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Speaker 1: So I don't wear glasses, although that doesn't mean I

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Speaker 1: can see by the way, I just don't wear glasses.

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Speaker 2: the website for important disclaimers. Remember always seek financial advice.

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Speaker 2: And we're back Episode one zero six bit delayed. I

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Speaker 2: do seem to have I don't know if sure you're

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Speaker 2: recording from Tehran because your internet is not great.

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Speaker 1: No, but my internet's amazing, Like my Intenet's more than

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Speaker 1: two hundred in each direction. But for some reason, I

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Speaker 1: was struggling to get onto the server. So it's not

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Speaker 1: an internet issue. It's just I don't know, some tech problem.

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Speaker 2: Pretty sure that's not the head of the Revolutionary Guards

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Speaker 2: before he got topped.

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Speaker 1: I am hearing planes buzzing around outside, so they could

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Speaker 1: have something to do with it. Who knows.

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Speaker 2: I had about fifty people ask me his idear. Okay,

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Speaker 2: is he still in Tel Aviv? You are thankful, thankfully

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Speaker 2: or so your family there, but you are personally not

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Speaker 2: in Israel anymore.

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Speaker 1: So I know. I'm in New York. I left a

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Speaker 1: few days before all the actions started. Frankly, I wouldn't

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Speaker 1: have minded to still be then. How it would have

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Speaker 1: been inconvenient because I didn't have a shelter inside my

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Speaker 1: actual building, so I would have had to go to

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Speaker 1: a published older Mostly I'm happy, my luck, my son

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Speaker 1: is with me. Mostly I'm happy he's out of Israel.

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Speaker 1: He's with you. Yeah, yeah, that would have been a

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Speaker 1: bit stressful if he was in there and I was out.

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Speaker 1: But yeah, it's very lovely all the people that have

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Speaker 1: contacted me. I got out of there a few days

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Speaker 1: before it all started, So I'm mostly thinking about my

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Speaker 1: friends who were in there, and one friend of mine

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Speaker 1: who is out of Israel but his family is stuck

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Speaker 1: in Israel. Or maybe I'll say he's stuck out of

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Speaker 1: Israel while his family's in Israel. You know, there's no

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Speaker 1: way to get back in now. So that's much harder

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Speaker 1: than me kind of wandering around the streets of Manhattan.

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Speaker 1: As for sure, now is a more hopeful time in

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Speaker 1: the last fifteen years in the Middle East, because there's

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Speaker 1: peace with a whole lot of Arab countries in Israel

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Speaker 1: that didn't exist fifteen years ago. Lebanon, I think has

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Speaker 1: a real shot at being a peaceful, great country again. Syria,

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Speaker 1: there's definitely some hope. I mean, there's also risk, but

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Speaker 1: there's some hope. And like the Palestinius has definitely been

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Speaker 1: a reset and if you Ran is removed as a

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Speaker 1: force for evil, I think it's a hopeful time. And

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Speaker 1: so my hope is that it might be a better

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Speaker 1: world to live in if you're a believer in Western

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Speaker 1: liberal democracy and freedom. Absolutely, I want to put something

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Speaker 1: to you. I'm not going to talk more about this stuff,

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Speaker 1: but I posted something on LinkedIn and people are welcome

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Speaker 1: to look at it, which was kind of just a

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Speaker 1: quick summary of my take on a bit of the

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Speaker 1: history and what's going on here. But since we're talking

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Speaker 1: about defense, I want to talk to you about this

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Speaker 1: and get your opinion on this. So much more business

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Speaker 1: you think So there was a post that somebody made

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Speaker 1: an Aussie made online a few weeks ago. I'm not

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Speaker 1: going to call at his name, even though he posted

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Speaker 1: it publicly. I really like him, but I think the

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Speaker 1: topic is interesting enough without mentioning his name. Is Smaller VC,

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Speaker 1: who effectively said I'm not interested in investing at all

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Speaker 1: in defense tech because no matter whether it's used for

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Speaker 1: offense or defense, ultimately it's designed to kill people. And

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Speaker 1: there's enough other things for me to invest in. And

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Speaker 1: I really took issue personally with that position because I

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Speaker 1: felt like this, and this is a great example of

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Speaker 1: what's happening now, is that unfortunately, you know, we all

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Speaker 1: sit here comfortably in our Western democracies, like drinking our lattes.

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Speaker 1: I'm guilty of it. We all do it right, and

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Speaker 1: like we're not too worried about things, and at least

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Speaker 1: we're a bit worried because like we we're Jewish, so

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Speaker 1: we know that there's some risk in life. But everyone's

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Speaker 1: very comfortable and we don't give much thought to the

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Speaker 1: fact that the reason we're sitting here is because there

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Speaker 1: are other Australians that are making sure that we stay

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Speaker 1: safe and other world powers that are making sure that

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Speaker 1: we stay safe. And frankly, if we did not have

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Speaker 1: the weaponry for self defense, then we would not sitting

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Speaker 1: in a Western liberal democracy, will be conquered by authoritarian regimes.

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Speaker 1: And so to me, this whole idea that says, you know,

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Speaker 1: it's a bit dirty to invest in defense tech, I

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Speaker 1: want to steer clear of it. I think it's totally

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Speaker 1: misguided from an ideological point of view, and I also think,

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Speaker 1: I mean, commercially, it doesn't really seem justifiable. And before

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Speaker 1: you respond to that, I will tell you that Steve Baxter,

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Speaker 1: I don't know if you know Steve. I really like Steve.

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Speaker 1: I like say so Steve's obviously was on Shark Tank,

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Speaker 1: is how a lot of people know him. So Steve

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Speaker 1: actually has a fund that invests in defense tech called

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Speaker 1: Beaten Zone, which is really interesting and I often talk

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Speaker 1: to him about it. I mean, what's your take on this,

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Speaker 1: the ideology of not investing in defense tech as a VC.

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Speaker 2: Yeah, i'd actually question that original. I don't know who

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Speaker 2: the VC you're talking about is, but he's probably not

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Speaker 2: a very good one by the sounds of it. If

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Speaker 2: I remember I'm I probably wouldn't be investing in raytheon

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Speaker 2: an actual sort of weapons manufacturers. Maybe, but it's very

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Speaker 2: different if you could invest in a drone jamming technology

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Speaker 2: that's literally defensive, it's hardly offensive, and you can make

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Speaker 2: a one hundred x return for your investors. In this

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Speaker 2: CLAIB who's taking people's money and getting paid for it

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Speaker 2: isn't doing it and it's saving lives. So it sounds

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Speaker 2: like these guys are moron to be honest, Well, I.

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Speaker 1: Don't think like. I definitely don't think he's a more

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Speaker 1: And I understand where this attitude in Western society came from.

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Speaker 2: To blanket everything under the one I think you can

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Speaker 2: be signed. I'm not going to invest in offensive weapons,

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Speaker 2: but to not not invest in defense, to invest in

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Speaker 2: the missile shield that protects tell a VIV that I

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Speaker 2: was saving.

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Speaker 1: There's no difference between offensive weapons and defensive weapons for

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Speaker 1: two reasons. Look, I'm going to do like a breakout

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Speaker 1: one thing and say probably there's a pretty strong argument

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Speaker 1: to say don't invest in illegal weapons like gas and

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Speaker 1: chemical and biological warfare. But let me tell you why

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Speaker 1: there's no difference between offensive and defensive weapons. There's two reasons.

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Speaker 1: One is all of the missile technology that's being used

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Speaker 1: to provide a missile shield is the same technology that's

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Speaker 1: being used to send missiles offensively. And secondly, if you

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Speaker 1: look at what's happening with you Run now and destroying

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Speaker 1: the nuclear facilities of you Run, what Israel is doing

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Speaker 1: is using a defensive weapons in a defensive capacity. I

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Speaker 1: would describe it like, I think it's pretty widely accepted

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Speaker 1: it's preemptive, but.

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Speaker 2: I actually argue it's not prem I argue that Iran

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Speaker 2: started this war on seven October. I take significant issues

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Speaker 2: and this is preempty.

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Speaker 1: Well that's a good point. Yeah, well that's a good point.

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Speaker 1: I can't really argue with that. I was more arguing

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Speaker 1: against some people were saying, you know, it's not preemptive

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Speaker 1: because Iran didn an attack Israelitic. But they were pretty

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Speaker 1: clear about what they were planning to do. People not

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Speaker 1: that they started this long ago. This is people say

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Speaker 1: Israel's got nuclear weapons, Like that's not fair. And number one,

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Speaker 1: I don't know if it's roll has new weapons. Let's

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Speaker 1: assume they do it right, Like, I don't believe they've

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Speaker 1: threatened to destroy any country. Also, it's a Western liberal democracy.

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Speaker 1: This moral equivalence between Western liberal democracies and totalitarian, terror

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Speaker 1: based dictatorships. It's just absurd to hear that coming out

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Speaker 1: of Westerners. Mouse So anyway, I think I would really

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Speaker 1: encourage people to invest in defense tech. You know, the

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Speaker 1: world at the moment is going through a pretty substantial

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Speaker 1: defense transition, not just I mean everyone talks about AI,

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Speaker 1: but to your own technology and missile defense shields. This

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Speaker 1: is like, these are the emerging technologies of the twenty

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Speaker 1: first century. I think it would be great if Australia

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Speaker 1: became a center for developing some of this technology. And

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Speaker 1: let's be honest, Australia is pitifully exposed to its enemies,

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Speaker 1: to our enemies, we basically have not enough weapons, the

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Speaker 1: wrong weapons. We have not enough people in the army,

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Speaker 1: we have very little sovereign capacity. I mean, we say

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Speaker 1: we buy some missiles, those missiles will get used in

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Speaker 1: about you know, one day's worth of fighting. There's no

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Speaker 1: missile defense shield at all. So you can argue whether

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Speaker 1: we need it or not. I think we do, but

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Speaker 1: I'm over the point. I'm more of the point it's

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Speaker 1: not even worth us bothering. We better bother because we

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Speaker 1: need to be able to defend ourselves. And also, if

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Speaker 1: you know, God forbid there is a war, then we

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Speaker 1: need to make a contribution to the side of Western democracy.

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Speaker 2: I'm not sure that's helped us in the part we

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Speaker 2: helped we went to war in Iraq. I'm not sure

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Speaker 2: this has helped. I'd rather astrgeous. So I guess we's

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Speaker 2: got to be army, but I'm not sure taking aside

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Speaker 2: is beneficial.

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Speaker 1: Well, World War two was pretty significant. Well, I think

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Speaker 1: Australia needs to pick aside, like either you're part of

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Speaker 1: the free world or you're not. I think we need

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Speaker 1: to be able to defend ourselves. And also, you know,

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Speaker 1: I saw Penny One come out and say, or maybe

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Speaker 1: it was Albin Easy that said, you know, we're not

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Speaker 1: getting involved in this war in Iran, Like we haven't

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Speaker 1: been asked to provide assistance and we won't be providing assistance.

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Speaker 1: And it's like, you know, Australia's got some very good

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Speaker 1: special forces, like we are definitely strong on that, but

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Speaker 1: beyond that, who in the hell is going to ask

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Speaker 1: Australia for assistance? Like our navy is out of the

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Speaker 1: water half the time. We're ten years away from getting

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Speaker 1: submarines if we get them, I think we will, but

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Speaker 1: ten years away from it, we've got four missiles, no drones.

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Speaker 2: But remember what defense. Defense spending in many cases is

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Speaker 2: simply just just discretionary spending and same as eight Like

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Speaker 2: this is spending a lot of money on a very

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Speaker 2: few jobs. Essentially, it is what most defense spent, and

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Speaker 2: I think it's mostly wasted. And I'd love to say

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Speaker 2: the US pull back on its defenseman, I like say

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Speaker 2: every country pulled back on its defense spending, ideally, because

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Speaker 2: this is money that could be going to farm more

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Speaker 2: productive assets, going.

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Speaker 1: To be persuading authoritarian regimes to pull back on defense spending.

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Speaker 1: They're quite keen on taking over the world.

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Speaker 2: If you're going to look at it, look at the

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Speaker 2: spending of what Iran would spend relative to the US.

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Speaker 2: It's like one thousandth it's time.

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Speaker 1: But I'm not sure Iran is the predominant adversary globally

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Speaker 1: of the US.

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Speaker 2: Even Russia, even Russian and China spending is a fraction

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Speaker 2: of what the US spends on defense, which you really offense.

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Speaker 1: Well, you know a fraction can mean anything.

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Speaker 2: Well, it's like ten percent, that's the fraction it's not.

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Speaker 1: It's China. It's not ten percent of yours. It's not

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Speaker 1: it is. And also you know that eight sevenths is

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Speaker 1: also a fraction, so when you say it's a fraction

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Speaker 1: of it could be eight sevenths, So I mean it's not.

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Speaker 1: So we disagree on this. I think that basically, So

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Speaker 1: Albaniz is going to meet Trump now, and like, what's

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Speaker 1: he going to say to him? He's going to say,

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Speaker 1: I've got nothing to offer you. But we basically just

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Speaker 1: isolated a close ally in Israel who happens to be

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Speaker 1: your closest ally. So we don't have that going for

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Speaker 1: us anymore, and we can't really contribute anything to you,

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Speaker 1: and we need you to keep orcst going. And like,

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Speaker 1: God help him if he talks about tariffs, which is

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Speaker 1: so inconsequential now in the grand scheme of things. So

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Speaker 1: I do think if we want America's halo, which I

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Speaker 1: think is in America's interests, I think things will change.

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Speaker 1: And you know, all of this defense spending, it comes

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Speaker 1: from tax dollars, and so all of these other spending

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Speaker 1: like it all exacerbates the debt problem. Basically, the U

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Speaker 1: spends around a trillion, which is about three x four

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Speaker 1: x what China spans, and it's about almost ten x

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Speaker 1: what Russia spans. And that's not counting the money that

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Speaker 1: gives to the autostoph it gives Israel. So it's actually

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Speaker 1: more than that I know, but that sounds about right

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Speaker 1: for China. And so not only do I have no

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Speaker 1: issue with VCS investing in defense tech, I think that

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Speaker 1: I think I'll be very supportive about Australia developing defense startups.

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Speaker 1: And by the way, all these space startups that Australia

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Speaker 1: is developing, like, let's be which is great. I think

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Speaker 1: it's fantastic. Let's be clear about this, like the relationship

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Speaker 1: between defense and space, like they are virtually two sides

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Speaker 1: of the same coin in terms of the technology. How

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Speaker 1: is your US chip going? So it's very enjoyable. We

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Speaker 1: like being here. I'm going to tell you some an

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Speaker 1: interesting experience because we talked about Chick phil a the

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Speaker 1: most profitable per store quick service restaurant chain on Earth,

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Speaker 1: despite being closed on a Sunday. How much does it

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Speaker 1: make per store? Nine mil nine to ten mili, Right,

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Speaker 1: that's revenue, not profit, that's right, But I think it's

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Speaker 1: profit margins. I vaguely remember that it's profit margins were

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Speaker 1: like twenty percent or something, so it was substantial.

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Speaker 2: So I think Gouzmin Gomez is that far off that. Incidentally,

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Speaker 2: in terms of per drive.

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Speaker 1: Ten milli USD per store, I think.

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Speaker 2: A good Goodsman and Gomez makes like a couple million

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Speaker 2: bucks as in the franchise makes that much.

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Speaker 1: The franchise makes that improfit. No, yes, yes, well maybe

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Speaker 1: because they have ten stores. No, no, personal, you think

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Speaker 1: Goozmin and Gomez is making two million dollars per store? Well,

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Speaker 1: I can't argue because I'm not across it, but like

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Speaker 1: I can tell you what we talked about, we talked

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Speaker 1: about it at the FOE time.

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Speaker 2: I'm pretty sure that's what they like in the drive

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Speaker 2: drive through stores, which are a lot more profitable than

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Speaker 2: the than the.

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Speaker 1: Not Goodsman also has the advantage of a Chick phil

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Speaker 1: A that they get to open seventeen percent more of

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Speaker 1: the week because Chick fil As are closed on Sunday

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Speaker 1: if you're overall. So, let me tell you what it's

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Speaker 1: like to go into one of these stores and whether

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Speaker 1: it's obvious to me why they've got so much revenue

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Speaker 1: per store. So just what happened. I walked into the store.

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Speaker 1: I walked in with my son. The minute we walked

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Speaker 1: in like there was a line waiting to order. So

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Speaker 1: you might think you're just waiting in the line and

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Speaker 1: you're going to order when you get to the front. Well,

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Speaker 1: that's not how it works at all. Somebody comes over

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Speaker 1: to you with a tablet and they say, do you

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Speaker 1: want to tell us your order? And I didn't know

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Speaker 1: what to order because I'm not familiar with the menu.

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Speaker 1: They said, okay, here's a menu, just tell us when

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Speaker 1: you were ready.

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Speaker 2: Macis has that that's not new technology.

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Speaker 1: Macas has people coming into the queue taking your order.

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Speaker 2: They got big screens, which is the same I know.

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Speaker 1: But then there's a queue lined up for the screen

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Speaker 1: here the minute you walk in. Within ten seconds of

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Speaker 1: walking in, somebody is they're taking your order onto a tablet.

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Speaker 1: They've employed someone.

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Speaker 2: Yeah, but I don't see how it's any better or

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Speaker 2: worse than having screens.

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Speaker 1: Because there's no cues. It's more efficient than having a

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Speaker 1: screen because the cue is just basically being simultaneously serviced

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Speaker 1: by people taking your order. There's no weight because you

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Speaker 1: hear a weight.

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Speaker 2: You're saying you got there's more iPads and there are

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Speaker 2: screens and.

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Speaker 1: That's right, and like you don't have to press any button.

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Speaker 1: You just say to someone in like eight words, this

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Speaker 1: is my order done. That's the end of it. Tap

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Speaker 1: tap your card on the iPad or on the little

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Speaker 1: device connected to the iPad, and then I would say,

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Speaker 1: within I don't know, two and a half minutes, the

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Speaker 1: food is ready and hot, like it's been constantly being made.

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Speaker 2: Two minutes.

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Speaker 1: Two and a half minutes, Yeah, unbelievably a walk in store,

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Speaker 1: hot food. And what do you order? I can't remember.

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Speaker 1: I think we ordered a chicken burger, which is called

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Speaker 1: the chicken sandwich here, so chicken sandwich, some nuggets, some

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Speaker 1: fries probably, I guess, and a drink.

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Speaker 2: Any vegetarian options this joint.

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Speaker 1: I didn't check, but I'm sure, I say, I'm sure

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Speaker 1: there would be. I am sure there would be. I

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Speaker 1: just didn't check that there were maybe pop back in

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Speaker 1: and well there are fries, they're vegetarian.

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Speaker 2: Yeah, you can't set that fries. How many calories in

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Speaker 2: this meal? Which is that curacy? It says it's like

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Speaker 2: a KFC, like it's no different, So a lot you'd

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Speaker 2: be up for four to five thousand kill you.

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Speaker 1: Sure, yeah, I don't think it's five thousand, but I

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Speaker 1: think the whole yeah, I berg is probably two thousand

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Speaker 1: or two and a half thousand killage. Also five for

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Speaker 1: our calories kind of thing on a good day. I

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Speaker 1: think so. Because chicken, it's chicken. Depends what you put

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Speaker 1: in the sauces and stuff.

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Speaker 2: Yeah, it's the bacon, and which obviously bacon to mayonnaise,

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Speaker 2: that's what really kills you.

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Speaker 1: And so as I was leaving, just because they don't

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Speaker 1: want people to be bored while they're waiting. So the

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Speaker 1: whole thing is a whirlwind of efficiency. It's it's people

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Speaker 1: are so nice, so caring. They get in and out

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Speaker 1: and then someone as I'm leaving, comes out and says, oh,

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Speaker 1: just for people who are waiting, here are some little

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Speaker 1: shakes for you to drink, just complementally little Like the

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Speaker 1: whole experience is unbelievable. How busy was it there were

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Speaker 1: it was a small store and there were probably twelve

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Speaker 1: or thirteen people in the store, so it was pretty full,

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Speaker 1: and it just moved was in Boston. It was so efficient,

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Speaker 1: so efficient, like you would just have to say, this

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Speaker 1: was a great experience and it's obvious why they can

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Speaker 1: have such a high throughput in the store. Everything is

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Speaker 1: about efficiency repped in great customer service. You never feel

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Speaker 1: like they're rushing you. You just feel like they're trying

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Speaker 1: to facilitate you moving through efficient You describe that as

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Speaker 1: process power. I dare to say, I think I was

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Speaker 1: trying to think about whether it could be replicated, and

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Speaker 1: I think there's something going on behind the scenes that

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Speaker 1: makes this difficult to replicate.

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Speaker 2: Well, they clearly do replicate it across one hundreds and

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Speaker 2: hundreds of stores.

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Speaker 1: They do, but I'm trying to think about whether a

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Speaker 1: competitor could replicate it. And I felt like there was

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Speaker 1: some magic going on behind the scenes that I wasn't seeing.

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Speaker 1: It wasn't just a matter of someone with an iPad

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Speaker 1: taking my order and handing out some free drinks.

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Speaker 2: But if you look look at what process power is, Yes,

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Speaker 2: look at cars, Turner has got the most process power

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Speaker 2: because it makes the most efficient cars.

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Speaker 1: But that's all.

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Speaker 2: Say BMW's got zero process power, Like there's other degrees

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Speaker 2: of process power. Chick fil A feels like it's the bad.

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Speaker 2: Then you've probably got McDonald's and you've got what about

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Speaker 2: like Chack Chack. As you said, there's obviously a continue

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Speaker 2: of them, but it feels like they have all their

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Speaker 2: powers process power again, which again, Riz Maria, we've talked

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Speaker 2: about it twice in twenty minutes.

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Speaker 1: Yeah. Well, the thing is, there's also this concept called

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Speaker 1: great food, and so I didn't think Chick fil A

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Speaker 1: was great food. Like I thought it was fine, but

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Speaker 1: it didn't blow me away. And like you know, later

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Speaker 1: on on this trip, I had a shake Shack burger,

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Speaker 1: which they have a special barbecue burger at the No, no, no,

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Speaker 1: don't need burgers. Nothing I like more than a barbecue burger.

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Speaker 2: I've eaten a mushroom burger and chake Jack's mah.

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Speaker 1: Well, I mean, come on, I don't even like mushrooms.

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Speaker 1: And I tell you they've they brought ordering off screens

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Speaker 1: in since the last time I was there, and they

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Speaker 1: also now let you have a number and they'll bring

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Speaker 1: it to your table, and it was quite efficient. But

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Speaker 1: it feels like that emotion of reluctant employees working in

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Speaker 1: a fast food restaurant. Chick fil A felt nothing like that.

