Reindustrialization, Data Center Gold Rush, Death of The Allocator, National Security, & Capital Flows with Michael Levy (#425)

Summary

POWERS Podcast #425 — Reindustrialization, Data Center Gold Rush, Death of The Allocator, National Security & Capital Flows

Host: Chris Powers
Guest: Michael Levy (Crow Holdings)
Date: July 29, 2026

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Overview

This episode dives deep into America’s seismic economic shifts—a resurgence of reindustrialization, the data center buildout frenzy, national security's new role in investment and development, and the dramatic transformation of real estate capital flows. Michael Levy, CEO of Crow Holdings, and Chris Powers discuss why America is rethinking its supply chains, the risks (and opportunities) in the data center gold rush, and how the classic “allocator” model in real estate has reached its limits, all underpinned by generational and technological change reshaping what prosperity looks like.

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Key Discussion Points

1. The Reindustrialization of America: Causes & Consequences

Main Idea:
The U.S. is undergoing a massive socioeconomic and industrial transformation, undoing decades of offshoring and rediscovering the value of physical infrastructure and making things "with our hands."

Key Insights:

• The Limits of Outsourcing: Michael recalls growing up as his father’s textile career collapsed with factory relocation to Asia. He relates this personal story to America’s broader fragility exposed during Covid, when the U.S. couldn’t even produce masks.

  “We can’t make much of anything in this country. We don’t celebrate people who do things with their hands...Finally we wake up that everything we were taught for nearly 50 years has put us in the most fragile place.” – Michael, [00:00 - 05:45]

• Historical Reversal: America is shifting back from globalized supply chains to valuing resiliency and national security, with huge capital going into infrastructure, manufacturing, and energy.

  “The things that are going to matter to us most are resiliency and national security...the business opportunity has changed dramatically.” – Michael, [05:45]

• Mega-Projects Are Catalysts: Michael and Chris discuss the TSMC plant in Phoenix and 55-million-square-foot chip plants now going up in Texas. These investments spark waves of traditional real estate (housing, retail, logistics) and entirely new manufacturing ecosystems.

  “I toured the new TSMC plant...dotted around it are thousands and thousands of homes...retail that pops up...traditional industrial parks become manufacturing parks.” – Michael, [05:45 - 08:15]

2. Young America: Generational Shift in Values and Work

Main Idea:
A new generation, often maligned as lazy or “screen-bound,” is actually driving the patriotic, entrepreneurial, and hands-on resurgence in the U.S.—especially outside the coastal bubbles.

Key Insights:

• Patriotism Re-emerges:

  “These kids...are super patriotic, they really want to win and their world is actually getting back to...hardware, like doing stuff with their hands...Walking into one of those factories is like Christmas.” – Chris, [09:17 - 10:09]

• Regional Nuance: Generational renewal is most intense in the South, Midwest, and regions with manufacturing legacies.

  “It’s probably Southeast, south, up through the Midwest...I was in Hawthorne interviewing an ex-SpaceX guy...the whole area is patriotic.” – Chris, [10:30 - 11:36]

• A Shift in Tech’s Relationship with National Security:

  “It was not but five, six, seven years ago that these companies would disdain a discussion about helping the US government...It’s just interesting to watch that shift.” – Michael, [11:36]

3. Capital Flows: The Data Center Gold Rush & its Constraints

Main Idea:
There’s a feverish race for data center sites and power capacity, but massive constraints—capital requirements, power allocations, and infrastructure bottlenecks—mean the opportunity is real, but sharply limited and mostly for giants.

Key Insights:

• Unprecedented Scale and Capital Needs:

  “We went from a 10-megawatt data center being enormous...to if it’s not a gigawatt, nobody wants to talk about it...You read demand schedules, we need a hundred of these around the country to meet demand...how does this work?” – Chris, [23:09 - 24:12]

• Power is the Choke Point: Utility companies now demand deposits of several $100 million years in advance, filtering out all but the largest players.

  “...we can get the power, large power, hundreds of megawatts, but the deposits are a million dollars a megawatt. And the contracts...say, I’ll maybe give you the power in five years...Not a nut that ‘normal’ companies can crack.” – Michael, [25:36 - 28:56]

• Obsolescence Risk Looms:

  “There’s probably a chip coming out...we don’t need $20 billion data centers anymore...some breakthrough’s coming.” – Chris, [31:21 - 32:21] “Obviously this is the obsolescence risk...most pronounced in the LLM training data centers in the middle of cornfields.” – Michael, [33:02 - 34:18]

• Notable Moment:

  “A billion here, a billion there...it’s real money.” – Michael, [30:04]

4. The End of the Allocator Model in Real Estate Investment

Main Idea:
The classic allocator—just raising money to place with operators—is dying. Scale, integration, and ability to add differentiated value through capabilities like development, credit, and true operating knowledge are now essential.

Key Insights:

• Industry is Mature, Highly Consolidated:

  “The industry’s mature and consolidating at a rapid pace...allocators by their design are being replaced as investors want operating models.” – Michael, [49:36 - 52:15]

• Opaque Performance: The “biggest” firms win fundraising through reputation and risk mitigation, not investment outperformance.

  “The largest real estate investment managers are not necessarily the best performers...it’s product development, sales, distribution.” – Michael, [54:22 - 55:08]

• Small Players Can Survive Locally:
  “There’ll always be room for that on a local level...for the guy who invests in buildings around the block.” – Michael, [59:48 - 60:19]
• Operators Must Differentiate:
  “If you’re not selling or merging, you really need to figure out how you differentiate your business model.” – Michael, [61:19]
• Crow’s Edge:
  Crow integrates operating knowledge, real development muscle, multi-market presence, and niche expertise (e.g., small retail) to set itself apart.

  “We have one of the best development companies in the country...That informs us on the investing side when we buy or finance properties.” – Michael, [66:41 - 69:41]

5. Changing Social Status of Work, College, & Skills

Main Idea:
A cultural and economic reckoning is underway regarding the value (and ROI) of college, with trades and “blue collar” careers regaining respect, driven by market demands for skilled labor.

Key Insights:

• Collegiate-Industrial Complex:

  “We talk about the military industrial complex, [but] we've created this whole collegiate industrial complex ... designed to self-perpetuate.” – Michael, [41:00]

• Revaluing the Trades:

  “Those electricians working on that data center in Abilene...hundreds of thousands of dollars.” – Michael, [45:54] “The master electrician is the new Google engineer.” – Chris, [45:59]

• Entry-Level White Collar vs. Trades:

  “All those kids who went to school for coding even five years ago...now they're like, 'I can't get a job.'” – Michael, [46:03]

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Notable Quotes & Timestamps

| Timestamp | Speaker | Quote | |------------|----------|-------------------------------------------------------------------------------------------------| | 00:00 | Michael | “We can’t make much of anything in this country. We don’t celebrate people who do things with their hands.” | | 05:45 | Michael | “In the great arc of history, America as a country is changing dramatically...resiliency and national security.” | | 09:17 | Chris | “These kids...are AI native, super patriotic, really want to win, and their world is getting back to hardware.” | | 23:09 | Chris | “We went from this world where a 10 megawatt data center was enormous...now, if it’s not a gigawatt, nobody wants to talk about it.” | | 25:36 | Michael | “We’ve had some situations where we can get the power, hundreds of megawatts, but the deposits are a million dollars a megawatt...not a nut that ‘normal’ companies can crack.” | | 31:21 | Chris | “You just know there’s a chip or a technology solution coming out that’s like, oh, we don’t need $20 billion data centers anymore.” | | 45:59 | Chris | “The master electrician is the new Google engineer, right?” | | 49:36 | Michael | “When we say the allocator in the investment management world is dead…it’s clear the industry is going to integrated operator models.” | | 55:08 | Michael | “It’s product development, sales, distribution...not necessarily investment performance driving the growth of these organizations.” | | 66:41 | Michael | “We have one of the best development companies in this country...that informs us on the investing side.” | | 77:53 | Chris | “Is it kind of like, we need to raise a billion—who’s going to be in it—or do you work for every dollar?” | | 79:50 | Michael | “There’s definitely a fatigue that’s grown in the industry right now...The 20s could be a lost decade in real estate.” |

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Timestamps for Major Segments

• 00:00–06:20: The fragility of “outsourced” America & awakening to the need for resiliency
• 07:10–11:30: Massive U.S. fab/plant projects & the multiplier effect for traditional and new real estate
• 14:00–17:25: Online/offline worldview divide; travel as a fix for tribalism
• 21:18–36:22: Data center energy & capital wars; obsolescence risk; market/utility bottlenecks
• 39:26–48:55: Rethinking college, ROI for the trades, “master electrician is the new Google engineer”
• 49:36–61:19: Death of the allocator, rise of the integrated operator, mega-trends in real estate capital flows
• 66:41–73:58: Crow’s unique integrated approach—why niche, local expertise and true development capability matter
• 75:45–79:50: Fees, market positioning, and why there’s “no fear of missing out” in current real estate investment landscape

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Memorable Moments & Takeaways

• Resilience & National Security are Now Business Fundamentals: Covid and geopolitics have ended the era of “cheapest wins all.”
• Mega-Investment in Infrastructure Cascades Through the Economy: New chip plants, manufacturing centers, and energy investments will drive related real estate booms.
• Biggest Constraint Is Power (and Capital), Not Land: Data centers’ growth will be throttled—only the giants can play.
• Cultural Shift: Hands-On Work is Cool Again: Skilled trades now offer massive earning power and esteem; the college premium is increasingly questioned, especially for commoditized white-collar paths.
• Real Estate Investment Is About Scale and Capabilities: The allocator middleman is fading; success requires true local or operational advantage, niche focus, or massive distribution scale.
• Market Fatigue and Flat Returns: Real estate is facing a post-boom malaise—the 2020s could be a “lost decade” unless new value creation models emerge.

