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- [00:00]
Andrew Channon
Space is viewed as strategic high ground for militaries. So without space, you know, your military is basically obsolete compared to the global superpowers that are out there. So if you want to compete, if you don't want to be relying on people, you have to build up your own space industry. That's not easy.
- [00:33]
Podcast Host
Okay, guys, welcome back to another great Thousand X podcast. We've got a very special guest today, Andrew Shannon. Is that.
- [00:40]
Podcast Outro/Disclaimer Voice
Is that it?
- [00:41]
Podcast Host
Shannon Channon. Channon. There we go. And so Andrew Channon is one of the most interesting people I've talked to in a very long time. He is so good at finding narratives before they appear in the mass market, before people kind of figure them out themselves. And he. He's made a career for himself actually launching products, taking advantage of that special ability of his. So welcome to the show.
- [01:05]
Andrew Channon
Thanks for having me. Appreciate the intro.
- [01:07]
Podcast Host
Of course. This is great. I mean, I kind of want to start by saying when I was researching you, I realized very quickly that you kind of are sometimes too early to things, and it takes a while for. For stuff. For stuff to play out. But basically, you've had a great track record figuring out and monetizing narratives, specifically by launching ETFs. And I want to start with the first one that you launched, if I have this right. You launched Hack, basically The first Cybersecurity ETF, back in 2014, grew to some pretty great heights pretty quickly. And you were like 30 years old, not even at the time.
- [01:51]
Andrew Channon
I think I was about 29 when we launched that. And that was actually the. Not. Not the first one I launched, however, that one actually.
- [01:59]
Podcast Host
Sorry, I meant the first cyber security etf.
- [02:01]
Andrew Channon
That's. That. That. That was the first cyber security ETF I was behind. So we were the sponsors of. Of Hack, and we actually brought that to market on November 14, 2014, almost exactly two weeks before the Sony breach happened, due to the movie, the interview, and North Korea allegedly being very upset with Sony Movie Pictures. And so that hack happened, and all of a sudden everyone realized, hey, cybersecurity might be something I want to get exposure to for investing. And we had the ETF that was there, and that was the only ETF in town if you wanted cyber pure play, cybersecurity exposure. And actually, even before that, in November 2012, I had created and sponsored the world's first Junior Silver ETF. And that was, I think, maybe even more so to your point. One that maybe we were early and yeah, I think at its high point, it maybe has raised up to about 6 billion in assets in that product since way back when. But yeah, no. Trying to figure out these early opportunities and get people diversified exposure has been something that I've been trying to do for a very long time.
- [03:13]
Podcast Host
So I want to hear a little bit about your approach. How do you find spaces in the market that are underserved? Or is that how you would even phrase what you do?
- [03:24]
Andrew Channon
I think that that's definitely a goal and it's not just what's not out there or what's early. I think I had the fortune of early in my career being on the floor of the American stock exchange when ETFs were kind of first taking off. I was there in 2007, right after graduating college and was quickly promoted, moved upstairs and I became a lead market maker for global and international equity ETFs. And so I saw a lot of the kind of innovations, the new thematic wave of products that were being launched. And Even way back 2007, 2010, that range, you had people saying all the ideas have been launched already. And sure enough, there were still opportunities. We're still seeing ETFs that are launching today that are thematic ETFs that are raking in billions of assets, some in record times because they're hyper focused on a specific theme that people want exposure to. And so kind of seeing the innovation, the ideas that were coming to market, realizing that also from our position, figuring out which ones we thought weren't going to do well, which ones were having a pretty good track record at determining those products, you know, before they would even launch, kind of let me know where innovation was coming from, where, where the puck was moving. And, you know, got to see that there was a, you know, a gold ETF and then a Gold Miners ETF and then a Junior Gold etf. And so I said to an ETF company, I said, you know, why don't you launch a silver mining etf? You know, people like, you know, your precious metals, sometimes they like, you know, the miners more because the miners, you know, are kind of a beta play on the metal. And at the junior, the explorers are that, you know, even higher beta play on that. And you know, when you look at gold and silver, silver tends to be that higher beta play on gold. So if people want this high beta exposure to precious metals, why not a junior silver etf? And that was kind of the reason that that fund was developed way back in 2012. But really kind of looking at how people invest in themes and industries, technologies being early, it's difficult picking who the winners are going to be some of these players get gobbled up, some of their technologies never see the light of day. Some of them just lose out because they didn't take the right path forward. And so when I find a theme, an industry that I think is in its early stages that I think people might want exposure to on a long term projection, it's not saying, oh, I think it's the MP3, your ETF, it's like, no, well then you would have launched the cassette tape ETF and then the CD etf.
- [05:56]
Podcast Outro/Disclaimer Voice
No.
- [05:57]
Andrew Channon
What's the theme there? Maybe it's audio or music or something like that. Figuring out what that longer theme is and giving people diversified in most cases, global diversification to various companies in those themes is how I would envision. You know, a lot of people that don't necessarily have the time, the energy, the focus to try to pick individual companies might want to play those themes.
