[SPEAKER_01]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.

[SPEAKER_01]: Here's your host, Justin Klein.

[SPEAKER_02]: So we're here with the founder of Hypris Anthony Katz and Anthony and I, we've known each other for about 18 years and we've seen your company from the very beginning.

[SPEAKER_02]: The most people don't know what it is and where it's really come from and how you've pioneered the recovery categories.

[SPEAKER_02]: Once you talk a little about the history of Hypris and where you see the recovery industry today.

[SPEAKER_03]: Yeah, so high price is kind of referred to as a sports recovery company.

[SPEAKER_03]: You know, that term recovery, you know, used to imply things that athletes do post workout, post training, post game.

[SPEAKER_03]: And it's sort of become a catch all term as really anything generated around body care.

[SPEAKER_03]: So you see in the proliferation of this wellness category that we kind of in wellness, I don't think has much meaning anymore either because it there's so much supplements could be wellness and is like what what is wellness and so where we specifically kind of focus

[SPEAKER_03]: is, and I say this with pride that we are a hardware company, and, and as much as, you know, the invested banking community frowns on that term, hardware is still a part of our life.

[SPEAKER_03]: We still, as humans use devices and products every day, some of the biggest and best companies and we're all there's still hardware companies.

[SPEAKER_03]: We really focus on,

[SPEAKER_03]: hardware that is geared to change the physiology of the human body in a way that could help in an athlete's recovery.

[SPEAKER_03]: treatment of an injury, a big one is warm up in movement preparation for injury prevention.

[SPEAKER_03]: Day-to-day body maintenance and overall wellness.

[SPEAKER_03]: So, while the term is recovery, it really encompasses just like body care.

[SPEAKER_03]: Anything to, will we say, our just do it is move better.

[SPEAKER_03]: We're trying to create products and habits that enable people of all ages and demographics to move better.

[SPEAKER_03]: One of the definitions of aging, it's the loss of movement over time, and we're trying to give people a sort of a sip of the found of youth of like, if you can do all these things and create these habits using our products, it'll enable you to do the things you love to do longer.

[SPEAKER_03]: So, there's two things, there's doing things longer, so there are longevity, but then there's also doing things better.

[SPEAKER_03]: And I think that part of losing our youth is that we used to be maybe good at something

[SPEAKER_03]: And you don't, you're not as good as something.

[SPEAKER_03]: That kind of causes people to maybe stop playing a sport or stop doing something.

[SPEAKER_03]: And, you know, there's a freedom in being able to do things that you love to do for as long as you can.

[SPEAKER_03]: So we're all about, like, trying to unlock that for people.

[SPEAKER_03]: So recovery is the term, but it really encompasses, you know, all those things I mentioned.

[SPEAKER_02]: Yeah, and do you talk to a little bit about warm-up in that that's something that's you've you've pioneered with the Viper and the then the venom, right?

[SPEAKER_02]: But you have a new product and you talked about move better is you're just do it.

[SPEAKER_02]: So you have a new product with Nike the Hyperboot.

[SPEAKER_02]: So I want you to talk a little about how that came about and then what kind of reception you've seen from athletes so far.

[SPEAKER_03]: Yeah, so warm up kind of implies like, oh, this thing I have to do before I play and some people look at it as this kind of chore.

[SPEAKER_03]: I kind of change it to like, movement prep, which is that if we are gonna put our body through a series of dynamic movements and sports our series of movements, right?

[SPEAKER_03]: We wanna put the body in the optimal state to start moving.

[SPEAKER_03]: Well, what is it why optimal?

[SPEAKER_03]: Because the optimal body, if you get the body in the optimal state, you reduce the risk of injury.

[SPEAKER_03]: And in the process of reducing your risk of injury, your body has less friction, and we have improved tissue glide, which means that we're going to perform better, or I might even move more efficiently.

[SPEAKER_03]: So I don't know what's the side effect and what's the primary effect?

[SPEAKER_03]: Are we warming up so we can perform better?

[SPEAKER_03]: And the side effect is preventing injury, or are we preventing injury and the side effect is...

[SPEAKER_03]: Perfect.

[SPEAKER_03]: Increase performance.

[SPEAKER_03]: When we look at our products, we look at offering a suite, like I look at it, sort of how Apple looks at it, where you have your Mac, is like your hub, your iPhone, so you take everywhere with you, you have your AirPods, which are situation, all you might have an Apple TV or, and it's this ecosystem of hardware that all kind of serves the purpose of communication, entertainment, all the things that we have to, we kind of run our life off the Apple ecosystem.

[SPEAKER_03]: And so, what I want to do is create a similar ecosystem for active people or the athlete, which is like, I have my device where I warm up, I have my device that, like, I do all my moving prep injury prevention that I recover with, if I have an injury, I could treat it.

[SPEAKER_03]: And on my day-to-day body maintenance, I just do these things just like brushing our teeth and taking shower.

[SPEAKER_03]: We wash the outside of our body, we should cleanse the inside of our body.

[SPEAKER_03]: And so we look at it through that lens of like providing the sweeter product that there's no magic bullets.

[SPEAKER_03]: The hybrid boot is our Nike collab.

[SPEAKER_03]: That came about as an idea that we brought to Nike.

[SPEAKER_03]: because we wanted to make a point, we did not start with, let's make a shoe and let's put this technology in the shoe.

[SPEAKER_03]: It started out with like, we wanted to make a portable device that focused on the foot-and-coin Achilles.

[SPEAKER_03]: You start talking that through and you start picturing a shoe.

[SPEAKER_02]: And this is before the Achilles, the rash of Achilles injuries and then BA.

[SPEAKER_03]: Yeah, I mean, it's been the trend in a killer structure has been going up since kind of the mid-2010s.

[SPEAKER_03]: And there's not one reason why there's a very reasons.

[SPEAKER_03]: But it was not really specifically for that.

[SPEAKER_03]: But it will help, probably.