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Conclusion

This episode captures a profound inflection point: where America rebuilds not only its physical infrastructure and supply chains, but also its collective philosophy of work, education, and investment. As the data center gold rush meets hard limits, generational attitudes shift, and the allocator model is superseded by integrated operational expertise, new opportunities emerge for those willing to adapt. Yet, for all the flux, Michael and Chris repeatedly stress: success and resilience now hinge more than ever on being nimble, tangible, and authentically connected to the foundational needs of the real economy.

Transcript

[Michael]

We can't make much of anything in this country. We don't celebrate people who do things with their hands. We celebrate people who go to college, and we subsidize their ability to college through loans, which increases the cost of college, and then they become subservient to loans and all these things.

[Pal]

The question isn't like, should your kid go to college? Should they not? But it is kind of about the relevance of college, because in a world of AI and in a world where working with your hands is going to be more important, again, a lot of what you learn in college is irrelevant.

[Michael]

All those kids who went to school for coding, even five years ago, this is the holy Grail, and you're going to be set for the rest of your life. And now they're like, I can't get a job.

[Pal]

Is the market ticking up?

[Michael]

There's definitely a fatigue that's growing in the industry right now. The 20s could be a lost decade of real estate. Our country is at risk in a way that we never realized. And so the big arc of history has completely swung.

[Pal]

Let's talk about something awesome, okay?

[Michael]

Let's step way back from the real estate business and really let's talk talk about society and our economy and, you know, what's happening in the world that we live in, in the great arc of history, right? The big arcs. There's a really big arcs of history, which are hundreds of years millennials. And you talk about empires falling and declining, and maybe let's go a little zoom in a little more than that. And this is just something that's been on my mind for the past couple years and affecting the way I think about the world and affecting our company and our business. When I went to college, which is well in advance of you going to college, it was, I wouldn't say the very beginning, but it really was near the beginning of let's outsource everything. We were taught that guns and butter move everything to where it was the lowest cost provider and the competitive advantages that they had. And America was on the move. And I experienced it personally. My dad was a sales rep for American down in Georgia and South Carolina, American Manufacturers of textiles. And when I was a little kid, dad was doing pretty good. But at about 10 years old, my father's career started to collapse. And it started to collapse because all of these mills were now moved over to Southeast Asia. And I. I'm a kid. I don't interpret what's going on, but I watched that happen to my family without even realizing the broader Arc of history. And then I go to college, and I'm a econ and international business major. And you're taught like, okay, do this. And so we spent all these years outsourcing all our capabilities. And then about 10 years ago, right from a political perspective, other perspective, people start to wake up and realize, like, wow, we might have a problem. And then along comes Covid, and we can't even make a paper mask. We can't make much of anything in this country. We don't celebrate people who do things with their hands. We celebrate people who go to college, and we subsidize their ability to college through loans, which increases the cost of college. And then they become subservient to loans and all these things. And finally we wake up that everything we were taught for nearly 50 years has put us in the most fragile place. And so in the great arc of history, America as a country is changing dramatically. And the things that are going to matter to us most are resiliency and national security. And along with that happened at the same time as America's hegemony, which was a fluke coming out of World War II. It's over, and the world is a far more dangerous place. And so to have an incredibly fragile supply chain dependent upon the world of which you may not be friendly with our country is at risk at a way that we never realize. And so the big arc of history has completely swung. And I don't think that's a political point of view. I don't think that's a Republican point of view or a Democrat point of view. I think that's a truth that most Americans understand at this point in time, and that changes the business landscape for all of us. And that's something that I've been thinking a lot about in our company. And I think it's the most important thing that will define. People often ask me what's going to be my impact. I think it's that. And so our company has moved day by day, step by step, slowly, carefully. But we have moved into the energy business. We've moved into the infrastructure business. We've moved into the national security business. And real estate. Our core competency and our core capabilities is obviously part and parcel of this word called infrastructure. But the framework and the landscape and the business opportunity has changed dramatically. And I think that's one of the most interesting things to talk about in business today. Now, look, I'm not alone. Everything I just said, most people get. Most business people get. So I'm. It's not. It's not like what I've said is particularly, you know, forward looking or clairvoyant. But it has affected the way that I as a business person think about our company and, and are spending time with our teams, you know, building out new capabilities and building out new teams and building out new areas of the firm. And I just think that's a really interesting place to spend your time talking about today. There are examples of it. I just toured. We opened an office recently in Phoenix, Arizona to build apartments and we had built some over time, but we had just recently opened that up with a terrific eye. And I toured not inside, but outside. I tore the new TSMC plant. My understanding is they're going to spend $165 billion to build the plant. These are big buildings. I mean you should. It's really cool to go see it. And dotted around it are thousands and thousands and thousands of homes and apartments. And there's going to be millions and millions and millions of square feet of industrial and there's going to be retail that pops up. So there's going to be traditional real estate that comes from these big infrastructure projects all over this country. And then there's going to be new manufacturing centers. There's going to be places in the heartland and other other areas that, you know, traditional industrial parks become manufacturing parks and people are going to need to build the infrastructure for that. I think it's a really interesting way to think about the next decade, the next two decades in this country. Certainly from a real estate perspective or an infrastructure perspective.

[Airshare Representative]

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[Pal]

that's flyarshare.com I think we could break this down in so many ways. And just to piggyback off that TSMC, the tariff AB going on in Grimes County. 55 million square feet.

[Michael]

Really?

[Pal]

55 million square feet.

[Michael]

That is hard to imagine.

[Airshare Representative]

It is.

[Pal]

It's 1700 football fields. To walk around the exterior of it would take you two and a half hours. That's one ship plant in Grimes County. Then you're talking about what you have. You're talking about everything going on south near the Austin area. And this is just the beginning. I mean, this is like the. The re industrialized movement started. It was probably noticed 10 years ago. Probably took three or four years of politics to start putting it in place. And it's like here and a lot of the meetings that I've been sitting in, and I'm sure you've been sitting in, like, there's stuff happening that isn't even announced yet. Like, you're just. These are no, like, I remember a million square foot Amazon facility was like, holy cow. Then it was like, man, 3 million feet. These guys that we're talking about, this is on a whole new level. And you're right. All the venture capital has gone from funding HR, SaaS software. How many more of those do we need?

[Michael]

Delivery apps.

[Pal]

And Palmer Lucky Evanduril gave this good talk the other day, and he was just saying, he's like, look, the capital market show you what's important. Just look where the money's flowing and you can actually see where everybody aligns. Where is it all going? Defense, AI, infrastructure, national security. And I think this younger generation that's grown up, if you're like 25, you've lived your whole life in America being told it's shitty, that we're racist, that we're terrible, that were on stolen land, that were, you know, you can't be a guy. You can't be like, it's just been this mess of like, who we are. And you're seeing these young kids.

[Michael]

I've.

[Pal]

I've started to meet them and they're like, resilient. And they're like, hell, no. We want to. We want this country to win. And there's that book, the Fourth Turning. I don't know if you've ever read it.

[Michael]

I've heard of it.

[Pal]

It's amazing. But it basically, like, the thing is, the world changes every 25 years and seasons. And it's like, as soon as you think the world's going to collapse and like, fall apart, humanity, like, saves itself. Like, we won't let ourselves do that. And we're in this Moment the book would describe as the fourth turning, but it basically describes like no, this next generation who's also gotten the flack of like they're not going to know how to do anything. They've just played video games forever. Like they just stare at screens. You actually go start meeting these kids. They're like AI native, they're super patriotic, they really want to win and their world is actually getting back to what you described as like hardware, like doing stuff with their hands. I mean factories. Do you walk through now with like those huge American flags hanging down the side? There's like nothing that gets me. It's like Christmas walking into one of those.

[Michael]

Do you think that your observation on generational change is impacted regionally? You said they're patriotic and they're focused on working with their hands. Do you think that you see that more down in the south than you see it in the Northeast, on the west coast or. I'm not sure you're sampling of that in the young people you interacted with.

[Pal]

It's probably like uh, that's a good, that's a great point. It's probably Southeast, south, up through the Midwest. Um, there was a conference like three weeks ago that I followed on X called Reindustrialize and basically it was every venture backed all the Elon spin out companies but they huge had this huge, basically like it's called re industrialized and just watching it online in the posts, it just, it was the most like entrepreneurial, patriotic. Now that was held in Detroit and apparently Detroit is incredible, never been but they have the bones of what? If you wanted to Reindustrialize that would be a good area to do it. But I was in Hawthorne, I'll tell you this, I was in Hawthorne the other day interviewing an ex SpaceX guy who's putting satellites in space. And the whole Hawthorne area is patriotic now, maybe not broader, we could talk about other areas. But you drive through that industrial park, it's like Tesla, SpaceX and then like a million space companies.

[Michael]

Isn't it interesting though it was not but five, six, seven, eight years ago that these companies and the people work for these companies would disdain a discussion about helping the US government or the military. And you can look at that as a matter of well, they've grown and they've matured or you can look at it cynically like it's the profit motive. And it was just interesting to watch that shift that happened. The other shift that happened obviously is those same companies and the people who seem to work for them generally were Very focused on issues such as climate change, for example. And when the demand for energy became, all of a sudden, that went out the window. And it's all of the above in energy at all costs. And so it's been really interesting to see the societal and cultural changes that have happened, that it's accelerated so quickly. I think all for the good. And I'm not. It's just interesting to watch that. So I'm glad it's happened. You know, I just. I just wonder is, is. Is this happening nationally, or are we sitting down here in Dallas, Texas, seeing it through a lens that reflects part of the country as opposed to all of the country. But I'm sure it affects all of the country to some extent, probably regionally and in. In. In different ways. I hope it covers the whole country.