- [06:20]
Podcast Host
And so maybe talk to me a little bit, I want to go back to the start because you said something about you were, you were an ETF market maker at the time. And I think that would probably be really interesting to a lot of people to hear about what that was like. I mean, talk about what is market making an ETF even look like.
- [06:39]
Andrew Channon
So, you know, I, I got to the American Stock Exchange right before there was no American Stock Exchange. And so the largest growing group at my companies, at my company at the time was our ETF specialist trading group on the floor of the American Stock Exchange. So if you go back to 2007 when I graduated college and you got thrown right onto the floor, I had the benefit, privilege, opportunity to see global markets from the ground floor as the global financial crisis started happening. So I remember in October of 2017, looking to my much older boss who had been on the floor in the 80s when New York almost defaulted on their debt and turning to him and saying, this is crazy, I've never seen anything like this. Then when he turned back to me and said, neither have I, I realized, okay, this is something that is probably a lot bigger than I'm even giving it credit for. Sure enough, global financial crisis rolled right through just a couple months later. And basically for an etf, there's an entire arbitrage trade. So a market maker is someone that's willing to be there and be willing to buy at a certain price and sell at a certain price throughout the entire trading day. And with an etf you have the value of that fund and then you have what it's actually trading At. And so as a market maker, as a lead market maker, as I was, for numerous products for several years, if you could sell shares of the ETF in the marketplace for a higher price than it costs you to buy the actual underlying positions, you could actually lock in that spread. There was this arbitrage trade. And then at the end of the day, if you were short the ETF because you're selling shares of the ETF and you're buying the underlying shares in the basket, at the end of the day, you would then deliver your underlying shares of that fund and they would give you shares of the ETF back. And now your position's flat. And so that was really the trade, you know, and with International Global Equity ETFs, in many cases, you'd be trading the ETF during the day and you'd have many of these underlying components that weren't trading because they were on foreign markets, trading in Asia or Europe had already closed. And you try to figure out where that spread is, where those underlying names might open the next day, where you'll be able to buy them. And that was really eye opening and kind of gave me this geopolitical, global, macro perspective on markets. And you know, having been the lead market maker for the first coal mining ETF as well as others, really seeing that this idea of people wanting to get global exposure to different specific themes was something that I early on realized this could be an opportunity to be able to build a business around.
- [09:20]
Podcast Host
Yeah, it's kind of interesting to hear you say that because I wanted you to. It's. I've seen this happen quite a few times in the world of finance where people start off in the minutia and then you take a step back and you think to yourself, wait a second, why am I, why am I picking up pennies when I can see the trends? Right? And this is a little bit, a little bit of what I did as well within crypto is I started and really quantitatively trading, I started doing a lot of arbitrage, like cross market arbitrage. And then you take a step back and you're like, wait a second, the entire industry is going up every. Like this is actually changing the world and I probably am going to make a lot more money with a lot less effort in many ways if I just actually look at the big picture as opposed to, as opposed to look at the minutia. And I've actually seen like, there's some people that love it, right? There's some people that are quantitative and they love it. And they love building these systems, and they love looking at their p and l be 25% a year with a three sharp and just like, kind of sitting it, like, doing it, doing it that way, which obviously would be amazing. But it's, I think, a little bit sometimes more rewarding to step back and look at the big picture. I mean, this. This podcast itself is a lot about both. It's about sitting back and entering into the mega trends when you see them coming, but then also being able to take advantage of all the crazy little inefficiencies in the market. But that's kind of fun that you. You went that way.
- [10:45]
Andrew Channon
So I. I remember my first internship happened to be at a Smith Barney branch. And I remember the branch manager kind of sat one day and he was telling me his story of how he kind of worked his way up into, you know, becoming a branch manager. And he was telling me that there was all this, you know, retirement money for, you know, specific, like, hospital staff, and no one had really read through tax code and stuff to. To really take the time to figure out how to better, you know, kind of build these accounts and to go after this market as, you know, a specific, you know, hey, here's how we can be doing this. And, you know, what he did was he read through all all the documents around this. He took out one of the individuals who, like, helped write the code and sat him down, and he was just happy to go out for a lunch and have a. I think it was a tuna salad or an egg salad sandwich. And he was able to talk to him and ask him all these questions. And sure enough, he did kind of uncover this overlooked area. He's able to build a career for himself. And so I remember when I got into the ETF industry, no one wants to read a prospectus. However, that's what every single commercial for an ETF says. You know, read the fund's prospectus, talk to your financial advisor. And unfortunately, many people don't do that. And when you read through them, you get a really good understanding of who the companies are that are involved, the roles, the service providers, you know, where you might be able to carve out an opportunity. And for me, you know, that was kind of my, you know, taking this idea of, okay, do the stuff that no one wants to do, read these documents that people don't want to do. I guess AI is probably synthesizing a lot of that and making it easier for people to extract the real value and information. There's in many cases, but, you know, it was really kind of understanding these products, figuring out, you know, the things I liked about how certain companies built theirs and things that I didn't like that I wouldn't want, you know, a fund of mine to have. And started off giving ideas to existing issuers because I thought, I want to trade these ETFs and you know, they're not out there. So if someone makes these, I could trade them. So eventually, one of the principals of GlobalX telling me, hey, why do you keep on giving us your ideas? You try launching your own. And that's how I kind of jumped from being a trader to building products.