[SPEAKER_03]: But again, I go and say it's like,

[SPEAKER_03]: When we put the foot ankle Achilles in the optimal state to move, we're increasing the tissue uh, playability, we're increasing ankle mobility and the glide and the Achilles, those things are going to prevent that injury, but it's also you know, as a performance enhancer, you get you get out of the boots and you feel like, wow, my legs never feel like this.

[SPEAKER_03]: There's nothing there's nothing I could do with my hands or or with kind of just ordinary devices to make my foot ankle Achilles feel like this.

[SPEAKER_03]: So we wanted to create an experience that you just could not replicate it in any other way.

[SPEAKER_03]: And we needed a footwear partner.

[SPEAKER_03]: And Nike was just the first and only call because, you know, they're the only brand that would have kind of gone all into this idea because of their dedication to, you know, breaking through for the athlete.

[SPEAKER_02]: And your marketing ethos has been very, very similar to Nike's, right?

[SPEAKER_03]: I mean, companies usually inspired by Nike, if you grew up when I grew up Nike was sort of the most aspirational brand.

[SPEAKER_03]: So still, if you're going to have a sports company, I just don't see how you get around, you know, that Nike influence it's sort of like,

[SPEAKER_03]: you know, it's like a rock band that, you know, it's the Beatles, right?

[SPEAKER_03]: It's like they touched every aspect of the culture and Nike crossing over from, you know, kind of sports to like the broader culture.

[SPEAKER_03]: And so you always, when you have started, you have to be aiming for something and it was very, you know, it was our aspirations to if we could create any sort of that Nike magic.

[SPEAKER_03]: And to be able to do a collaboration with them,

[SPEAKER_03]: kind of, it allowed us to kind of like get a taste of that.

[SPEAKER_03]: And so that's how the project kind of started in kind of where we cope with continues to go.

[SPEAKER_02]: Yeah, and our listeners look a lot of big public companies in researching them and you've been, your company has been one of the most innovative companies over the last couple decades in the sports space.

[SPEAKER_02]: But you know, if you look at the bigger companies that are public, you know, that operate worldwide.

[SPEAKER_02]: There hasn't been a lot of innovation from those type of companies.

[SPEAKER_02]: So why do you think that's the case?

[SPEAKER_02]: And why do you think most of the innovations have come from smaller companies like yours?

[SPEAKER_03]: So I would say that the larger companies, you know, focus on footwear in a peril.

[SPEAKER_03]: So Nike D.D.

[SPEAKER_03]: this, under armor, and now you have, you know, upstarts like on, and hook a, you know, new balance is sort of having a resurgence, A6.

[SPEAKER_03]: When you focus on footwear and apparel, innovation really happens at the margins.

[SPEAKER_03]: It's not like we've discovered all, like we're not adding to the chart of the elements, right?

[SPEAKER_03]: Yeah.

[SPEAKER_03]: So we're not going to go under some new foam that's 20% more responsive and bounce your, you know, where, you know, it's like, you know, foam is they, you know, is the basis of a soul of a shoe, you know, is so like baking bread.

[SPEAKER_03]: Like you can change the composition of flower and water and baking soda and stuff that you fundamentally, it's similar and Nike's been really innovative and how they've sort of experimented and manipulated and come across more responsive films that you can mold in different ways.

[SPEAKER_02]: I mean, Adidas, how it's been iterative.

[SPEAKER_02]: Yeah, it's been iterative, right?

[SPEAKER_03]: Yeah, and there's, and I would say that,

[SPEAKER_03]: The proliferation of manufacturing technology has kind of the advantage that one company has over another is not as great as it used to be.

[SPEAKER_03]: The dynamic range of what a top and class product to what a much more company they still might have, that's more company might have access to similar technologies and molding and things like that.

[SPEAKER_03]: So, for when a panel is a lot of materials and a lot of, there is, you know, obviously engineering involved.

[SPEAKER_03]: But it's hard for them to really take big leap.

[SPEAKER_03]: So what you saw in the 2000s was that I'm trying to acquire other companies, a data acquired tailor made.

[SPEAKER_03]: And,

[SPEAKER_03]: You know, Nike had, you know, had commerce early and, you know, I think Umbro, they had at one point.

[SPEAKER_03]: Technology in our space didn't really exist until the advancement of lithium ion battery technology, which allowed these like devices that manipulate the body to come in smaller form factors that became consumer products.

[SPEAKER_03]: larger companies are just more, they are not so, because they're reactive, they're reactive.

[SPEAKER_03]: I mean, they're all so just not like, they're not going to be the ones experimenting with these new technologies and trying to roll them out to the public.

[SPEAKER_03]: So you have to wait till startup does it and sort of we were that company.

[SPEAKER_03]: And so, and then once it becomes sort of,

[SPEAKER_03]: You know, accepted in the culture more broadly, then you start to see, you know, some of the, the, the bigger players take an interest in a category.

[SPEAKER_03]: When I first, you know, started, I remember people at some of the very come saying, oh, yeah, that recovery, that new recovery kind of category thing.

[SPEAKER_03]: And it's like, will it catch on or just that people would say, is it just a fad?

[SPEAKER_03]: Yeah, I thought that was crazy because I don't, I just don't think, I think that the train of looking for better health.

[SPEAKER_03]: is only going in one direction.

[SPEAKER_03]: It's never, it's never been put in reverse.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: Um, and so we're part of, we're part of that.

[SPEAKER_03]: And I think that like you're asking why the big public companies are not as innovative.

[SPEAKER_03]: I don't.

[SPEAKER_03]: They're innovative in their own way.

[SPEAKER_03]: They're just, they live in a category where they're not taking risks.

[SPEAKER_03]: But they're living in a category where innovation is pretty iterative.

[SPEAKER_03]: It's not like, oh, wow, we just found this new material that just is completely transformative.