[Pal]

Yeah, I do, too, I would say. And we, We. This even relates to real estate, but there are migration patterns that would show. And I don't think that people are just moving down here just so they can be close to, like, defense companies. But I would say it's a broader thing, is, like, the areas that. I think there is an overwhelming groundswell of people that want to love our country again. And maybe again, I'm living in a bubble. But you talk to most people around the country, and Marc Andreessen said this on a podcast the other day. He said the world has gotten to where you're either too offline or too online, and your worldview is so dramatically different. So if you wake up every day, you're never online. You're just watching, like, mainstream media, you have such a different world than if you take your news in through online. And those worlds are so polar opposite. But when you kind of just like, step back from both those. And when I talk to most people, everybody's generally on the same page. Like, once you kind of get rid of the noise, it's like we're all pretty much fighting for the same things. Now. We can be pulled in either direction by certain things, but it's very rare I meet somebody that I'm like, we are so different in every way. And again, maybe that's because I'm where I am.

[Michael]

Yeah, I think we become. When you're anonymous, people become. They bring up sometimes the worst of themselves. It's like when you're driving in traffic and people are honking the horns and cutting people off because they're hidden behind windshields and they're kind of anonymous from each other, they behave horribly. I think the Internet and social media brings out that side. But when you meet people and you talk to them, generally speaking, you might have some ideological differences, but can find more. More meeting in the middle.

[Pal]

Well, it's like most people want a tribe to fight for.

[Michael]

Yeah.

[Pal]

And so you just fight for your tribe. But in reality, like, if you just kind of sat with, like you're, you're fighting to fight, but if you really just were forced to sit in a room with your opponent for a day or two, you'd probably leave the room back. Yeah, we're actually pretty good buddies. Like, we're. This is totally dumb.

[Michael]

Well to, you know, and so therefore what we need to do, everybody needs to get out more, get out of their bubbles and physically go out and, and see new places and visit new places. I had went to a couple weeks ago, I had the chance to go to Baku, Azerbaijan, and what an amazing place that was that. It's nestled right along the Caspian. Its northern neighbor is Russia. Its southern neighbor is Iran. Its western neighbor is Armenia, and right next to Armenia is Turkey, and its eastern navy is the Caspian Sea. And Baku, Azerbaijan, which is right on the Caspian Sea, was actually the first place in the world or one of the first places that commercial oil and gas exploration occurred before it occurred in the United States and Pennsylvania. So it's been a. Been a fascinating country, but it's an all secular country. Completely secular. The population is all Muslim and it has been tussled between Russia and the Persian empire in Iran for 200 years and 35 years ago gained its independence. But you might speak to a lot of Americans who would think, oh my God, that's such a foreign place. And their backgrounds, and they were former Soviets and all the things that go through people's minds, they're awesome. They're just like you and me. They want the exact same things. They're looking for peace and prosperity and they want their kids to do well and they're interested in the world. And that's the way people are everywhere. And yet we vilify each other as we sit in our tribes and we go to war over it. It's sad. People need to get out more. One of the things people always write about is how few Americans have passports and how little we see. But that number's exploded in the past 30 years. Americans are traveling a lot more and seeing more of the world. And also you see in this FIFA World cup, all these foreign people coming here. No way. It's a select few, or maybe social media is exaggerating, but they're like, wow, this is great. In America, we were. We were taught this was terrible, and this is fabulous. I think we all need to do that more. I know it costs money, so I'm not saying it's easy, but it's important.

[Pal]

Every time I've left the country, I come back with a just better perspective. One, more grateful for what I have. But two, like you said, like, everybody's kind of directionally fighting the same fight, and there's a lot of cool areas around the world. Like, it is a good place. If you get off the Internet and you get off the tv, do you

[Michael]

have habits that evolve and change over time with the way you engage with the online world? Or are you. Are you right now disciplined or undisciplined? Or what do you do?

[Pal]

Yeah, I will. One, I have an app on my phone called Opal that is. I can turn off. I basically can't do anything but phone message, email. And every app is locked down, and not in the way that, oh, if I just want to, like, bypass the app, I can turn it all back on. It's locked down. Like, you have to email the company. They have to unlock your phone. So when I'm. When I want to stay focused, I do that. And I've realized, I mean, I don't know about you. Like, when you don't have your phone on you, you catch yourself, like, patting yourself for it. It's become habit. As far as, like, how I read it, I read only X. Really. That's pretty much where I get all my stuff. And I have, like, categories that let you categorize things. So I have categories where I just won't see the politics. I'll see tech. I'll see energy. I'll see business. I'll see stocks. Occasionally, I'll venture into the political scene Just. Just if I really want to torture myself. But I probably spend an hour or two on that, a day maybe. And then I just. I'm trying to get in a better habit of just calling people. Like, okay, somebody called. Somebody called me the other day, and they called me, and I was like, what's up? And they were like, nothing. They literally were just like, I just want to talk. I was like, it, like, tripped. I'm like, wait, you don't have an agenda? We don't have to do something? He's like, no, dude, you've been my friend for, like, 20 years. We just haven't talked for a while. That alone, I'm like, man, that we've gotten so far from that, where the cell phone is like business only men

[Michael]

are particularly bad at that.

[Pal]

Oh, they're terrible.

[Michael]

We're terrible at that.

[Pal]

But on the vein of talking to people, even if it is with an agenda, you realize really quickly whether it's what we're doing today in person, like you just gain a lot from even 15, 20 minute check ins with people. Hey, what are you doing? What are you working on? What are you thinking that you'll never get in a text? And so that's kind of my deal. I don't watch any media on TV and I haven't for a while. And that's not like. Cause it's all fake or whatever. It's just the new media is here. Like what we're doing here. There's no script, there's not a million people working for the podcast that are going to edit this and make it a narrative. And the new media is here. And you now when you see the old media and you watch it, you just realize really quickly like they don't really talk to each other like normal people talk to each. It seems very scripted. It's a show, it's a play.

[Michael]

I couldn't agree more. The only issue with the new me, the truth. Conversations like this, where people are having conversations and discussion, it does take a lot of time to consume it. And so that's the only. No, the old media was snippets and sound bites and quick and they could get these points across and get their agenda points across and they could do it quickly in this current environment. It's like, let's say you're interested in Joe Rogan. It's like a three and a half hour commitment. Yeah. Who has three and a half hours?

[Pal]

You know they are saying for the 28 election though, like they don't think you can win again. We'll see what happens. They don't think you could win the general election if you don't go on the Rogan show. That's kind of what obviously Trump and they all went on Rogan, the other side didn't. And they think if the other side had, they might have had a better chance. Now I don't know if Rogan is the, the, the, the gatekeeper of it all from. But he has such a broad audience. So whether it's Rogan or you won't be able to win the next election without doing like a three or three and a half hour conversation where no amount of media training could keep you on guard.

[Michael]

By the way, I think that's terrific.

[Pal]

It is terrific.

[Michael]

You really get to the heart of. If you make the time listening to people who are going to represent you in this republic, which is so critical, I just wanted to hit you up a little bit on the data center side. I'm curious. One of the things that I've seen being the industrial development business for so long, we obviously have seen a lot of land that has wound up as powered land and we have not historically gone vertical, but we've profited from that dynamic as others have taken the land from us and built vertical buildings on it. We're doing that now, but we'll get back to that in a moment. But one of the things that seems to have changed in the past year is the deposit costs for electricity years in advance of getting that, which has gone up in some municipalities a hundredfold. So I'm just curious, as a smaller data centered developer, you know, have these deposits come your way? Have you been in the position where you need to put, you know, $50 million down for 50 megawatts that might come in three to five years from now? Or have you been, you've been lucky enough to.

[Pal]

Our goal is to do the upfront work enough to get to a point where we also can bring a tenant in tow, where basically we can work on it together as opposed to being like a speculative. Like we'll just keep pumping money into it, getting it to a point and we can talk about the capital markets around that. It's really hard to find capital to do anything speculative.

[Michael]

But even the tenants who. Getting the attention of the large tenants three to five years in advance of maybe getting the power, they've got a lot on their plate right now. They're very focused on, I need capacity in 2028 and 2027. And you want me to spend time with you on something that's five years out and a maybe how. How do you get their attention on that? Or, or you're figuring it out as we say.

[Pal]

I think, I think that we took an approach which I don't know if it's right or wrong, but you're right. You said three to five years out. I mean some of the. So we went from this world where like a 10 megawatt data center was enormous, to where like two years later, if it wasn't a gigawatt, it was like nobody wanted to talk about it. And now you're seeing the world snap back to wait, we'll just take anything that's kind of available and, and these big mega gigawatt or even 200 gig plus 200 megawatt plus these are big projects. These are capital. Like there's only so many people that can even do these. And there's still no proven offtake for any of this stuff.

[Michael]

No, there's no proven offtake. Although, you know, folks like Blackstone are creating vehicles.

[Pal]

They'll figure it out.

[Michael]

Yeah, someone.

[Pal]

But, but like if you take like a, a stargate, that's like 10 gigawatts. Like what's the offtake on that? Some CMBS market or that's a hundred billion dollar project.