- [12:44]
Podcast Host
So I think what's kind of interesting there is also thinking about most people, I mean, including myself. Sometimes we get very lazy when it comes to the financial markets we like. Today, for example, I'll just be honest with you guys. I bought dram and I'm like, I actually have never read the. I've never read the perspective. I know nothing about this etf, like, literally nothing about it. How important you're from the business. Like, how would you differentiate a good ETF from a bad etf? Right, if they're covering the same sector, yeah.
- [13:16]
Andrew Channon
No, it's tough to say. I think a lot of it is personal opinion. I mean, I remember years ago I was invited to speak at a conference in Vegas and I kind of did an entire presentation on the things that you might not know about your ETF that you're investing in. And we kind of looked at, you know, a gold, an actual gold ETF and actually went through the various risk disclosures and things like that. And so, you know, for me, when, when we wanted to launch the first Pure Play space etf, you know, we could have picked any index. We could have gone active, we could have gone passive. There were a lot of options. And you know, for me, you know, people don't necessarily know me or my brands or anything like that as being stock pickers, even though I think I might be able to be pretty decent at it. For me it was, you know, using a passive strategy, finding an index that we believed in and really understanding and working through the methodology to say, hey, if I wanted to invest in the space industry, is this portfolio going to look like something that I would hopefully expect to have if I invest in a space ETF? Additionally, if you're looking at, you know, existing ETFs that are already out there and you say, okay, well, there's already Aerospace and Defense, okay, well, if your space ETF has the same holdings, the same Overlap, same correlation. Are you really providing anything to the marketplace? And to me, if any of those questions are, no, I'm going to pass on that idea or I'm going to wait till I can find out a different way of doing it where you're actually providing new exposure, or else you're not really providing anything for investors that they can already get. And being a smaller independent firm, you know, for me, it's, it's, you know, having conviction in those methodologies. Believing that those methodologies are built to kind of capture what I think that industry is going to look like in the future and be able to evolve to fit that industry as well, to me is really important because that's, you know, that's the credibility that we have. And if we're just slapping a fancy name on something that people could already get exposure to, I don't want to have a part in that.
- [15:19]
Podcast Host
How did you. I'm curious. So you start, you, you started a Pure funds, right? And that kind of ended up a little bit messy. You actually got into a fight with nasdaq, if I got that right.
- [15:35]
Andrew Channon
No, no, no, no. NASDAQ and I are friends to this day. Okay. So. So NASDAQ was one of my partners, and there is a very lengthy judgment in the Southern District of New York for anyone that's interested in looking at that. NASDAQ and my first company that I started, Pure Funds, were on the same side of the table. NASDAQ had actually acquired my original partner, the International Securities Exchange, which I created this group, ISE ETF Ventures. They were an index company that decided, hey, you know, being an index provider, you can only make so many basis points. But if we actually want to take a venture angle and get a little bit more stake and put some money behind these ideas that we believe in, as opposed to just licensing an index, there could be a bigger opportunity. And so, you know, we had first approached them with a couple ideas, one of them being the Junior Silver etf, which became the first ETF that we sponsored. And we went to a white label provider. So essentially someone that tells you, hey, you know, bring your ideas, bring all the money, bring the indexes. You know, you do the marketing, maybe we'll do some a la carte stuff. You know, for you, all these platforms are different, but, you know, we'll be your middle and back office and you can, you know, you know, promote it and you fund it and whatnot. And, you know, you can see in that, in that judgment what, what the judge believed, you know, occurred and unfortunately, we were never able to get those funds back. Not because of the, necessarily the judgment, but just the way things transpired. So, you know, from that experience, I said, hey, you know, if I'm going to continue doing this and bringing products and ideas to market, we need to own and operate our own infrastructure. And that's how Procure was built. We were never going to put ourselves in a position where we created these funds, put all this effort into them, took the financial risk behind them, and let someone just take them away from us. And so fortunately, the judge ruled in our favor. But, you know, I had to start from scratch.
- [17:33]
Podcast Host
So I, I want to, I want to talk a little bit about where you are now with Procure. You've launched this UFO etf. By the way, great taker.
- [17:43]
Andrew Channon
Thank you.
- [17:44]
Podcast Host
UFO etf? What the hell is the UFO etf?