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Speaker 1: It felt like these people there's no way they would

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Speaker 1: rather be than serving you in the Chick fil A

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Speaker 1: like it was really a special experience.

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Speaker 2: That's the definition of process power if you ask me

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Speaker 2: in a retailer environment, so I do. Actually, I've actually

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Speaker 2: spoken to an insider at Goodsman and gome as someone

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Speaker 2: who knows the business very well, and they've told me

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Speaker 2: that good GYG franchises make over two million dollars ebidary year,

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Speaker 2: so numbers above two. This is this is the best ones.

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Speaker 2: So these are super profit, these are beasts. These things

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Speaker 2: so up there with Chick fil A, So little Australian

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Speaker 2: fast food businesses is a world better. Speaking of good service,

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Speaker 2: I went We talked about glasses a couple of months

415
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Speaker 2: ago and inspired meuse I've had to change glasses and

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Speaker 2: I wear glasses for light driving basically and washing footage.

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Speaker 2: So I went to Specsavers, which I love and talking

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Speaker 2: about great experiences. How long do you reckon? I went in,

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Speaker 2: had an eye test, chose frames, paid for everything. How

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Speaker 2: I get two questions, A, how long do you reckon

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Speaker 2: it took me? And B how much you reckon it

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Speaker 2: cost me?

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Speaker 1: If you wouldn't have if you wouldn't have prompted me?

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Speaker 1: So I know it's going to be quick. If you

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Speaker 1: I'm trying to imagine if you would have said, how

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Speaker 1: long should I expect it to take to go in

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Speaker 1: and do all of that? I mean, I would have

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Speaker 1: thought it would be north of half an hour. Yeah

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Speaker 1: to me, half an hour. I thought. I was staggered

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Speaker 1: how quick that was. So I wouldn't have thought it

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Speaker 1: could take half a hour. I thought it would be

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Speaker 1: over half an hour. I thought maybe up to an hour,

433
00:19:12,200 --> 00:19:14,600
Speaker 1: depending on how many people are there and how many

434
00:19:14,600 --> 00:19:15,680
Speaker 1: are waiting for an eye test.

435
00:19:15,840 --> 00:19:18,560
Speaker 2: I would thought an hour's quick for that anyway, So.

436
00:19:18,520 --> 00:19:20,879
Speaker 1: I don't wear glasses, although that doesn't mean I can

437
00:19:20,920 --> 00:19:23,399
Speaker 1: see by the way, I just don't wear glasses. I

438
00:19:23,440 --> 00:19:26,080
Speaker 1: can say neither far nor close. So I don't know

439
00:19:26,080 --> 00:19:29,240
Speaker 1: what the solution is. I just have great eyesight, and

440
00:19:29,280 --> 00:19:31,200
Speaker 1: all of a sudden, I'm now blown pretty rare.

441
00:19:31,760 --> 00:19:34,840
Speaker 2: Someone your vintage obviously wear different money or you're a

442
00:19:34,920 --> 00:19:39,399
Speaker 2: genack so different, different, very different. But for yeah, to

443
00:19:39,440 --> 00:19:41,560
Speaker 2: not use glasses at your age is actually really unusual.

444
00:19:41,760 --> 00:19:43,680
Speaker 1: Yeah, well, thank you. That makes me feel great. It's

445
00:19:43,760 --> 00:19:46,160
Speaker 1: the most big headed compliment I've ever said. I don't

446
00:19:46,200 --> 00:19:49,720
Speaker 1: think so, thank you very much. So, But so I

447
00:19:49,760 --> 00:19:51,280
Speaker 1: don't I'm not really familiar. Then when you say what

448
00:19:51,280 --> 00:19:52,920
Speaker 1: do they cost? I don't know what they cost. Doesn't

449
00:19:52,920 --> 00:19:55,040
Speaker 1: it depend on how expensive the frames are that you buy.

450
00:19:55,200 --> 00:19:57,280
Speaker 1: You would have probably three all a frame, so that's

451
00:19:57,320 --> 00:19:59,240
Speaker 1: the problem. But I would have thought of a pair

452
00:19:59,280 --> 00:20:01,000
Speaker 1: of a pair of of frames. I would have thought

453
00:20:01,240 --> 00:20:03,239
Speaker 1: like I would have thought, ninety nine dollars is a

454
00:20:03,280 --> 00:20:05,000
Speaker 1: discounted pair of frames.

455
00:20:05,040 --> 00:20:07,879
Speaker 2: That's very cheap. Well, maybe you get frames and glass

456
00:20:08,000 --> 00:20:10,800
Speaker 2: and obviously the lenses. It all comes as as one.

457
00:20:11,240 --> 00:20:13,320
Speaker 1: Oh, I forgot about that. Now I'm talking only about

458
00:20:13,359 --> 00:20:15,879
Speaker 1: the frames. I would have thought just the frames and

459
00:20:15,960 --> 00:20:16,760
Speaker 1: nine nine dollars.

460
00:20:16,720 --> 00:20:18,440
Speaker 2: Charge you for one like they charge you for kind

461
00:20:18,480 --> 00:20:20,560
Speaker 2: of it's an integrated package essentially.

462
00:20:20,359 --> 00:20:22,639
Speaker 1: To ninety nine would be a bargain for both. Is

463
00:20:22,640 --> 00:20:24,800
Speaker 1: that right or not? Because the glass feels expensive?

464
00:20:25,400 --> 00:20:29,480
Speaker 2: Yeah, I remember one year ago I bought like I

465
00:20:29,600 --> 00:20:31,119
Speaker 2: think I bought Ted Baker frame. Like they can go

466
00:20:31,160 --> 00:20:33,000
Speaker 2: up to well over one thousand dollars for the name

467
00:20:33,280 --> 00:20:34,000
Speaker 2: brand frames.

468
00:20:34,080 --> 00:20:36,560
Speaker 1: Yeah, I'm not surprised. But if their brand name frames,

469
00:20:36,640 --> 00:20:37,879
Speaker 1: or if the glasses are.

470
00:20:37,720 --> 00:20:40,360
Speaker 2: Complex, yeah, exactly, which you have friends are like topics

471
00:20:40,400 --> 00:20:42,159
Speaker 2: like I don't go which I made billions from this,

472
00:20:42,359 --> 00:20:45,159
Speaker 2: so I obviously don't. I can't barely wear them. It

473
00:20:45,280 --> 00:20:47,919
Speaker 2: was pointless me getting named brands. I'm not get them anyway,

474
00:20:47,960 --> 00:20:50,439
Speaker 2: but I certainly aren't buying fancy frames now. So I

475
00:20:50,480 --> 00:20:53,239
Speaker 2: got two for it was I think it was two

476
00:20:53,320 --> 00:20:55,119
Speaker 2: fifty and it mean private health gives you, so my

477
00:20:55,440 --> 00:20:57,840
Speaker 2: total ad of pocket costs for everything, So I test

478
00:20:58,160 --> 00:21:01,040
Speaker 2: two frames lean, I've got this lens reflective thing on

479
00:21:01,080 --> 00:21:05,320
Speaker 2: their forty nine bucks a half an hour. Well, that

480
00:21:05,400 --> 00:21:08,480
Speaker 2: was astonished, and the spectator's team were again super friendly.

481
00:21:08,760 --> 00:21:11,119
Speaker 2: And I can't spend highly enough with this business privately

482
00:21:11,160 --> 00:21:13,600
Speaker 2: held still out of the UK. An incredible experience.

483
00:21:13,680 --> 00:21:15,359
Speaker 1: So let's talk about something else that is not an

484
00:21:15,400 --> 00:21:18,960
Speaker 1: incredible experience. Let's talk because we talk about Google a lot,

485
00:21:19,000 --> 00:21:21,399
Speaker 1: and you know my view is, and I'm not unique

486
00:21:21,440 --> 00:21:23,360
Speaker 1: in having this view, is they might have some problems

487
00:21:23,359 --> 00:21:26,240
Speaker 1: now with their search monopoly problems and opportunities.

488
00:21:26,280 --> 00:21:28,240
Speaker 2: I think we'd put that Google.

489
00:21:28,160 --> 00:21:31,000
Speaker 1: Asking problems and opportunities, And now let's talk about how

490
00:21:31,000 --> 00:21:36,199
Speaker 1: they might increase their revenue whilst under pressure from as

491
00:21:36,400 --> 00:21:39,560
Speaker 1: all of the search decline that they're having right and

492
00:21:39,640 --> 00:21:42,359
Speaker 1: so one way they might increase it is by increasing

493
00:21:42,400 --> 00:21:47,040
Speaker 1: the price of YouTube premium to Mike, have you noticed, like,

494
00:21:47,080 --> 00:21:50,040
Speaker 1: you're not in a family plan on YouTube premium I assume, right.

495
00:21:50,119 --> 00:21:51,760
Speaker 3: No individual plan, and.

496
00:21:51,680 --> 00:21:55,120
Speaker 1: So you wouldn't be aware of this ridiculous price rise

497
00:21:55,160 --> 00:21:57,840
Speaker 1: because you're probably still paying your what sixteen dollars a

498
00:21:57,880 --> 00:22:02,119
Speaker 1: month or something for your interview, your plan something around that. Yeah,

499
00:22:02,280 --> 00:22:02,560
Speaker 1: there was.

500
00:22:02,600 --> 00:22:04,600
Speaker 2: Much more than that. I thought Google was like thirty

501
00:22:04,640 --> 00:22:05,560
Speaker 2: or forty bucks a month.

502
00:22:05,560 --> 00:22:07,760
Speaker 1: Well, this is just for YouTube premium, not for any

503
00:22:07,760 --> 00:22:10,840
Speaker 1: other service. And so I was paying thirty three dollars

504
00:22:10,840 --> 00:22:14,280
Speaker 1: a month for a family plan for four I think,

505
00:22:14,320 --> 00:22:16,000
Speaker 1: I'm not sure how many it is, let's say four.

506
00:22:16,760 --> 00:22:19,679
Speaker 1: And then I just got an email that said the

507
00:22:19,720 --> 00:22:23,760
Speaker 1: price is increased and it has increased to forty dollars

508
00:22:23,840 --> 00:22:27,520
Speaker 1: a month. Now, that is seven on thirty three. That

509
00:22:27,640 --> 00:22:31,560
Speaker 1: is a pretty substantial increase, right, That isn't what twenty

510
00:22:31,600 --> 00:22:34,720
Speaker 1: three percent? Two percent? I mean, that is crazy. And

511
00:22:34,800 --> 00:22:39,040
Speaker 1: I thought, I feel like somehow that just passed the

512
00:22:39,080 --> 00:22:41,000
Speaker 1: threshold and I'm going to cancel. And I thought about,

513
00:22:41,000 --> 00:22:44,120
Speaker 1: why is the seven dollars a month going to drive

514
00:22:44,160 --> 00:22:46,840
Speaker 1: me to cancel? And I think the answer is that

515
00:22:46,880 --> 00:22:50,560
Speaker 1: by increasing their price to a number that is pretty

516
00:22:50,640 --> 00:22:53,679
Speaker 1: much five hundred dollars a year. It forced me to

517
00:22:53,680 --> 00:22:55,480
Speaker 1: go back and look at how much I'm actually paying,

518
00:22:56,000 --> 00:22:58,160
Speaker 1: and I thought, oh my god, I'm paying thirty three

519
00:22:58,200 --> 00:22:59,840
Speaker 1: dollars a month for this. By the way, that's cheaper

520
00:22:59,840 --> 00:23:01,680
Speaker 1: than if I was buying it through the Apple App Store,

521
00:23:01,760 --> 00:23:06,840
Speaker 1: right like, it's cheaper. And I think they just have

522
00:23:07,160 --> 00:23:10,119
Speaker 1: probably alerted a whole lot of people to how expensive

523
00:23:10,160 --> 00:23:13,159
Speaker 1: YouTube premium is and online if you look. I was

524
00:23:13,200 --> 00:23:15,080
Speaker 1: talking to my son and he was saying, you know,

525
00:23:15,160 --> 00:23:17,720
Speaker 1: the Internet is full of people canceling their YouTube premium

526
00:23:17,720 --> 00:23:20,600
Speaker 1: family plans because of this price rise. At the same time,

527
00:23:20,680 --> 00:23:22,720
Speaker 1: I use it an Internet provided super loop. I don't

528
00:23:22,720 --> 00:23:26,239
Speaker 1: know if you've probably heard of them, right, And my

529
00:23:26,280 --> 00:23:27,280
Speaker 1: internet plan went from.

530
00:23:27,200 --> 00:23:29,719
Speaker 2: Eighteen Evan Slattery's business, isn't it was?

531
00:23:29,800 --> 00:23:33,200
Speaker 1: I think? And so my superloopment from eighty nine dollars

532
00:23:33,320 --> 00:23:35,159
Speaker 1: to ninety five dollars a month. I don't know what

533
00:23:35,160 --> 00:23:36,959
Speaker 1: you pay for internet. So I have very fast internet

534
00:23:37,000 --> 00:23:38,080
Speaker 1: with you know, a lot of.

535
00:23:38,520 --> 00:23:40,600
Speaker 2: A bit less. I'm always I'm re renting now while

536
00:23:40,640 --> 00:23:42,760
Speaker 2: we renovate. I'm paying I think about eighty bucks for

537
00:23:42,880 --> 00:23:45,320
Speaker 2: a terrible I thought it'd be okay, but the wife

538
00:23:45,400 --> 00:23:47,920
Speaker 2: up to his wife, I hopeless, my phone tells you

539
00:23:48,000 --> 00:23:48,600
Speaker 2: is so much better.

540
00:23:48,640 --> 00:23:50,600
Speaker 1: And so I was kind of comparing this super loop

541
00:23:51,000 --> 00:23:53,800
Speaker 1: six dollars over eighty nine, so less than ten percent,

542
00:23:54,520 --> 00:23:57,760
Speaker 1: to this close to twenty five percent increase on YouTube premium,

543
00:23:58,359 --> 00:24:02,560
Speaker 1: and I thought that smells like desperation to me, Like,

544
00:24:02,600 --> 00:24:05,360
Speaker 1: what are they increasing their price by that much for.

545
00:24:05,600 --> 00:24:07,840
Speaker 2: So compared to Google removing not allowing you a pay

546
00:24:07,840 --> 00:24:10,200
Speaker 2: with credit card? This is like nothing like the credit

547
00:24:10,200 --> 00:24:11,760
Speaker 2: card thing. Is the greatest own goal on the history

548
00:24:11,800 --> 00:24:13,640
Speaker 2: of business, I know, but that these guys are morons.

549
00:24:13,720 --> 00:24:17,000
Speaker 1: It's different though that is hard to understand. But this

550
00:24:17,320 --> 00:24:22,040
Speaker 1: to me feels like the actions of a company that

551
00:24:22,200 --> 00:24:25,160
Speaker 1: is used to just printing money and growing every quarter

552
00:24:25,240 --> 00:24:28,800
Speaker 1: without trying, and all of a sudden it's seeing some

553
00:24:28,960 --> 00:24:32,080
Speaker 1: problems down the road and it is scrambling to figure

554
00:24:32,080 --> 00:24:35,600
Speaker 1: out how it's next quarterly results or halfily results they're

555
00:24:35,600 --> 00:24:38,080
Speaker 1: going to have enough growth in it. And I think

556
00:24:38,119 --> 00:24:41,040
Speaker 1: that this is like a canary in a coal mine moment,

557
00:24:41,080 --> 00:24:44,119
Speaker 1: this increase of YouTube premium. It's interesting they only keep

558
00:24:44,160 --> 00:24:47,240
Speaker 1: it to family. But when I say I'm going to

559
00:24:47,280 --> 00:24:49,280
Speaker 1: cancel it. It kind of depends on the level of

560
00:24:49,320 --> 00:24:51,000
Speaker 1: complaint I received from my kids.

561
00:24:51,440 --> 00:24:56,159
Speaker 2: But honest, if you're canceling and you're hardly poor, imagine

562
00:24:56,160 --> 00:24:58,040
Speaker 2: if like sort of how normal people are doing like

563
00:24:58,119 --> 00:25:01,080
Speaker 2: this is like I've think people running Google to see

564
00:25:01,080 --> 00:25:02,680
Speaker 2: if Google are used to be rip poor. I'm not

565
00:25:02,680 --> 00:25:04,560
Speaker 2: sure it is now these people need to go like

566
00:25:04,560 --> 00:25:07,160
Speaker 2: that hopeless. It feels very I think Marian surgery, they've

567
00:25:07,200 --> 00:25:09,400
Speaker 2: been out of it too long. Even Eric Schmid, who

568
00:25:09,400 --> 00:25:12,119
Speaker 2: people criticized I think was a very good CEO. I

569
00:25:12,160 --> 00:25:14,919
Speaker 2: think Soundars is just hopeless. I think he's just He's just.

570
00:25:15,040 --> 00:25:17,760
Speaker 2: I think you look at Satcha at Microsoft, who's loved

571
00:25:17,800 --> 00:25:20,159
Speaker 2: and rightfully so and Soonder at Google is just like

572
00:25:20,359 --> 00:25:20,960
Speaker 2: just hopeless.

573
00:25:21,160 --> 00:25:23,720
Speaker 1: Mike, you what do you reckon about forty dollars a

574
00:25:23,760 --> 00:25:25,960
Speaker 1: month for the YouTube family plan? Like? What do you

575
00:25:26,000 --> 00:25:28,679
Speaker 1: what do you think your price limit on the individual planning?

576
00:25:28,680 --> 00:25:31,760
Speaker 1: So if I increased your individual plan by twenty five percent,

577
00:25:31,840 --> 00:25:35,119
Speaker 1: so sixteen dollars to twenty dollars, are you still paying? Yes?

578
00:25:35,280 --> 00:25:37,400
Speaker 3: At that point, yes, I am still paying.

579
00:25:37,600 --> 00:25:39,080
Speaker 2: When are you churning? At what point?

580
00:25:39,560 --> 00:25:43,480
Speaker 3: Twenty five I wouldn't pay much more than twenty a month.

581
00:25:43,359 --> 00:25:45,640
Speaker 1: Unless they cooked you slowly, right, they'd have to cook

582
00:25:45,720 --> 00:25:49,800
Speaker 1: you slowly twenty twenty two, twenty five, twenty and then

583
00:25:49,840 --> 00:25:50,200
Speaker 1: you'd pay.

584
00:25:50,359 --> 00:25:53,879
Speaker 3: Yeah, But basically if it got over twenty a month,

585
00:25:54,480 --> 00:25:58,360
Speaker 3: then I would just start finding solutions to get around the.

586
00:25:58,280 --> 00:26:01,159
Speaker 2: Ass watching ads. You just watch ads thirty second, Its

587
00:26:01,200 --> 00:26:02,920
Speaker 2: not the end of the world. Let me look another way.

588
00:26:03,200 --> 00:26:05,160
Speaker 2: How many adds would you be watching if you weren't

589
00:26:05,200 --> 00:26:06,040
Speaker 2: paying the subscription?

590
00:26:06,240 --> 00:26:08,720
Speaker 3: I would say I'd probably be watching at least one

591
00:26:08,840 --> 00:26:09,960
Speaker 3: hundred ads, and.

592
00:26:09,920 --> 00:26:12,879
Speaker 2: The average ad size is fifteen seconds.

593
00:26:12,560 --> 00:26:13,800
Speaker 3: Or so fifteen to thirty.

594
00:26:13,880 --> 00:26:15,919
Speaker 2: Yeah, let's assume it's fifteen some of the some are

595
00:26:15,960 --> 00:26:18,720
Speaker 2: like five seconds, so fifteen seconds. So yeah, that's twenty

596
00:26:18,720 --> 00:26:21,560
Speaker 2: five minutes of ads per week, right, sure, yeap? So back. Actually,

597
00:26:21,640 --> 00:26:23,840
Speaker 2: so you're paying thirty two dollars an hour. You're paying

598
00:26:23,840 --> 00:26:26,600
Speaker 2: thirty two dollars athor it was a week, it's a month.

599
00:26:26,640 --> 00:26:29,200
Speaker 1: He's paying eight dollars an hour to not watch ads.

600
00:26:29,240 --> 00:26:30,840
Speaker 1: I think it's good, it's good value.

601
00:26:30,920 --> 00:26:32,320
Speaker 2: It's not bad. Yeah, it's not bad.

602
00:26:32,680 --> 00:26:33,800
Speaker 1: That's a good way to look at it.

603
00:26:33,800 --> 00:26:36,560
Speaker 3: But I think for me, I need to like access

604
00:26:36,640 --> 00:26:40,280
Speaker 3: videos really quickly sometimes, And I think it's a hyper

605
00:26:40,400 --> 00:26:44,199
Speaker 3: specific you're extressing for me that I don't think a

606
00:26:44,200 --> 00:26:46,040
Speaker 3: lot of other people. I think a lot of people

607
00:26:46,040 --> 00:26:48,080
Speaker 3: would happily just watch the ads. But for me, I

608
00:26:48,160 --> 00:26:53,000
Speaker 3: sometimes need very quick access to a video, and every

609
00:26:53,480 --> 00:26:56,560
Speaker 3: even a five to fifteen second stopper for me is

610
00:26:56,600 --> 00:26:57,280
Speaker 3: not worth it.

611
00:26:57,359 --> 00:26:58,439
Speaker 1: I'd rather not have it.

612
00:26:58,480 --> 00:27:00,639
Speaker 2: You're actually a bad example because of your job, you

613
00:27:01,000 --> 00:27:03,119
Speaker 2: do it. I'm a bobably better. I'm probably a good example.

614
00:27:03,119 --> 00:27:06,800
Speaker 2: I'm a light to moderate user of YouTube. I reckons

615
00:27:06,840 --> 00:27:08,719
Speaker 2: I'll use a little bit, but not hugely. And I

616
00:27:08,800 --> 00:27:12,280
Speaker 2: reckon it's maybe I may be watching five minutes of

617
00:27:12,320 --> 00:27:16,320
Speaker 2: ads a month max max. So what five minutes a month? Like,

618
00:27:16,480 --> 00:27:19,240
Speaker 2: I'm never going to pay for this anything. So I

619
00:27:19,240 --> 00:27:21,399
Speaker 2: think where they obviously get, they get the hardcore users

620
00:27:21,440 --> 00:27:24,679
Speaker 2: like you, Mike. It's ideas the pivot point. You're obviously

621
00:27:25,000 --> 00:27:26,840
Speaker 2: I'm the lightest your market and the heaviest idea. You're

622
00:27:26,920 --> 00:27:27,840
Speaker 2: right in the middle here.