[Michael]

And these big projects in the middle, these big LLM training projects. You know that the question of obsolescence is actually for those. As opposed to inference or infill locations. That's a real question for sure.

[Pal]

You had Oracle, OpenAI, Blackstone or. I don't even know if it's Blackstone, Blue Owl. Like the biggest companies in the world all had to come together to finance one project. Like, and then, and then you read demand schedules. It's like, oh, we need a hundred of these around the country to meet demand. It's like, well, where does the, how does this work? So that's a whole nother.

[Michael]

Don't worry about it. Figure it out.

[Pal]

That, that is, I think that's the, the general answer. So we were, we just said look, there has to be a lot of demand for sub 75 for the rest of the Fortune 500 because even on the big sites there's only 7, 8, 10 companies that can take them. And so for the sub 75, if you stay sub 75, it's a different set of requirements without, without all these huge deposits and, and everything else. Um, the site that we're working on, that's much larger. I, I can't get too. But that, that, that, that money, that money's there and that's been in the queue for three years. Um, but to your point, if we were just starting today,

[Michael]

the, the, the easy money has been made.

[Pal]

It has. And we all know a few of our buddies that have, you know, thought they were getting into an industrial or home home deal and it ended up having a 345 line running through it and substation nearby.

[Michael]

And we benefited from that ourselves on multiple occasions.

[Pal]

How are y' all playing it? Like, are y' all playing it?

[Airshare Representative]

Or.

[Michael]

We, we did this enough times where we acquired land to build warehouses on and someone else figured out the power and we sold the land and benefited from it. And then our guys in the field, broadly speaking, without being data center experts, started to say, hey, maybe we could Work the power angle and utility company. Now at the same time we were building out a renewable energy business and those guys and that capability informs the real estate business. So there was a little bit of in house knowledge and expertise that was developing. And so over the past couple of years we have, I don't know, about a half a dozen sites, give or take that are in various stages of power allocation at the same time. In the past year, a number of those sites, it's become clear one, we've had some community backlash. You know that's happening, you know that's happening. It's real. And we've had some situations where we can get the power, large power, hundreds of megawatts, but the deposits are, you know, a million dollars a megawatt. And the contracts with the utility companies basically say look, in five years I'll maybe should probably will give you the power. Meaning your recourse to them is limited in these. They're public utilities. So I'm going to put up a, you know, pick a number, 500 megawatts. I'm going to put up a $500 million deposit five years in advance of having the power allocated to me with various outs. You know, that's a, that's not a nut that let's just say normal companies can crack. And if that's where we're going as a country, then the business is an oligopoly because you'll need the massive investment grade balance sheets in order to provide letters of credits or pursue it. And the industry hasn't figured this out. The utility companies are doing what they need to do and we're here in North Texas and I'm going to get the numbers wrong. But this has been public. Encore, which is our electricity transmission network, currently delivers 32 gigawatts of power for North Texas. And their business plan is over the next five years to build enough telephone poles to deliver another 32 gigawatts. I think their Q right now is over 300 gigawatts of demand. So how do they ration that? Well they can't under, you know, the federal law just willy nilly say well I'm giving it to you, I'm not giving it to you. So they need a fair structure to put in place and. Right. And by the way, Encore is not doing it economically anywhere near these levels because it's Texas and they're trying to be business friendly. But other utilities, for example in the Northeast we have a utility we've been working with for a 750 megawatt power allocation and they want $580 million. I understand why they're doing it because they have to ration the allocation of power and it's one way to shake out a lot of market participants. And that's what's going on in the business right now. And I think the real estate developers who've bet their ranch on this strategy, I, you know, this game changed in the past year. We, in addition to what was occurring in our business as a result of acquiring new land and pursuing, we happened to own some land in Dallas for 65 years that just happens to be really well suited in terms of its location. It's a very infi. Location for a data center project. And we were, you know, lucky enough to put in a request for power before ChatGPT became a household name. And so we have a 250 megawatt project that we're building right now in Dallas. But that's something we put into play years ago. I think today if you and I went to Encore and said, hey, I have a demand for 250megawatts, it's get in the back of the queue, buddy, and we'll see what happens in the future.

[Pal]

So is that just a shell that you're building or are you going to.

[Michael]

No, we'll be turned tire. We'll be turnkey. Will be fraternity on the project.

[Pal]

Is it spec or do you have a tenant?

[Michael]

We won't do spec. And we're in advanced negotiations on the, on the project. And it'll, it'll be a couple of buildings themselves. But these things are not for the faint of heart.

[Pal]

And it's like 30 million a megawatt all in.

[Michael]

I can't speak for anybody else's projects. Our projects is, you know, a bit less than that. Okay, a bit less than that.

[Pal]

Yeah, but still, Even if it's 10 million a megawatt, that's a two and a half billion dollar project.

[Michael]

Yeah, no, it's, they're, they're not.

[Pal]

They're big.

[Michael]

They're big. This, everything's a billion.

[Pal]

These, a billion here, a billion there.

[Michael]

It's real. It's real money. Well, we've had inflation the past five years. You know, it's just true. Everything, it's amazing.

[Pal]

It's amazing. But just like 4% a year or whatever the.

[Michael]

But not since, I mean, past five years. Inflation. I know we're, we're veering off. I do want to get back to business models, but this. Inflation's been a real thing in real estate. You Know what? I get it that Americans all over the country are upset that the, you know, the price of housing. I got it. It's unaffordable. But the cost of building has skyrocketed. I mean, just I look at, you know, we have, we have buildings that we built for $800 a foot five years ago, and when we bid the jobs out now they're 1200 a foot. And if you don't have the rental growth, you know, this inflation is really putting stress on, on, on the real estate business. And obviously it's help at creating values in built real estate, but it's putting stress on the development of new buildings.

[Pal]

We'll get back. So when you think of data centers.

[Michael]

Yeah, sorry. We're all over the place.

[Pal]

We're going to go all over.

[Michael]

I love it.

[Pal]

The other thing, like there was a company announced yesterday. I think if I had a view again, is not some novel view. There's probably a lot of people that share this. You just know there's a chip that's coming out or a technology solution that's coming out that's like, oh, we don't need $20 billion data centers anymore.

[Michael]

Sure.

[Pal]

We could just connect every house in America and put chips in people's bedrooms and like, you know, just like the cloud was built.

[Michael]

Yep.

[Pal]

So we're looking at things through this lens where the, the. The wall of capital needed and the. Even if you had the capital, we don't have the labor, we don't have the materials. We haven't even gotten there. You can't get turbines till like forever. And that's if they even arrive by 2030. And we all know on an oligop, like the, the main players are going to get them all.

[Michael]

Yeah. And warehouses already sitting.

[Pal]

And then there's going to be like a gray market to try and find a used one somewhere. So you take like capital, which I still don't fathom how we get all the capital to build it all. But then you go, okay, even if we could get materials, you know that there's just some breakthrough coming where, you know, your cell phone that you have, and my cell phone, you take that back 60 years ago, that was the size of the Empire State Building. To get that much computer, like, I'm not a technologist, I just have to believe that's where it's headed. And there's going to be a group

[Michael]

of projects that get dislocated because of that. Correct. I think a couple things. One, I don't think anywhere near the volume of as you said, the volume of projects that are in people's minds or have been announced are going to get done for sure. We're just not going to create everything that's been announced. It will be everything from community backlash to lack of supply to you know, some will get through, a fair amount will get through and they will get built. But obviously this is the obsolescence risk, you know, and I think it's most pronounced in the LLM training data centers being built in the middle of cornfields. And you know, I'm not critical of cornfield. I love cornfield.

[Pal]

We love corn.

[Michael]

You know, I think that's very different than your, your in town inference data center. You know, if you go across America, you know, and you look at like the most valuable data centers in the country, not in terms of scale but like per megawatt. These are often 40 and 50 year old buildings in the middle of town that are nondescript buildings that have the hyper connectivity and the telecommunications infrastructure and they're just embedded. But I do think to your point about there'll be some new technology that comes out as I think everybody's heard Elon Musk has said, it's all going to space. Now whether it goes to space or doesn't go to space, you just imagine that there's going to be some significant changes over the next decade or 20 years in this space that's going to create a lot of dislocation for a lot of capital. And I don't think any of these large projects are getting built without people assuming a residual value. But those people generally won't be around 20 years from now. So they'll let someone else worry about it. But imagine if there's no residual value on a $20 billion data center project in the middle of a cornfield somewhere. The capital markets are not underwriting that because otherwise the math wouldn't make sense and the projects wouldn't get financed. So the society or let's say the capital markets are willing to overlook that right now.

[Pal]

Well, you can see a world where inference is the most in demand thing on the planet. So right now there's what millions of people using paid for LLMs. There's 8 billion people on the planet. So you got to think like we got a ways to go there, but that's on the human population. Then you start getting into agents. And the idea if you fast forward, there could be 10, there could be billions of agents. We'll double the workforce not by humans, but by agents that are going to be Using inference not just from when they wake up at nine, till they go to bed at nine, 24, seven, round the clock, never ending. And that really all ends up back

[Michael]

in inference and this massive distributed GPU CPU infrastructure that's in every nook and cranny in urban America in dedicated buildings and non dedicated buildings, maybe even in people's homes. Right? Yeah. And maybe that's the future.

[Pal]

And we'll need new energy sources. I mean, it all boils back to where we started. Like we just need all this other stuff and not just for AI. We need it because we need it, but it's a big part of it will be to power AI. And at least if everything is the way they say it is, you're going to need to be a leader in AI to be a leader in the world. There is no.