- [17:49]
Andrew Channon
So this was one of those ideas where, you know, I had figured that people one day are going to want to invest in the space industry. And you know, it wasn't until later on in my career that I thought this industry is really starting to shape up and hit some inflection points that I thought was kind of making it turn the corner for its next iterations. And so some of these catalysts that we were looking at were things like reusable rockets. So the ability to significantly reduce the cost of accessing space. You know, a faster cadence between launches because you're not rebuilding a brand new spacecraft every time you want to launch a rocket to space. You know, the vertical landing wasn't necessarily as important, but the reusability in the significant reduction of cost of accessing space. So you think about it, great for SpaceX, right? They're able to, you know, bring in customers, they're able to help them send stuff to space. They're able to utilize their own capabilities to launch satellites for their Starlink constellations and their other projects. But what does that do for the space economy? Well, it opens it up to significantly many companies that would have never thought to even consider what they might be able to do if they could access space. And so making these ideas, these innovations potentially economically feasible was happening for really the first time for the space industry. And so all of a sudden you could be someone who tests stuff out and builds stuff in your own garage. And for a couple hundred thousand dollars, a little over a million dollars, you might be able to get a ride share on a payload to space and test out your, your product to see if it actually works. And that was truly revolutionary. And so, you know, being Able to essentially bridge the gap between, you know, cost and ability to bring things into outer space was. Was truly a transformational change for the space industry. And so that was occurring. But also.
- [19:45]
Podcast Host
Okay, can I ask. You can. Before you, before you go on, because I need to understand. You were in cybersecurity before. That was the other big ETF that you launched. I mean, tell me about how you, like, what do you do to uncover these things? Are you just reading about space and it just sort of struck you or how are these ideas even popping into your head?
- [20:08]
Andrew Channon
So it's a mix. So Junior Silver was one that I was interested in. When the global financial crisis, you know, you know, happened, I basically went all, all cash that, you know, that October I was talking about, I went all cash and I started figuring out, you know, where would I feel comfortable putting in money. And precious metals was something that I, I really started digging into. And that, you know, led to my, you know, kind of thinking of this idea of a Junior Silver etf. Cyber security was actually something that my colleagues at the International Securities Exchange said, hey, we're thinking about this concept. What do you think? And I said, yeah, let's go ahead and let's do this. I also came up with the concept for the first AI etf. We brought it out under the ticker. Eventually we changed it to big D and it was big data and analytics, which essentially is your ticker is big D. It was, it was. And we had some great T shirts. People loved it, but people didn't really understand the theme at that time. And so we had it out there. This was 2003, 15, I believe. We brought this ticker out and people didn't care as much about that one as the first Digital Mobile Payments ETF iPay that we brought out at the same time. And so that one did take off then later on, you know, but that, that was something that I thought, hey, this, you know, big data, you know, AI, all these things are transformational technologies, you know, own the companies that have the data and are doing things to, to better understand and extract value. You know, that was the idea that one like, to your point, was maybe before people were ready for the idea, but looking back, you know, I think the index probably did pretty darn well. Someone came to us who was an expert in video games. They covered the video game market as an analyst. And that was a fun that they brought to us because they saw, hey, this company is doing these innovative ideas. Maybe, you know, this is something that kind of fits into what they're offering. So we ended up doing the first fintech, health tech, video games, drone funds, and a whole slew of them. It wasn't just cyber security, but it was really, hey, what are these early stage ideas? I think people want exposure to that. It's, you know, especially, you know, there might not be a ton of companies here in the US but once you look globally, there might be some more opportunities. I prefer looking at kind of pure play opportunities that I could bring because if I call fund something, I want it to have these types of exposures. The drone one was a little bit broader because, you know, finding pure play drone companies was, you know, very tough back in 2016. So we had to build out an entire strategy around it, which our partners did. But yes, space was one of these ideas. And knowing how difficult of an industry it is and how there's large and small companies from not just the US but from around the world, okay, you know, how do you build out the strategy? And for us, when we found the index that we ultimately licensed for ufo, it was co developed by the former director of research from the Space Foundation. And so while he was there, he actually helped build the model for what became what they used to calculate the size and the growth of the global space economy that they would publish in the Space Report every year. And so he helped build that model while he was there. He said, hey, let's build an index. Let's, let's pick these publicly traded companies, let's put them in an index, and maybe we could license this to a financial firm. And they said, great, go ahead. And then they said, wait, we're supposed to be unbiased and nonprofit, so how are we going to have an index that chooses companies that go into it, that we license to the financial industry for people to invest in? You know what, you go, take that, do whatever you want with it. And that was the iteration of the underlying index that, that our fund licensed. But for us, beyond just, you know, figuring out the universe, the types of companies that are space companies, we wanted there to be a focus on pure play space. So if you look at it, at least 80% of the fund at rebalance is focused on these companies that invest or that generate at least 50% of their revenues from space. When you look at it, a lot of those pure play names are closer to 90 to 100% revenues from space. So that's kind of. It's one thing coming up with an idea, it's another one figuring out what index you think captures that idea, where that Puck is moving that ultimately, you know, has long term staying ability and that people might want to be invested in it. Not just for short term potential catalysts or things like that, but hopefully for, you know, longer term opportunities as well.