623
00:27:28,040 --> 00:27:31,800
Speaker 1: It's interesting that they decided to increase the family plan

624
00:27:31,960 --> 00:27:35,719
Speaker 1: price so dramatically but leave the individual plan alone. I

625
00:27:35,720 --> 00:27:37,600
Speaker 1: suspect it might have something to do with the fact

626
00:27:37,600 --> 00:27:40,679
Speaker 1: that the individual plan might be easily compared to like

627
00:27:40,720 --> 00:27:43,919
Speaker 1: a Netflix type price, and they might have felt that

628
00:27:43,960 --> 00:27:47,119
Speaker 1: there was it was easier to make that look expensive

629
00:27:47,160 --> 00:27:50,879
Speaker 1: by accident, because you've got an anchor point, whereas I mean,

630
00:27:50,920 --> 00:27:53,800
Speaker 1: I'm just speculating, but it seems it's a very strange decision.

631
00:27:53,840 --> 00:27:55,800
Speaker 2: Basically, well, that's not that strange. Like this, you've got

632
00:27:55,840 --> 00:27:58,440
Speaker 2: three people in your family plan, you're paying what is it?

633
00:27:58,520 --> 00:28:01,119
Speaker 1: I was paying thirty three, I was getting like three

634
00:28:01,200 --> 00:28:02,560
Speaker 1: for two, you're paying eleven.

635
00:28:02,600 --> 00:28:04,520
Speaker 2: Now you're paying fourteen. So he's still paying obviously less

636
00:28:04,520 --> 00:28:06,600
Speaker 2: than the individual plan. So that's why they put it

637
00:28:06,640 --> 00:28:08,960
Speaker 2: up because it was cheaper relatively bad person significantly.

638
00:28:09,080 --> 00:28:10,800
Speaker 1: Well, this feels to me like a lack of so

639
00:28:10,960 --> 00:28:14,560
Speaker 1: pricing is really a science, as I'm sure you agree,

640
00:28:15,040 --> 00:28:19,000
Speaker 1: and people largely do not spend anywhere near enough time

641
00:28:19,040 --> 00:28:22,280
Speaker 1: thinking about pricing or testing pricing, and I think there

642
00:28:22,359 --> 00:28:25,080
Speaker 1: was some sense to what YouTube was doing. It felt

643
00:28:25,119 --> 00:28:27,760
Speaker 1: like what they were saying is that once you have

644
00:28:27,840 --> 00:28:31,800
Speaker 1: more than one person that is using YouTube Premium, it's

645
00:28:31,840 --> 00:28:34,280
Speaker 1: actually the same price as going on to a family plan.

646
00:28:34,640 --> 00:28:37,240
Speaker 1: And after that, obviously you should be on a family plan.

647
00:28:37,320 --> 00:28:39,320
Speaker 1: And I think there should also be always be a

648
00:28:39,480 --> 00:28:44,000
Speaker 1: very clear relationship between an individual plan and a family plan.

649
00:28:44,080 --> 00:28:47,000
Speaker 1: The pricing should have a very clear relationship, and I

650
00:28:47,000 --> 00:28:49,200
Speaker 1: think that they've broken that relationship now. I just do

651
00:28:49,240 --> 00:28:50,960
Speaker 1: not think they've thought this through well at all.

652
00:28:51,120 --> 00:28:53,840
Speaker 2: Is made well obviously that obviously know how many people

653
00:28:53,960 --> 00:28:55,600
Speaker 2: in each family, So if you've got three people in

654
00:28:55,640 --> 00:28:57,680
Speaker 2: a family plan, it's still cheaper to get family like

655
00:28:57,720 --> 00:29:01,480
Speaker 2: significantly it's forty eight versus forty. So they're obviously has arms.

656
00:29:01,480 --> 00:29:03,400
Speaker 2: How many people have two, how many people have three?

657
00:29:03,680 --> 00:29:05,000
Speaker 2: If you've got two, you're going to go back to

658
00:29:05,080 --> 00:29:07,239
Speaker 2: the two by one, and if you if you got three,

659
00:29:07,240 --> 00:29:09,360
Speaker 2: you're going to stick with the family. Just I've obviously

660
00:29:09,360 --> 00:29:11,280
Speaker 2: looked at these numbers. They're not complete idiots in this

661
00:29:11,320 --> 00:29:13,120
Speaker 2: respect after the credit card thing, but they're not in

662
00:29:13,120 --> 00:29:14,440
Speaker 2: this respect that it's looked at numbers.

663
00:29:14,520 --> 00:29:17,560
Speaker 1: This is easy. But the thing is this is not water,

664
00:29:18,040 --> 00:29:20,600
Speaker 1: Like I can live without it, I'll be fine. And

665
00:29:20,640 --> 00:29:23,280
Speaker 1: so I think that that is what they've missed unstood.

666
00:29:23,600 --> 00:29:25,840
Speaker 1: Like it's not just oh should I buy a family

667
00:29:25,920 --> 00:29:27,640
Speaker 1: or this, it's like should I buy this at all?

668
00:29:28,160 --> 00:29:29,920
Speaker 1: And so I think they make it hard. I'll tell

669
00:29:29,920 --> 00:29:31,560
Speaker 1: you this as well about being in the US. If

670
00:29:31,600 --> 00:29:33,640
Speaker 1: you said to me, oh, I mean you might not

671
00:29:33,640 --> 00:29:36,160
Speaker 1: love this as luxury escapes. But what advice would I

672
00:29:36,200 --> 00:29:39,800
Speaker 1: give people Australians about coming to the US. I would say,

673
00:29:39,880 --> 00:29:41,360
Speaker 1: if you're on a budget, don't.

674
00:29:41,240 --> 00:29:43,200
Speaker 2: We sell very little US so feel free to say

675
00:29:43,240 --> 00:29:45,360
Speaker 2: that go to Barlei instead, which we sell most off.

676
00:29:45,440 --> 00:29:47,840
Speaker 1: So the hotels are so expensive, and it's not just

677
00:29:47,840 --> 00:29:49,840
Speaker 1: because it's crazy. So what I discovered is, and I

678
00:29:49,840 --> 00:29:51,320
Speaker 1: don't want to go to the whole detail of this,

679
00:29:51,720 --> 00:29:55,280
Speaker 1: but basically there's a law in New York City which

680
00:29:55,360 --> 00:29:59,080
Speaker 1: is if you come here and you're seeking asylum, then

681
00:29:59,120 --> 00:30:02,400
Speaker 1: the city se actually has an obligation to house you.

682
00:30:03,440 --> 00:30:06,080
Speaker 1: And so there are now I think tens of thousands

683
00:30:06,120 --> 00:30:10,320
Speaker 1: of people that have sought asylum that are being put

684
00:30:10,400 --> 00:30:13,000
Speaker 1: up in hotels in New York. The Roosevelt Hotel next

685
00:30:13,000 --> 00:30:17,400
Speaker 1: to Grand Central that is one hundred percent asylum hotel.

686
00:30:17,480 --> 00:30:19,120
Speaker 1: Now you can't even book it if you go past.

687
00:30:19,520 --> 00:30:23,520
Speaker 1: There's like barrier, barricades and some guards at the door. Basically,

688
00:30:24,160 --> 00:30:26,800
Speaker 1: and there's just been this huge amount of stock taken

689
00:30:26,840 --> 00:30:28,920
Speaker 1: off the market in New York. Plus, as you know,

690
00:30:29,320 --> 00:30:31,520
Speaker 1: no are b and B in New York City, and

691
00:30:31,560 --> 00:30:36,160
Speaker 1: so there's a huge shrinkage of available inventory in hotels

692
00:30:36,200 --> 00:30:38,640
Speaker 1: in New York. The prices have gone through the roof

693
00:30:38,640 --> 00:30:41,760
Speaker 1: plus the strained dollars a week, and so this is

694
00:30:41,840 --> 00:30:44,520
Speaker 1: not the place for people on a budget at the moment.

695
00:30:45,040 --> 00:30:48,520
Speaker 2: It's such a great place to be. It's very speaking

696
00:30:48,520 --> 00:30:50,800
Speaker 2: of big tech gone bad, you heard about my story

697
00:30:50,800 --> 00:30:52,920
Speaker 2: with Apple a couple of weeks ago, which is a

698
00:30:52,960 --> 00:30:54,200
Speaker 2: disaster setting out my phone.

699
00:30:54,240 --> 00:30:58,400
Speaker 1: You three your trilogy that you wrote about your experience

700
00:30:58,440 --> 00:30:58,880
Speaker 1: with Apple.

701
00:31:00,480 --> 00:31:02,640
Speaker 2: So my wife a new phone. Her phone also broke

702
00:31:02,640 --> 00:31:04,640
Speaker 2: the same way, and it's pretty old anyway. So she

703
00:31:05,000 --> 00:31:07,480
Speaker 2: went to Apple Chatty, brought a new phone, came back,

704
00:31:07,520 --> 00:31:10,880
Speaker 2: set up. Didn't work like as in the phone did

705
00:31:10,920 --> 00:31:13,680
Speaker 2: not like just was just wouldn't load like it just

706
00:31:13,760 --> 00:31:15,760
Speaker 2: as in it was funning lifting. It was just a

707
00:31:15,800 --> 00:31:18,040
Speaker 2: dad phone, which obviously so many components on these phones.

708
00:31:18,080 --> 00:31:20,120
Speaker 2: This kind of thing can happen. Caught up. Apple waits

709
00:31:20,120 --> 00:31:22,520
Speaker 2: in an hour, so this thing probably took her five

710
00:31:22,640 --> 00:31:24,440
Speaker 2: six hours. Had to go to Apple. They switched it

711
00:31:24,480 --> 00:31:26,480
Speaker 2: over in like one of ten minutes, and she set

712
00:31:26,520 --> 00:31:28,600
Speaker 2: up in the store. But what a complete way this

713
00:31:28,680 --> 00:31:31,800
Speaker 2: is again, Steve Jobs would literally be like throwing himself

714
00:31:31,840 --> 00:31:34,160
Speaker 2: around this coffin if he wasn't cremated, Like what.

715
00:31:34,640 --> 00:31:36,480
Speaker 1: Have they done to this guy's legacy? Well, he would

716
00:31:36,480 --> 00:31:39,200
Speaker 1: probably be throwing people around the room. You know who

717
00:31:39,200 --> 00:31:41,240
Speaker 1: should run Apple? They should get the sea of chick

718
00:31:41,240 --> 00:31:45,480
Speaker 1: filated go and run Apple. Absolutely, this Apple a pe

719
00:31:45,480 --> 00:31:46,840
Speaker 1: of like thirty three. It's one of the second or

720
00:31:46,880 --> 00:31:49,840
Speaker 1: third most valuable business in the world. You're the most

721
00:31:49,840 --> 00:31:51,880
Speaker 1: expensive business in the world. This is a business that

722
00:31:52,000 --> 00:31:54,400
Speaker 1: core product, the iPhone, has shrunk year on year for

723
00:31:54,480 --> 00:31:57,760
Speaker 1: like five years straight, that can't produce these products, is

724
00:31:57,760 --> 00:32:01,400
Speaker 1: getting smashed by terrists potentially, you mean, doesn't get round

725
00:32:01,480 --> 00:32:04,000
Speaker 1: back completely. I can't see a proper business at least

726
00:32:04,120 --> 00:32:06,760
Speaker 1: rather big tech business, at least rather invested than this one.

727
00:32:06,960 --> 00:32:10,640
Speaker 1: Yet people value at three trillion dollars. Yeah, it's remarkable

728
00:32:11,440 --> 00:32:15,120
Speaker 1: that on the topic of valuable businesses, I did happen

729
00:32:15,160 --> 00:32:17,920
Speaker 1: to see a list of the most valuable businesses in

730
00:32:17,960 --> 00:32:20,440
Speaker 1: the world as of last week. And I'm not going

731
00:32:20,440 --> 00:32:22,480
Speaker 1: to run you through all of them, but i will

732
00:32:22,520 --> 00:32:24,600
Speaker 1: tell you this and tell me if this surprises you.

733
00:32:25,040 --> 00:32:27,400
Speaker 1: The business that made it into equal ninth. So let's

734
00:32:27,440 --> 00:32:32,440
Speaker 1: just call it tenth by market cap is TSMC, And

735
00:32:32,480 --> 00:32:35,440
Speaker 1: so what do they do? They make chips basically for

736
00:32:35,680 --> 00:32:38,400
Speaker 1: prominently for N video N Video, Yeah but not just

737
00:32:39,160 --> 00:32:41,400
Speaker 1: I know, yeah, well heavily for it. I'll say, they

738
00:32:41,400 --> 00:32:45,320
Speaker 1: make nvideous chips and other people's chips. Are you I mean,

739
00:32:45,360 --> 00:32:47,240
Speaker 1: obviously there's been this huge rising N Video on the

740
00:32:47,280 --> 00:32:50,920
Speaker 1: back of AI, which kind of breaks my heart because

741
00:32:51,000 --> 00:32:54,920
Speaker 1: N video is a games graphics card for games business

742
00:32:54,960 --> 00:32:58,120
Speaker 1: and everyone's forgotten about that now. But are you surprised

743
00:32:58,120 --> 00:33:02,360
Speaker 1: that TSMC's followed it up into the top ten most

744
00:33:02,560 --> 00:33:03,880
Speaker 1: valuable business before?

745
00:33:04,000 --> 00:33:06,360
Speaker 2: I listened to obviously the quiet episodes on TSMC and

746
00:33:06,360 --> 00:33:08,200
Speaker 2: in video and videos there's three of them teams, and

747
00:33:08,360 --> 00:33:12,040
Speaker 2: there's effectively two because there's an interview as well. I

748
00:33:12,080 --> 00:33:15,400
Speaker 2: was always surprised historically why in video is more valuable

749
00:33:15,440 --> 00:33:18,400
Speaker 2: than TSMC. Because TSNC has got the process power, obviously,

750
00:33:18,640 --> 00:33:21,640
Speaker 2: but what video has got is a bunch of network effect.

751
00:33:21,640 --> 00:33:23,720
Speaker 2: It's got switching costs of network effects, and a bunch

752
00:33:23,760 --> 00:33:24,160
Speaker 2: of others.

753
00:33:24,200 --> 00:33:27,600
Speaker 1: Well, it's a chip. It's a chip designs.

754
00:33:27,120 --> 00:33:29,880
Speaker 2: And also programs the language Cooter, which is although the

755
00:33:30,040 --> 00:33:33,760
Speaker 2: start people are starting to get away from couter finally,

756
00:33:33,800 --> 00:33:37,680
Speaker 2: but TSNC is an incredible business. Obviously they obviously rely

757
00:33:37,800 --> 00:33:41,040
Speaker 2: on ASML out of is it Denmark or I think

758
00:33:41,080 --> 00:33:42,600
Speaker 2: it's Denmark or Norway, one of those kinds.

759
00:33:42,640 --> 00:33:45,560
Speaker 1: I thought it might have been the Netherlands, but you might.

760
00:33:45,400 --> 00:33:47,560
Speaker 2: Be Rightbelands could be Netherlands one of one of those

761
00:33:47,640 --> 00:33:50,400
Speaker 2: games in aving countries when Netherlands isn't, but one of

762
00:33:50,440 --> 00:33:51,640
Speaker 2: those northern European countries.

763
00:33:52,000 --> 00:33:56,400
Speaker 1: One of two global manufacturers I think with maybe Phillips

764
00:33:56,520 --> 00:34:00,360
Speaker 1: or something that actually makes the machines that makes these chips, so.

765
00:34:00,320 --> 00:34:02,280
Speaker 2: You need all these sort of essential tools in the chain.

766
00:34:02,320 --> 00:34:04,560
Speaker 2: But it doesn't TSMC being top ten don surprised me

767
00:34:04,560 --> 00:34:06,840
Speaker 2: in the slightest. I'm surprised it's not worth more.

768
00:34:07,000 --> 00:34:09,880
Speaker 1: I was quite shocked by that there were basically, I mean,

769
00:34:09,920 --> 00:34:11,239
Speaker 1: since I've I don't have the list in front of

770
00:34:11,280 --> 00:34:13,319
Speaker 1: me and I'm missing enough memory. But like so, there

771
00:34:13,320 --> 00:34:16,480
Speaker 1: were a whole lot of tech companies in there. Microsoft

772
00:34:16,520 --> 00:34:19,160
Speaker 1: one in I you can say your list and you're

773
00:34:19,160 --> 00:34:19,880
Speaker 1: going to be right.

774
00:34:19,920 --> 00:34:22,239
Speaker 2: In Microsoft, Apple and Video maybe I think top three,

775
00:34:22,239 --> 00:34:25,080
Speaker 2: and then you got probably Google. I think, do you

776
00:34:25,120 --> 00:34:26,640
Speaker 2: know who the richest person in the world. The second

777
00:34:26,680 --> 00:34:28,399
Speaker 2: richest person in the world now is you.

778
00:34:28,320 --> 00:34:29,920
Speaker 1: Should let me let me know when I'm back in

779
00:34:29,960 --> 00:34:31,440
Speaker 1: this conversation because I don't have the list, so I

780
00:34:31,440 --> 00:34:33,040
Speaker 1: can't compete with you because you're two simat on a

781
00:34:33,120 --> 00:34:36,239
Speaker 1: list and like the richest person in the world, I

782
00:34:36,280 --> 00:34:38,400
Speaker 1: don't know the riches second reaches. Obviously Master is number one.

783
00:34:38,400 --> 00:34:41,600
Speaker 1: Who's number two? Well, just just Gensen know enough of

784
00:34:41,640 --> 00:34:43,680
Speaker 1: his company? No, he doesn't own enough of his company, right,

785
00:34:43,840 --> 00:34:46,600
Speaker 1: So that not the Nvidio, not the Infdia because he

786
00:34:46,600 --> 00:34:50,839
Speaker 1: doesn't known enough, right, So who would be number two?

787
00:34:50,960 --> 00:34:54,960
Speaker 1: Now I was surprised at this, Well, who, I mean,

788
00:34:55,160 --> 00:34:57,000
Speaker 1: who have you got? You've got Bezos, but he gave

789
00:34:57,040 --> 00:34:58,960
Speaker 1: half his money away in his divorce, so he's not

790
00:34:59,000 --> 00:34:59,319
Speaker 1: going to be.

791
00:34:59,400 --> 00:35:01,959
Speaker 2: Not half, but big chance job. He's still high.

792
00:35:01,960 --> 00:35:04,439
Speaker 1: He've got Gates, but Gates can't give money away fast enough,

793
00:35:04,480 --> 00:35:06,959
Speaker 1: so he keeps sliding down. Just Gates given two hundred

794
00:35:06,960 --> 00:35:08,840
Speaker 1: billion away. Yeah, Gates and Bornemer are down. It's a

795
00:35:09,000 --> 00:35:11,320
Speaker 1: one four so they can't be. And then you got Zuckerberg.

796
00:35:11,360 --> 00:35:12,640
Speaker 1: I mean he's got to be pretty high.

797
00:35:13,680 --> 00:35:16,600
Speaker 2: Zuckerberg is number two now like he was, he was

798
00:35:16,640 --> 00:35:19,560
Speaker 2: way down yeah, and he's coming. And really, given Tesla's

799
00:35:19,560 --> 00:35:21,520
Speaker 2: going to go to grow close to as tota zero,

800
00:35:22,440 --> 00:35:25,120
Speaker 2: Zuckerberg has to be number one in the next two years.

801
00:35:25,600 --> 00:35:27,640
Speaker 2: I think there's no way Musk can hold this number

802
00:35:27,640 --> 00:35:29,520
Speaker 2: one because it's based on this Tesla share price, which

803
00:35:29,560 --> 00:35:30,600
Speaker 2: is just a mirage.

804
00:35:30,719 --> 00:35:33,160
Speaker 1: So currently I find the scariest person in the world

805
00:35:33,200 --> 00:35:35,600
Speaker 1: when I look at him to be Sam Altman, the

806
00:35:35,640 --> 00:35:37,960
Speaker 1: founder of open Ai. Whenever I look at him, I

807
00:35:38,000 --> 00:35:39,480
Speaker 1: just think he's a guy that would love to take

808
00:35:39,520 --> 00:35:43,239
Speaker 1: over the world and his eyes would you would have

809
00:35:43,280 --> 00:35:46,440
Speaker 1: no qualms about doing anything to anyone. Remember the Remember.

810
00:35:46,160 --> 00:35:47,560
Speaker 2: That, but it just a bad deal?

811
00:35:47,640 --> 00:35:47,839
Speaker 1: Was that?

812
00:35:47,840 --> 00:35:49,760
Speaker 2: That's we haven't talked about that six point five billion

813
00:35:49,760 --> 00:35:52,920
Speaker 2: dollar purchase or be it for script of Johnny Ives company.

814
00:35:53,000 --> 00:35:55,120
Speaker 2: It's not even a company, it's just basically Johnny Ives

815
00:35:55,160 --> 00:35:58,200
Speaker 2: kind of idea. Johnny I's got a separate company. This

816
00:35:58,280 --> 00:36:01,879
Speaker 2: is like, this is the greatest consideration of shareholder money.

817
00:36:01,880 --> 00:36:06,759
Speaker 1: I'm ever saying, well, it's stock and it's massively overvalued

818
00:36:06,800 --> 00:36:09,839
Speaker 1: payment using massively overvalued stock. So that wasn't that kind

819
00:36:09,840 --> 00:36:10,959
Speaker 1: of balance out in a way?

820
00:36:11,400 --> 00:36:12,520
Speaker 2: Open eyesn't were zero.

821
00:36:12,920 --> 00:36:16,759
Speaker 1: Well, it's not worth Zeros company. It's massively overvalued.

822
00:36:16,960 --> 00:36:18,640
Speaker 2: Open I was probably worth what ten or twenty billion,

823
00:36:18,680 --> 00:36:21,520
Speaker 2: it's not three hundred, but it's worth something. So he's

824
00:36:21,520 --> 00:36:25,320
Speaker 2: still paid significant money for this nothing business that Johnny had,

825
00:36:25,800 --> 00:36:27,200
Speaker 2: like it's nothing, which is nothing.

826
00:36:27,360 --> 00:36:30,320
Speaker 1: Well, I think this was this the most expensive aquiahire

827
00:36:30,360 --> 00:36:33,040
Speaker 1: in the history of tech, wasn't It's basically.

828
00:36:33,000 --> 00:36:35,920
Speaker 2: Exactly exactly and they did that ridiculous video.

829
00:36:36,320 --> 00:36:38,799
Speaker 1: So I think he's the scariest guy on earth when

830
00:36:38,800 --> 00:36:41,800
Speaker 1: I look at him, I'm actually genuinely terrified of Sam Altman.

831
00:36:42,040 --> 00:36:43,680
Speaker 1: I think, remember that movie Don't Look Up? Do you

832
00:36:43,680 --> 00:36:45,879
Speaker 1: remember that move with the Leonardo DiCaprio in it about

833
00:36:45,960 --> 00:36:47,799
Speaker 1: I never watched it anyway, there was a guy in

834
00:36:47,840 --> 00:36:50,080
Speaker 1: there that was meant to be Peter Thiel, I think,

835
00:36:50,400 --> 00:36:52,600
Speaker 1: And actually it reminds you a lot more of Sam Oltmoney.