[Michael]

But there's to your point, at some point we'll get back to business models, but we're going to need other things like energy. For the past 20 odd years, we had flatlined our demand for energy in America because of energy efficiency. Things like LED bulbs coupled with the fact we outsourced all manufacturing. Right. That's completely turned around. And the opportunities in the energy space, I mean, that starts with the beginning of this discussion. These are the big things, these are the big movers. AI and technology leading to data centers and the infrastructure around that. The energy necessary not just to power that, but to power a manufacturing base that is coming back to the country. I mean, these are just really cool things.

[Pal]

Well, the wealth of a country is predicated by the cost of their energy and the abundance of it.

[Michael]

Which isn't it surprising to see the way the world has reacted over the past.

[Pal]

You know, esg, like doesn't. I haven't heard about it in years.

[Michael]

I just. But I can't believe the damage countries have done to themselves by their policies. Right. Which have put them in such a terrible position with respect to their energy capacity. All in the name of climate change, which it's not a denier. It's like, okay, you know, man is affected, it's there. We're pretty resilient. But you know, your society, look at what's going on in Europe with this heat wave. People don't have air conditioning. I mean, could you imagine being down here in Dallas, Texas without air conditioning? It's crazy. People are now living in environments that are akin to Dallas, Texas. I mean, and they're dying from this.

[Pal]

It's crazy.

[Michael]

No, thank goodness the United States has done at least a on A distributed basis because we don't control it as a centralized economy. But we've done a pretty good job, you know, on our energy requirements. But not everywhere. You know, the cost of retail electricity up in the northeast is multiples of what it is in the Southeast. And that's a direct function of policies that have been enacted over. Over decades. And I just don't understand it.

[Pal]

Well, you get to a place with inflation and cost of energy and cost of food where when we were in this environment for 20 years with no inflation and things were pretty peaceful around the world, the human will always find stuff to complain about. We will find problems. If you don't have a problem, you can go find one. Well, when the problems rise up again, that you can't afford a house, you can't afford energy, blah, blah, blah, guess what? You start focusing on not all that other stuff. And this, and I think it's where we started is like the next however many 10, 20, 30 years, we're redirecting attention because if we don't, nothing else matters.

[Michael]

Yeah, it's just inevitable. This is where we're headed.

[Pal]

And hopefully we get nuclear back. Looks like that's going to happen.

[Michael]

Looks like it's happening.

[Pal]

You know, like it's happening and it's not just. And on the topic of energy, we. We don't have to go too far down. But it's not just America. Most of the world has none. As they become more prosperous, guess what they're going to want fossil fuels, oil and gas things to make their nations more prosperous. So it's not just an American issue. It's like we use more oil today than we use yesterday. My bet is we use more oil 10 years from now than we're using right now. We need all the other forms of energy, but like man, there's whole billions of people that have none yet. And they're going to get it eventually if they remain prosperous.

[Michael]

And they deserve it.

[Pal]

And they deserve it for sure.

[Michael]

Yeah. Those forecasts over the past couple decades by the various international organizations that have said we've reached peak oil, have been politically driven. Correct. It's obvious with billions of people being lifted out of poverty into the middle class, you know, and they deserve every opportunity that every American had, which was to, you know, create that environment. And they need the energy to do it. And it's all of the above, which is why we're in the business.

[Pal]

Can we talk about one thing around college before we get to business models?

[Michael]

Love to.

[Pal]

The question isn't like, should Your kid go to college, should they not? But it is kind of about the relevance of college. Cause you said something that's really important. It's more expensive than it's ever been. We could argue in a world of AI and in a world where working with your hands is going to be more important again, a lot of what you learn in college is irrelevant. It doesn't take away from the social experience, which I think everybody always anchors into is like, yeah, but it's a chance to grow up and live on your own. And there's no alternative to that. But we do saddle a lot of people with a ton of debt. And one thing we were talking about the other day was, um, you know, when you go to college, like half the courses you take, you only take them because the university requires you to take them. Like you would never take that half of the debt load that you carry coming out of college. You borrowed money to take classes that will never benefit you in any career path. So we probably have a trillion plus of debt that people borrowed to take

[Michael]

like bowling classes they didn't want or need or need.

[Pal]

Then you start looking at all these new models of schools that are starting to be built. Whether they're online or there's Alpha school or a lot of the, the, the, the, there's a lot more thought being put into like what should a. We've had the same program forever for a hundred years. Okay, so now that I've laid the, the foundation, like what, what do you tell the young American right now as they think about college? Or, or maybe just what's your view of, of the whole apparatus?

[Michael]

So many things come to mind. You know, just listening to you just now I'm thinking about, well now we've created this whole. We talk about the military industrial complex, the collegiate industrial complex that's designed to self perpetuate itself and to sell itself and to get money and people's jobs are dependent. So we've created this animal, right? I'm not discounting some of the great things these schools do, but we've really created this animal and we subsidize this animal through taxpayers and student loans. And you and I can both joke, I'm sure when you go to colleges today and you see the level of infrastructure, like well I didn't live in a dorm like that. Can you imagine what it was like for me and what I see today? I think that biggest picture we devalued as a society as the colleges went up and you know, whatever Post World War II and the GI Bill and all the federal money and colleges go up, but we started to find success for our children is going to college, right? And that's what people, parents became proud of. And you know, certainly in the, let's just say the socioeconomic circles that you and I travel in, if you went to a cocktail party and everybody had their kids and said, you know, how many of you don't want your kids going to college? Right? Out of a hundred hands, how many hands do you think go up there?

[Pal]

Not very many.

[Michael]

Not very many. And that's a value that we've placed on it and exactly how that happened and why it happened. And we can spend a lot of time, but that's a big root issue, right? We as a society, we as adults have to value and be proud of things other than, you know, going to college and people working with their hands or maybe not going to college and taking, you know, various training programs around very specific applications in their lives.

[True North Advisors Representative]

True North Advisors wasn't built to mirror the industry, but to rethink about it entirely. Since 2000, they've served business owners, entrepreneurs and families as a multi family office and private wealth advisory firm with over 5.6 billion under management and offices in Dallas, Fort Worth, Austin and Kerrville. They're real investors, not just allocators. Conflict free counsel portfolios built around your life and not just the market. A conversation is the first step north. Visit truenorthadvisors.com to learn more. By the time you're in the room, half the decision is already made. An allocator forms an opinion of your firm long before the first meeting. From your materials, your presence and your positioning. And that impression is worth real money. Collateral Partners exists exactly for that one team shaping how your firm is understood. Instead of a dozen vendors each holding a piece, the market pays for what it understands. See how the market sees you at collateral.com forward slash powers. That's collateral.com forward slash powers.

[Michael]

Obviously kids need to mature. Anybody has 18 year old kids recognizes they might be adults under the law, but they're, they're, they're kids and they still need to kind of mature and develop, you know, particularly boys. You know, our frontal cortex is not quite developed at that age. And so there's gotta be a way that we can continue to help young people mature and socialize, but also be more targeted in the way that we help them develop the skills for it. And some of it's this, conversations like this, really talking about it, but ultimately I think it's going to be about money. So you take that kid who goes to, let's just say a nondescript state school, it's fine, has a good education. He or she comes out, how much can they make? What are they really going to get paid? $60,000 they're making up. But you're seeing now in the things where people move with their hands, they can have much shorter training programs and come out and make a lot more money out of the gate. And they can be entrepreneurial and business people and build businesses. I have a friend, you may even know him, he's a guy named Rob Holmes. Okay. And Rob runs and his partner runs a training facility in North Texas called Forge now. And they have trained and they focus on, you know, all sorts of kids, but they, they focus a lot on military vets, you know, young people who've come out. And I think they've trained several thousand kids in the trades and they're having massive success. And Rob and his socioeconomic circle is people like you and me. And values are beginning to change. And I think that's one we need to create more conduits. And not some of these training schools are set up again to bilk people for the money, just like colleges were. Or you go to like, I'll send my kid to community college and learn something. The outcomes from community colleges in America are terrible. You know, and so I think this needs to change, but I actually think the free markets will change it. Because how much does those electricians working on that data center in Abilene make? Hundreds of thousands of dollars.

[Pal]

Hundreds of thousands at entry level position.

[Michael]

And I just think the market will respond to that.

[Pal]

The master electrician is the new Google engineer, right?

[Michael]

Oh, gosh. I mean, yeah. And think about that. All those kids who went to school for coding even five years ago, this is the holy grail and you're going to be set for the rest of your life. And now they're like, I can't get a job. So I think the markets are going to solve this problem for us, and I think that's terrific. When I went to high school, I took all of the shop classes, electrical, woodworking, auto. I thought it was great. And today I now actually have some skills with my hands because of that. And I think that that's a wonderful thing to come back into society. I think the markets are going to take care of it.

[Pal]

I totally. I'm with you. And maybe it's different on Wall street, maybe it's different, everybody's different. But, like, I just don't Think the weight of certain degrees even matter when you show a resume anymore, especially in a world of AI. Like I tell young people right now, like, if you can't tell your employer, especially in a white collar role, like how, maybe, maybe specifically to a white collar role, because blue collar, like how you're using AI or how you think you can impact this business, it's like the rest of your resume is very, like, looking at you. We've all looked at resumes. I mean, you come out of college, it's like you had three internships, you had all this community involvement. I mean, you, it's like, Holy cow, at 22, you've already taken over the world. It's like, you know, that's you've learned how to build a resume.