- [24:26]
Podcast Host
What do you, what do you think about the current state of the market post the SpaceX IPO? Is it, is SpaceX really the main game in town now or are you still seeing that? I mean, you look at, for example, all of the other space stocks, they ran up a lot heading into the SpaceX IPO. And then once SpaceX launched, kind of these, like these companies are down a lot.
- [24:52]
Andrew Channon
Yeah, even SpaceX itself, you know, there was a lot of excitement in the, the early couple days and you know, now it's trading, you know, back down to even, you know, where the first trades were back closer to the IPO priced depending on the day that you're looking at it. But you know, you look at that and you say, okay, that that's probably healthy. Right. The market had run up significantly, you know, really, you know, looking at, you know, end of December when the rumor came out that SpaceX might IPO, you had all the Reddit traders and you know, thought leaders and you know, covering space and other industries that said, hey, space is this next hot industry. We need to, you know, pile in and find some potential space proxies or something like that. And there were even, you know, ETF companies that would put, you know, private shares of SpaceX via SPV. So not even direct, but through an SPV into the fund. And those funds, I believe, still hold spv. It's a publicly traded name now. Our fund, UFO owns it. We bought it after the IPO occurred. But we hold outright. The fund owns shares of the ticker SpaceX. We don't own a liquid SPV that's charging high fees. You know, just to still have this exposure even after it's already IPOed, it's kind of wild. But you know, SpaceX drew a lot of excitement. I think the excitement and the attention was absolutely deserved. This is an, a truly transformational company. It's pushing other companies to do difficult things and try to compete and also do it at a way that you're driving down the cost of launch
- [26:32]
Podcast Outro/Disclaimer Voice
and
- [26:32]
Andrew Channon
it's even, you know, having, you know, foreign companies also competing. So I don't know if you just heard, but just the other day China announced that they had a successful vertical landing catch of one of their, you know, stages of their, their crafts. So, you know, this, this company has done so much to open up access to space, that the attention was absolutely deserved. Now that's a publicly traded company. You know, just like other publicly traded companies. People look at earnings, they look at revenues, they try to look at comps to other companies. Is something overvalued, is undervalued? Does the multiple make sense? They play the market cap game. You know, does this deserve to be a 2 trillion, a 1.75 trillion, a 1 trillion, a 3 trillion? And you know, they, they look at these, you know, earnings reports and they, they make these decisions and more information has to come out there. So while I believe that SpaceX is, you know, at this moment in time, the biggest, most important player probably in the space industry as far as, you know, the, the milestones that they've hit, the, you know, the customers that they serve. It's, you know, it's governments, it's militaries, it's, it's commercial customers, it's themselves in many cases as well. They're not the only show in town. And there's other companies that are fulfilling other parts of the market. You know, there are some strategies where people are, you know, buying SpaceX and they're buying, you know, the companies that SpaceX works with, partners with, supplies it. But then you also think, well, SpaceX loves to vertically integrate. Elon loves to vertically integrate. I mean, if you're basing it on SpaceX and the companies that it uses, you know, are they going to look to replace them and build out their own, you know, solution set or maybe acquire them? If the price is right.
- [28:10]
Podcast Host
But yeah, I mean, could, could. That's actually where my head was at. I mean, could buy them out. Although he doesn't love to do that
- [28:16]
Andrew Channon
exactly, unless the price was right or reasonable enough. So there's all different ways that people are looking at space. But just from looking at the postmortem after the ipo, space seems like it was overheated and it's now sold off. But space is still a very real industry. And one of the other factors that we looked at beyond just the significant reduction in the cost of accessing space for being a potential driver, was the militarization of space. And that's been this major wave that we're seeing. We're seeing governments, we're seeing military. It is, you know, across the board, space is viewed as strategic high ground for militaries at this moment, now and potentially and likely moving forward. So without space, you know, your military is basically obsolete compared to the global superpowers that are out there. So if you want to compete, if you don't want to be relying on people, you have to build up your own space industry. That's not easy. So you have to be super selective in who you ally with. If you're, you know, Europe, Europe's kind of going in at, you know, based on the European Space agency, the ESA, the U.S. you know, we, you know, space has been collaborative, but we also don't necessarily want to rely on, you know, certain, you know, stuff out of Russia. We saw the buildup of the Ukrainian Russian conflict. This was really, you know, space was like front and center, whether you noticed it or not. I mean, the first talks before the invasion happened was Maxar satellite imagery showing the buildup of troops and supply on the Russian Ukrainian border. And so, you know, that was the start. Then it was jamming of satellites. Then it was Elon providing Starlink satellites for communications. It was Russia banning engine part exports. It was Russia taking hostage at the Bakonor launch base in Kazakhstan of one web satellites which was significantly owned by the British government. And so all of a sudden these major decisions, these long term decisions because space is a long term industry, had to be made. How are we as a country, how are we as a military, how am I as a company going to figure out how to move forward? And we're seeing all these things now being laid and we have this new space race 2.0. We have two space race 2.0s. One is a race for low Earth orbit because the more things we send into low Earth orbit, the more crowded it's going to be. So the ability to get approvals in the future to send things into low Earth orbit might become more difficult, which could drive demand forward for launch.