836
00:36:52,719 --> 00:36:55,320
Speaker 1: I thought i'd him terrifying, but I Reckon Zuckerberg's maybe

837
00:36:55,320 --> 00:36:58,800
Speaker 1: my number two on terrifying, because like Elon is it

838
00:36:58,960 --> 00:37:02,520
Speaker 1: just erratic. But I don't really find him terrifying because

839
00:37:02,520 --> 00:37:04,719
Speaker 1: he can't really get it together enough to terrify me.

840
00:37:05,200 --> 00:37:07,239
Speaker 1: But I find it's like a book terrifying.

841
00:37:07,480 --> 00:37:14,360
Speaker 2: He has none I'm mixed. Obviously, the whole Instagram teen issue,

842
00:37:14,480 --> 00:37:16,279
Speaker 2: I'm certainly not a fan of. Think he also blame

843
00:37:16,360 --> 00:37:19,000
Speaker 2: governments for allowing it, homeless.

844
00:37:18,600 --> 00:37:23,920
Speaker 1: Bowlers not targeting, targeting especially young girls when they the

845
00:37:24,000 --> 00:37:28,360
Speaker 1: algorithm thought that they were vulnerable and feeling depressed and suicidal.

846
00:37:28,520 --> 00:37:31,640
Speaker 1: I mean, there's this scary stuff, right, Like, I'm actually terrified.

847
00:37:31,960 --> 00:37:34,759
Speaker 2: I think they have done some steps to improve this.

848
00:37:34,840 --> 00:37:36,920
Speaker 2: By the way, so I think he.

849
00:37:37,000 --> 00:37:40,760
Speaker 1: Is, well, they will now because it's been exposed. But like,

850
00:37:41,520 --> 00:37:43,880
Speaker 1: I'm not sure. I'm like, you're gonna argue. Zuckerberg's one

851
00:37:43,920 --> 00:37:45,960
Speaker 1: of the we will be the richest person in the world.

852
00:37:45,960 --> 00:37:48,440
Speaker 1: I suspect him the next couple of years. But he's

853
00:37:49,040 --> 00:37:51,360
Speaker 1: been one of the best business builders and one of

854
00:37:51,400 --> 00:37:53,920
Speaker 1: the best acquirers of all time. So he's built this

855
00:37:53,960 --> 00:37:57,879
Speaker 1: incredible basically then bought Instagram and WhatsApp Instagram top three

856
00:37:57,880 --> 00:37:59,839
Speaker 1: acquisition ever. Yeah, I agree, but you know, being great

857
00:37:59,880 --> 00:38:00,960
Speaker 1: and been good and not the same.

858
00:38:01,040 --> 00:38:02,560
Speaker 2: I'm not saying it's good. I'm saying I'm not. I

859
00:38:02,600 --> 00:38:06,960
Speaker 2: don't un necessary think is fully bad. I'm sort of unsure.

860
00:38:07,000 --> 00:38:08,799
Speaker 1: I think he's terrifying. But going back to my list

861
00:38:08,880 --> 00:38:10,200
Speaker 1: that I don't have in front of me that you

862
00:38:10,239 --> 00:38:12,799
Speaker 1: seem to be able to reel off despite neither one

863
00:38:12,840 --> 00:38:15,760
Speaker 1: of us having there. There were pretty much three companies

864
00:38:15,800 --> 00:38:19,800
Speaker 1: on that list from memory that were not tech companies.

865
00:38:20,120 --> 00:38:24,080
Speaker 1: Do you know what those three were? Saudi Aramco? Yes,

866
00:38:24,239 --> 00:38:27,200
Speaker 1: very good, that's one of them. Walmart yep.

867
00:38:28,440 --> 00:38:29,360
Speaker 2: Who's the third?

868
00:38:30,040 --> 00:38:32,040
Speaker 1: Well you know it, and you're going to probably argue

869
00:38:32,080 --> 00:38:33,400
Speaker 1: with me at the end of it, because you'll just

870
00:38:33,400 --> 00:38:35,800
Speaker 1: find some reason to argue. But I still, by my

871
00:38:36,040 --> 00:38:43,000
Speaker 1: intro to this, it's not a tech company. Okayly no, no,

872
00:38:43,239 --> 00:38:45,520
Speaker 1: But like you just, I can't believe you, of all

873
00:38:45,560 --> 00:38:48,080
Speaker 1: people are not thinking of this. There's one clue I

874
00:38:48,120 --> 00:38:49,520
Speaker 1: can give you that would immediately give it to you.

875
00:38:49,520 --> 00:38:50,279
Speaker 1: I don't want to give it to you.

876
00:38:50,440 --> 00:38:52,000
Speaker 2: But you're putting Tesla in there.

877
00:38:52,719 --> 00:38:55,520
Speaker 1: No, I'm not. But Tesla's top ten or is it

878
00:38:55,600 --> 00:38:57,360
Speaker 1: not in ten? And it's a tech company?

879
00:38:57,800 --> 00:38:59,200
Speaker 2: It is that you think it is a tech company?

880
00:39:00,000 --> 00:39:01,040
Speaker 1: What do I think it is?

881
00:39:01,080 --> 00:39:01,320
Speaker 2: It is?

882
00:39:01,360 --> 00:39:02,439
Speaker 1: That's a tech said?

883
00:39:02,719 --> 00:39:05,120
Speaker 2: He said that? He said top three who aren't tech companies?

884
00:39:05,239 --> 00:39:07,160
Speaker 1: Yes, that's what Tesla is not one of the ones

885
00:39:07,160 --> 00:39:07,960
Speaker 1: I'm talking about.

886
00:39:08,120 --> 00:39:09,760
Speaker 2: Okay, sorry, sorry.

887
00:39:11,400 --> 00:39:13,319
Speaker 1: You're supposed to shoot three ducks. I mean, I don't

888
00:39:13,320 --> 00:39:15,560
Speaker 1: like shooting anything, but you just killed a swan. We're

889
00:39:15,600 --> 00:39:18,440
Speaker 1: not doing swans. Tell me the three ducks, two or

890
00:39:18,480 --> 00:39:26,240
Speaker 1: three ducks? Is it like JP Morgan BERSI, yes, Berkshire.

891
00:39:26,320 --> 00:39:30,120
Speaker 1: Your agreed's not tech rights not tech? All right, thank god,

892
00:39:30,800 --> 00:39:33,800
Speaker 1: it's like an apple, but it's not tech. That was

893
00:39:33,840 --> 00:39:37,359
Speaker 1: my thing was going to be about as fasts tech. Yeah,

894
00:39:38,120 --> 00:39:41,359
Speaker 1: I think hard copy and your reports. So those are

895
00:39:41,480 --> 00:39:45,440
Speaker 1: the three, the three non tech ones in the top ten. Interestingly,

896
00:39:46,160 --> 00:39:49,399
Speaker 1: so if you went back twenty years, my guess would

897
00:39:49,440 --> 00:39:52,479
Speaker 1: be there would be a significant number of fossil fuel

898
00:39:52,600 --> 00:39:58,040
Speaker 1: energy companies in the definitely twins It's almost number one

899
00:39:58,760 --> 00:39:59,279
Speaker 1: period of time.

900
00:39:59,320 --> 00:40:02,399
Speaker 2: But after that it fell away, like the BP wasn't

901
00:40:02,400 --> 00:40:05,640
Speaker 2: that high, Shell wasn't that high? Yeah, there wouldn't have

902
00:40:05,640 --> 00:40:08,880
Speaker 2: been that many. Obviously, Saudy was private. Yeah, can I

903
00:40:08,960 --> 00:40:11,080
Speaker 2: change the topic quickly? Got a question for you. So

904
00:40:11,120 --> 00:40:13,520
Speaker 2: I went to a Katy Perry concert last Friday. I

905
00:40:13,560 --> 00:40:16,040
Speaker 2: thought she did really well. By the way, there's always

906
00:40:16,040 --> 00:40:17,200
Speaker 2: a lot of hate for Katie, and she had a

907
00:40:17,239 --> 00:40:20,040
Speaker 2: pretty tough year last year. But I think she's great.

908
00:40:20,080 --> 00:40:21,439
Speaker 2: I think she's a great put in a great shat.

909
00:40:21,840 --> 00:40:24,120
Speaker 2: What do you feel about when you go to a

910
00:40:24,160 --> 00:40:26,920
Speaker 2: concert and you're sitting down so towards the front of

911
00:40:26,960 --> 00:40:29,640
Speaker 2: the seats, How do you feel about people standing up

912
00:40:29,880 --> 00:40:30,640
Speaker 2: during concerts?

913
00:40:30,960 --> 00:40:32,720
Speaker 1: I think that's the point of going to a concert.

914
00:40:33,080 --> 00:40:34,640
Speaker 1: If you want to sit down, go back to your

915
00:40:34,719 --> 00:40:36,759
Speaker 1: nursing home and sit in a chair there. What are

916
00:40:36,800 --> 00:40:37,680
Speaker 1: you doing at a concert?

917
00:40:37,880 --> 00:40:41,560
Speaker 2: I agree. So we were in the second row for

918
00:40:41,680 --> 00:40:44,440
Speaker 2: Katy Perry. There's really lovely, he said, a flamboyant guy

919
00:40:44,440 --> 00:40:46,360
Speaker 2: in the front row, and he was getting really getting

920
00:40:46,360 --> 00:40:48,319
Speaker 2: to Katy Perry, and he was standing up. He happened

921
00:40:48,360 --> 00:40:50,400
Speaker 2: to be the only person in our bay standing up.

922
00:40:50,880 --> 00:40:52,200
Speaker 2: Look at the rest of the stadi. It was Rod

923
00:40:52,280 --> 00:40:54,680
Speaker 2: Labor people standing up. He was standing. It wasn't standing

924
00:40:54,719 --> 00:40:56,680
Speaker 2: up the whole time in its was standing up probably

925
00:40:57,040 --> 00:41:00,200
Speaker 2: forty to fifty percent of the time and having great time.

926
00:41:00,280 --> 00:41:03,000
Speaker 2: And he was great fun. And there were people behind us.

927
00:41:03,080 --> 00:41:04,160
Speaker 2: So we were in second way. The people on the

928
00:41:04,160 --> 00:41:06,360
Speaker 2: third row who was older, I don't know why they

929
00:41:06,400 --> 00:41:08,160
Speaker 2: were there, and they basically go into a fight with

930
00:41:08,239 --> 00:41:10,719
Speaker 2: this guy, yelling him sit down, even yell. Then our

931
00:41:10,800 --> 00:41:12,800
Speaker 2: kids behind himtood up because I couldn't see obviously, and

932
00:41:12,840 --> 00:41:14,560
Speaker 2: no one find to stand up having to go with

933
00:41:14,640 --> 00:41:15,080
Speaker 2: our kids.

934
00:41:15,800 --> 00:41:18,200
Speaker 1: What are your views look down? I mean, come on,

935
00:41:18,360 --> 00:41:21,800
Speaker 1: it's not like the ballet? What is it the opera like?

936
00:41:22,480 --> 00:41:24,840
Speaker 1: But also, were you in very expensive seats? Because this

937
00:41:24,960 --> 00:41:27,160
Speaker 1: is part of the problem. Oh, they weren't. They weren't cheap.

938
00:41:27,360 --> 00:41:29,880
Speaker 1: They were four hundred dollars seats, right, that's so not that.

939
00:41:30,040 --> 00:41:31,520
Speaker 1: I mean, I was going to say mid mid range.

940
00:41:31,760 --> 00:41:33,600
Speaker 1: Not many people can afford them. But then again, people

941
00:41:33,760 --> 00:41:36,120
Speaker 1: buy on credit to be able to turn.

942
00:41:36,040 --> 00:41:38,319
Speaker 2: Up to the much more expensive seats. There were much

943
00:41:38,360 --> 00:41:39,200
Speaker 2: more expensive.

944
00:41:38,840 --> 00:41:40,680
Speaker 1: Sets in that. Yeah, but part of the problem is,

945
00:41:41,280 --> 00:41:43,960
Speaker 1: you know, this is what these entertainers try to avoid.

946
00:41:44,000 --> 00:41:46,040
Speaker 1: They try to avoid rich people buying all of the

947
00:41:46,080 --> 00:41:46,920
Speaker 1: seats close.

948
00:41:46,719 --> 00:41:47,320
Speaker 2: To the stage.

949
00:41:47,400 --> 00:41:50,640
Speaker 1: Right, That's one of the challenges that exists. But I

950
00:41:50,680 --> 00:41:53,000
Speaker 1: think it's ridiculous. I would have loved to have a

951
00:41:53,040 --> 00:41:53,840
Speaker 1: fight with that person.

952
00:41:54,040 --> 00:41:56,640
Speaker 2: And I actually sadly didn't know. I could see them

953
00:41:56,680 --> 00:41:59,000
Speaker 2: having the fight with the guy at the front, but

954
00:41:59,160 --> 00:42:00,480
Speaker 2: I didn't know that. Having go I knew to have

955
00:42:00,480 --> 00:42:01,800
Speaker 2: even got Mike I was a few seats down. I

956
00:42:01,800 --> 00:42:03,480
Speaker 2: would literally go into a fight with these people. These

957
00:42:03,480 --> 00:42:05,759
Speaker 2: people were absolute losers. They look they look like that,

958
00:42:05,920 --> 00:42:07,799
Speaker 2: you know. They were the exact kind of people who

959
00:42:07,960 --> 00:42:09,440
Speaker 2: during COVID would have told you to put on a

960
00:42:09,520 --> 00:42:12,399
Speaker 2: mask like the scum of the earth. That's you ajailable fence.

961
00:42:12,440 --> 00:42:14,719
Speaker 1: By the way, I'm so happy that you segued to

962
00:42:14,800 --> 00:42:20,320
Speaker 1: this topic because I actually no masks and masks and concerts.

963
00:42:20,440 --> 00:42:22,560
Speaker 1: I've got a story for you about masks and concerts.

964
00:42:22,920 --> 00:42:27,759
Speaker 1: So I took my son to his first ever symphony

965
00:42:28,200 --> 00:42:30,840
Speaker 1: orchestra performance, Melbourne Syphony Orchestra, which by the way, I

966
00:42:30,880 --> 00:42:32,840
Speaker 1: don't go too very often, but he's very musical. I

967
00:42:32,840 --> 00:42:34,520
Speaker 1: thought it'd be nice to take him, and it just

968
00:42:34,600 --> 00:42:37,120
Speaker 1: so happened that the night that we were going, that

969
00:42:37,320 --> 00:42:40,160
Speaker 1: afternoon Andrews announced that there was going to be a

970
00:42:40,280 --> 00:42:43,239
Speaker 1: lockdown from that night and this performance was going to

971
00:42:43,280 --> 00:42:46,640
Speaker 1: be like the last performance before a lockdown, and everyone

972
00:42:46,760 --> 00:42:49,279
Speaker 1: there had to wear masks. So I was sitting there

973
00:42:49,320 --> 00:42:52,000
Speaker 1: with my son, We're both wearing masks, and there was

974
00:42:52,040 --> 00:42:54,640
Speaker 1: an older couple next to us. The woman was sitting

975
00:42:54,680 --> 00:42:56,000
Speaker 1: next to my son and I was on the other

976
00:42:56,080 --> 00:42:59,080
Speaker 1: side of him, and like he was wearing glasses, my

977
00:42:59,120 --> 00:43:01,000
Speaker 1: son was glasses so you know, we put the mask up,

978
00:43:01,040 --> 00:43:03,600
Speaker 1: like at Folxy glasses. So he just put the mask

979
00:43:03,640 --> 00:43:05,800
Speaker 1: down for a little bit just to be able to breathe.

980
00:43:05,840 --> 00:43:08,880
Speaker 1: He put it below his nose. The woman turns to

981
00:43:09,000 --> 00:43:14,640
Speaker 1: him and was so unbelievably rude to him about the mask.

982
00:43:14,920 --> 00:43:17,880
Speaker 1: Was the first time the kid's been to a symphony orchestra.

983
00:43:18,280 --> 00:43:21,080
Speaker 1: She's abused him about the mask anyway, Like usually I

984
00:43:21,120 --> 00:43:24,720
Speaker 1: stay pretty calm. My blood absolutely boiled. I just turned

985
00:43:24,760 --> 00:43:27,000
Speaker 1: her and I said, let me tell you something. I'm

986
00:43:27,040 --> 00:43:29,439
Speaker 1: a doctor, and you don't have to worry. If he's

987
00:43:29,440 --> 00:43:35,160
Speaker 1: got COVID mask or no mask, you're dead anyway. I

988
00:43:35,200 --> 00:43:37,400
Speaker 1: don't feel great about There was no more conversation after that.

989
00:43:37,520 --> 00:43:39,120
Speaker 1: Let me say she left him alone.

990
00:43:39,320 --> 00:43:41,520
Speaker 2: Far more polite, don't You were far more polite than

991
00:43:41,520 --> 00:43:45,640
Speaker 2: I would. I had multiple screaming matches, almost coming to

992
00:43:45,680 --> 00:43:48,000
Speaker 2: physical blows with people like that woman, who I was

993
00:43:48,040 --> 00:43:49,840
Speaker 2: not a female or whatever comes to physical blows with.

994
00:43:50,000 --> 00:43:54,600
Speaker 2: But if I was premier, lock her up, lock her up,

995
00:43:54,680 --> 00:43:56,839
Speaker 2: and so what happened with jail that is good enough

996
00:43:56,880 --> 00:43:59,520
Speaker 2: for that scumbag. It's great to know that masks people

997
00:43:59,560 --> 00:44:02,280
Speaker 2: wear masks now was just like basically belonging to lunatic Asylan.

998
00:44:02,360 --> 00:44:04,720
Speaker 2: Anybody wearing a mask now is either a palaestinning supporter

999
00:44:05,200 --> 00:44:06,040
Speaker 2: or a lunatic.

1000
00:44:05,800 --> 00:44:09,319
Speaker 1: There are many or a bank a bankrubber criminal. There

1001
00:44:09,360 --> 00:44:11,120
Speaker 1: are many things. There are many things I love about.

1002
00:44:11,120 --> 00:44:12,959
Speaker 1: Talking criminal is the least batter of those three people.

1003
00:44:12,960 --> 00:44:14,520
Speaker 1: By the way, there are many things I love about

1004
00:44:14,520 --> 00:44:16,600
Speaker 1: talking to you, but one of my favorite things is,

1005
00:44:16,920 --> 00:44:19,719
Speaker 1: however extreme I think I've been. I talk to you

1006
00:44:19,880 --> 00:44:22,960
Speaker 1: and suddenly I feel super moderate. Moderate. And so what

1007
00:44:23,040 --> 00:44:24,919
Speaker 1: happened to this person that told people to sit down?

1008
00:44:25,560 --> 00:44:28,080
Speaker 2: Oh, I just love another guy at the front just

1009
00:44:28,360 --> 00:44:30,320
Speaker 2: he stood up more as a result, So it was

1010
00:44:30,360 --> 00:44:32,759
Speaker 2: pretty fair enough. It was good on him. He was

1011
00:44:32,760 --> 00:44:35,120
Speaker 2: having great and one point, Katie actually he was dancing.

1012
00:44:35,200 --> 00:44:37,759
Speaker 2: Katie putting him out and like waved at him, and

1013
00:44:37,960 --> 00:44:39,719
Speaker 2: that was that was a great moment. And she was

1014
00:44:39,719 --> 00:44:41,960
Speaker 2: actually really great at engaging with the audience. So it

1015
00:44:42,080 --> 00:44:45,080
Speaker 2: was yeah, I thought she did well, And good on

1016
00:44:45,160 --> 00:44:47,839
Speaker 2: that guy for having great time. I don't know his name,

1017
00:44:47,920 --> 00:44:50,160
Speaker 2: but he was a lovely guy. And the people behind

1018
00:44:50,320 --> 00:44:52,560
Speaker 2: stay home. Next time we'll move on to a more

1019
00:44:53,160 --> 00:44:55,480
Speaker 2: financial topic, which is obviously what of our listeners Love

1020
00:44:55,680 --> 00:44:57,759
Speaker 2: and Virgin a couple of weeks going outs that will

1021
00:44:57,800 --> 00:45:00,600
Speaker 2: finally be realisting on the ASX in what has been

1022
00:45:00,640 --> 00:45:04,520
Speaker 2: an absolutely magnificent trade for owner Bain Capital, which has

1023
00:45:04,520 --> 00:45:07,200
Speaker 2: played an absolute blinder. The float will be a bonanza

1024
00:45:07,280 --> 00:45:09,600
Speaker 2: for the Virgin exec team, with new CEO Dave Emerson

1025
00:45:09,640 --> 00:45:11,360
Speaker 2: said to earn more than ten million dollars if the

1026
00:45:11,400 --> 00:45:14,759
Speaker 2: share airline share price trades above its initial two dollars

1027
00:45:14,800 --> 00:45:17,799
Speaker 2: ninety price. My all mate Nick Rolak, who's done an

1028
00:45:17,800 --> 00:45:20,680
Speaker 2: amazing job running the Velocity business, sits a pocket more

1029
00:45:20,719 --> 00:45:23,200
Speaker 2: than four million dollars, and it's speculated that former boss

1030
00:45:23,280 --> 00:45:26,960
Speaker 2: Jane Herdlika could be collecting upwards of one hundred million dollars.

1031
00:45:27,440 --> 00:45:30,520
Speaker 2: That's obviously just a high level speculation. Virgin's float will

1032
00:45:30,600 --> 00:45:33,520
Speaker 2: raise almost seven hundred million dollars. Qatar Airlines will maintain

1033
00:45:33,600 --> 00:45:36,280
Speaker 2: their twenty three percent stake and staff will own six percent.