[Michael]

And I couldn't agree more. Like, I come from, I was, you know, I got whatever, lucky enough to wind up at a job on Wall street working for fancy firms. And all the young people went to fancy schools and came out and I went to Brooklyn Law School. It wasn't particularly fancy. And so I think at some level I always had, you know, I certainly wasn't in a tribe. Right. That was going to drive my decisions. And today at our company, you know, this is this conversation, like, what school did the kid go to? Who cares? Yeah. Why is that relevant to this discussion? For Christmas sake, You know, so I'm excited about it and I think they're really good people. And I think there are guys like Rob and Fords now and other groups.

[Pal]

Awesome.

[Michael]

Who are doing really great things and. But I love to see, you know, this kid who come. I have a friend of mine son who went to college for four years and he is coming out to then get his plumbing certification because he wants to be in the plumbing business and start a plumbing company. And I'm like, right on, man.

[Pal]

It's awesome.

[Michael]

More of you. And if I was a young person today, you know, I don't know what path I'd go down. But I, I, I hope it's shifting, you know, I think it's shifting.

[Pal]

Anybody listening? Like, there's only so much time you can spend in a conference room or in front of a computer. That's that like the idea of being out and about in a truck and being with your buddies and working on stuff and using your hands. I'm not saying that's the career path I've taken. I'm not trying to. But I'm just saying it is becoming sexier again. And we all like being outside and working on Stuff.

[Michael]

The satisfaction of actually building something. Like when I build things. And, you know, even when I bought my first house, I did a lot of work myself. I would look at that, you know, tile work that I did, and I'd stand there, you know, admiring it for. I think there's a satisfaction in building things with your hands, you know, I have a friend of mine, incredibly successful executive here in town. He's got five kids, and what he enjoys most in his life is working on building a car with his son. And he just. He gets more joy out of that, I think, than most anything else.

[Pal]

Okay. Before we came in, we made a bold claim, or I don't know if it's even bold, but it was. The allocator model in real estate is done.

[Michael]

Let's qualify that. I think the bigger point is the. When we talk about and people say I want to be in a real estate business, I'm like, what do you mean? So we're talking about the real estate investment business here, right? In this conversation. Not the development business, the services business, the real estate investment business. I think the bigger issue is that the industry is mature and it's consolidated and consolidating at a rapid pace. And in those models, a lot of those firms are allocators. Now, just bear with me. By their very design. But increasingly, they are buying the operator, right? And they're buying the operator in their fund, or they're buying the operator on the balance sheet, right? And they're developing more integrated business models because that's what investors want. So it's. It's. It's happening. I mean, you saw it. I'm careful not to name names, but, you know, public things. Like you saw Benthold, Green Oak, the Canadian Sun Life company, right? The big. And it bought Bell Partners as an operator in its space. I mean, and you've seen Blackstone for years, has had linked logistics. And I think that's what investors are increasingly going towards. And I think, like all things, it might be what investors want. Whether or not the facts are there. That it generates better investment results is just. Our industry's so opaque. It's just so unclear. Nobody can look at a Bloomberg report and see exactly what the data is. So I would say to you, I can't prove or refute to you that those models are better in terms of investment returns. But it's clear to me that investors globally are speaking that that's what they want. And you see it all over the place. The only issue with that model is when you're a Fully integrated operator in the real estate is. I rarely have seen anybody fire themselves if they're not doing a good job in terms of operating the real estate. And I think that's true. And I think anybody who's worked at a fully integrated real estate company knows exactly what I'm talking about. Right. What is true about that model is it's going to be easier for you to get data and analytics and reporting and all of those things that are increasingly of interest to investors. But the thing that I haven't been able to prove other than anecdotally is does it in fact result in better returns? Right. From the underlying investors? But it kind of doesn't matter because the market's speaking.

[True North Advisors Representative]

Okay.

[Pal]

So the obvious is they're doing it because they think they can get better returns. The jury's out of if that's even happening.

[Michael]

Because it's all anecdotal. Right. Because we don't as an industry have a good clearinghouse for actual golden source investment return results. We're opaque.

[Pal]

So when we say the allocator in the investment management world is dead, are we talking about the groups that just raise money from pensions sit as a middleman to deploy to operators?

[Michael]

Correct. Right. And I just think it's, you know, I, I want to be careful about the word dead, but you know, it's, it's, but it's clear. Like you just see fun flows. Like it's obvious. Right. You know, it doesn't mean all of them are dead and doesn't mean they don't have business models. But it's very clear to me that that's where the investor base globally is going. And we can point to so many examples. We can point to examples of, you know, companies like Graystar that were relatively small property management companies that are now massive investment managers and they also have the operations. Or we can point to the Blackstones of the world that have acquired or built operating capabilities. Or you just watch the trades as they're happening. There was a trade announced. Was it yesterday? I don't know what their business model is. I think it's Allocator. I could be wrong. Was Kane Anderson sold to Bridgepoint. So there's really two trends. I mean, the big mega, mega trend is scale. Right. This is very clear. We're in a mature consolidating industry where the products are increasingly getting commoditized. Right. And the businesses become largely about marketing and distribution. The largest real estate investment managers in the world are not the ones necessarily with the best investment performance. It's not the investment performance that's driving the growth of these organizations. It's product development, it's sales, it's distribution. And then within that product development is, well, what is it that the customer wants? What is it the investor wants? Well, they may be the only one office today. Maybe they want data centers today, but maybe they want operator models versus allocator models. And I think these firms have become incredibly sophisticated and incredibly capable with respect to developing products and capabilities and then having massive teams of people from a sales and marketing perspective and distributing it all over the world, from sovereign wealth funds down to accredited investors. And these firms today, you know, Blackstone runs with $300 billion of real estate. You know, when I started the business, I think they ran half a billion dollars. You know, they'll run a trillion dollars. And you just, that's just that consolidation wave is the big megatrend. And then underneath that is this trend around operators. I think those are the two big things.

[Pal]

So is the pitch from the largest guys then? Look, we're not going to have outsized alpha, but we're a safe place. You're not going to be.

[Michael]

That's what they say. I can't imagine that's what they say.

[Pal]

But like the numbers would say, like, well, you can say whatever you want, but it's just not showing up on paper.

[Michael]

Well, I think the industry is very opaque with respect to what the actual data is. And well, my fund isn't quite that. Or now the Odyssey, the Odyssey funds are the only place that we have the core open end funds is where we have good data that you can compare it. And, you know, they fight for relevance. The top five guys are 12 basis points apart in return. And, you know, they're pounding their chest that they're number one by, you know, but, you know, I think to some extent, you know, there's some brands out there. Look, a lot of investors are not paid to take risk, right? They're in roles in companies and positions. They're about stability and safety. They're personally not incentivized from a financial perspective to take risks. So the whole thing, do you get fired by hiring IBM? So what if you invest with one of the large global consolidators and the fund doesn't perform well? Well, look, it was, don't blame me, right? The firm, our pension fund, our sovereign wealth fund, has this strategic relationship with this great large money manager and we do tons of business. So of course we did their real estate funds and it didn't work out. It's not going to hurt me. But if, if I go out of my way to do an investment with a smaller firm, right, that may be off the run and it doesn't work out, right, Then it sits on me. And I think that's happening in our business. Clearly. It's clearly happening to me.

[Pal]

And do you think that's just like where we are as a, in an industry, or is it like market driven? Like if, if the market totally imploded, would all these rules go back? Would all these rules go.

[Michael]

I don't think it ever goes back. I mean, I think if the market totally, people thought we'd have real distress. I think if the market implodes really badly, then the tide will go out on some people really badly and hurt them instead of just muddling, maybe subpar returns, maybe crush some people from a return perspective. Because track record at some level matters, right? I mean, some level, it's just going to really interfere with your ability to raise capital. But I think, look, you know, big, big picture, these mega trends aren't going to change irrespective of market cycles. Our industry has, you know, 30 years ago, pension funds, sovereign wealth funds, et cetera, had 2% or 3% allocations to real estate. Today they have 10% or 12% or 14%. They're not going to 20, they're not going to 25. So we're not going to see this newfound wave of growth. That's why all the large money managers are going after high net worth, because it's the new frontier and it's the only place for growth in terms of capital to the real estate industry. And then within that, just like we saw in the liquid securities business 30 years ago, the firms were T. Rowe Price and Franklin Templeton, and they managed $100 billion and they used to charge a point and a half on equity for, for, for, for, for mutual funds and a point for fixed income or whatever the numbers were today, right? They're $10 trillion and they offer the product for 10 basis points. The same dynamic is going on in the liquids. Whether it's real estate or private equity or credit, it won't collapse to the same levels, but it's, it's, it's. You're having declining revenue per aum, right? You've got to squeeze out your cost per aum in order to deal with that. You get there through scale. And investors are comfortable with that because it makes their lives easier to do business with fewer people. And, and again, if it doesn't quite work out or if the returns are fine. The returns are fine. You know, they're in the median, right?

[Pal]

Yeah.

[Michael]

They're in the ballpark. It's fine. Right.

[Pal]

And the ballpark is, you know, and

[Michael]

the ballpark is wide, because. So you tell me what a opportunistic fund from this vintage, you know, should get. You know, Cambridge. You. You go look at five or ten consultants out there and what they tell you, the median vintage and the data, it's all over the map. There is no singular source of track record data. It's. And so therefore, you know, it allows people to hide in the shadows of the relative track records.

[Pal]

So what happens if you're not that? If you're not the large scale or you're nowhere close to getting there, let's say you have a half a billion to a couple billion of aum. And to be clear, like, the middle is actually pretty big of people.

[Michael]

Yeah.

[Pal]

It's not like a very. It's a.

[Michael]

Well, that's not the middle. That's the small.

[Pal]

That's small.