- [30:42]
Podcast Host
Are there, are there current international rules for that?
- [30:45]
Andrew Channon
So, you know, the main thing that we look at here in the US is the FCC giving, you know, approvals for satellite constellations and things like that. And one of the important things that's probably pulling this demand forward is they have, you know, essentially they'll approve your satellites, but you have to launch about half of them within the first couple of years of that approval or else potentially forego all your future satellites. Right now that's something that Project Kuiper and Amazon is significantly battling with. And so, you know, for them, they need to get these satellites up or potentially lose their ability to launch the full constellation that they have envisioned. Now the FCC might say, hey, you know, it is important and we want to have competition here. We don't want Starlink to win the whole game or a couple companies to win it all. So, you know, maybe we'll provide some flexibility, but there's no guarantee that they'll do it for them. There's no guarantee that they'll do it for the next player. And so getting things into space now is really important because it might be more difficult in the future to get that FCC approval to get stuff in, into, into low earth orbit. The other is, you know, the, the race among nations. You know, everyone wants to be the global space superpower. Getting to the moon is important. Having, you know, orbiting space stations is important. Having your own launch capabilities is important. And, you know, if you're not there, there's a good chance that you could get elbowed out. And so there's this race to put your infrastructure in space, to build it out, to have a presence with legitimate technology that actually works, not just throwing things in the space, just to have something in space. But there is this new Space Race 2.0, which isn't like the early days of the space race, which was more of a vanity project to say, oh yeah, we got someone to the moon, oh yeah, we launched a satellite. These will have real ramifications. And the winners of this, these next couple of decades could potentially put themselves in a place where they are leaders for multiple decades to come. Come because of that.
- [32:40]
Podcast Host
That's. I, I see by the way, you got a lot of space paraphernalia behind you, which is kind of, just kind of, kind of cool. Got a little astronaut, got a little, if you're, if you're watching this on audio, it's, it's, it's pretty, pretty fun stuff. But that makes, that makes a ton of sense. I mean, it's funny, you go back to what we were, you know, why we cared about space before, and everyone's reaction to, is why is the government wasting money on this? And you'd always point out, well, like we invented, you know, we invented so much that there were byproducts that invented the civilian sector. And, but the actual action itself wasn't impacting the world itself. It was sort of the, it was byproducts that were. And today what you're getting is, yeah, you're actually getting genuine changes because of what we're operating in space. I mean, I quite literally just bought a Starlink. It's helping my life. And the reason that it's helping my life is because I record. I'm now a media creator. And if I'm traveling for a conference or for fun or for what else I still have to get on my computer and I have to record. And I'll tell you this, if you're in Europe, the Internet is terrible. Kind of no matter where you are, it doesn't matter if you're staying in a five star hotel. And so I need to get a Starlink. It's changing my life. I'm spending money on it. And so it is going to be kind of interesting to see how things impact, you know, you know, how space actually impacts our world. But I, I want to, I want
- [34:06]
Andrew Channon
to, I, I also a happy Starling customer as well. So I've seen these benefits firsthand. When our power got knocked out, our Internet got knocked out for longer just during the July 4th storms in, you know, in the tri state area. And having Starlink allowed me to stay.
- [34:20]
Podcast Host
Your Internet got knocked out during the July, like seriously, from, from July 4th
- [34:25]
Andrew Channon
until I think it was Tuesday or Wednesday, I was operating.
- [34:29]
Podcast Host
That's third worldest.
- [34:30]
Andrew Channon
Oh, nice. And thanks to space and Starlink and SpaceX, I was able to stay connected and not have it affect my job.
- [34:40]
Podcast Host
Oh, that's amazing. Yeah, I haven't actually opened mine yet because I just got it two days ago. But I'm excited to get it set up and get going. It's pretty fun. I want to talk a little bit about a big problem that people have been talking about, including myself on this podcast. How are passive funds, public funds, being impacted by the fact that companies are staying private so much longer? So SpaceX goes public at 1.5 trillion. If you go back 10, 15 years, ETFs would probably have more access to more companies that are working on world changing technologies. And now so many companies are staying private. I mean, what do you make of that? Is that going to hurt the ETF business?