1034
00:45:36,600 --> 00:45:39,760
Speaker 2: Bayin will go from forty from seventy percent to forty

1035
00:45:39,800 --> 00:45:43,239
Speaker 2: percent ownership, and the business will have evaluation of two

1036
00:45:43,280 --> 00:45:46,360
Speaker 2: point three billion dollars upon listing, giving it what is

1037
00:45:46,480 --> 00:45:49,640
Speaker 2: notionally a thirty percent discanter quantas in the current financial

1038
00:45:49,719 --> 00:45:51,839
Speaker 2: year Virgin inspected to achieve a net profit of three

1039
00:45:52,000 --> 00:45:54,359
Speaker 2: hundred and thirty million dollars, up from two fifty nine

1040
00:45:54,440 --> 00:45:57,439
Speaker 2: million last year. Joe Aston, obviously friend of the pod

1041
00:45:57,560 --> 00:45:59,960
Speaker 2: riding in rampart, was a little suspicious of the flow,

1042
00:46:00,440 --> 00:46:03,280
Speaker 2: noting that Bayan will collect six eighty million on proceeds

1043
00:46:03,320 --> 00:46:05,359
Speaker 2: on top of a billion already taken out and five

1044
00:46:05,480 --> 00:46:08,320
Speaker 2: hundred million paid for by guitar. So how's this for

1045
00:46:08,360 --> 00:46:11,239
Speaker 2: an investment? Bayin invested seven and thirty million dollars in

1046
00:46:11,320 --> 00:46:13,840
Speaker 2: twenty twenty and will have collected two point two billion

1047
00:46:13,920 --> 00:46:17,400
Speaker 2: dollars plus it's obviously ownership stub so that's seven thirty

1048
00:46:17,480 --> 00:46:20,920
Speaker 2: million into about three billion in five years. That's a

1049
00:46:21,000 --> 00:46:25,080
Speaker 2: that's a pretty incredible return for the Baying guys. Joe

1050
00:46:25,360 --> 00:46:28,479
Speaker 2: was somewhat critical of Virgin not including ninety million dollars

1051
00:46:28,560 --> 00:46:32,200
Speaker 2: in transformation costs in its profit line, but keeping the

1052
00:46:32,200 --> 00:46:35,080
Speaker 2: one hundreds of million dollars of benefits in current earnings.

1053
00:46:35,719 --> 00:46:38,000
Speaker 2: As a note that virgin statue in net profit before

1054
00:46:38,040 --> 00:46:40,080
Speaker 2: tax into twenty twenty five was one hundred and eighty

1055
00:46:40,120 --> 00:46:42,640
Speaker 2: five million. Obviously, adding back to the IBO cost gets

1056
00:46:42,680 --> 00:46:45,239
Speaker 2: you to three twenty million before tax in profit, so

1057
00:46:45,320 --> 00:46:48,960
Speaker 2: that's called of EBT. Quantus makes two point four billion

1058
00:46:49,320 --> 00:46:52,120
Speaker 2: at the same line. So Quantus obviously is absolutely in

1059
00:46:52,160 --> 00:46:54,400
Speaker 2: the lights out virgin unbelievable story.

1060
00:46:54,560 --> 00:46:56,360
Speaker 1: What's the three point fifty let's say you call it

1061
00:46:56,440 --> 00:46:58,320
Speaker 1: profit before tax, So what's it on? What sort of

1062
00:46:58,400 --> 00:46:59,200
Speaker 1: revenue is that on?

1063
00:46:59,400 --> 00:47:01,560
Speaker 2: It looks like that about six just have a six

1064
00:47:01,640 --> 00:47:03,319
Speaker 2: billion in revenue, so.

1065
00:47:03,480 --> 00:47:05,680
Speaker 1: Six or seven percent profit margin. So I don't really

1066
00:47:05,840 --> 00:47:09,040
Speaker 1: know much about airline economics other than it seems to

1067
00:47:09,120 --> 00:47:12,160
Speaker 1: be mostly terrible and then periodically amazing.

1068
00:47:11,960 --> 00:47:15,160
Speaker 2: A couple of notable exceptions by Ryan Air and Southwest.

1069
00:47:15,400 --> 00:47:19,440
Speaker 1: Yeah, and what multiple is this floating on? Is it? Look?

1070
00:47:19,480 --> 00:47:20,920
Speaker 1: What thought or trailer?

1071
00:47:21,560 --> 00:47:24,160
Speaker 2: What metric? You? So it's going to have a market

1072
00:47:24,200 --> 00:47:26,040
Speaker 2: cap of two point three billion, so it's sort of

1073
00:47:26,120 --> 00:47:27,760
Speaker 2: seven to eight times.

1074
00:47:27,920 --> 00:47:31,480
Speaker 1: Okay, and it's before tax, okay, so you wouldn't say, God,

1075
00:47:31,560 --> 00:47:34,520
Speaker 1: that's a stretchy come multiple. And it's lower than quantus

1076
00:47:34,640 --> 00:47:35,080
Speaker 1: is multiple.

1077
00:47:35,320 --> 00:47:38,120
Speaker 2: It's about thirty to forty percent long than quantits multiple.

1078
00:47:38,360 --> 00:47:41,960
Speaker 1: So I don't really begrudge anyone anything in this whole process,

1079
00:47:42,160 --> 00:47:47,160
Speaker 1: like basically the lockdowns and the lack of international travel.

1080
00:47:47,880 --> 00:47:51,279
Speaker 1: I mean nobody pretty did that coming. And governments can't

1081
00:47:51,320 --> 00:47:54,200
Speaker 1: bail out in everything. You can argue that the amount

1082
00:47:54,200 --> 00:47:56,360
Speaker 1: of money they gave to Quantus was akin to a

1083
00:47:56,440 --> 00:47:57,920
Speaker 1: bailout in some respects.

1084
00:47:58,640 --> 00:48:01,880
Speaker 2: There's almost three billion. I think that was just so stupid.

1085
00:48:01,880 --> 00:48:03,400
Speaker 2: They could have taken equity stake in it and made

1086
00:48:03,440 --> 00:48:06,160
Speaker 2: a fortune. But Friedenberg and Morrison are just incompetent.

1087
00:48:06,640 --> 00:48:09,200
Speaker 1: Well, okay, I don't agree with that, but like, definitely

1088
00:48:09,200 --> 00:48:12,799
Speaker 1: they could have taken pretty hard to argue that they

1089
00:48:12,800 --> 00:48:13,800
Speaker 1: could have made it alone.

1090
00:48:13,840 --> 00:48:15,880
Speaker 2: At the very least, I should have made equity like

1091
00:48:15,960 --> 00:48:17,920
Speaker 2: the US did in eight They were just idiots.

1092
00:48:18,120 --> 00:48:22,239
Speaker 1: And so basically the government decided not to bail out

1093
00:48:22,360 --> 00:48:24,840
Speaker 1: Virgin And we can speculate all we want about that,

1094
00:48:24,960 --> 00:48:26,960
Speaker 1: but once the government decided not to bail them out,

1095
00:48:27,400 --> 00:48:29,399
Speaker 1: the collapse of it was actually the right call. Yeah,

1096
00:48:29,400 --> 00:48:31,720
Speaker 1: and it was inevitable. The collapse was inevitable. And although

1097
00:48:32,239 --> 00:48:35,319
Speaker 1: it kind of sucks for equity holders, and there were

1098
00:48:35,360 --> 00:48:37,839
Speaker 1: some other note holders that were in there as well,

1099
00:48:37,960 --> 00:48:41,200
Speaker 1: some debt holders like that, that's what capitalism is. Sometimes

1100
00:48:41,239 --> 00:48:43,480
Speaker 1: it sucks. Sometimes, you know there's a risk. People love

1101
00:48:43,520 --> 00:48:45,799
Speaker 1: the return. They just forget that there's a risk side.

1102
00:48:46,080 --> 00:48:49,440
Speaker 2: The owner of Virgin previously were basically airlines. I think

1103
00:48:49,440 --> 00:48:51,920
Speaker 2: it was Singapore Airlines owned a Barne I think in

1104
00:48:52,040 --> 00:48:54,160
Speaker 2: New Zealand owned some and anti ad So like the

1105
00:48:54,200 --> 00:48:55,719
Speaker 2: Shane government doesn't care about these data.

1106
00:48:55,800 --> 00:48:58,000
Speaker 1: But there were some retail investors that I think held

1107
00:48:58,360 --> 00:49:00,920
Speaker 1: tiny though, like ten percent of held debt. Remember there

1108
00:49:00,960 --> 00:49:03,440
Speaker 1: was a debt instrument that was held by some retail investors.

1109
00:49:03,680 --> 00:49:05,400
Speaker 2: Yeah, but who cares like that that people go in

1110
00:49:05,560 --> 00:49:06,359
Speaker 2: with open eyes there.

1111
00:49:07,000 --> 00:49:09,080
Speaker 1: Yeah, And so that's what I'm saying, Like everyone likes

1112
00:49:09,120 --> 00:49:11,960
Speaker 1: to talk about returns, but nobody loves talking about risk.

1113
00:49:12,040 --> 00:49:13,880
Speaker 1: But that's a risk with all of these returns.

1114
00:49:13,960 --> 00:49:16,320
Speaker 2: It it's capitalizes on my way up, communis on my

1115
00:49:16,400 --> 00:49:16,680
Speaker 2: way out.

1116
00:49:16,840 --> 00:49:20,640
Speaker 1: And so I think exactly. And so I think I

1117
00:49:20,680 --> 00:49:23,080
Speaker 1: don't begrudge anyone for making money. I think I don't

1118
00:49:23,120 --> 00:49:26,520
Speaker 1: begrudge Bane for making money. This is classic private equity.

1119
00:49:27,120 --> 00:49:30,399
Speaker 1: Like they used leverage to perfection here and they found

1120
00:49:30,400 --> 00:49:32,800
Speaker 1: a million different ways to take money out of this business.

1121
00:49:33,280 --> 00:49:35,960
Speaker 1: I think they basically got all of their money back,

1122
00:49:36,680 --> 00:49:42,000
Speaker 1: like not instantly, but unbelievably quickly. Yeah, And so that's

1123
00:49:42,040 --> 00:49:44,319
Speaker 1: a classic private EQUDROMI remember when Maya was bought by

1124
00:49:44,360 --> 00:49:46,960
Speaker 1: private equity and then they sold the properties within the

1125
00:49:47,000 --> 00:49:49,200
Speaker 1: first fifteen seconds and got all of their equity back

1126
00:49:49,320 --> 00:49:51,400
Speaker 1: or refinanced. They did they bought sorry, they bought the

1127
00:49:51,440 --> 00:49:53,399
Speaker 1: probablys on refinance them or sold them or did something.

1128
00:49:53,440 --> 00:49:56,160
Speaker 1: I can't remember the detail. But this is classic private equity.

1129
00:49:56,160 --> 00:49:58,200
Speaker 2: This is almost as good as it gets for something

1130
00:49:58,280 --> 00:50:00,800
Speaker 2: of every private equity trick in the book. Had you

1131
00:50:00,840 --> 00:50:03,759
Speaker 2: had asymmetric bet because if it went under like big deal,

1132
00:50:03,920 --> 00:50:05,279
Speaker 2: it's just a bit of debt and a little bit

1133
00:50:05,280 --> 00:50:07,400
Speaker 2: of a set of equity. But that doesn't that's not

1134
00:50:07,480 --> 00:50:07,960
Speaker 2: in the world.

1135
00:50:08,120 --> 00:50:10,399
Speaker 1: Well you lose seven hundred and fifty milif it goes broke.

1136
00:50:10,560 --> 00:50:11,960
Speaker 2: Well, that was just equity, wasn't it. There was down

1137
00:50:12,000 --> 00:50:13,320
Speaker 2: on top of it was down on top of that.

1138
00:50:13,560 --> 00:50:15,200
Speaker 2: But it's not the money. This is this is investor

1139
00:50:15,239 --> 00:50:17,719
Speaker 2: money anyway. This this isn't Bain's money. Bane gets a

1140
00:50:17,800 --> 00:50:20,239
Speaker 2: carries twenty percent carry on of it. So if you

1141
00:50:20,280 --> 00:50:23,440
Speaker 2: look at they, it was it was an industry that

1142
00:50:23,520 --> 00:50:25,279
Speaker 2: was suffering from COVID, that was always going to come back.

1143
00:50:25,520 --> 00:50:28,440
Speaker 2: It was airlines have this huge operational leverage and when

1144
00:50:28,440 --> 00:50:30,760
Speaker 2: they go well and go really well. You got all

1145
00:50:30,880 --> 00:50:33,320
Speaker 2: price that dropped, so you had that tail winds and

1146
00:50:33,400 --> 00:50:35,400
Speaker 2: you had and they did a really good job in

1147
00:50:35,480 --> 00:50:38,400
Speaker 2: hiring and Jane gets criticized, but she did an unbelievable

1148
00:50:38,440 --> 00:50:40,560
Speaker 2: job here, and they hired great people like Nick and

1149
00:50:40,640 --> 00:50:42,840
Speaker 2: Dave who are really good operators. Nick came out of

1150
00:50:42,920 --> 00:50:44,920
Speaker 2: Quantas and Libby's done a great job in market. They

1151
00:50:44,920 --> 00:50:47,600
Speaker 2: don't put incredible team together, they timed it beautifully. They

1152
00:50:47,640 --> 00:50:49,640
Speaker 2: had this beautiful tail wind of quancers performing really well.

1153
00:50:49,760 --> 00:50:52,040
Speaker 2: They lawty programs done well. They did that master's stroke

1154
00:50:52,080 --> 00:50:54,200
Speaker 2: with Guitar in selling a quarter to Guitar and getting

1155
00:50:54,239 --> 00:50:57,640
Speaker 2: that international network. They've played as well a game here

1156
00:50:57,760 --> 00:51:00,640
Speaker 2: as almost I've seen an EPE business played in easily

1157
00:51:00,719 --> 00:51:02,880
Speaker 2: ten years and possibly twenty years. You probably have to

1158
00:51:02,920 --> 00:51:04,040
Speaker 2: go back to you Ben and Meyer.

1159
00:51:04,320 --> 00:51:06,920
Speaker 1: Yeah, I agree with you, and so I don't begrudge anyone.

1160
00:51:07,000 --> 00:51:09,680
Speaker 1: And also management making money out of this. It seems

1161
00:51:09,800 --> 00:51:13,000
Speaker 1: actually those numbers that you quated, apart from Jane Hardlicker's number,

1162
00:51:13,040 --> 00:51:15,120
Speaker 1: which by the way, I don't begrudge it. I don't speculate.

1163
00:51:15,160 --> 00:51:16,880
Speaker 1: I don't think she would have she'd get one hundred

1164
00:51:16,880 --> 00:51:18,680
Speaker 1: mil out of this but even if she did, I

1165
00:51:18,719 --> 00:51:21,279
Speaker 1: don't think it's unreasonable. I mean, you know, and like,

1166
00:51:21,440 --> 00:51:23,000
Speaker 1: let's not forget there was a whole lot of lying

1167
00:51:23,080 --> 00:51:25,000
Speaker 1: that went on on the way in. Right, we're keeping

1168
00:51:25,080 --> 00:51:27,880
Speaker 1: this person where not she's coming, she's going scarf. Right,

1169
00:51:28,000 --> 00:51:29,960
Speaker 1: That's how it works, right these people, I mean, you know,

1170
00:51:30,040 --> 00:51:34,600
Speaker 1: it's a tough business, but like, but basically people making

1171
00:51:34,680 --> 00:51:37,359
Speaker 1: three or four million dollars or ten mil I mean,

1172
00:51:37,400 --> 00:51:39,799
Speaker 1: that's totally reasonable, probably at the lower end of being

1173
00:51:39,840 --> 00:51:41,680
Speaker 1: involved in private equity, to be honest.

1174
00:51:41,880 --> 00:51:44,320
Speaker 2: Yeah, especially it sounds like I think there could be

1175
00:51:44,360 --> 00:51:45,920
Speaker 2: some other money in there to getting I think this

1176
00:51:46,040 --> 00:51:48,160
Speaker 2: is just to go forward money. I think Dave and

1177
00:51:48,200 --> 00:51:51,160
Speaker 2: hopefully Nick gets some money from kind of out of

1178
00:51:51,200 --> 00:51:52,760
Speaker 2: the bay cut, which they deserve.

1179
00:51:53,000 --> 00:51:55,279
Speaker 1: They've been in the phenomenal and so let's say all

1180
00:51:55,360 --> 00:51:58,960
Speaker 1: of this is beautifully executed, I think, very fair, et cetera.

1181
00:51:59,440 --> 00:52:03,000
Speaker 1: The question is would you ever buy an IPO of

1182
00:52:03,120 --> 00:52:06,080
Speaker 1: private equity ever again? And I think my view on

1183
00:52:06,160 --> 00:52:09,560
Speaker 1: that is that the answer is no. Not. My main

1184
00:52:09,680 --> 00:52:12,759
Speaker 1: reason to say no is this, So you'll see why

1185
00:52:12,840 --> 00:52:14,759
Speaker 1: this is definitely not an investment advice, because it's a

1186
00:52:14,880 --> 00:52:17,600
Speaker 1: crazy reason. I think that if I buy stock off

1187
00:52:17,600 --> 00:52:20,960
Speaker 1: private equity and then all of the value evaporates, I'm

1188
00:52:20,960 --> 00:52:22,960
Speaker 1: going to be sitting there thinking, how the hell could

1189
00:52:22,960 --> 00:52:24,759
Speaker 1: I have ever bought this? Isn't it totally obvious that

1190
00:52:24,800 --> 00:52:26,960
Speaker 1: when private equity is selling, I should never be buying.

1191
00:52:27,320 --> 00:52:29,880
Speaker 1: And so I think the overwhelming feeling of stupidity if

1192
00:52:29,880 --> 00:52:32,400
Speaker 1: it went broke would just be too enormous, And so

1193
00:52:32,719 --> 00:52:35,120
Speaker 1: I don't think I would go anywhere nearbying this, despite

1194
00:52:35,160 --> 00:52:36,960
Speaker 1: the fact that I fly Virgin Heaps and I quite

1195
00:52:37,080 --> 00:52:37,680
Speaker 1: like the airline.

1196
00:52:37,800 --> 00:52:39,319
Speaker 2: I think the only crower to that, and I think

1197
00:52:39,520 --> 00:52:41,480
Speaker 2: I think that thesumption and private equity is smarter than

1198
00:52:41,480 --> 00:52:43,400
Speaker 2: your eyes, so don't bet against them.

1199
00:52:43,560 --> 00:52:45,680
Speaker 1: Well, and they've got the inside track right like they

1200
00:52:45,800 --> 00:52:48,320
Speaker 1: know everything that's going on in the business. I know

1201
00:52:48,480 --> 00:52:50,200
Speaker 1: nothing going on in the business, just.

1202
00:52:50,239 --> 00:52:52,360
Speaker 2: The Coroli to that is actually selling thirty percent and

1203
00:52:52,440 --> 00:52:54,760
Speaker 2: keeping forty percent. If they were selling all their steak,

1204
00:52:54,880 --> 00:52:56,759
Speaker 2: then you'd be much more concerned they're actually selling the

1205
00:52:56,800 --> 00:52:57,759
Speaker 2: minority at their steak.

1206
00:52:57,840 --> 00:53:00,759
Speaker 1: Yet, so listen, I think that's a already know you

1207
00:53:01,000 --> 00:53:03,080
Speaker 1: to be honest and surprising from me, or you might

1208
00:53:03,120 --> 00:53:04,520
Speaker 1: shoot me down on this. But I think if they

1209
00:53:04,520 --> 00:53:07,680
Speaker 1: could sell seventy, they'd sell seventy. They're selling the absolute

1210
00:53:07,760 --> 00:53:10,120
Speaker 1: maximum they can sell. Remember when gy and so this

1211
00:53:10,280 --> 00:53:10,920
Speaker 1: is maybe.

1212
00:53:11,160 --> 00:53:13,840
Speaker 2: But that's not that's not inconsistent with what I'm saying.

1213
00:53:14,160 --> 00:53:16,480
Speaker 1: Well, they might just say the last forty that we're

1214
00:53:16,520 --> 00:53:19,279
Speaker 1: forced to hold is just free upside because we've made

1215
00:53:19,320 --> 00:53:20,560
Speaker 1: our money on this investment.

1216
00:53:20,760 --> 00:53:22,480
Speaker 2: But forty is a lot to hold. I think I

1217
00:53:22,480 --> 00:53:25,560
Speaker 2: also think that priced it. Okay, I'm not a public

1218
00:53:25,560 --> 00:53:27,840
Speaker 2: company in a public market investor anyway, I'm not an

1219
00:53:27,880 --> 00:53:31,160
Speaker 2: airline investor. I think if you think oil prices will

1220
00:53:31,200 --> 00:53:33,000
Speaker 2: continue to stuff. Was that a spike last week on

1221
00:53:33,040 --> 00:53:35,080
Speaker 2: the Iran stuff? But as you this gets finished soon

1222
00:53:35,280 --> 00:53:37,680
Speaker 2: and oil prices go back down to sixties.

1223
00:53:37,840 --> 00:53:40,640
Speaker 1: I think Iran is only one percent of the world's

1224
00:53:41,040 --> 00:53:42,680
Speaker 1: oil and guests, but.

1225
00:53:42,640 --> 00:53:44,800
Speaker 2: It's a it's a fear gauge. Forget the fact that

1226
00:53:45,400 --> 00:53:47,799
Speaker 2: it's more that I think I think will go back

1227
00:53:47,840 --> 00:53:49,759
Speaker 2: down to those six that sixties at a level. And

1228
00:53:49,800 --> 00:53:52,000
Speaker 2: in that case then you're probably it's probably not a

1229
00:53:52,040 --> 00:53:55,000
Speaker 2: bad short term bet. But I just don't like investing

1230
00:53:55,040 --> 00:53:57,800
Speaker 2: in airlines because they're just too capital intensive.

1231
00:53:57,920 --> 00:54:00,000
Speaker 1: So now I'll talk against what I just said about

1232
00:54:00,280 --> 00:54:02,120
Speaker 1: selling down because I really think if they could sell

1233
00:54:02,120 --> 00:54:03,839
Speaker 1: the other forty they would. But then if you look

1234
00:54:03,840 --> 00:54:07,560
Speaker 1: at GYG, when TDM was selling, TEDM was like, we're

1235
00:54:07,560 --> 00:54:09,080
Speaker 1: not selling more than x, and then there was more

1236
00:54:09,160 --> 00:54:11,399
Speaker 1: demand and then suddenly everyone was like, okay, we'll sell more,

1237
00:54:11,719 --> 00:54:13,880
Speaker 1: and then they sold more. But it turned out they

1238
00:54:13,920 --> 00:54:16,160
Speaker 1: were they were on the wrong end of that transaction

1239
00:54:16,320 --> 00:54:16,879
Speaker 1: to sell more.

1240
00:54:17,640 --> 00:54:19,200
Speaker 2: They kept more than they so they kept a lot more.

1241
00:54:19,200 --> 00:54:21,360
Speaker 1: Time, I know. But they sold more than the original

1242
00:54:21,480 --> 00:54:22,520
Speaker 1: number that they were.

1243
00:54:22,520 --> 00:54:23,080
Speaker 2: Which was zero.

1244
00:54:23,400 --> 00:54:25,680
Speaker 1: Yeah, that they said they were going to sell right like,

1245
00:54:25,760 --> 00:54:28,000
Speaker 1: they took the There was demand and they took the opportunity,

1246
00:54:28,040 --> 00:54:31,720
Speaker 1: and that to me could easily be considered a negative signal,

1247
00:54:32,360 --> 00:54:34,520
Speaker 1: but actually it turned out that it was not at

1248
00:54:34,520 --> 00:54:36,440
Speaker 1: all a negative signal because the stock is worth much

1249
00:54:36,480 --> 00:54:37,560
Speaker 1: more than the ibo price.

