --> 0:16:10.880 Democrat and Republican support and that's why it's going through 0:16:10.880 --> 0:16:14.440 this regular order process and we think we could potentially 0:16:14.440 --> 0:16:17.120 see a vote as early as July. Then we have 0:16:17.200 --> 0:16:19.360 to move onto the House, which has passed seven times 0:16:19.440 --> 0:16:21.880 in the past, but we'll have to go through that 0:16:21.920 --> 0:16:24.680 process again. So that is helpful. But in the interim, 0:16:24.760 --> 0:16:28.600 we are seeing structures like one of the companies, Terrace End, 0:16:28.680 --> 0:16:32.000 is potentially listing on the Toronto Stock Exchange. Now we 0:16:32.080 --> 0:16:34.320 might be seeing a structure that might actually be blessed 0:16:34.360 --> 0:16:37.160 by the NASDAK waiting on SEC. So if we're able 0:16:37.200 --> 0:16:39.960 to get access to the exchanges even without or while 0:16:40.000 --> 0:16:43.320 we are waiting for safe banking, that's progress. And our 0:16:43.320 --> 0:16:47.640 industry is finally done being stuck from a capital perspective 0:16:47.840 --> 0:16:50.760 and very happy to see that action is moving again 0:16:50.840 --> 0:16:53.200 and so capital will start to flow as a result 0:16:53.240 --> 0:16:53.400 of that. 0:16:54.040 --> 0:16:56.080 All right, Morgan, thanks very much for joining us. Morgan 0:16:56.160 --> 0:17:01.680 Paxia there from Poseidon Asset Management. The ETF is the 0:17:02.880 --> 0:17:07.240 Act Advisor Shares Posidon Dynamic Cannabis ETF and the ticker 0:17:07.320 --> 0:17:08.920 is PSDN. 0:17:10.840 --> 0:17:14.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:17:14.440 --> 0:17:18.480 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:17:18.680 --> 0:17:21.960 the Bloomberg Business App and YouTube. You can also listen 0:17:22.040 --> 0:17:25.160 live on Amazon Alexa from our flagship New York station 0:17:25.600 --> 0:17:28.399 Just Say Alexa, playing Bloomberg eleven thirty. 0:17:29.600 --> 0:17:32.760 Bloomberg News reporting earlier this year how the fitness sector 0:17:32.800 --> 0:17:35.960 has roared back after being devastated by the pandemic. Cost 0:17:36.000 --> 0:17:40.119 pressures though, and a possible recession could possibly pose a threat. 0:17:40.240 --> 0:17:42.760 So we thought we'd take a look man at the industry, 0:17:42.800 --> 0:17:45.080 and we've got someone who's actually spent more than twenty 0:17:45.160 --> 0:17:48.280 years managing, owning, and franchising health clubs, Chuck Runyon, his 0:17:48.359 --> 0:17:51.679 co founder and CEO at Anytime Fitness, a franchiser of gyms, 0:17:51.720 --> 0:17:55.399 joining us on Zoom from Woodbury, Minnesota. Check also the 0:17:55.400 --> 0:17:57.439 CEO and co founder of Self Esteem Brands, which is 0:17:57.440 --> 0:17:59.680 the owner of Anytime Fitness and also the bar Method 0:17:59.680 --> 0:18:02.800 and more so he's certainly well versed in this space. Hey, Chuck, 0:18:02.960 --> 0:18:06.280 nice to have you here with Matt and myself. Talk 0:18:06.320 --> 0:18:09.560 to a little bit more about Anytime Fitness, how it 0:18:09.600 --> 0:18:12.560 all works, and the type of growth you've seen, particularly 0:18:12.680 --> 0:18:13.520 post pandemic. 0:18:14.359 --> 0:18:16.520 Yes, Carol, Matt, thank you for having me from this 0:18:16.600 --> 0:18:18.000 beautiful day in Minnesota. 