[SPEAKER_02]: Yeah, I always think of the iPhone where it's like, there are smart phones before, but the iPhone, you know, took the touchscreen and that technology and really combined it with, you know, what was already kind of being done and kind of forged a really a whole new type of device.

[SPEAKER_03]: But yeah, the difference there is this is 142 different suppliers with 142 different components.

[SPEAKER_03]: So what we call the downstream supply chain, so think about the ZICE lens is a German use come from Germany, there's chips from Taiwan, there's lots of chips from Japan, there's I think there's something like 30 countries participate in the supply chain.

[SPEAKER_03]: And so what an innovation like the iPhone does is when you know you're going to sell hundreds of millions of of a product, the downstream supply chain starts innovating for you.

[SPEAKER_03]: Because they're watching business because they want the business.

[SPEAKER_03]: So like if if I'm making if I'm making a chip or like maybe a lens.

[SPEAKER_03]: Zeiss is like, we need to make the best lens in the world so that we can sell hundreds of millions of lenses to Apple.

[SPEAKER_03]: And the motivation for them to stay on top and make the best lens, because the second at some other start might have something better.

[SPEAKER_03]: I mean, think about the loss of business out would be to a company like Zeiss.

[SPEAKER_03]: And that's without knowing anything about the arrangement there.

[SPEAKER_03]: I'm just saying that

[SPEAKER_03]: basically Apple because this is a platform so so all the suppliers in the sub-supply chain are basically motivated to say if I make the best whatever it is component I'm going to have a multi-million dollar business because just just on the iPhone alone and that is what keeps the innovation pipeline going not just what like Apple could imagine the overall experience and the software and how it all comes together in the design

[SPEAKER_03]: But innovation now, and this is the importance of, of, of, of why globalization so important is that we need to be able to pool the brain power, a company like Apple wants to make sure that they have good relations with Germany, which are paying what's I want because they want to be able to to to be able to buy the components.

[SPEAKER_03]: at scale and don't want any options that supply chain because it affects their innovation.

[SPEAKER_03]: So it's all we're all interdependent and we can't unwind that sort of relationship.

[SPEAKER_02]: Yeah, we'll get to supply chains here in a little bit.

[SPEAKER_02]: But what should I talk about, like, what do you think makes an innovative leader?

[SPEAKER_02]: You know, you've obviously been an innovative leader.

[SPEAKER_02]: You've probably seen a lot of innovative leaders and talk to them.

[SPEAKER_02]: What do you think makes that up?

[SPEAKER_02]: We know, you know, we've seen also leaders that

[SPEAKER_02]: are the opposite of innovation where they almost only talk about the numbers, right, and there's no really speater ethos to the company or to innovation, yeah, just buying back shares, you know, basically just, you know, using financial metrics and magic to try to create value, but reality innovation is really what creates value.

[SPEAKER_02]: So what do you think makes an innovative leader?

[SPEAKER_03]: technology now is available to everyone right it's it's it's been scaled there's more companies of different sizes making components and technology than ever before really what the innovator's job now is almost to imagine the end experience or the end product because you could always work backwards to the technology so it's not crucial

[SPEAKER_03]: that it's crucial that the innovator understands the general landscape of where technology is at, where chipset, with battery power and capacity at, but they need to understand the customer and what they need.

[SPEAKER_03]: Yeah, so you always start with the consumer first and work backwards to the technology.

[SPEAKER_03]: So to me, what an innovator is, the ultimate example to me the greatest innovator or time is Steve Jobs,

[SPEAKER_03]: And Steve Jobs didn't come up with the, I want to make a hard drive that plays music.

[SPEAKER_03]: He said, I want a thousand songs in my pocket.

[SPEAKER_03]: So I could imagine the experience that I want to have.

[SPEAKER_03]: And then we work backwards.

[SPEAKER_03]: So you go to the design team.

[SPEAKER_03]: Well, what would it, what would that take?

[SPEAKER_03]: And you go to engineering, what would that take?

[SPEAKER_03]: Well, it would take a hard drive that has this capacity.

[SPEAKER_03]: And at that time, there were two big, three-fifth in your pocket.

[SPEAKER_03]: And then what happened was to sheba came out the 1.8 hard drive.

[SPEAKER_03]: And one of the sales guys was in Japan at a trade show and said,

[SPEAKER_03]: to sheba just came out of the hard drive small enough.

[SPEAKER_03]: So, to sheba's innovation, now it opened up the door for Apple to create the product they wanted to create, and that gave us the first iPod, which is one of the most transformative products in my lifetime.

[SPEAKER_03]: And that's a perfect example of an innovator, like I said, I have the end experience of what I want.

[SPEAKER_03]: but the technology needs to come along.

[SPEAKER_03]: So you're an aggregator, right?

[SPEAKER_03]: So an innovator is an aggregator.

[SPEAKER_03]: And it's someone who can foresee and see around the corner of like where technology is going.

[SPEAKER_03]: Because I would say technology, all it does is limit our imagination.

[SPEAKER_03]: And as technology gets better, our imagination scope gets wider and wider, and you could say, hey, I want somebody's people to say, I want a car that I could charge for five minutes and it goes a thousand miles.

[SPEAKER_03]: That will happen someday.

[SPEAKER_03]: So it's just, you know, you put, you have to imagine the car first and the whole experience first, and then you work backwards and when that technology becomes available, you back into it.

[SPEAKER_02]: So the ethos of innovation is imagination.

[SPEAKER_03]: I would say it's imagination creativity and aggregation is that understanding that it doesn't all happen in your building, but it may not be you that actually does it, right?

[SPEAKER_02]: If a team that can can source these things and figure, find yourself right.

[SPEAKER_03]: Leadership is by surrounding yourself with people that can enhance your ideas.

[SPEAKER_03]: So you might have the initial idea, and someone might come to you and refine that idea and make it into something better, saying, hey, I know you wanted to do this, but what if we went this direction and maybe, you know, and being open?