1250
00:54:37,760 --> 00:54:40,040
Speaker 2: So and TEDDM, to their credit, were always big supporters

1251
00:54:40,040 --> 00:54:42,880
Speaker 2: of GYG and done incredibly well. There's a UGS exception

1252
00:54:42,960 --> 00:54:46,319
Speaker 2: to that. Don't sell down when Semi that was also

1253
00:54:46,360 --> 00:54:49,319
Speaker 2: a fan to sell down. But like we said the time,

1254
00:54:49,440 --> 00:54:51,360
Speaker 2: we say GYG is a great business, a great process

1255
00:54:51,440 --> 00:54:53,759
Speaker 2: power and great brand and will do well and it

1256
00:54:54,239 --> 00:54:57,160
Speaker 2: unsurprisingly has I guess question. Let's look at Virgin, let's

1257
00:54:57,160 --> 00:54:59,160
Speaker 2: look out Le's quickly talk of Powers a Virgin while

1258
00:54:59,160 --> 00:55:03,799
Speaker 2: we're here. Obviously it's got a pretty good brand. It's

1259
00:55:03,880 --> 00:55:05,879
Speaker 2: not Quantus, but it's got a pretty in that mid market.

1260
00:55:05,880 --> 00:55:07,200
Speaker 2: It's got a pretty good brand. You love it.

1261
00:55:07,480 --> 00:55:09,480
Speaker 1: Oh, I wonder if we're going to settle on the

1262
00:55:09,640 --> 00:55:14,200
Speaker 1: same key power here. So yes, brand, good brand, but

1263
00:55:14,560 --> 00:55:16,360
Speaker 1: just ye, I've got no issue with that. Agree.

1264
00:55:16,400 --> 00:55:20,319
Speaker 2: There's a little bit of Canter position harmonically against quantas well.

1265
00:55:20,360 --> 00:55:24,319
Speaker 1: The counterposition is predominantly we're cheaper. Isn't it.

1266
00:55:25,800 --> 00:55:30,239
Speaker 2: Not just that they're Funner's It is the Yeah, it's

1267
00:55:30,239 --> 00:55:32,200
Speaker 2: a little bit. It's a little bit. Obviously they were

1268
00:55:32,239 --> 00:55:33,800
Speaker 2: in an upstart. There's a lot more in two thousand

1269
00:55:33,800 --> 00:55:38,840
Speaker 2: and one when Brett started Scale no network process power.

1270
00:55:39,280 --> 00:55:42,879
Speaker 1: I don't go down that road. That's a no, not really.

1271
00:55:42,960 --> 00:55:44,800
Speaker 1: But there's another one that is one I think that

1272
00:55:45,000 --> 00:55:45,800
Speaker 1: exists here.

1273
00:55:46,160 --> 00:55:49,240
Speaker 2: Switching costs. We talk about loyalty. We talk about loyalty.

1274
00:55:49,320 --> 00:55:52,000
Speaker 1: So everyone in Australia is a member of both programs

1275
00:55:52,040 --> 00:55:53,160
Speaker 1: if they're a member of one, no.

1276
00:55:53,280 --> 00:55:55,480
Speaker 2: But not everybody's not. Everybody's a platinum member of both,

1277
00:55:55,680 --> 00:55:57,400
Speaker 2: So once you get to platinum or goal, there is

1278
00:55:57,440 --> 00:56:00,520
Speaker 2: definitely switching costs. So I think there's an that Quantus

1279
00:56:00,560 --> 00:56:02,880
Speaker 2: has better switching costs because they've got the international network.

1280
00:56:03,000 --> 00:56:05,800
Speaker 1: There's no plantinum switching costs for Virgin because I'm a

1281
00:56:05,840 --> 00:56:07,840
Speaker 1: platinum member of Virgin and I get nothing better than

1282
00:56:07,880 --> 00:56:11,000
Speaker 1: gold people except an economy's X seat, which I don't use.

1283
00:56:11,120 --> 00:56:12,600
Speaker 1: So it's actually but if.

1284
00:56:12,560 --> 00:56:15,359
Speaker 2: You're a god, but it's something like if you're back

1285
00:56:15,400 --> 00:56:17,600
Speaker 2: in row, if you're back in row thirty B, you're

1286
00:56:17,640 --> 00:56:18,200
Speaker 2: rather be in four.

1287
00:56:18,360 --> 00:56:21,800
Speaker 1: Yes, but the main switching I think the main switching

1288
00:56:21,840 --> 00:56:25,160
Speaker 1: cost at the frequent fly level is gold on Virgin,

1289
00:56:25,400 --> 00:56:27,279
Speaker 1: but I think it might be platinum on Quantus. I

1290
00:56:27,320 --> 00:56:30,680
Speaker 1: think the Quantus is a jump from gold to platinum. Eg,

1291
00:56:31,200 --> 00:56:33,200
Speaker 1: you can use the business lounge. I think if you're

1292
00:56:33,200 --> 00:56:35,879
Speaker 1: a platinum right domestically and you can use the first

1293
00:56:35,920 --> 00:56:39,279
Speaker 1: class lounge internationally. So I think Quantus does a much

1294
00:56:39,320 --> 00:56:42,239
Speaker 1: better job of differentiating gold from platinum than Virgin does.

1295
00:56:42,280 --> 00:56:44,040
Speaker 1: Once you get to gold, I don't think it really

1296
00:56:44,080 --> 00:56:45,520
Speaker 1: matters to get to platinum.

1297
00:56:45,120 --> 00:56:47,120
Speaker 2: Although it does change now with a catar, which while

1298
00:56:47,160 --> 00:56:49,680
Speaker 2: I love that guitar, hook up so much. If you

1299
00:56:49,719 --> 00:56:52,080
Speaker 2: can use your status on guitar, gold on guitar is

1300
00:56:52,080 --> 00:56:54,760
Speaker 2: actually quite powerful. So if you can use platinum Virgiin

1301
00:56:54,840 --> 00:56:57,479
Speaker 2: gives you gold guitar, that's actually quite quite helpful because

1302
00:56:57,520 --> 00:56:59,840
Speaker 2: Caitar has got great lounges. So there's definitely some switching

1303
00:56:59,840 --> 00:57:02,359
Speaker 2: cos it's not quantous because quantas have the best witching

1304
00:57:02,400 --> 00:57:06,080
Speaker 2: costs in tourism. But it's something, and that's why it's

1305
00:57:06,120 --> 00:57:08,400
Speaker 2: not priced as much. I'm not sure what other powers

1306
00:57:08,400 --> 00:57:08,759
Speaker 2: are left.

1307
00:57:09,080 --> 00:57:11,840
Speaker 1: Will there is one more? That's one I think is

1308
00:57:11,880 --> 00:57:13,120
Speaker 1: so important in this situation.

1309
00:57:13,400 --> 00:57:13,600
Speaker 2: What's on?

1310
00:57:13,719 --> 00:57:17,040
Speaker 1: What am I forgetting cornered resource on the planes? There's

1311
00:57:17,160 --> 00:57:20,200
Speaker 1: no there's only two airlines in Australia, and so while

1312
00:57:20,280 --> 00:57:22,960
Speaker 1: it might not be cornered against their main competitor, which

1313
00:57:23,000 --> 00:57:26,600
Speaker 1: is contis, it's a cornered resource against every possible other

1314
00:57:26,720 --> 00:57:30,360
Speaker 1: competitor that could flow domestically in Australia. That's why Rex died.

1315
00:57:30,560 --> 00:57:34,880
Speaker 1: They died on slots like nobody nobody can compete with

1316
00:57:35,040 --> 00:57:38,400
Speaker 1: these two airlines domestically because they have a cornered resource.

1317
00:57:38,520 --> 00:57:41,320
Speaker 2: No, you're right, Yeah, I stand corrected. Nah, you're totally right.

1318
00:57:41,320 --> 00:57:44,320
Speaker 2: I remember to speak to Bruce Buchanan who's now running

1319
00:57:44,400 --> 00:57:46,880
Speaker 2: rock To, one of the top their most successful startups.

1320
00:57:46,960 --> 00:57:49,640
Speaker 2: He previously ran round Jet Staff very well. He should

1321
00:57:49,640 --> 00:57:52,480
Speaker 2: have been Contests maybe rather than Joyce. But Bruce was

1322
00:57:52,520 --> 00:57:55,640
Speaker 2: saying the most valuable thing they have is terminal slots

1323
00:57:55,840 --> 00:57:57,240
Speaker 2: because once you got them, you don't lose them and

1324
00:57:57,320 --> 00:57:59,000
Speaker 2: you can't get them. So I think you're actually totally

1325
00:57:59,120 --> 00:58:00,040
Speaker 2: right there that that's a great.

1326
00:58:00,080 --> 00:58:02,440
Speaker 1: Well, that's exciting that we found something that had cornered

1327
00:58:02,560 --> 00:58:05,120
Speaker 1: resource that was not maybe the most obvious cornered resource.

1328
00:58:05,160 --> 00:58:08,360
Speaker 2: It's not a rare Earth's mine. Yeah, So congratulations to

1329
00:58:08,440 --> 00:58:11,400
Speaker 2: Turbain and Jane and Nick and the guys. They're actually

1330
00:58:11,400 --> 00:58:14,040
Speaker 2: a lovely team. I really liked them so well done.

1331
00:58:14,080 --> 00:58:17,600
Speaker 2: They're obviously Quantus is flying high, even higher, but as

1332
00:58:17,640 --> 00:58:20,240
Speaker 2: I said, to have two strong airlines in Australia, we're blessed.

1333
00:58:20,360 --> 00:58:21,960
Speaker 2: I don't think we realized how like we are. Cust

1334
00:58:22,040 --> 00:58:24,120
Speaker 2: move on. Did you see that article in the Financial

1335
00:58:24,120 --> 00:58:26,760
Speaker 2: Review over the weekend about Immutable.

1336
00:58:26,480 --> 00:58:28,840
Speaker 1: Yeah, I know it because Chris Hitchin I think was

1337
00:58:28,880 --> 00:58:30,960
Speaker 1: the you know, Chris, he was the seed investor I

1338
00:58:31,040 --> 00:58:31,840
Speaker 1: think in that business.

1339
00:58:31,960 --> 00:58:35,160
Speaker 2: Oh, I love it, I Chris, they just went bang.

1340
00:58:36,080 --> 00:58:39,120
Speaker 2: So AFR noted the Mutable has been valued by higher

1341
00:58:39,160 --> 00:58:42,320
Speaker 2: profile investors at three point eight billion, making it austray

1342
00:58:42,320 --> 00:58:45,040
Speaker 2: as fourth Light, as Unicorn behind obviously the great Camber

1343
00:58:45,280 --> 00:58:48,600
Speaker 2: Rocked and air Wallacks. As AFR noted, Immutable was founded

1344
00:58:48,640 --> 00:58:51,200
Speaker 2: by Sydney brothers James and Robbie Ferguson and Alex Connell

1345
00:58:51,240 --> 00:58:53,880
Speaker 2: in twenty and eighteen as a platform that would launch

1346
00:58:53,960 --> 00:58:56,200
Speaker 2: video games on the blockchain. This whole thing just never

1347
00:58:56,240 --> 00:58:58,840
Speaker 2: really made much sense to me. Bitcoin gaming is similar

1348
00:58:58,840 --> 00:59:01,240
Speaker 2: to the regular video gaming, except players are awarded with

1349
00:59:01,280 --> 00:59:04,120
Speaker 2: non funeable tokens who can trade it for cash instead

1350
00:59:04,120 --> 00:59:06,760
Speaker 2: of bragging right, so courts sort of a semi gambling business.

1351
00:59:07,320 --> 00:59:10,200
Speaker 2: The business has raised almost a billion dollars across its

1352
00:59:10,240 --> 00:59:12,680
Speaker 2: platform and gaming fund over five years. There's been some

1353
00:59:12,760 --> 00:59:15,880
Speaker 2: big names here, so Tamar Sek from Singapore, ten Cent

1354
00:59:16,000 --> 00:59:20,720
Speaker 2: of course, Air Tree, King, River Capital and Reinventure. It's

1355
00:59:20,920 --> 00:59:25,640
Speaker 2: actually been a few departures recently, so the CFO Dave Bignell,

1356
00:59:25,720 --> 00:59:28,840
Speaker 2: the coelo Ed Bunting Head Investment Brenda mar are all

1357
00:59:28,960 --> 00:59:31,760
Speaker 2: due to depart the company in the next few months.

1358
00:59:31,920 --> 00:59:35,840
Speaker 2: AFI noted that Immutable does provide monthly investments to monthly

1359
00:59:35,960 --> 00:59:39,680
Speaker 2: updates to investors, which the AFR somehow saw. And this

1360
00:59:39,800 --> 00:59:42,480
Speaker 2: is what really sort of shook me. These reports show

1361
00:59:42,520 --> 00:59:45,800
Speaker 2: the company has made up to US three million dollars

1362
00:59:45,880 --> 00:59:48,560
Speaker 2: revenue every month since February, and only half comes from

1363
00:59:48,560 --> 00:59:51,360
Speaker 2: its platforms and half comes from something called service revenue,

1364
00:59:51,400 --> 00:59:53,280
Speaker 2: which is really bizarre. I thought this was a much

1365
00:59:53,400 --> 00:59:56,200
Speaker 2: much bigger business than this. Unless there's something I'm missing.

1366
00:59:56,520 --> 00:59:59,440
Speaker 2: Immutable is of course tied to the iMX token, and

1367
01:00:00,040 --> 01:00:02,200
Speaker 2: if I knowed, this price is forward ninety percent. In

1368
01:00:02,240 --> 01:00:04,240
Speaker 2: the past four years, the tokens market cap has formed

1369
01:00:04,240 --> 01:00:06,680
Speaker 2: from four point seven US billion to under a billion

1370
01:00:06,720 --> 01:00:08,400
Speaker 2: this week. What am I missing? How is this a

1371
01:00:08,520 --> 01:00:10,640
Speaker 2: four billion dollar business when it turns over a couple

1372
01:00:10,680 --> 01:00:11,600
Speaker 2: of million bucks a month.

1373
01:00:11,800 --> 01:00:14,200
Speaker 1: The idea of NFTs non fund as you said, non

1374
01:00:14,240 --> 01:00:16,720
Speaker 1: fungible tokens, I mean, it's just a very I don't

1375
01:00:16,760 --> 01:00:19,560
Speaker 1: know yesterday thing to be talking about. But like the

1376
01:00:19,960 --> 01:00:22,600
Speaker 1: NFTs are very controversial in the gaming world. The MIC

1377
01:00:22,680 --> 01:00:24,520
Speaker 1: might want to chime in here as well, but like

1378
01:00:25,920 --> 01:00:31,160
Speaker 1: generally speaking, most mainstream gamers are very against the idea

1379
01:00:31,960 --> 01:00:37,120
Speaker 1: of having to buy like tools or things that can

1380
01:00:37,280 --> 01:00:41,320
Speaker 1: influence performance in the game with the money, even if

1381
01:00:41,400 --> 01:00:43,320
Speaker 1: you go in like mine for them and get them

1382
01:00:43,360 --> 01:00:47,280
Speaker 1: and then trade them. Like, generally speaking, the gaming community

1383
01:00:47,320 --> 01:00:49,520
Speaker 1: does not like the idea of like all of these

1384
01:00:49,560 --> 01:00:53,840
Speaker 1: additional micro payments spread throughout games, which is they're a

1385
01:00:53,920 --> 01:00:56,240
Speaker 1: fixture of mobile gaming because that's how they make money

1386
01:00:56,280 --> 01:00:58,840
Speaker 1: a free game. And then like in that purchasers mic.

1387
01:00:58,880 --> 01:01:00,800
Speaker 2: Like candy the Candy Crash should.

1388
01:01:00,520 --> 01:01:03,160
Speaker 1: Have Yeah, that's right, but generally, like, if you're a

1389
01:01:03,240 --> 01:01:06,040
Speaker 1: serious gamer, like you don't want to have these NFTs

1390
01:01:06,440 --> 01:01:09,720
Speaker 1: starting to penetrate your game because you and so it's

1391
01:01:09,960 --> 01:01:12,320
Speaker 1: not fair. I think, well, the thing is, it's not

1392
01:01:12,520 --> 01:01:15,160
Speaker 1: fair unless you pay right. And so people just people,

1393
01:01:15,360 --> 01:01:16,960
Speaker 1: people don't people don't want that, and.

1394
01:01:17,040 --> 01:01:18,720
Speaker 2: So it's not a game of skill Anymore's a game

1395
01:01:18,720 --> 01:01:19,320
Speaker 2: of who's the rich.

1396
01:01:19,240 --> 01:01:21,760
Speaker 1: And immutable has their own games, and these are that's

1397
01:01:21,800 --> 01:01:23,880
Speaker 1: my understanding, And these are embedded in there, These tokens

1398
01:01:23,880 --> 01:01:26,840
Speaker 1: are embedded in their own games. So that's something altogether

1399
01:01:26,920 --> 01:01:29,920
Speaker 1: completely different. And I actually think, like I was not

1400
01:01:30,080 --> 01:01:31,960
Speaker 1: very cynical about this. I thought this was a very

1401
01:01:32,040 --> 01:01:34,320
Speaker 1: interesting concept. I thought it was a chance of catching on.

1402
01:01:34,400 --> 01:01:38,360
Speaker 1: I don't know, like these are new concepts, but basically

1403
01:01:38,880 --> 01:01:41,840
Speaker 1: I thought it was a very worthwhile VC bet to

1404
01:01:41,920 --> 01:01:43,720
Speaker 1: bet on this type of thing. It made a lot

1405
01:01:43,760 --> 01:01:45,440
Speaker 1: of sense to me as a VC bet.

1406
01:01:45,520 --> 01:01:47,760
Speaker 2: At three point eight billion for a company basically making

1407
01:01:47,920 --> 01:01:51,040
Speaker 2: visually zero revenue. So you guys are both big, big gamers.

1408
01:01:52,000 --> 01:01:55,960
Speaker 2: Do you know anyone who's played these immutable games before? Like?

1409
01:01:56,480 --> 01:01:58,960
Speaker 1: Is it popular as a common I don't know anyone

1410
01:01:59,040 --> 01:02:02,520
Speaker 1: that's played any so I can't comment about how common

1411
01:02:02,520 --> 01:02:05,320
Speaker 1: they are. I'll talk about my understanding of the business

1412
01:02:05,360 --> 01:02:08,240
Speaker 1: success in a second. I certainly don't know anyone who's

1413
01:02:08,240 --> 01:02:11,200
Speaker 1: played immutable games. I'm the probably the wrong generation for

1414
01:02:11,280 --> 01:02:13,160
Speaker 1: that stuff though, But I can tell you, like my

1415
01:02:13,280 --> 01:02:14,960
Speaker 1: son has not played immutable games either.

1416
01:02:15,040 --> 01:02:17,800
Speaker 2: Mike, You're the right You're absolute. Mike's absolutely the right generation.

1417
01:02:17,920 --> 01:02:20,160
Speaker 2: So if you're if Liam hasn't, Mike and you haven't,

1418
01:02:20,200 --> 01:02:21,920
Speaker 2: do you have any any of your mates played it?

1419
01:02:22,280 --> 01:02:25,360
Speaker 3: I do not know anyone who plays any of this

1420
01:02:25,720 --> 01:02:29,920
Speaker 3: these games, and they all just look like terrible games

1421
01:02:29,960 --> 01:02:32,440
Speaker 3: as well, Like they look like games that are designed

1422
01:02:32,640 --> 01:02:35,440
Speaker 3: to get you addicted so you spend money. Like to me,

1423
01:02:36,040 --> 01:02:38,640
Speaker 3: when I look at like I'm just on their website now,

1424
01:02:38,800 --> 01:02:41,640
Speaker 3: just looking at their kind of catalog. This isn't what

1425
01:02:42,120 --> 01:02:46,040
Speaker 3: gaming is about to me, Like, this isn't what it is.

1426
01:02:46,560 --> 01:02:48,920
Speaker 3: I like, I hate it this side of gaming.

1427
01:02:49,080 --> 01:02:53,200
Speaker 1: I hate. My son like is really against NFTs in games,

1428
01:02:53,240 --> 01:02:55,680
Speaker 1: like he hates it as well. Like I'm I'm like

1429
01:02:55,960 --> 01:03:00,720
Speaker 1: probably more interested in trying out different things, but like

1430
01:03:01,000 --> 01:03:03,480
Speaker 1: not NFTs, I'm not very interested in trying that out.

1431
01:03:03,560 --> 01:03:05,600
Speaker 1: So I mean, there must be a market for this

1432
01:03:05,720 --> 01:03:08,080
Speaker 1: some way, because they've got revenue, but I've never come

1433
01:03:08,160 --> 01:03:09,240
Speaker 1: across anyone.

1434
01:03:09,240 --> 01:03:12,280
Speaker 2: Revenues like virtually if you're working revenue for a couple

1435
01:03:12,320 --> 01:03:16,000
Speaker 2: million bucks a month, business raised a billion, Like I've

1436
01:03:16,040 --> 01:03:18,919
Speaker 2: always thought this business is like never made genuine things

1437
01:03:18,920 --> 01:03:20,160
Speaker 2: don't make sense to me, even though I'm not a

1438
01:03:20,200 --> 01:03:21,600
Speaker 2: big gamer like you guys, Well.

1439
01:03:21,600 --> 01:03:23,720
Speaker 1: Let me say this before you comment about it, because

1440
01:03:23,760 --> 01:03:25,800
Speaker 1: like I want to put it just an opposite view,

1441
01:03:26,040 --> 01:03:29,560
Speaker 1: Like Liam just sent me a little message because he's

1442
01:03:29,600 --> 01:03:31,840
Speaker 1: hearing me right next to me talking about this, so

1443
01:03:32,000 --> 01:03:35,920
Speaker 1: he said. Australia, especially the West, especially hates NFTs and

1444
01:03:35,960 --> 01:03:39,680
Speaker 1: micro transactions, but in Southeast Asia and Japan, micro transactions

1445
01:03:39,720 --> 01:03:41,920
Speaker 1: are pretty common in gaming and so they've got a

1446
01:03:41,960 --> 01:03:43,320
Speaker 1: different attitude towards.