- [35:21]
Andrew Channon
You know, it's, you know, would it hurt, does it hurt the ETF business? I don't necessarily think, you know, so much. So does it, you know, hurt, you know, potential returns that investors might get, you know, if they're accessing companies after, you know, their market caps are higher and maybe there's not, you know, as much percentage room for growth? You know, it depends on the theme, it depends on the strategy. You know, by no means do I think that that's an ETF killer that these companies are staying, you know, I think it's, it's good that there's, you know, more avenues for companies that they don't have to go public, that, you know, staying private longer could be an option. Staying private forever can be an option. You said you still have, you know, some very large companies that are, you know, private, family owned, you know, throughout the world as well. And, you know, they're still very successful and people can't get access to it. You know, I don't think that, you know, we necessarily. Everyone needs access to private companies. And by the time that you are able to get that access, maybe you've already missed, you know, a lot of that value creation as well. So, you know, ETFs weren't necessarily initially created to, you know, get access to earlier stage companies. You know, kind of the, you know, the advent came out of, you know, the financial crisis in the 80s and there were a lot of issues with mutual funds. So people said, how do we create a different type of vehicle that might not have the same issue where everyone is banging the close across an entire index or entire industry because mutual funds give you the closing price. And so this was, you know, intraday liquidity. And, you know, ultimately, you know, one of the great things in my mind is that ETFs have been able to provide new access and exposure for investors that haven't previously been able to. And because of that, you know, we've seen numerous iterations upon iterations of ETFs providing these, you know, different, different exposures. I mean, you know, this was even, you know, almost a decade ago or maybe even more at this point. But like currency hedge gtfs became, you know, a thing and that was, you know, really novel. And all the leverage ETFs and the leverage up and leverage down. Now you've got single stock leveraged ETFs and you've got, you know, you know, buffered strategies and just so many different types of vehicles, some that were previously just set for like, structured products. And that was the only way you'd get those exposures. Now it's, that's not the case. I mean, ETFs are providing so many exposures, it's not shocking to see that they're starting to provide exposures to private companies as well. Now is that good or bad? Tough to say. Should everyone own private companies? Probably not. Do people want to. Yeah, that's why these ETFs are being created. But, you know, people need to understand, you know, the fees that come along with owning an spv, the illiquidity, the fact that, you know, they could still be illiquid after the company that you're trying to get that exposure to goes public because the fund can't get out of that SPV until a Lockup window is over. So, you know, it is moving in that direction. You know, we're seeing the tokenization of, you know, financial markets and you know, potentially ETFs in other areas as well. So, you know, that's kind of just how ETFs have always been this innovative product. And we're continuing to see more and more layers. Now at a certain point, might that go too far? Possibly. But you know, are we there yet? Hopefully not, actually.
- [38:46]
Podcast Host
Are you looking at that? Are you looking at tokenization?
- [38:50]
Andrew Channon
We've been approached by companies that potentially may want to tokenize different things that we're doing, but we're looking not necessarily for what we have now, but we're working on a bunch of stuff in stealth mode that we're really excited about that we think could be transformational to all different areas of markets and whatnot. And so I think you have to look at tokenization because there are people that want it, certainly AML and kyc and those things are still very important.
- [39:23]
Podcast Host
I, those words give me so much agita, man. Yeah, and they're, they're ridiculously important. But you know, coming from the traditional world where that was just like, you know, your entire life, for better or for worse. I mean, we used to, like all the LPs used to come into our funds. It was a whole thing. But that's good. I want to sort of also talk about what you view as next because you've been good at getting into things early outside of space. Are there any themes coming up that really interest you?
- [39:59]
Andrew Channon
And you know, my problem is, you know, if I, if I, if I say something, people like to take my ideas. You know, there's, there's been a long list of people that have seen products that I've launched that have been successful and, and they, they create the copycats. Even when we were first filing for our first products, people were looking at our filings to say, hey, can we leapfrog them and get approval before them and would look at taking these ideas too. So, you know, one of the downsides of being the ETF industry is that, you know, it's hyper competitive. You know, it wouldn't be a multi trillion dollar global industry if it wasn't competitive. And so I believe that there is still white space. I believe that my company has the ability to, to participate in that white space and hopefully launch, you know, one of the, the most transformational products that, you know, that, that might hit the ETF market for, in years. But you know, everything takes a lot of Work time parties and, and we'll see. But we're absolutely cooking up some, some, some stuff that I'm, I'm obsessed with and I'm, I'm looking forward to seeing if we can get to see the light of day.
- [41:05]
Podcast Host
I'm excited. I guess we'll have to get you back on the podcast at some point.
- [41:08]
Andrew Channon
I cannot wait.
- [41:09]
Podcast Host
Well, you heard it here first. The Procure Am guys are cooking up something awesome. Andrew, this was great.