[Michael]

We're in the middle. You're in the middle, we're in the middle. But I think, look, there will always be, you know, and this has probably gone on since, you know, the Greeks and the Romans before then for the local. The local sharpshooter who goes to the country club or the friends and families, you know, and. And that can. Look, in this market, that can be hundreds of millions of dollars of equity capital, you know, but that person will be fine. Right. Because the way people invest in with him, they like Joe and they trust him and he hangs out with him and he's fun and he hasn't screwed

[Pal]

him over, and he sends him a Yeti cup.

[Michael]

Yeah. And you know, and they. And Joe invests in buildings around the block and they can see them and they can tell their friends, oh, I own a piece of this. And I think those. And. And Joe's able to charge. I mean, it's really amazing, the economics, that I'm picking on Joe as your typical small guy. You know, I get 50 over an 8 or something like that. I mean, literally, like, maybe that's how you started your business. I mean, maybe you were Joe. And I think that, you know, there, There'll always be room for that because there'll always be room for that on a local level. But that Joe, who gets there, wants to then move to the institutional market. I mean, almost always. And whether he does or the people who work for him, they want to grow, and now they try and move into the Middle level. And I think the last thing the market wants or needs is another, you know, small to medium size, you know, real estate allocator. That's why we'll get this. I'm interested in your views on servicer and operator. I think if you're there already, you know, you're doing one of two things and I can speak to this. I obviously see a lot of other firms in, in the middle. A lot of firms are selling themselves. You know, you're just, you're just seeing it. And if you speak to their management teams or their CEOs about what they're doing, they're trying to sell themselves or merge themselves. They're smart. I mean the folks who run Kane Anderson they just in P R E P E R E they just did an article about, you know, this whole conversation. They sold themselves to bridgepoint for scale. And I think a lot of people are doing that. If you're not doing that then you've really got to look at your business model and figure out how do you differentiate it.

[True North Advisors Representative]

Every operator I know hits the same wall. Eventually your best people are doing necessary work instead of their best work. That's why I like Relay Human Cloud and it's why I brought them into all the companies that I run. They took the repetitive accounting off my team overnight. So we showed up to work. That actually moved the company forward. Pre vetted global talent fully managed up to 75% less than hiring locally.

[Pal]

And they weren't a vendor, they were part of our team.

[True North Advisors Representative]

Go to relay human cloud.com forward slash powers. That's relayhumancloud.com powers.

[Pal]

So in that situation what did Cain gain by selling access to more capital?

[Michael]

Well, it was announced that they got $1.393 billion just for the operating. Yes. So that's what was announced.

[Pal]

So, so that, that what you're saying there is the fees are worth a lot. If you can stack a lot of fees it's valuable.

[Michael]

Yeah profitable fees because not only it's the same. I don't know anything about their financials but. But I mean if you ask what they got but what they got. So, so forget that. That's just the owners of the business as a firm they got distribution, they got bought by $100 billion you know firm called Bridgepoint and that selling other products. And so now when Bridgepoint executives going to see the sovereign wealth fund, a pension fund. I don't know anything about Bridgepoint so I don't know the products they sell. But in addition to our Making it up hedge funds, private equity, venture capital. We now have this, you know, real estate suite of products. And I think the money managers, the big money managers want to deliver all of it to you. Right? All alternatives, all liquid. We are going to make your life better. We can have a platform discount with you. We'll give you consolidated reporting and we have capabilities along it. That is the model. Right. There's no question. That's not where the business is going to. That's where the business is today. And those guys get far more share of capital today than they ever got historically. So I think from a financial perspective, the owners of Kane Anderson got the proceeds from the transaction in terms of a business strategy. They've got distribution through their broader platform. And all that makes sense to me. I mean, I totally get it. I still can't answer the question whether or not it's going to result in better investment returns. Right. I'm going to keep coming back to this point. It's neither here nor there. It doesn't matter what I think because the marketplace is speaking, right? This is clearly what investors want. I think what you do, I'm not going to wax poetic about all the different things we're doing, although I'm happy to answer your questions. But you step back and say, okay, do you have any other advantages in the marketplace that can differentiate you so that what you're offering to the marketplace isn't as easily delivered by those larger firms? Or you can in fact prove through data and, or, you know, analytics or anecdotes to investors that it is better, that it is different, that will result in either better returns for the same strategy or that it's just a strategy that you can't get through the big guys because you're playing a niche or you're playing a space. And I think that's what everybody needs to do. And therefore, you need to be nimble on your feet and you need to be willing to change or expand your business into new areas in keeping up with this. And that's what everybody's trying to do. But big picture, the middle's getting squeezed and we'll get squeezed for the rest of my career. And it doesn't mean they go out of business. It doesn't mean they don't make any profits. But I think that's just the reality. And you know, years forward, I mean, today, would you speak to anybody about, I think the right thing is to go into long only equity, you know, mutual fund business from scratch, like, who's going to do that? Right. Why are you going to do that? The last thing the world needs is another long only equity mutual fund manager. And I think in alternatives we're going to be heading right towards the same place.

[Pal]

So the obvious question would be what are you doing about it?

[Michael]

Figured you'd come around to that.

[Pal]

Well, you all have.

[Michael]

I know we said I didn't want to talk a lot about us on this. No, no, no, I'm going to answer your question. I'm teasing. You know I'm teasing. I, I, okay. I'd say a couple things about our firm, right, that are objective facts. Right? Alongside our real estate investment management company, arguably we have one of the absolute best real estate development companies this country's ever seen. We have offices in 22 markets where we have people on the ground who build real estate. They build apartment buildings of all stripes, they build industrial buildings of all stripes. We actually even build office buildings. We are on the ground. We know everything that takes place in all of these markets. And so there just is access, intel, credibility, reach that others don't have. And that informs us on the investing side when we buy industrial buildings or we buy apartment buildings or we provide capital to another developer in those markets. And so in those kind of core food groups of industrial and multifamily, that would be in addition to our track record, which of course I can't talk about which anybody is welcome to diligence.

[Pal]

It's awesome.

[Michael]

That is legit. And I see it. I'm one of the few people at the firm because these are segregated businesses. I sit above both businesses and I, I see the knowledge that we have and because none of it's public securities and we really don't get into conflicts because remember the development business chases dirt, right? Really where it competes and the investment business actually capitalizes people afterwards. So there's really never a conflict in those two businesses. And so our ability to leverage the knowledge and information we have. And also it's, you know, the business, it's not just knowledge and information. People think it's just data and analytics, it's relationships. It's the first call, it's the last look, it's the benefit of the doubt. It's your drinking buddy, it's your, that's the way business gets done in real estate. I mean you gotta pay a price that's in a ballpark. That's a big deal, man. And I don't think a lot of New York City based or LA based or Dallas based, you know, allocators, you know, medium sized firms can even think about having the type of access and reach that we have in that space. That's one thing I would say to you. I think the second thing I would say to you is when it's attractive to investors, we do and we are able to create investment management vehicles specifically around our development company. And that obviously provides an opportunity for our development company, which, by the way, it can access capital from all over the markets. It doesn't need the investment management business crow to raise its capital, but it does provide opportunity for the investment management company when it makes sense in the marketplace, whether to programmatic ventures or funds. With respect to our development company, which manufactures products, for lack of a better word. And so that's another area of our investment management company that's relevant and important for us. We have carved out a niche and earned it over 30 years in the small retail space. We're really good at small. Let's, you know, you got a Starbucks on one end, a Jersey Mike's on the other, a cupcake store, Verizon Wireless store. These are small properties. These are 5, 10, 15, $20 million properties. These fly below the radar screen of a lot of institutions. And we've just built up a very large portfolio and we're very good in this space. So it's a niche, right? What I'd say to you, it's a where we've earned the right to compete, where we've gotten the proven track record, where not everybody and their brother is good at it, not everybody and their sister has the track record. And so we've kind of earned that right to compete in that space. Not that others aren't in the space, but it's not as crowded a space and very few, if anyone, has the history and track record we have. So that's, you know, these are differentiators within our platform. And then I'm just going to keep going down because you got me on a roll here.

[Pal]

Let's go.

[Michael]

So, credit. You know, it's fascinating. There were no asset management firms providing real estate credit, you know, 15 years ago, and now everybody provides real estate credit.

[Pal]

Okay.

[Michael]

So I of course, thought, okay, you know, could we do anything here? And. But what is our differentiator? What is it you can imagine that we could possibly do that all these other guys couldn't do? Well, go back to the things I already told you. Imagine your mezzanine lender, right, is one of the country's largest developers of apartment buildings and industrial buildings, and you happen to have another army of your firm that's Mezzanine lending on industrial and multifamily. Well, the senior lenders really like it because if something goes wrong, right? I mean, it's not that hard for us. You know, nobody wants to do loan to own, that is. But I'm just saying if something goes wrong, your ability to step in, etc. Also, the actual developers or operators of that real estate, they know you get it right. They understand you're not just a capital allocator. You understand the underlying development business or the redevelopment business. And so we built out a mezzanine lending business in the multifamily and industrial space. That's working out really, really well and everything. I just told you, it's like, it's actually true. There are actually senior lenders out there and banks that we do business with already. Like, we do business with like 75 banks, local regional banks. And they love having us as a partner because it helps them. It helps them with their senior loan. It brings them comfort that we're in the position. And the borrowers are Main street borrowers. People we've known in many instances for a long time who understand that they're not going to have to explain themselves to some money manager in New York. They're going to actually have people who understand the business. And so we've carved out that niche in that space. So I'm going to stop with that because there's a few other things, but each of these are authentic to our firm. None of these are. I'm jumping on a bandwagon because life science is in vogue. So let's just go hire a team who's done life science and go after it. I mean, so many firms do that. They see the marketplace and so they go and hire three people who have capabilities. They have no track record, they've never done it before, but because they're good at raising money, they're able to raise the fund. They go out there and do it. And that's not how Crow does things. And that's how we compete in the marketplace. And don't get me wrong, I don't mean to say it's easy. I mean, we're subject to these same forces. You know, we're subject to the fee compression that's going on. And people say, oh, my rack rate on my funds are the same as it was before. It's not true. Co Invest has changed everything in terms of economics. Breakpoints have worked their way into the business.