0:18:18.119 --> 0:18:19.040 Excited to be here. 0:18:19.520 --> 0:18:21.879 My partner and I started Anytime Fitness just over twenty 0:18:21.920 --> 0:18:22.400 years ago. 0:18:22.800 --> 0:18:24.679 We started in Minnesota. 0:18:24.160 --> 0:18:27.520 But today we serve over fifty five hundred communities in 0:18:27.640 --> 0:18:31.080 forty countries around the world. And our goal has always 0:18:31.119 --> 0:18:35.600 been to make fitness more affordable, more accessible, and more effective, 0:18:35.960 --> 0:18:39.280 and we utilize technology to do that so members could 0:18:39.359 --> 0:18:42.560 work out on their schedule, not the gym schedule. That 0:18:42.640 --> 0:18:44.560 technology is still in place today, and when you buy 0:18:44.640 --> 0:18:47.480 membership at your local club, to say in Minnesota, you 0:18:47.520 --> 0:18:50.119 get to use every club in the network. So we 0:18:50.200 --> 0:18:53.600 are still infused with technology. And now recently we've just 0:18:53.680 --> 0:18:57.879 launched our coaching suite, which is providing people with education 0:18:58.040 --> 0:19:02.000 motivation anytime, anywhere, whether they're in one of our gymder studios, 0:19:02.119 --> 0:19:04.640 or wherever in the world they live. We can now 0:19:04.720 --> 0:19:07.480 reach them right, help them be healthier, help them eat better, 0:19:07.760 --> 0:19:10.320 coach them to a better lifestyle. And so we're very 0:19:10.320 --> 0:19:13.520 excited and you know, tremendous growth ahead. We are on 0:19:13.560 --> 0:19:16.520 a pathway to have ten thousand units by twenty thirty. 0:19:16.640 --> 0:19:18.800 So do you have You know a lot of people, 0:19:20.119 --> 0:19:24.280 myself included, have joined gyms and then like they'll go 0:19:24.320 --> 0:19:27.200 a few times and then never go again, and every 0:19:27.240 --> 0:19:29.160 you know, a couple of years, I'll join another one 0:19:29.200 --> 0:19:31.280 and do it again, do it all over again. But 0:19:31.320 --> 0:19:34.240 I wish I could stick with it. How do you 0:19:34.359 --> 0:19:35.560 motivate someone like that? 0:19:36.840 --> 0:19:39.240 It's a great question and something that has been going 0:19:39.280 --> 0:19:42.040 on in our industry since day one, and you know, 0:19:42.280 --> 0:19:45.160 it comes down to a handful. Then, first of all, personalization. 0:19:45.640 --> 0:19:48.520 You know, it really helps with understanding our members where 0:19:48.520 --> 0:19:50.760 they're at in their life journey and where they want 0:19:50.800 --> 0:19:51.239 to get to. 0:19:51.560 --> 0:19:53.840 And once we do that, we can now not only. 0:19:53.640 --> 0:19:56.800 Give them the workout necessary, but give them the coaching, 0:19:56.880 --> 0:19:59.560 give them the motivation, give them the education that matters 0:19:59.560 --> 0:20:01.719 to them, and serve them up to type of content 0:20:01.760 --> 0:20:03.919 that they want to see. And so we're just in 0:20:04.000 --> 0:20:06.080 this for a series of small wins, if we can 0:20:06.119 --> 0:20:09.880 help our members just achieve some small wins, some progress 0:20:09.920 --> 0:20:12.879 along the way. Right, when members see progress and experience it, 0:20:12.920 --> 0:20:15.000 they stick with their membership longer and they reach their 0:20:15.040 --> 0:20:17.360 fitness goals. When, like you said before, if they don't 0:20:17.400 --> 0:20:19.440 get that extra help but they don't feel that level 0:20:19.440 --> 0:20:22.760 of personalization, they start to drift away. They leave the industry, 0:20:23.000 --> 0:20:24.680