[SPEAKER_03]: So I think it's like, it's, you have to be imaginative, creative, you have to be collaborative, you have to be open, and I would say you have to be worldly, because it's not, you know, we have products that have components,

[SPEAKER_03]: from all over and to be open that there might be a startup in Slovania that has a really cool technology that no one else is going to have is going to make your product better, but if you're not open to like exploring and talking to other people from other places or chatting other places then you're just kind of like you're limiting your ability to make products.

[SPEAKER_02]: So you think the whole reality of distortion field from like Steve Jobs is like maybe you're it's a little too extreme.

[SPEAKER_02]: You need to have that collaborative mind where you're able to also maybe envision something but compromise here and there to actually fit what is what is possible.

[SPEAKER_03]: I mean because people don't sometimes really driven people don't like the word compromise because they think they're giving up something.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: But sometimes compromises get you to a better end result.

[SPEAKER_03]: So the whole, like, don't let, you know, the perfect thing you've got in your mind.

[SPEAKER_03]: Many of good.

[SPEAKER_03]: Yep.

[SPEAKER_03]: I think that it's important that, um,

[SPEAKER_03]: that a person has enough humility to say, I might have good ideas, but other people also have good ideas.

[SPEAKER_03]: It can make my ideas better and being open and not rigid and not being threatened by other aid players to bring, and by surrounding yourself with aid players.

[SPEAKER_03]: I would say you always know another aid player because

[SPEAKER_03]: The A player is never threatened to be in a room with another A player.

[SPEAKER_03]: When you know you have a B players when that B player is surrounded by other people's ideas.

[SPEAKER_02]: Yeah, so speaking of other people's ideas, is there any other companies, leaders in your space over the last five years, that a couple of something that you think has been truly innovative that you were like, wow, I wish I thought of that idea or came up with.

[SPEAKER_02]: that made a part of my company.

[SPEAKER_03]: In my space, no, James Dyson is a huge, like I would say, on my Mount Rushmore in modern times, like, because I think there's a difference between inventing something, and then reinventing something, and James Dyson has reinvented things that were just accepted as, we're just going to accept that hairdryers.

[SPEAKER_03]: have an intake and they heat a metal grill and then has an endoghost or how many other industries can't be reinvented that way and like you know vacuum cleaner well they have a bag and then you know it it's like he reinvented the vacuum cleaner you know the air purifier the hair dryer things that we use every day we kind of take for granted is like these are just kind of there's a hundred products in the market they're all kind of different versions of self and then dice and came along and reinvented it yeah

[SPEAKER_03]: And so I would say that like there's, I give just as much credit to someone who's a reinventor like him in our specific space, you know, we, you know, Normachack was, you know, is our best selling product by revenue.

[SPEAKER_03]: And is a huge, you know, part of our brand identity and that was not a product that was part of our original product line.

[SPEAKER_03]: It was an acquisition that we made and that was sort of the spirit behind why we made acquisition.

[SPEAKER_03]: As I said, I think that reality compression is at the infancy stages, there's more people that use normal technique.

[SPEAKER_03]: There's more people that buy a normal check now.

[SPEAKER_03]: any year, then in the whole history of the company before we bought them and they were company for 15 years or something before that, where you brought the price point down.

[SPEAKER_03]: Right, and that's the whole, and also I think that we put Norma Tech in a better brand vehicle that reach more people to then expand our distribution globally, but that was something where I was like, wow, when when I first got in it and I said like this makes them measurable, it checked all the boxes, the experience when you use it feels good.

[SPEAKER_03]: you feel good after, and there's science to back it up.

[SPEAKER_03]: Those are that's the Trinity of what makes a great product in our space.

[SPEAKER_03]: So, yeah, so, to answer your question, you said in the last five years, well we bought Norm Tech five years ago, so I would say that was the one that, and we just felt we needed it.

[SPEAKER_03]: We felt that you couldn't have a comprehensive recovery brand without the technology.

[SPEAKER_03]: And there was nothing that we were, you know, we didn't have the chops in house to do what they did.

[SPEAKER_03]: It was developed by MITMD and there was a huge amount of acceptance around their technology.

[SPEAKER_03]: So yeah, I would say like, you know, Norma Tech is, you know, was the one and we ended up playing it.

[SPEAKER_02]: Yeah, well, it's talking about, uh, exhibitions in a second, but.

[SPEAKER_02]: before we close on innovation, we can't talk today about innovation without talking about AI.

[SPEAKER_02]: So, where do you think AI is going to help impact your industry sports, sports performance, et cetera, do you see any lanes that is going to take certain products, certain verticals to the next level, or is it too early to sell?

[SPEAKER_03]: Well, number one, I think it's early to other words too.

[SPEAKER_03]: I'm probably not the best person to answer this question, but I will offer my opinion as a hardware developer that I think there have been and are gonna continue to be a lot of failed attempts to try to come up with some sort of algorithm that tells people

[SPEAKER_03]: that their body is in the fully recovered state.

[SPEAKER_03]: I've had so many numerous

[SPEAKER_03]: start up software engineers come and say, I figured out a way to take data from an Apple watch, or from a word, I wear a or a ring.

[SPEAKER_03]: So work does give me that.

[SPEAKER_02]: Like if I'm in a rest of the state, how much if I'm ready to work out or whatever.

[SPEAKER_03]: My mentor is a great saying, don't trust the scam, trust the man.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: And when people say, well, they would come and say, well, this could tell you exactly when a muscle is fully recovered.

[SPEAKER_03]: And I'm like, you know what tells me what a muscle is fully recovered when it's not so anymore.

[SPEAKER_03]: When my brain tells me it's not.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: I think that our brains are more perceptive than any AI model can ever send AI model.

[SPEAKER_03]: So me it just has high level pattern recognition to our muscles are a liquid syrup surrounded by connected tissue that connects to other muscles to try to quantify and any

[SPEAKER_03]: accurate way of how recovered a muscle is.