[Pal]

Can you explain that in detail?

[Michael]

Oh, sure.

[Pal]

Like how CO Invest.

[Michael]

So let's say some Some closed end fund. I'm just picking standard market economics, you know, says, okay, I'm going to get a point and a half on equity committed and I'm going to get 20% of the profits above an 8% return. I'm making it up. And everybody thinks, oh, that's your economics. Well, you know, someone who comes in above this dollar amount, 50 million and above gets a discount, 100 million and above gets this down. You know, large investors get more discounts, things like catch ups. I don't want to explain catch ups for the audience. It's too more difficult. But there are a variety of economic tools in the relationship between the investment manager and the investor that investors are very sophisticated on today. And they're just chipping away day by day, week by week, month by month at the fees, even if the headline base rates still seem to be what they might have been 10 years ago. Underneath that is a continued reduction in the economics. That investment manager getting per dollar of assets under management. And at the same time, costs notwithstanding, AI, you know, compliance costs haven't gone down. The whole ESG costs were very, are very substantial. And many investors around the world, notwithstanding the conversation we had, care a lot about this topic, right? And you, if they're your investor and they're your partner, you need to meet them where they sit. And now AI is going to save us a ton of money. You tell me the investment manager right now that isn't spending more money on technology.

[Pal]

They are.

[Michael]

Everyone is everyone, right? So your costs are going up. And so I'm subject to those same forces. And so I need to invest in, you know, marketing and investor coverage and distribution. And we need to expand our, and we have, expand our product lineup to have more capabilities. There are other things I didn't go through with you to have more capabilities. So when we show up with an investor, we're not just one single fund. You know, When I joined 10 years ago, we were one fund and we had another capability. You know, we've expanded the capabilities of the firm because we need to make it easier for investors to do business with them. Maybe we can't offer them private equity and venture capital and credit and long only equities and. But we could offer them a broader array of real estate investment opportunities that I think are authentic to us that generally have really strong track records, not generally have strong track records, but I'm giving them an opportunity to work up and down the capital stack. You know, if they want lower risk, lower return or higher risk, higher return in the Spaces in the areas that I think are authentic to our firm. And there's no reversing this for us. There's only one way for us to go, and it's to continue to do this. And I think if we have the resources of Crow holdings, right, we have a lot of resources, we can continue to invest in this. We don't have outside shareholders. We're not a public company. We're not subject to those kinds of scrutinies. We can be very patient, and we're going to continue to kind of work at it, whether or not I'll be able to, will be able to as a firm continue to stay ahead of this thing that's driving other people out of business or into the arms of other people. We're committed to that. And I think because of our other capabilities, we got a shot. We got a better shot than most. That's what I would say.

[Pal]

Is there an argument to be made, especially given a business like Yalls, where there's such an abundance of capital trying to find a home, that groups like y' all actually could raise your fee load because you are. Or does raising the fees negate the returns that you were like, is there a world where the best can actually charge more, or is it like everybody's heading towards a 10 basis point?

[Michael]

Look, there's no doubt there are moments in time. Look, it's all about fear of missing out, right? You know, there are moments in time when you happen to be the spot that what you do and your product is in vogue, right? And you can, at that moment in time, you know, hold the line. And the more commoditized your product is and the more that other people in the marketplace offer the same thing with the perceived. With the perceived same capabilities, you're going to be subject to that lowest common denominator and fees. To the extent that you happen to have differentiated yourself at a moment in time for the thing that everybody wants, you're going to have more pricing power. So. But betting your entire franchise that for decades ahead, you're always going to be the person that has the capabilities that are differentiated. You have to, at some level, understand in a big, mature, consolidated industry, you're going to have competition and you need to build your business and run your business from a perspective that accepts that, recognizing that sometimes, right. Once a cycle, whatever, you're going to be in the right place at the right time, and you're going to have an area that does, you know, particularly well just for.

[Pal]

This is truly for. For learning for me If I think about Crow and you think about Crow, or just any big brand name that have been around 30 years, they've raised billions of dollars. They've done tons of funds. They're so entrenched. When you go out to raise your next whatever fund in your world, is it kind of like. It's not like, God, we need to raise a billion dollars. I hope we get it. Or is it more like who's going to be in it? Or do you take the same approach every time? Like we got to work for every dollar to get into that fund.

[Michael]

It's always the latter. We've got to earn the right. Right? Of course, we've done business with people for many years who like and trust us. But look, here's the reality. People turn over in every organization over time. The new treasurer comes in, the new CIO comes in, the head of real estate turns over, new people come in. You need to be prepared as a business in this space that through cycles, no matter what you do, no matter how well you perform, that you're going to, that some investors are not going to be there for you the next time around. Now, look, I don't know what it's like. Pick on them because I think they're, they're, they're great people. But, you know, the folks at Blackstone, I don't know what it's like to be there. Maybe they don't worry about this kind of stuff and maybe they're just, ah, you put it on the shelf and people buy it, you know, and maybe there are a few other firms that feel that way. But we work hard all the time to earn, you know, the trust. And look, when you, when you try and do this globally, you know, like a lot of people just don't know who we are. And that's not helpful, really. It's a big world.

[Pal]

It is a big world.

[Michael]

I guess even in the United States. Imagine that you're a place and you just don't have a big real estate team. And your investment committee is not full of real estate people. Crow.

[Pal]

Who?

[Michael]

What? Tramel? I don't know who you're talking about. So it's very different than Apollo, Ares, Blackstone. I mean, these are household names that these institutions do business with across a broad range of capabilities. It's a competitive advantage they have. So I think we work harder and I think we think about everything. How we treat the investment partner, how we engage with them, how we service them. We try really, really hard to find the cracks where the large firms may not have the ability to compete where we do, but at the end of the day, we're all held honest by the marketplace. And people are not going to pay you 2x just because you're a nice guy, you know, so at large, just

[Pal]

market right now, is the market ticking up, are we.

[Michael]

The big issue with real estate broadly, and we'll keep data centers aside because it's. It's not even real estate. There's really no fear of missing out. I think that CIOs across the world who invested in US real estate have been very disappointed by the results of real estate since 2022. It has failed to perform. It has failed to do the things that they thought it would do. And the investment returns are near the bottom of the barrel relative to almost everything else they've been investing in. And because of that, you'd think, well, given this relative value difference, equities are up 100% in five years and real estate is flat or down, wouldn't now be a great time to go long real estate? I think there are some folks who believe that, but I don't think most folks act that way. I think most folks act chasing the trailing return as opposed to taking that kind of risk of getting out in front of it. And so in general, there's really very little fear of missing out. And overall, in the industry, it's not a malaise. Some parts of the industry, there's a malaise, but there's a fatigue. There's definitely a fatigue that's grown in the industry right now. And I don't know how long. Look, the 20s could be a lost decade in real estate. It could be. I don't know this, but it's like, okay, we had 35 years of declining interest rates and we had 35 years of allocations institutionally going from 2% to 12%. Those are very powerful forces. Well, do I think that that allocation's going up from here? No, I think it's moving into infrastructure, by the way. But do I think interest rates are going to collapse for the next. No, I don't think they are. So those. No, that could impact us irrespective of the supply picture clearing itself up in the next few years, you know, in the. In the core food groups of multifamily and industrial. Okay, office, you know, okay, yes, people are leasing great office buildings, but that doesn't mean the capital markets are jumping all over office. Right. It's just. And people who got burned this last time around, you think they're going to jump right back in and say, yes, I'm going to go long and, you know, multifamily. Okay, things have been occupied, but, boy, there's a lot of supply, and it just hasn't played out as people had hoped it would play out. Industrial's pretty good. I think that's the one area where there's largely because there's reindustrialization, that's the kind of real. One bright spot. And the other real bright spot is retail. You know, it's. And that's done well. But still there's, you know, from a growth perspective, development. There's really a limited amount of development taking place. And I think in terms of actionable opportunities on the retail side, there's only so much people can invest in this space from a macro. But in the aggregate, you know, I think there's a disappointment. And therefore, I think the marketplace also continues to move towards all these niches and specialty areas like core is not the old core. Core is now a portfolio of everything from industrial outdoor storage to student housing to of course it'll include multi, and of course it'll include industrial. But the marketplace also shifted in terms of the areas that people are focused on. But it's not terrible. It's not bad. The debt markets are liquid as heck. Spreads are tight. Base rates are relatively high. You still got some negative leverage going on. But there is debt financing. Equity fund flows aren't terrible. They're okay. But there's a lot of inventory, there's a lot of funds. There's a lot of people who bought a lot of stuff in 2018, 2019, 20, 20, 21, 22 that had business plans to monetize it, and it's going to sit for a decade. There's a lot of investors who invested and thought they'd be getting distributions back, and they're not getting distributions back, and that's dampening the business. And I don't know, it will turn and when it will turn, it'll be fun. And until then, we'll work it through.

[Pal]

I mean, honestly, we've covered a lot of ground. All right. Michael.

[Michael]

Hey, pal. So good to see you.