1447
01:03:43,120 --> 01:03:46,000
Speaker 2: This stuff that could maybe this isn't very Asian eccentric business,

1448
01:03:46,000 --> 01:03:48,360
Speaker 2: but it's doing virtually zero revenue. It never made any

1449
01:03:48,440 --> 01:03:52,640
Speaker 2: sense to me. This whole thing felt like a pyramid

1450
01:03:53,200 --> 01:03:57,000
Speaker 2: scheme and it doesn't surprise the fact that's what are

1451
01:03:57,200 --> 01:03:58,920
Speaker 2: doing in this thing. But like maybe one of the

1452
01:03:58,960 --> 01:04:01,480
Speaker 2: going creak can reach out. It's a VC, but they

1453
01:04:01,520 --> 01:04:02,840
Speaker 2: can call me and tell me why they invested in

1454
01:04:02,920 --> 01:04:04,200
Speaker 2: this thing because it makes no sense to me.

1455
01:04:04,440 --> 01:04:08,560
Speaker 1: Well, because you can't like four years after a VC

1456
01:04:08,720 --> 01:04:10,600
Speaker 1: bet that looks like I thought it was done four

1457
01:04:10,640 --> 01:04:13,640
Speaker 1: years ago. I know, but you might be wrong. Like vcs,

1458
01:04:13,920 --> 01:04:16,320
Speaker 1: like they have to look at things and say, is

1459
01:04:16,400 --> 01:04:19,120
Speaker 1: there is there a can I see a reasonable road

1460
01:04:19,240 --> 01:04:21,480
Speaker 1: to this thing? One hundred xing? My man, I think

1461
01:04:21,520 --> 01:04:22,120
Speaker 1: the answer is not.

1462
01:04:22,760 --> 01:04:24,920
Speaker 2: I think it was four years ago. That's where we disagree.

1463
01:04:24,960 --> 01:04:27,640
Speaker 2: Like that was my view four years ago, but maybe

1464
01:04:27,880 --> 01:04:29,920
Speaker 2: it's now improven. It looked like it's being prevenent, right,

1465
01:04:29,960 --> 01:04:30,120
Speaker 2: I know.

1466
01:04:30,240 --> 01:04:32,720
Speaker 1: But like you're maybe you were not exactly the right

1467
01:04:32,800 --> 01:04:34,960
Speaker 1: person to make the assessment about this because you're not

1468
01:04:35,000 --> 01:04:37,160
Speaker 1: a gamering not interested in this whole world of stuff,

1469
01:04:37,640 --> 01:04:38,680
Speaker 1: and it turned out you were right.

1470
01:04:38,800 --> 01:04:42,400
Speaker 2: But I always thought NFTs forget the gaming. I thought NFTs.

1471
01:04:42,400 --> 01:04:45,560
Speaker 2: I remember having an argument with my friend Nathan who

1472
01:04:45,640 --> 01:04:48,120
Speaker 2: runs Founder, and I was saying, I think NFTs didn't

1473
01:04:48,280 --> 01:04:51,320
Speaker 2: never made it. There were JPEGs like JPEGs never made it.

1474
01:04:51,440 --> 01:04:53,400
Speaker 2: Like the whole NFT thing never made any sense to me.

1475
01:04:53,440 --> 01:04:55,640
Speaker 2: And I'm very glad at proven to be words here.

1476
01:04:55,880 --> 01:04:58,200
Speaker 2: All Right, Well, I whole things are absolute rude.

1477
01:04:58,360 --> 01:05:00,600
Speaker 1: I think you know, there are a lot of creadable

1478
01:05:00,920 --> 01:05:04,840
Speaker 1: resources in games, and there is a whole marketplace for

1479
01:05:04,960 --> 01:05:08,200
Speaker 1: people that play things like World of Warcraft, and they

1480
01:05:08,280 --> 01:05:11,120
Speaker 1: go and create characters and then they put them for

1481
01:05:11,240 --> 01:05:15,800
Speaker 1: sale on various platforms eBay or Facebook, Marketplace maybe, And

1482
01:05:15,920 --> 01:05:17,680
Speaker 1: so I think there was a pretty good argument that

1483
01:05:17,800 --> 01:05:21,560
Speaker 1: said that might be replaced by NFTs, because that's the

1484
01:05:21,640 --> 01:05:25,160
Speaker 1: perfect use case of an NFT. Basically, it's a bad argument,

1485
01:05:25,160 --> 01:05:27,400
Speaker 1: but it's anment. But you're not in that world, So

1486
01:05:27,520 --> 01:05:29,000
Speaker 1: why do you How can you say that's a bad

1487
01:05:29,080 --> 01:05:30,960
Speaker 1: argument if you're not in that world. By the way,

1488
01:05:30,960 --> 01:05:34,920
Speaker 1: I guess the world stupid. Well, but do you think

1489
01:05:34,960 --> 01:05:37,600
Speaker 1: it's a stupid world. That's an even better reason that

1490
01:05:37,640 --> 01:05:40,080
Speaker 1: you think it might work. So I think people also

1491
01:05:40,280 --> 01:05:43,520
Speaker 1: monkey jps. That's different. Like, I think let's agree that

1492
01:05:43,640 --> 01:05:46,600
Speaker 1: that was we both thought that was total absurdity, right.

1493
01:05:47,040 --> 01:05:49,800
Speaker 1: But by the way, the people that were buying the

1494
01:05:50,920 --> 01:05:54,080
Speaker 1: gorillas for a million, for not even one million dollars,

1495
01:05:54,120 --> 01:05:58,080
Speaker 1: for probably seventeen million dollars, those people made their money

1496
01:05:58,280 --> 01:06:01,280
Speaker 1: out of like selling other gorilla type NFTs or other

1497
01:06:01,480 --> 01:06:04,760
Speaker 1: crypto things like it was just the world of crypto

1498
01:06:04,880 --> 01:06:08,480
Speaker 1: bros buying each other's junk, okay, And so let's keep

1499
01:06:08,520 --> 01:06:11,360
Speaker 1: that in context. I don't think this was the context

1500
01:06:11,480 --> 01:06:14,160
Speaker 1: this is. I don't think no, I don't think this

1501
01:06:14,360 --> 01:06:16,400
Speaker 1: was a bad bit. You do. I don't think it's

1502
01:06:16,400 --> 01:06:17,240
Speaker 1: a bad bit, is it?

1503
01:06:17,640 --> 01:06:17,680
Speaker 2: No?

1504
01:06:17,960 --> 01:06:20,000
Speaker 1: So is the There was the argument, sorry, it was

1505
01:06:20,040 --> 01:06:22,480
Speaker 1: the article saying it's no longer worth three point eight

1506
01:06:22,520 --> 01:06:23,120
Speaker 1: billion dollars.

1507
01:06:23,520 --> 01:06:26,160
Speaker 2: Argument didn't article didn't prefer a view on that. It

1508
01:06:26,280 --> 01:06:28,240
Speaker 2: just said this is this. This is the facts, the

1509
01:06:28,280 --> 01:06:31,320
Speaker 2: fact that the revenue is tiny and these idiots paid

1510
01:06:31,520 --> 01:06:33,360
Speaker 2: up to three point eight billion for it. Like I

1511
01:06:33,400 --> 01:06:35,720
Speaker 2: can understand investing at a five to ten million dollars

1512
01:06:35,760 --> 01:06:38,920
Speaker 2: out whatever, have a punt. We're talking billions of dollars here.

1513
01:06:38,880 --> 01:06:41,880
Speaker 1: For you know how you know how these things work.

1514
01:06:41,920 --> 01:06:45,120
Speaker 1: I feel like we have this discussion semi regularly where

1515
01:06:45,160 --> 01:06:46,240
Speaker 1: we're both on the same page.

1516
01:06:46,280 --> 01:06:48,160
Speaker 2: By the way, let's just like I'll tell you fifth

1517
01:06:48,440 --> 01:06:49,520
Speaker 2: arguing against what you believe.

1518
01:06:50,040 --> 01:06:52,240
Speaker 1: I don't have the argument. I'm just arguing. I feel

1519
01:06:52,280 --> 01:06:55,600
Speaker 1: like I'm always defending visas, which is not even my

1520
01:06:55,720 --> 01:06:59,320
Speaker 1: natural place in life. It's not my natural place. But

1521
01:06:59,520 --> 01:07:01,320
Speaker 1: like the thing is, they've got it. They've got it.

1522
01:07:01,400 --> 01:07:04,560
Speaker 1: They've got a model, and they their model is this

1523
01:07:04,760 --> 01:07:06,880
Speaker 1: power law. We just want to find the huge winners

1524
01:07:07,520 --> 01:07:10,800
Speaker 1: and we get to have preference shares. So the valuation matters,

1525
01:07:10,920 --> 01:07:12,560
Speaker 1: but it doesn't matter in the same way as common

1526
01:07:12,560 --> 01:07:15,440
Speaker 1: stock valuations matter because we're protected and you'll never get

1527
01:07:15,440 --> 01:07:17,520
Speaker 1: to see the way we're protected. And sometimes we're protected,

1528
01:07:17,560 --> 01:07:20,200
Speaker 1: we might get three times our money back even if

1529
01:07:20,280 --> 01:07:22,360
Speaker 1: nobody else makes anything. So I think all of these

1530
01:07:22,440 --> 01:07:27,480
Speaker 1: valuations are complicated, all of these you know, chasing mega winners.

1531
01:07:27,840 --> 01:07:30,360
Speaker 1: It's basically going to the race track and trying to

1532
01:07:30,440 --> 01:07:32,680
Speaker 1: pick a horse that you think is going to win

1533
01:07:32,760 --> 01:07:35,320
Speaker 1: the race. When the horse is still in the I

1534
01:07:35,360 --> 01:07:37,760
Speaker 1: don't know what the woman horse called the female horse.

1535
01:07:38,800 --> 01:07:41,840
Speaker 1: I don't know what it's called. Filing is that little whatever?

1536
01:07:43,080 --> 01:07:44,840
Speaker 1: I want to just say the mum's horse. It's like

1537
01:07:45,040 --> 01:07:48,160
Speaker 1: picking who's going to win the Melbourne Cup when all

1538
01:07:48,240 --> 01:07:51,320
Speaker 1: of the horses are still fetuses inside the mum horse.

1539
01:07:51,840 --> 01:07:54,280
Speaker 1: That is what VC feels like. And so I don't

1540
01:07:54,320 --> 01:07:56,440
Speaker 1: think that this was a bad VC investment. I think

1541
01:07:56,480 --> 01:07:58,560
Speaker 1: it turned out badly. At one point in this business

1542
01:07:58,960 --> 01:08:01,520
Speaker 1: was really hot and it was growing rapidly. And I

1543
01:08:01,560 --> 01:08:03,320
Speaker 1: don't know if the revenue's gone backwards. I guess it

1544
01:08:03,360 --> 01:08:08,080
Speaker 1: is really because the revenue is made up, I think

1545
01:08:08,120 --> 01:08:10,560
Speaker 1: the revenue might have gone backwards, and especially if the

1546
01:08:10,640 --> 01:08:13,880
Speaker 1: revenue is being valued based on the value of the token.

1547
01:08:13,920 --> 01:08:15,800
Speaker 1: I don't know if that's how it was working, but

1548
01:08:15,920 --> 01:08:18,920
Speaker 1: if so, it would have lost like what nine tenths

1549
01:08:19,000 --> 01:08:21,840
Speaker 1: of its monthly revenue, right is the token fell of

1550
01:08:22,200 --> 01:08:25,240
Speaker 1: seventy five percent of wherever it is And so even

1551
01:08:25,240 --> 01:08:26,920
Speaker 1: if it was ten million dollars a month, that's still

1552
01:08:27,160 --> 01:08:30,679
Speaker 1: just third. What if it was thirty MILLI month, it's still.

1553
01:08:30,520 --> 01:08:32,559
Speaker 2: Way too expensive. But it wasn't, but it's still ways

1554
01:08:32,840 --> 01:08:34,479
Speaker 2: some of them mutable Cup. Robbie, come on the show

1555
01:08:34,520 --> 01:08:35,760
Speaker 2: and defend yourself now if it was.

1556
01:08:35,920 --> 01:08:38,000
Speaker 1: If it was thirty it was thirty MILLI a month,

1557
01:08:38,600 --> 01:08:40,640
Speaker 1: there would have been three and sixty million year. There

1558
01:08:40,640 --> 01:08:44,160
Speaker 1: would be ten times you know, recurring and you're recurring

1559
01:08:44,240 --> 01:08:47,600
Speaker 1: revenue or it's not really annual transactional revenue.

1560
01:08:47,280 --> 01:08:49,439
Speaker 2: Let's call it and last as business.

1561
01:08:51,680 --> 01:08:53,519
Speaker 1: It would have gone from zero to three n sixty

1562
01:08:53,520 --> 01:08:55,760
Speaker 1: million year in a blink of an eye and gets

1563
01:08:55,880 --> 01:08:59,519
Speaker 1: very excited, I think, rightly so. And then it turns

1564
01:08:59,560 --> 01:09:02,200
Speaker 1: out it was being valua. We don't know, right speculation,

1565
01:09:02,280 --> 01:09:04,080
Speaker 1: but if it was, if the revenue was based on

1566
01:09:04,120 --> 01:09:05,840
Speaker 1: the value of the token, then maybe that was the

1567
01:09:05,960 --> 01:09:09,479
Speaker 1: red flag right of all of this process totally. But

1568
01:09:09,640 --> 01:09:12,640
Speaker 1: I think what this really emphasizes to me more than

1569
01:09:12,880 --> 01:09:18,120
Speaker 1: anything else is the importance of founders who get very

1570
01:09:18,240 --> 01:09:22,320
Speaker 1: large valuations for businesses that are disconnected from current revenue

1571
01:09:22,680 --> 01:09:26,800
Speaker 1: to ensure that they sell down secondary placements as part

1572
01:09:26,880 --> 01:09:27,879
Speaker 1: of capital raisings.

1573
01:09:28,000 --> 01:09:29,799
Speaker 2: And that may amded. We don't know if that happened

1574
01:09:30,120 --> 01:09:31,120
Speaker 2: as part of these raisers.

1575
01:09:31,200 --> 01:09:32,840
Speaker 1: Well, I hope it did. I hope it did.

1576
01:09:33,000 --> 01:09:33,200
Speaker 2: Well.

1577
01:09:33,280 --> 01:09:36,720
Speaker 1: Maybe I'll say I'm fairly confident there was some secondary

1578
01:09:36,800 --> 01:09:39,599
Speaker 1: along the way in all of this capital racing let's

1579
01:09:39,600 --> 01:09:40,360
Speaker 1: go to super quick break.

1580
01:09:40,439 --> 01:09:42,799
Speaker 2: We got a couple more stories after this. In today's

1581
01:09:42,840 --> 01:09:46,880
Speaker 2: digital landscape, proving your security commitment isn't just important, it's

1582
01:09:47,000 --> 01:09:51,479
Speaker 2: essential for business growth. Fanta is revolutionizing trust management with

1583
01:09:51,560 --> 01:09:54,840
Speaker 2: that proven platform that helps everyone from startup founders to

1584
01:09:55,000 --> 01:09:59,719
Speaker 2: experience security professionals establish security credentials faster and more effectively

1585
01:09:59,800 --> 01:10:02,559
Speaker 2: than ever before. And we use it at luxury escapes

1586
01:10:02,640 --> 01:10:06,200
Speaker 2: and love it. What makes Fancy unique automation and continuous

1587
01:10:06,320 --> 01:10:09,559
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1588
01:10:09,640 --> 01:10:13,320
Speaker 2: helps you achieve critical frameworks like SOCK two and ISO

1589
01:10:13,520 --> 01:10:17,519
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1590
01:10:17,640 --> 01:10:21,200
Speaker 2: the results speak for themselves. A recent IDC report found

1591
01:10:21,240 --> 01:10:23,840
Speaker 2: that van To customers say over five hundred thousand dollars

1592
01:10:23,880 --> 01:10:26,680
Speaker 2: per year and their compliance teams are one hundred and

1593
01:10:26,720 --> 01:10:30,240
Speaker 2: twenty nine percent more productive. And in today's AI driven

1594
01:10:30,320 --> 01:10:34,080
Speaker 2: business environment, companies need to move quickly and land bigger deals.

1595
01:10:34,320 --> 01:10:38,479
Speaker 2: Those enterprise clients expect robust security frameworks from day one,

1596
01:10:38,760 --> 01:10:42,120
Speaker 2: and van To delivers. With Fanta's AI plowered platform, you

1597
01:10:42,160 --> 01:10:46,479
Speaker 2: can complete security questionnaires upfront five times faster, giving valuable

1598
01:10:46,600 --> 01:10:49,960
Speaker 2: time back while building trust that delivers business growth. For

1599
01:10:50,080 --> 01:10:53,400
Speaker 2: any business, trust is an optional, it's essential, and vanter

1600
01:10:53,520 --> 01:10:57,200
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1601
01:10:57,479 --> 01:11:00,400
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1602
01:11:00,680 --> 01:11:05,320
Speaker 2: NTA dot com slash Contrarians. Don't forget Listeners that sign

1603
01:11:05,400 --> 01:11:07,840
Speaker 2: up for a van to compliance platform will receive one

1604
01:11:07,960 --> 01:11:12,120
Speaker 2: thousand US dollars if you mentioned contrarians. I navigating tech

1605
01:11:12,240 --> 01:11:15,080
Speaker 2: in business isn't just tricky, it's critical. You need to

1606
01:11:15,120 --> 01:11:17,240
Speaker 2: get the right advice at the right time.

1607
01:11:17,479 --> 01:11:21,000
Speaker 1: Telstra's business experts understand your local market and can help

1608
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Speaker 1: you build strategies that deliver results. Whether you need help

1609
01:11:24,560 --> 01:11:29,000
Speaker 1: with connectivity or optimizing your operations, Telstra's experts are here

1610
01:11:29,080 --> 01:11:31,880
Speaker 1: to support you every step of the way. That's what

1611
01:11:32,000 --> 01:11:35,840
Speaker 1: I love about Teltra's Business Technology Centers. They offer every

1612
01:11:35,920 --> 01:11:39,920
Speaker 1: business direct access to dedicated experts ready to future proof

1613
01:11:40,000 --> 01:11:44,400
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1614
01:11:44,520 --> 01:11:48,559
Speaker 1: dot Com, dot au, Forward slash tb TC.

1615
01:11:49,080 --> 01:11:51,720
Speaker 2: In short, they help turn tech from a headache into

1616
01:11:51,760 --> 01:11:57,200
Speaker 2: a strategic asset. And we're back. And do you remember

1617
01:11:57,200 --> 01:11:59,840
Speaker 2: an idea when a saying bolt one is I think

1618
01:12:00,120 --> 01:12:03,040
Speaker 2: third gold medal. He did that great victory lab Yep,

1619
01:12:03,400 --> 01:12:05,360
Speaker 2: well that's nothing on what I'm about to do. Mike.

1620
01:12:05,400 --> 01:12:06,720
Speaker 2: Can you play charity of fire music?

1621
01:12:06,840 --> 01:12:09,720
Speaker 1: Oh wow, okay, I'll get it started. I hope this

1622
01:12:09,880 --> 01:12:12,200
Speaker 1: is not this Is this a victory at my expense?

1623
01:12:12,320 --> 01:12:13,960
Speaker 1: Or am I going to be able to be happy

1624
01:12:14,240 --> 01:12:14,640
Speaker 1: for you?

1625
01:12:15,280 --> 01:12:15,960
Speaker 2: What your expense?

1626
01:12:16,200 --> 01:12:17,360
Speaker 1: At your expense?

1627
01:12:17,439 --> 01:12:17,839
Speaker 2: Directly?

1628
01:12:18,000 --> 01:12:18,360
Speaker 1: Anyway?

1629
01:12:18,479 --> 01:12:20,680
Speaker 2: So you may have seen the news this week. A

1630
01:12:20,760 --> 01:12:23,040
Speaker 2: company I said was the best shot I've ever seen

1631
01:12:23,920 --> 01:12:26,920
Speaker 2: appears to be maybe too kind, and the once two

1632
01:12:27,000 --> 01:12:31,519
Speaker 2: billion dollar business is rapidly heading towards insolvency unless it's

1633
01:12:31,520 --> 01:12:34,320
Speaker 2: fortunates dramatically change or it is somehow able to rize

1634
01:12:34,439 --> 01:12:37,599
Speaker 2: raise external capital. Dear, do you know what I'm talking about?

1635
01:12:37,800 --> 01:12:37,840
Speaker 3: You?

1636
01:12:38,040 --> 01:12:41,760
Speaker 1: Enjoy Weston. Have I probably spent half of your week

1637
01:12:41,840 --> 01:12:43,280
Speaker 1: talking about this business? Is that right?

1638
01:12:43,439 --> 01:12:45,559
Speaker 2: Has Joe talked about it? I haven't seen Joe wrote

1639
01:12:45,560 --> 01:12:48,479
Speaker 2: about it this morning, but I mean he wrote about

1640
01:12:48,479 --> 01:12:51,280
Speaker 2: it this morning. Of course. I'm talking about Sataia my

1641
01:12:51,520 --> 01:12:54,920
Speaker 2: Bete Noir, the business that once tried to sue me

1642
01:12:55,200 --> 01:13:00,720
Speaker 2: to stop me talking about it. These people are voracious animals,

1643
01:13:01,000 --> 01:13:04,439
Speaker 2: and they are bundling towards insolvency. This is one of

1644
01:13:04,479 --> 01:13:07,200
Speaker 2: the greatest announcements I've ever seen. Last week, I'm great

1645
01:13:07,320 --> 01:13:10,000
Speaker 2: for me, terrible for shareholders, said, I told the market

1646
01:13:10,040 --> 01:13:13,519
Speaker 2: that had lost a staggering six point nine million dollar marrion.

1647
01:13:13,600 --> 01:13:15,280
Speaker 2: This is what six point nine million of that abortion

1648
01:13:15,520 --> 01:13:19,160
Speaker 2: EBA Darwich excludes all that wages, basically six point nine

1649
01:13:19,200 --> 01:13:21,680
Speaker 2: million dollars in the last two months. The market had

1650
01:13:21,760 --> 01:13:24,160
Speaker 2: been expecting an annual EBDA number of seven point eight

1651
01:13:24,240 --> 01:13:27,960
Speaker 2: million and a five hundred thousand dollars Q four profit.

1652
01:13:28,640 --> 01:13:30,560
Speaker 2: The company stated that year to day revenue and the

1653
01:13:30,600 --> 01:13:32,400
Speaker 2: actually when you read the annuncement didn't actually look too

1654
01:13:32,439 --> 01:13:33,560
Speaker 2: bad on the face of it. It's only when you

1655
01:13:33,640 --> 01:13:36,800
Speaker 2: look at the previous data that looks so horrific. They

1656
01:13:36,840 --> 01:13:39,360
Speaker 2: announced that revenue was up one point seven percent year

1657
01:13:39,400 --> 01:13:42,160
Speaker 2: on year, but of course that wasn't fooling anyone, because

1658
01:13:42,160 --> 01:13:44,920
Speaker 2: analys very quickly worked out that the revenue for Q four,

1659
01:13:45,000 --> 01:13:46,960
Speaker 2: which I didn't say in the statement but could be

1660
01:13:47,000 --> 01:13:50,080
Speaker 2: worked out, was down twenty one percent. But of course

1661
01:13:50,160 --> 01:13:52,480
Speaker 2: this isn't the worst part. The kicker is the incredible

1662
01:13:52,600 --> 01:13:55,880
Speaker 2: working capital unwined we are witnessing. Do you want to

1663
01:13:55,920 --> 01:13:57,640
Speaker 2: quickly explain what negative working capital is.