[SPEAKER_03]: I mean, you, you know, it didn't it becomes like you get into the work.

[SPEAKER_03]: What does recover even mean?

[SPEAKER_03]: Yeah.

[SPEAKER_03]: You know, I would say recovery, if you asked me to do some line recovery, I say, when the body can return to full range of motion without restriction, soreness, pain, or limitation.

[SPEAKER_03]: Yeah.

[SPEAKER_03]: So like, if I did a series of motion and I can't feel any friction, I can't feel any

[SPEAKER_02]: That my brain can tell me that, you know, like so I don't think it's going to impact your space.

[SPEAKER_03]: No, I will never say that much compared to a lot of other issues.

[SPEAKER_03]: I don't think that I think the human body is so complex and it's so, there's so many variables with every person.

[SPEAKER_03]: Then I don't think we're going to have some agreed upon.

[SPEAKER_03]: You know, algorithm that's going to be like, this is the end all be all and this is going to tell you that, you know, you know, the coaches are going to look at it and say, well, my guy is not recovered.

[SPEAKER_03]: Well, it's like, the thing that bothers me about that is like, as someone who is an athlete and who put, who grew up around sports,

[SPEAKER_03]: Well, the Michael Jordan Flugate, well, they just set him out.

[SPEAKER_03]: So we would never have the Michael Jordan Flugate.

[SPEAKER_03]: Kirk Gibson's home run.

[SPEAKER_03]: Yeah.

[SPEAKER_03]: He would just do what we're not going to play.

[SPEAKER_03]: He's not in the family recovered state.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: It's absurd to think that like, I just think that

[SPEAKER_03]: You know, technology has limits, and I just think that our own human experience should be enhanced by technology and it should not, it's never going to, it should never dictate our lives.

[SPEAKER_03]: See, it can, it can inform us, but not dictate.

[SPEAKER_02]: See, I think the AI craze has, has got a little too far.

[SPEAKER_03]: I think that there's, look, I think in some applications.

[SPEAKER_03]: People a lot smarter than me.

[SPEAKER_03]: are saying it's the biggest technological revolution of our time and I live through the internet which is a pretty big one.

[SPEAKER_03]: It changed.

[SPEAKER_03]: It changed the way we live.

[SPEAKER_03]: It flattened the world.

[SPEAKER_03]: It connected the world.

[SPEAKER_03]: It's just going to be bigger than that than we're in for some.

[SPEAKER_03]: But I also don't know that it happens sweeping tomorrow and we're all just going to be at a work in our lives.

[SPEAKER_03]: You're going to be running on autopilot either.

[SPEAKER_03]: I don't see that world now.

[SPEAKER_03]: And look, I'm the first person say it could be wrong, but that's just my opinion.

[SPEAKER_02]: at KPP Financial.

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[SPEAKER_02]: So let's put it over talking about acquisitions.

[SPEAKER_02]: So you've made some acquisitions throughout the years.

[SPEAKER_02]: Some large, some smaller, obviously, Norma Tech was your largest.

[SPEAKER_02]: So what have you learned from those acquisitions?

[SPEAKER_02]: And what makes a good acquisition target?

[SPEAKER_03]: So we've made four acquisitions to date, all for different reasons, all various sizes.

[SPEAKER_03]: The first one was a strictly an IP acquisition for what was a precursor to the Monetary Massage Gun, which became a massive category for us.

[SPEAKER_03]: So it was

[SPEAKER_03]: You know, at the time, it wasn't we weren't buying a company.

[SPEAKER_03]: We were more buying the IP around a new way to create a percussion device.

[SPEAKER_03]: Before the whole massage gun praise happened, we were, you know, there was some early versions of a massage gun that existed and we had brought to market a product called the Raptor.

[SPEAKER_03]: And we did it kind of in conjunction with Gary BDU as a head trainer, the Lakers of the Time, and we wanted to own the IP around it because we wanted to kind of take the roots of that and like kind of grow, you know, and add, you know, IP to it, and to this day that is a, you know, a big part of our business and so it was a strategic acquisition strictly around IP.

[SPEAKER_03]: The second acquisition was Norbert Tech, which they had the leading product in the category.

[SPEAKER_03]: We thought that was going to be a big, we made a big bet on the future that pneumatic compression was going to continue to grow and

[SPEAKER_03]: And if that product was in our vehicle that it would thrive more which it did, the third acquisition was a startup with a bunch of young engineers called RecoveryCubrex that was specializing in thermal technology, portable thermal technology, and we have multiple product lines now that feature that technology, and that was really an acquisition for the talent.

[SPEAKER_03]: We'd like the young engineers we thought they were really good product developers.

[SPEAKER_03]: We were looking at our product team.

[SPEAKER_03]: You know, one for IP, one for kind of, you know, kind of brand positioning and product positioning in the category, one for talent.

[SPEAKER_03]: And then we brought in that team and developed all, you know, kind of rejuvenated two or three new product line for us.

[SPEAKER_03]: And then that technology ended up going to the hyperboot.

[SPEAKER_03]: So, you know, the fourth one was just like, you know, it was sort of we took a chance at a time where we were looking at new categories.

[SPEAKER_03]: It was a big topic.

[SPEAKER_03]: It was a very top goal of, you know, it was a month's athletes of, like, kind of, um, that's a well, this.

[SPEAKER_03]: And you know, we took a chance on a hardware device that connected to an app and it just, you know, it didn't work for in our brand and it's fine.

[SPEAKER_03]: You know, we, if you go three for four, it's not bad.

[SPEAKER_02]: It'd be great to go four for four.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: But, you know, I think the lesson from that, and I always say you learn more from your, from your failures, you do your wins.

[SPEAKER_03]: And the lesson from that was just a brand has to do things that are that state true to who they are and what they're about.

[SPEAKER_03]: When they don't do that, the market responds.

[SPEAKER_03]: It's the best indicator.