- [41:18]
Andrew Channon
No, I appreciate it. We've kind of expanded way beyond as a company beyond just ETFs. We also do consulting, we do IP financial IP and it's been eye opening. We get to work with early stage, you know, private space and defense tech companies. I think that that is one of the most important areas, you know, of our economy right now. And I would actually love to see like we had the jumpstart our jobs act and opportunity zones and stuff like that. I would love to see. And you know, I, I don't need to be the one that leads. I'd be happy to if you know, any politicians want to, want to hit us up after the show. But if we could create something similar to, similarly to opportunity zones to encourage US investors and companies to invest in early stage defense tech, deep tech, space, national defense, national security, things like that, that have a true, real lasting impact on safety in American life today. I think that that would be one of the greatest policies our government could put forward. And I think there's a lot of opportunities out there to help America put itself in an even better place than we are right now. And I think some of these policies could be done very easily. And you know, I think there's a lot of room for things like that too. So we're happy to not just be an ETF issuer. We have these other, you know, affiliate companies that we're doing some really, really exciting stuff that I'm proud of.
- [42:44]
Podcast Host
That's actually, that's actually really interesting. So you policies that are opportunities on life to go invest in burgeoning US Industries I think make a lot of sense. I mean, you see Trump now kind of carving out different industries that he really wants investment into. But he's not cluing in your average investor, nor is he. You know, he obviously opportunity zones are kind of available to everybody in a way and these opportunities aren't. I mean he's funding, you know, nuclear reactors now. He's saying we need to invest more in drone tech. He's, he basically went to the hyperscalers and said if you're going to build data centers. You also have to build power supply to those data centers. And so, I mean, these are, this, this is great if the government. And the government is getting more involved in the markets. Kind of every day we're seeing this. They're, I don't want to say picking winners, but they're definitely helping certain people out. For example, Intel, a huge beneficiary of Trump's policies. And that makes sense, right? These aren't necessarily, these aren't necessarily bad things. I think people hear the government meddling in the markets and if you lie on the more conservative side of the spectrum, you might think that it's bad. But sometimes for national security reasons, it's also very important. I think we learned that with the offshoring of manufacturing is that if you just let the free markets go, then it's economically good, but it could actually be long term socially. And not just socially, but it actually could end up economically poor if your competitors end up getting choke points on you, which is what China did. So that's actually. I've never heard that before.
- [44:23]
Andrew Channon
Exactly. Well, so, I mean, you know, we don't need another Solyndra, right, Where the government, like you said, is, you know, picking companies and throwing money and, you know, sometimes it's not necessarily going to the right companies, you know, for all the wrong reasons, you know, but if you're incentivizing investors to say, hey, you know, put your money up and you know what, you might get some more upside down if your company is successful because, hey, you've been creating these things that are going to help better protect, you know, our, you know, our civilization, you know, our, our economy, our country, our safety, security, things like that. I mean, to me, those things, you know, need to be celebrated more. You know, you're a defense company. That doesn't mean that you're, you know, doing bad things. I mean, you might be, you know, helping save lives. And, you know, these areas I think should have, you know, a priority. And, you know, I think there are definitely levers that can be pulled that might get people to say, yeah, you know, I might not create, you know, this better nuclear plant, but, you know, I'm willing to take that risk. I'm willing to do some of these harder things that would benefit our company because they're going to, you know, provide these incentives and, hey, we all win, you know, if these are successful. And so I think there's, you know, there's tremendous opportunities for things like that. And then, you know, we also get to see some really cool things, you know, in these early stages that are being cooked up in small labs across the country, like, you know, propellantless propulsion, you know, things like that, you know, if, that, if you could successfully do that, how far could that leapfrog the space economy? If all of a sudden you have all these different technologies that people aren't even really aware that are, you know, people are working on these sometimes even in garages and, you know, small operations and things like that. But if, you know, any of these technologies become successful, you know, you need to expand your imagination of what the space industry can become, what other industries can become become. And Joe, I, I think that that's, you know, even more exciting than the work that we do bringing out ETFs is some of these, you know, projects that we work on with, with entrepreneurs and innovators. And, you know, I think that's, you know, some of the cooler things that having had a successful career in etfs has opened up opportunities for us to get involved in as well.
- [46:23]
Podcast Host
That's awesome. So if somebody's building something in their garage, they can call you.
- [46:26]
Andrew Channon
Yeah.
- [46:27]
Podcast Host
All right, let's, let's, let's, let's get, let's get it done. If any, if any of the listeners out there right now, if you guys are building something interesting, reach out to Andrew. Andrew, this was, this was a pleasure. Thank you so much for coming on the Thousand X Pod. I think this is going to be, this is going to be a banger one.
- [46:42]
Andrew Channon
So I really, I really appreciate it. This is a blast. We, we could spend hours. I, I had a lot of fun on this. I love the, love the format and hopefully we can do this again soon.
- [47:07]
Podcast Outro/Disclaimer Voice
Nothing said on the Thousand X podcast is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of One KX Media. Our hosts, guests, and the One KX team may hold positions in the company's funds or projects discussed.