[SPEAKER_03]: You might think, hey, we're doing this for the right reasons.

[SPEAKER_03]: This is who we are and the market says now.

[SPEAKER_03]: That's not why.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: It's why certain brands make acquisitions that go to zero because they just, you know, like they misread the market and they misread how the market's going to react.

[SPEAKER_03]: The market's actually more.

[SPEAKER_03]: in tune with like a brand's identity sometimes that sometimes a brand's not self-aware enough to know that like, hey, yeah, you don't have permission to just do whatever you want.

[SPEAKER_03]: Yeah.

[SPEAKER_03]: You know, like Apple's not going to launch a skincare line, right?

[SPEAKER_03]: Because it's just not true to really art what they do.

[SPEAKER_03]: Yeah.

[SPEAKER_03]: And just to go and get extra revenue and I see brands that all the time, they go into new categories.

[SPEAKER_03]: It's a revenue ground.

[SPEAKER_03]: That's not really true to who they are.

[SPEAKER_03]: And a lot of times, I'll make our positions and I'm like, well, how they can't help this company.

[SPEAKER_03]: This is just kind of, you know, using, uh, using acquisitions as a means to just like, to grow revenue because they can't generate an old product line.

[SPEAKER_03]: It happens all the time.

[SPEAKER_02]: So what do you think is most important in an acquisition target is it, is it IP?

[SPEAKER_02]: Is it a talent acquisition?

[SPEAKER_02]: Is it finding the right price?

[SPEAKER_03]: All of those things.

[SPEAKER_03]: Plus, I would say, yes.

[SPEAKER_03]: Well, sometimes you might not need, like, let's say it's a parallel, right?

[SPEAKER_03]: Nike acquired Commerce in 2003, not for the IP.

[SPEAKER_03]: I mean, the brand IP, yes.

[SPEAKER_03]: But, you know, fashion, cyclical, and they caught a commerce on a way down, and then right when they bought it, it had a big resurgence and now it's a huge, you know, resident revenue positive acquisition for them.

[SPEAKER_03]: So, I mean, everything I think you said IP, it's sometimes it's talent, it's not, a lot of times I'm the all these things, it could be one, it could be multiple, but sometimes you could just be timing, you know, you get something right before it goes big in the culture and you get there early and, um, you know, you're going to have a lot of fun.

[SPEAKER_02]: but without having a vision for like what you're going to do with this company as opposed to like you said like uh uh just just to do it because it's a that's a popular category or it's a you're you're proud to use it yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah yeah

[SPEAKER_03]: is, hey, we have our product pipeline's not very good, so people will just go and attack this on, and it's going to give us revenue we need.

[SPEAKER_03]: And by sometime, to do our own innovation.

[SPEAKER_03]: So yeah, and I would say that, but again, the values I learned from acquisitions are, is it who you are?

[SPEAKER_03]: Is it what you're about?

[SPEAKER_02]: Yeah.

[SPEAKER_02]: When you make an acquisition, you have to.

[SPEAKER_02]: integrate this new company.

[SPEAKER_02]: What have you learned about that?

[SPEAKER_02]: How difficult is that to take this company that may have a few employees, might have an inked armisek, you bought it, had what, 20, 30 employees, 55 employees.

[SPEAKER_03]: When you say company, just cross out the work company, how do you get taking your group of people, emerge it with another group of people, bringing out it, and so

[SPEAKER_03]: You know, we were on the west coast, normal technicals on east coast, different like kind of cultures on both sides country, you know, every company kind of has their own set of values, it kind of comes from the top down.

[SPEAKER_03]: We were able to make it work.

[SPEAKER_03]: I think in the end we both wanted the same thing.

[SPEAKER_03]: So like, you know, how you get there, you kind of have to figure that out.

[SPEAKER_03]: There's been acquisitions where the where it's been seamless and there's been, you know, and in one particular like it just like it was just very two different cultures that were really made it weren't really bad to be in a good because the missions are very different.

[SPEAKER_02]: Yeah, you have to sell almost sell that to the new company or acquiring that hey, this is the our vision is that you come along with it.

[SPEAKER_03]: The people part is of it.

[SPEAKER_03]: Anyone could sell anyone else's products, maybe not effectively, but they could do it.

[SPEAKER_03]: It's not easy to integrate people into another group of people's value system into their norms, so the way they do business.

[SPEAKER_03]: So I would say that in that particular case, when it comes to the hardest part of that access, is just getting the people to all kind of now.

[SPEAKER_03]: You worked for a company ahead of vision, that was their Garshtar.

[SPEAKER_03]: now you're in this company and then now the North stars over here and then maybe it was kind of in the same direction but there's always going to be you know just new dynamics and how do you get people you know you might have been senior at this company and now you're more junior or you know and then how does it and it's not just hard for the company's getting acquired the the acquiring company and know all your people have this new set of

[SPEAKER_03]: Like there's always a little bit of a natural humans are tribal by nature and a little bit in group and that's the new guy and you know, so it's But yeah managing that is a real challenge for management.

[SPEAKER_02]: That's really so it's the main so the whole synergies because of acquisition is a lot harder than it sounds

[SPEAKER_03]: It's easy for the people that stare at a spreadsheet and look at the numbers and say, this numbers plus this numbers is this, without any consideration for companies or made of humans, humans are complicated and it makes the acquisition complicated.

[SPEAKER_02]: Yeah, and you talked about how the world is crazy at that time, what do you think that taught you about timing and acquisition?

[SPEAKER_02]: Do you think that you'll think twice when

[SPEAKER_02]: things are a little frothy and markets economy or and do you think it may be better to wait for times when maybe you're in a session or and and be able to find acquisitions at more reasonable prices more that blacks one events.

[SPEAKER_03]: that like there's some black holes upon events that don't last very long and the paradigm shift is not as big.

[SPEAKER_03]: COVID was a prolonged black's one event that totally changed human behavior, our interactions, the way we interact with products and brands and you see like you could someone can write a book on just the nuttiness that went on for that to your period of

[SPEAKER_03]: Acquisition's brands and companies that like spiked like this and then all of a sudden like when the world went back to normal Yeah, but but like you know, it was died You know, like I would say you know, the in my industry like the connected fitness was just sort of like the Peloton train is pulled Tonal and mirror and all these other Man's into valuation stratist years that that were completely untethered to reality.

[SPEAKER_03]: Yeah, so I mean glue the bot what mirror Yeah, yeah, and that hasn't gone well.

[SPEAKER_03]: I think we're that

[SPEAKER_03]: Yeah, I know.

[SPEAKER_03]: Yeah, so I would say that don't make decisions in a black swan of it during a black swan event.

[SPEAKER_03]: Like, something set a lot.

[SPEAKER_03]: That thing is like set a lot of it.

[SPEAKER_03]: And hopefully, we don't have to face another black swan event.

[SPEAKER_03]: That's the whole thing that makes some black swan events.

[SPEAKER_03]: You don't know what they're going to come.

[SPEAKER_02]: Well, you can argue we're in a black swan event right now with the trade war that we're in.

[SPEAKER_02]: So a self, a self, like usually black swan events

[SPEAKER_03]: You know, extra 9-11 was a sell.

[SPEAKER_03]: It was a box one event, the financial crisis was a, you know, even though it was self-inflicted over a long period of time and yeah, but, but yes, I would say this is kind of more than that.

[SPEAKER_02]: Yeah, okay.

[SPEAKER_02]: How would you say that's changed the way that you thought about investing in your supply chain or adjusting your supply chain?

[SPEAKER_03]: Well, the issue that I think all businesses that make physical products now are facing is just the inability to plan and forecast, and that slows investment, and we are just waiting for things to settle down and normalize either way, even if it's, if it's, if it's, if it's

[SPEAKER_03]: These won't clarity.

[SPEAKER_03]: Bad news is, okay, that will give us guidance to go somewhere else.

[SPEAKER_03]: Yeah.

[SPEAKER_02]: So it sounds like you've looked at options, it's just you don't know which way to go, because you don't know how to set it up.

[SPEAKER_03]: It's a, you know, we're on a football field, and the goal poster moving, the yards moving, the end zones are moving, you know, you don't know a play to know.

[SPEAKER_03]: You don't know.

[SPEAKER_03]: Yeah.

[SPEAKER_03]: We're, you know, it's, it's just, and in the, the hard part about is that,

[SPEAKER_03]: You think that it's like, okay, so this is the no flies on here.

[SPEAKER_03]: The tariffs are going to be too big here.

[SPEAKER_03]: Let's try here and then all of a sudden, that becomes prohibitive and then so it's like, well, do we keep like, at some point, there has to, this has, like, this is can't go on forever.

[SPEAKER_03]: Because, you know, ultimately, the consumer is going to end up, you know, paying the price and companies will end up paying the paying the price for it.

[SPEAKER_03]: And yeah, I think every company and this is,

[SPEAKER_03]: just, you know, coming from a company that makes physical products, like we just wanted to.

[SPEAKER_02]: Yeah.

[SPEAKER_03]: And it would be nice to not have to worry about it because it definitely, it takes a lot of bandwidth on a company's supply chain and finance and logistics people that are constantly like,

[SPEAKER_03]: And it creates the inefficiencies.

[SPEAKER_03]: And that's one thing I think it's underrated is that the uncertainty is creating inefficiencies in business.

[SPEAKER_03]: And I think this will show up.

[SPEAKER_03]: And I think the market is disconnected from what's happening on the ground.

[SPEAKER_03]: I think all suppliers are kind of in the same boat is they're operating on the same information as us.

[SPEAKER_03]: Everyone's trying to find solutions, and but I also think too it's the reality is we live in a highly connected interdependent economy.

[SPEAKER_03]: And in a supply chain, it's not everything on a planet Earth comes from one place.

[SPEAKER_03]: And if you want to make these sophisticated products, like I mentioned, the 142 suppliers make this, I mean auto industries are perfect example.

[SPEAKER_03]: You know, you might have, I mean, I remember pre-dating that the tariff issue, a lot of the wire harnesses for Audi cars were made in Ukraine.

[SPEAKER_03]: And when the Ukraine war broke out, you affected Audi's production because it just shows how delicate the global supply chain is.

[SPEAKER_03]: And you could have one interruption, it's like, well, I can't make a car without the wire harness.

[SPEAKER_03]: now it's my whole business is at risk so i think it's causing companies to diversify diversify but also like you know dual source and develop second suppliers but it takes time it's highly disruptive and and company good companies did that anyway but there has to be an understanding of the delicacy of the global supply chain

[SPEAKER_03]: Yeah, if you, but you kind of have to be a larger company in order to have that right if you're a smaller company you're kind of right at the wins right and it's not easy to find and there's certain types of Product participants that are not that scale but other parts of the world.

[SPEAKER_02]: Yeah, you know, and so if there are what it looks like is that The terrors are going to come in globally anywhere from base is 10% right, but most deals are kind of coming in between the 15 and 20% range

[SPEAKER_03]: Which is crazy high.

[SPEAKER_03]: I mean, like that sounds not bad.

[SPEAKER_02]: If you would have told someone that a year ago, because our effective rate was like two and a half percent before, right?

[SPEAKER_02]: So you're talking about, you know, nearly a 10x for, you know, on on on that side.

[SPEAKER_03]: So which is all and so it's a tax on the American companies.

[SPEAKER_03]: And it's in its front paid, which is that's the word.

[SPEAKER_03]: You're going to see cash flow issues because I think companies

[SPEAKER_03]: It's, it's not like it's after we collect the sales and the profits from all our products.

[SPEAKER_03]: It's up front.

[SPEAKER_03]: And so, yeah, your inventory costs are high.

[SPEAKER_03]: It's always cycles.

[SPEAKER_03]: Yeah, yeah.

[SPEAKER_02]: So how do you think, do you think this is, does this make Mexico, because the USMCA, does this make producing in Mexico longer term more attractive if you can avoid, because most of those products are exempt from the tariffs.

[SPEAKER_03]: But yeah, until, but we have a trade agreement that doesn't seem to really matter.

[SPEAKER_00]: I mean, we've, we woke up one more day and it was still last so 25% of them.

[SPEAKER_03]: So, that's the problem is that like the solutions are only solutions until they're subject to the same thing.

[SPEAKER_03]: And so, if trade agreements are just not worth the paper they're written on, then it's really hard for us to, in theory, if that FDSMCA,

[SPEAKER_03]: was ironclad and that gave us clear.

[SPEAKER_03]: That's a whole point of why you signed trading games.

[SPEAKER_03]: And so, but Mexico, I think, has that, I've said for years, is a massive opportunity.

[SPEAKER_03]: It's a resource country with big tourism.

[SPEAKER_03]: Youngs population, good demographics, unlike some of the Asian counterparts.

[SPEAKER_03]: Um, and I think we should be, um, you know, partying and strengthening our relationship with Mexico as much as we can to the North American general like, you know, if you want to count if you want to be less dependent on.

[SPEAKER_03]: You know, the Asian supply chain, the North American supply chain needs to be developed and needs to be developed by all parties in North America and not just, you know, I'd say it.

[SPEAKER_03]: So I feel like companies build factories, nations build supply chain so they build them with collaboration with other nations.

[SPEAKER_02]: And do you think that Mexico has the skill and infrastructure to eventually rival China at some point?

[SPEAKER_02]: Or do you think it's going to take?

[SPEAKER_03]: I mean, I think people underestimate the trillions of dollars in the planning that went

[SPEAKER_03]: The one advantage of having a government like that is if you have really smart people that can engineer really good, like if they wanted this only manufacturing, they could basically just want to engineer us to do like, yeah, raw materials up on the north, that goes on rid, you build the rail system that goes down and disperses those raw materials into the various industries, refinement in the middle, and then you have textiles here, technology here, and then ports.

[SPEAKER_03]: I mean, this is, you don't build that in a decade.

[SPEAKER_03]: It's been taking three decades to build the track.

[SPEAKER_03]: So before we just think that we're going to roll up the warehouse door, and just replicate all that, I think.

[SPEAKER_03]: And look, you see the videos of like, thinking about the shipping containers and the shipping boats, but also the institutional knowledge of how to, the tooling, for example, right?

[SPEAKER_03]: And like, look, we want to get better in shipping.

[SPEAKER_03]: All right, well, there's steel terrors now.

[SPEAKER_03]: So we're even going to boats right now.

[SPEAKER_03]: Like, there's just, it's, yeah, I say you can't opt out of globalization anymore than you could opt out of gravity.

[SPEAKER_03]: It's a force that's here and it's not going anywhere.

[SPEAKER_03]: So I think.

[SPEAKER_03]: The strength of the U.S. economy has been that we've used globalization as a massive, massive tailwind.

[SPEAKER_03]: And, you know, people thought that in 2027 the Chinese economy was going to surpass the U.S. economy, that is not going to happen.

[SPEAKER_03]: Obviously, we're definitely, you know, in my view, America is still the most dynamic economy leading in all the major sectors.

[SPEAKER_03]: And we've sort of offloaded some of the most

[SPEAKER_03]: And so we can focus on owning the IP and the creativity and the, in the, in dominate the industries.

[SPEAKER_03]: So I like to see that continuum.

[SPEAKER_03]: I just, you know, I, I hope it does.

[SPEAKER_03]: But and I hope people realize the advantages that, you know, we've enjoyed the last like three decades.

[SPEAKER_03]: You know, the people in the United States have a high standard of living now.

[SPEAKER_03]: And it's,

[SPEAKER_03]: It's, you know, I'm not a fan of, like, radically changing a game that was really benefiting us.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: So you deal with a lot of retailers and a lot of companies like you, rely on retailers, what willingness of you seeing from retailers to work with you on pricing and how much leeway do you think they have to eat some of those, those pricing creases and how much do you think will be passed on?

[SPEAKER_03]: Well, I mean, not much the way to be honest, you know, all businesses operate on economic models that are pretty sensitive and they're sensitive to little, you know, a swing, five, ten percent in margin is huge.

[SPEAKER_03]: I mean, it's a big impact to the business.

[SPEAKER_03]: So, I think it's in the short term, figuring out like a split of who's going to, you know, it's going to affect both the brand and the retailer.

[SPEAKER_03]: But ultimately, it's going to get passed on with consumer.

[SPEAKER_03]: I mean, it's just there's a negotiation of what's the pricing sensitivity in the particular category, because we want that price increase to cover both of, it's, there's not a lot of people think that there, these companies are operating on these massive.

[SPEAKER_03]: We're retellers are operating on massive.

[SPEAKER_02]: We only have three, four, five percent margin.

[SPEAKER_03]: And so in a little, so that, these are,

[SPEAKER_03]: These numbers, you know, when people hear, oh, it's only going to be 10%, it's an 8% increase over what it is now.

[SPEAKER_03]: I mean, that's not insignificant, so someone has to pay for that.

[SPEAKER_03]: So either companies or brands are going to be less profitable, which means they have less money for hiring and investment or demands are going to go down.

[SPEAKER_03]: I mean, I just don't think that increased prices is good, you know, it's going to be shared by everyone, but I don't know who wins in that scenario.

[SPEAKER_02]: Yeah.

[SPEAKER_02]: Well, we live in unique times and you run a unique business and a unique category.

[SPEAKER_02]: So congratulations on all your success and thanks for being here.

[SPEAKER_03]: Thanks.

[SPEAKER_03]: It's a pleasure to be here and I just only hope good things for the global economy going for it.

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