1664
01:13:57,920 --> 01:14:01,200
Speaker 1: I presume their working capital is well, it's not their stock. Hey,

1665
01:14:01,520 --> 01:14:02,599
Speaker 1: how do they have working.

1666
01:14:02,400 --> 01:14:05,240
Speaker 2: Capital and negative work That was the beauty of this

1667
01:14:05,320 --> 01:14:07,920
Speaker 2: business on the way up. So can you expain what

1668
01:14:08,000 --> 01:14:09,599
Speaker 2: negative working capital is for our listeners?

1669
01:14:09,840 --> 01:14:13,840
Speaker 1: Yeah, so essentially, if you think about I'll say what

1670
01:14:14,560 --> 01:14:17,240
Speaker 1: positive working capital is. It's so confusing because positive working

1671
01:14:17,280 --> 01:14:20,120
Speaker 1: capital is add and negative working capital is good. Got

1672
01:14:20,200 --> 01:14:23,519
Speaker 1: to love accountants. So positive working capital, which means you

1673
01:14:23,680 --> 01:14:26,080
Speaker 1: need to tie up your own money in the business

1674
01:14:26,200 --> 01:14:29,640
Speaker 1: as working capital, it's not positive for you. It just

1675
01:14:29,760 --> 01:14:33,800
Speaker 1: means that the number is positive, not negative. So the

1676
01:14:33,840 --> 01:14:35,960
Speaker 1: best example is if I run a business and I've

1677
01:14:36,000 --> 01:14:37,880
Speaker 1: got a million dollars worth of stock that I have

1678
01:14:38,000 --> 01:14:40,040
Speaker 1: to keep in order to sell stuff in my shops.

1679
01:14:40,720 --> 01:14:43,320
Speaker 1: A million dollars of my money that should be in

1680
01:14:43,439 --> 01:14:46,840
Speaker 1: my pocket is tied up in the business as what's

1681
01:14:46,880 --> 01:14:50,600
Speaker 1: called working capital. It's called positive working capital because that

1682
01:14:50,800 --> 01:14:53,320
Speaker 1: one million dollars has got a positive sign in front

1683
01:14:53,360 --> 01:14:53,479
Speaker 1: of it.

1684
01:14:53,600 --> 01:14:56,000
Speaker 2: So your current assets of great and your current liabilities

1685
01:14:56,439 --> 01:14:57,280
Speaker 2: is essentials.

1686
01:14:57,439 --> 01:15:01,200
Speaker 1: That's right. And so the negative working capital, I think

1687
01:15:01,240 --> 01:15:04,240
Speaker 1: the easiest way to think about negative working capital the

1688
01:15:04,360 --> 01:15:08,760
Speaker 1: business gives you more cash into your bank account than

1689
01:15:08,840 --> 01:15:12,000
Speaker 1: the profitability of the business ought to be generating. And

1690
01:15:12,040 --> 01:15:13,760
Speaker 1: there's lots of different ways to think about it, but

1691
01:15:13,800 --> 01:15:15,439
Speaker 1: that's the easiest way to think about it. And the

1692
01:15:15,520 --> 01:15:17,960
Speaker 1: way that I'm guessing the way that played out for

1693
01:15:18,080 --> 01:15:21,799
Speaker 1: satire is they had x dollars x million dollars of profit,

1694
01:15:22,520 --> 01:15:25,080
Speaker 1: but the free cash that was flowing into the business

1695
01:15:25,240 --> 01:15:28,200
Speaker 1: was significantly higher than their X million dollars of profit.

1696
01:15:28,280 --> 01:15:28,600
Speaker 1: Is that right?

1697
01:15:28,680 --> 01:15:31,400
Speaker 2: I'll give another example, like escapes is negative working capital business.

1698
01:15:31,479 --> 01:15:34,599
Speaker 2: Our customers pay us on average six months in advance.

1699
01:15:34,720 --> 01:15:36,639
Speaker 2: We have that cash and then we pay the hotel

1700
01:15:36,680 --> 01:15:38,240
Speaker 2: when they a bit before they check in.

1701
01:15:38,360 --> 01:15:40,280
Speaker 1: And so what that means is even though you take

1702
01:15:40,320 --> 01:15:42,280
Speaker 1: the cash, you don't book it as revenue, so it's

1703
01:15:42,320 --> 01:15:44,600
Speaker 1: not going to affect your profitability.

1704
01:15:44,400 --> 01:15:46,120
Speaker 2: When you get that's sort of meaning or there. But

1705
01:15:46,200 --> 01:15:48,400
Speaker 2: it's more that you have the we actually often do

1706
01:15:48,479 --> 01:15:51,560
Speaker 2: bookers revenue. It depends on the how refundable it is,

1707
01:15:52,240 --> 01:15:53,519
Speaker 2: is the sort of question there.

1708
01:15:53,680 --> 01:15:57,160
Speaker 1: But it's throwing off your business enables you to have

1709
01:15:57,800 --> 01:16:01,639
Speaker 1: more cash in the bank, and you otherwise would based

1710
01:16:01,640 --> 01:16:05,240
Speaker 1: on the profitability of the company because you collect cash

1711
01:16:05,360 --> 01:16:07,360
Speaker 1: before you actually have to deliver services.

1712
01:16:07,600 --> 01:16:10,120
Speaker 2: And every travel business is the same, airlines are the same.

1713
01:16:10,360 --> 01:16:13,360
Speaker 2: Everybody gets the cash up front and they had this,

1714
01:16:13,560 --> 01:16:15,840
Speaker 2: you can so you can have lower current assets and

1715
01:16:15,880 --> 01:16:18,479
Speaker 2: liabilities because you have to pay your hotels or your

1716
01:16:18,560 --> 01:16:22,080
Speaker 2: airlines or crew companies for much later on. So that's

1717
01:16:22,080 --> 01:16:23,600
Speaker 2: why there's always a lot of risk around while you

1718
01:16:23,640 --> 01:16:25,799
Speaker 2: need to put have insurance and go on their schemes

1719
01:16:25,920 --> 01:16:28,479
Speaker 2: and charge. So that's why, and that's why travel companies

1720
01:16:28,520 --> 01:16:31,439
Speaker 2: inherently are based on trust, because customers are smart enough

1721
01:16:31,479 --> 01:16:32,840
Speaker 2: to know that I'm not going to base some dodgy

1722
01:16:32,920 --> 01:16:34,800
Speaker 2: Brothers travel agent because if they go on, I'm not

1723
01:16:34,800 --> 01:16:36,599
Speaker 2: going to have a holiday. So that's why travel companies

1724
01:16:36,600 --> 01:16:37,720
Speaker 2: intend to be bigger.

1725
01:16:37,680 --> 01:16:41,080
Speaker 1: Well, and that's why when travel companies do go broke.

1726
01:16:41,360 --> 01:16:43,559
Speaker 1: Like I saw a look, I didn't own the company.

1727
01:16:43,560 --> 01:16:46,000
Speaker 1: I actually bought its carcass, which was not the greatest

1728
01:16:46,040 --> 01:16:49,920
Speaker 1: decision end, But like I saw, like this company go

1729
01:16:50,560 --> 01:16:54,719
Speaker 1: go broke, that like was a hotels dot com competitor,

1730
01:16:54,880 --> 01:16:57,160
Speaker 1: and all of these people had paid money and like

1731
01:16:57,320 --> 01:16:59,840
Speaker 1: that was all unsecured creditors and they never got any

1732
01:17:00,040 --> 01:17:02,840
Speaker 1: of their money, and there was all all the disaster yep,

1733
01:17:03,160 --> 01:17:04,440
Speaker 1: not my disaster.

1734
01:17:04,320 --> 01:17:06,320
Speaker 2: Coming out of COVID. We did a capital raise for

1735
01:17:06,400 --> 01:17:08,400
Speaker 2: that reason because we you we'd have to start paying

1736
01:17:08,439 --> 01:17:10,000
Speaker 2: hotels and obviously we want to make sure I don't

1737
01:17:10,000 --> 01:17:13,160
Speaker 2: have plenty of buffer in about it. But talking about

1738
01:17:13,160 --> 01:17:16,280
Speaker 2: to Satire, so what Setire? How why Satire? What SETI

1739
01:17:16,400 --> 01:17:18,040
Speaker 2: is not a travel business or insurer? Why they got

1740
01:17:18,080 --> 01:17:21,439
Speaker 2: negative working capital? Well the answer is they're a drop shipper.

1741
01:17:21,640 --> 01:17:24,760
Speaker 2: So you pay Satire for a fair coat. They then

1742
01:17:24,880 --> 01:17:29,080
Speaker 2: pay the Italian jobber thirty to sixty days later, so

1743
01:17:29,200 --> 01:17:31,439
Speaker 2: they get the cash in from customers first, and they

1744
01:17:31,520 --> 01:17:33,960
Speaker 2: paid the supplier one to two months later. That's that's

1745
01:17:34,040 --> 01:17:36,600
Speaker 2: negative classic negative working capital. No is extreme as a

1746
01:17:36,640 --> 01:17:40,400
Speaker 2: travel company, but still fairly significant work negative working capital.

1747
01:17:40,320 --> 01:17:42,640
Speaker 1: So it's not it's really it's quite similar in a

1748
01:17:42,680 --> 01:17:48,040
Speaker 1: lot of ways to assess business that might get paid

1749
01:17:48,160 --> 01:17:51,920
Speaker 1: a year up front for providing services, but you know

1750
01:17:52,000 --> 01:17:53,799
Speaker 1: it doesn't need to pay for those services.

1751
01:17:55,320 --> 01:17:58,439
Speaker 2: That course, the following SAS is SaaS. The investment SaaS

1752
01:17:58,479 --> 01:18:01,280
Speaker 2: comes before because you've got to build the software before

1753
01:18:01,320 --> 01:18:02,200
Speaker 2: you get any money.

1754
01:18:03,960 --> 01:18:04,120
Speaker 3: I know.

1755
01:18:04,560 --> 01:18:07,320
Speaker 1: But when you've got, when you've got, when you're selling

1756
01:18:07,360 --> 01:18:09,200
Speaker 1: a year in advance, and all of your cost insests

1757
01:18:09,240 --> 01:18:12,040
Speaker 1: of people, and you pay people forwards on a monthly basis.

1758
01:18:12,600 --> 01:18:16,280
Speaker 1: So when you're selling year long subscriptions up front, what

1759
01:18:16,439 --> 01:18:18,919
Speaker 1: it means generally is you have to raise less capital

1760
01:18:18,920 --> 01:18:22,160
Speaker 1: because your customers are providing partial funding. But that model,

1761
01:18:22,240 --> 01:18:24,800
Speaker 1: as you're about to say with Center I suspect, is

1762
01:18:24,920 --> 01:18:29,120
Speaker 1: heavily dependent on maintaining strong growth in order to work.

1763
01:18:29,040 --> 01:18:31,400
Speaker 2: Or at least not shrinking like you consiad of be

1764
01:18:31,800 --> 01:18:34,240
Speaker 2: level pegging and you're probably okay. It's when you start

1765
01:18:34,280 --> 01:18:36,559
Speaker 2: shrinking then you've got some real issues. And we've seen

1766
01:18:36,600 --> 01:18:39,599
Speaker 2: that here, so basically we weing. Chiang Hu's a great

1767
01:18:39,600 --> 01:18:41,840
Speaker 2: analyst at RBSA. It was a first down grade. SETI

1768
01:18:41,880 --> 01:18:44,120
Speaker 2: actually well ahead of the curve. If you look at

1769
01:18:44,880 --> 01:18:48,000
Speaker 2: satires cash two months ago, they had seventy six million

1770
01:18:48,040 --> 01:18:51,200
Speaker 2: dollars in cash. Now they've got forty five million dollars

1771
01:18:51,240 --> 01:18:53,720
Speaker 2: in cash, so it's just back acculie. So in that

1772
01:18:53,880 --> 01:18:56,960
Speaker 2: time they've lost seven million bucks ebada, and there's a

1773
01:18:56,960 --> 01:18:59,240
Speaker 2: couple of million bucks in their capex, so Sy've lost

1774
01:18:59,280 --> 01:19:01,759
Speaker 2: ten million dollars. In real terms, this is a twenty

1775
01:19:01,880 --> 01:19:05,000
Speaker 2: one million dollar working capital unwined. So we talked about

1776
01:19:05,040 --> 01:19:08,360
Speaker 2: the working capital. So that based on this, and June's

1777
01:19:08,400 --> 01:19:10,200
Speaker 2: not a great month for them historically, neither of you'rely

1778
01:19:10,280 --> 01:19:10,599
Speaker 2: they get.

1779
01:19:10,640 --> 01:19:13,080
Speaker 1: And so the way to just as like I say

1780
01:19:13,160 --> 01:19:16,320
Speaker 1: this in an increasingly straightforward way, they had all of

1781
01:19:16,400 --> 01:19:19,840
Speaker 1: this negative working capital because they were paid by their

1782
01:19:19,880 --> 01:19:24,519
Speaker 1: customers and hadn't paid the suppliers yet, and then they

1783
01:19:24,600 --> 01:19:27,080
Speaker 1: had to pay their suppliers. But the money from the

1784
01:19:27,160 --> 01:19:29,880
Speaker 1: customers was not coming in at a fast enough rate

1785
01:19:30,600 --> 01:19:33,720
Speaker 1: to replace the money they were paying out to suppliers.

1786
01:19:34,240 --> 01:19:36,599
Speaker 1: And that is the whole that you're talking about basically.

1787
01:19:36,720 --> 01:19:39,080
Speaker 2: Yeah, so I have you imagine, say last month they

1788
01:19:39,120 --> 01:19:41,200
Speaker 2: sold one hundred dollars and they got so got ninety

1789
01:19:41,200 --> 01:19:43,439
Speaker 2: dollars some customers, and that one hundred dollar customer to

1790
01:19:43,439 --> 01:19:45,720
Speaker 2: pay ninety dollars out of supplies, which is fine. This

1791
01:19:45,840 --> 01:19:48,160
Speaker 2: month only got eighty dollars in sales, so they got

1792
01:19:48,200 --> 01:19:49,639
Speaker 2: to pay the ninety dollars or eighty dollars.

1793
01:19:49,720 --> 01:19:50,679
Speaker 1: So you can't.

1794
01:19:50,840 --> 01:19:53,640
Speaker 2: You've got to dig into your working capital provisions to

1795
01:19:53,760 --> 01:19:57,360
Speaker 2: pay the piper, so to speak. So this will continue.

1796
01:19:57,439 --> 01:19:59,160
Speaker 2: And if you look at the current rate, and.

1797
01:19:59,200 --> 01:20:01,080
Speaker 1: That would be bad, and if they were still profitable,

1798
01:20:01,080 --> 01:20:03,960
Speaker 1: because at least that they were still profitable, that would

1799
01:20:04,000 --> 01:20:06,360
Speaker 1: be the only cash problem that they were dealing with.

1800
01:20:06,960 --> 01:20:09,320
Speaker 1: But they're also dealing with the fact that actually it

1801
01:20:09,360 --> 01:20:10,719
Speaker 1: seems like they're now losing money.

1802
01:20:10,800 --> 01:20:12,320
Speaker 2: Yeah, I'm losing more money than they say it because

1803
01:20:12,320 --> 01:20:13,759
Speaker 2: rememb they capitalize all these wages.

1804
01:20:13,880 --> 01:20:15,599
Speaker 1: Well they have historically. I don't know if you've looked

1805
01:20:15,600 --> 01:20:17,599
Speaker 1: at it ruck. Yeah, historically they're.

1806
01:20:17,479 --> 01:20:21,760
Speaker 2: Burning easily ten million dollars a month, probably more. It's

1807
01:20:21,800 --> 01:20:23,719
Speaker 2: a current levels. And bear in mind they're talking about

1808
01:20:23,720 --> 01:20:25,920
Speaker 2: reducing promotions because their losses are so high, so that'll

1809
01:20:25,960 --> 01:20:28,519
Speaker 2: reduce sales even more. But these guys could be out

1810
01:20:28,560 --> 01:20:32,200
Speaker 2: of business. And I'm not being hyperbolic here if this continues,

1811
01:20:32,360 --> 01:20:35,040
Speaker 2: they haven't got They've got three months, so they've either

1812
01:20:35,040 --> 01:20:37,559
Speaker 2: got to raise capital somehow, and who like cat Rock,

1813
01:20:37,760 --> 01:20:40,760
Speaker 2: the hedge fund idiots have just sold out. I can't

1814
01:20:40,800 --> 01:20:43,840
Speaker 2: imagine Phil from Phil King from Regals putting any more

1815
01:20:43,840 --> 01:20:45,840
Speaker 2: money in there after he bought Dean Minz's steak, so

1816
01:20:46,439 --> 01:20:49,880
Speaker 2: I don't think maybe Dean could put bankroll. He's Dean's

1817
01:20:49,880 --> 01:20:52,040
Speaker 2: taking three hundred million dollars out, so Dean Mens could

1818
01:20:52,040 --> 01:20:54,200
Speaker 2: put his own money, which were definition of good money

1819
01:20:54,200 --> 01:20:56,519
Speaker 2: after bad, so Dean could save it. But he's the

1820
01:20:56,600 --> 01:20:58,920
Speaker 2: only person who can say unless they raised capital in

1821
01:20:58,920 --> 01:21:01,599
Speaker 2: the next three months, I think they run out of cash.

1822
01:21:02,479 --> 01:21:05,639
Speaker 1: So this is a this is a I think they'll

1823
01:21:05,720 --> 01:21:08,960
Speaker 1: raise capital. Who's going to give them money? Though, I

1824
01:21:09,120 --> 01:21:10,759
Speaker 1: tell you why I think they're going to raise capital.

1825
01:21:10,880 --> 01:21:16,760
Speaker 1: One reason is because didn't Daniel Augustinelli yep, just.

1826
01:21:16,800 --> 01:21:18,800
Speaker 2: Bet some of the he became a director, and he

1827
01:21:18,840 --> 01:21:21,479
Speaker 2: actually called de Mens a genius, which you could argue

1828
01:21:21,560 --> 01:21:22,920
Speaker 2: was the case. He saw three to a million bucks

1829
01:21:22,960 --> 01:21:24,640
Speaker 2: in his company is now worth about a hundred tough

1830
01:21:24,720 --> 01:21:26,519
Speaker 2: mout tough week for the last week, Dan, he's the

1831
01:21:26,560 --> 01:21:28,760
Speaker 2: greatest train retailer, has had a very bad week because

1832
01:21:29,040 --> 01:21:32,799
Speaker 2: because Accent also had a profit, Dan Credo, Dan's copyent.

1833
01:21:33,080 --> 01:21:35,479
Speaker 1: Well, you know, I think that his presence on that board,

1834
01:21:35,560 --> 01:21:38,080
Speaker 1: like we can say, you know a bit, he probably

1835
01:21:38,200 --> 01:21:40,479
Speaker 1: regrets going on to the board now, but like his

1836
01:21:41,040 --> 01:21:44,960
Speaker 1: present his presence on that board, I think that significantly

1837
01:21:45,080 --> 01:21:47,840
Speaker 1: increases the likelihood of being able to raise money from

1838
01:21:47,880 --> 01:21:53,200
Speaker 1: someone because he's got such a strong reputation and and so.

1839
01:21:53,400 --> 01:21:55,280
Speaker 2: I don't think Dan's reputation. I don't think I think

1840
01:21:55,280 --> 01:21:57,360
Speaker 2: you could Warren Buffet on this board. You could exhumee

1841
01:21:57,439 --> 01:21:59,160
Speaker 2: Charlie Mungo and put him on this board. You could

1842
01:21:59,200 --> 01:22:02,080
Speaker 2: put you could put Sam Walter on this board, and

1843
01:22:02,120 --> 01:22:03,240
Speaker 2: they still wouldn't be able to raise it.

1844
01:22:03,240 --> 01:22:07,719
Speaker 1: They've got a few things going for public companies raising money,

1845
01:22:07,960 --> 01:22:10,960
Speaker 1: Like occasionally they can't and they go broke. But public

1846
01:22:11,000 --> 01:22:13,439
Speaker 1: companies that are doing badly can often survive for a

1847
01:22:13,479 --> 01:22:16,320
Speaker 1: long time. And one reason these investment banks are extremely

1848
01:22:17,479 --> 01:22:19,800
Speaker 1: incentive to be able to raise money because that's their

1849
01:22:19,800 --> 01:22:21,200
Speaker 1: stock in trade. Yeah.

1850
01:22:21,240 --> 01:22:22,800
Speaker 2: Sure, but what's it the business is going to mark

1851
01:22:22,880 --> 01:22:25,639
Speaker 2: up one hundred million barks. Let's say they raise thirty

1852
01:22:25,680 --> 01:22:27,439
Speaker 2: So what's the shirre it's been trying to make a

1853
01:22:27,479 --> 01:22:27,960
Speaker 2: million barks?

1854
01:22:28,000 --> 01:22:33,840
Speaker 1: Who cares? It's this thing? What's the share price? Thirty

1855
01:22:33,880 --> 01:22:37,080
Speaker 1: cents or something? Do you think could do you think

1856
01:22:37,120 --> 01:22:39,400
Speaker 1: they could get a capital raising away at three cents?

1857
01:22:40,320 --> 01:22:42,639
Speaker 1: Probably not, I think they could, Like I think they're

1858
01:22:42,640 --> 01:22:45,560
Speaker 1: going to be some crazy discount to market price that

1859
01:22:45,600 --> 01:22:46,920
Speaker 1: I'll get a capital raising away.

1860
01:22:47,960 --> 01:22:50,880
Speaker 2: You're raising one hundred grand, like it's pointless, it's going

1861
01:22:50,960 --> 01:22:53,120
Speaker 2: to like in the last three days. I think this

1862
01:22:53,200 --> 01:22:55,640
Speaker 2: missus is on a death spiral, you know when a

1863
01:22:55,720 --> 01:22:58,320
Speaker 2: plane goes on a death brow and youtually can't nothing.

1864
01:22:58,360 --> 01:23:00,160
Speaker 1: I'm trying to think of the No, I'm trying to

1865
01:23:00,240 --> 01:23:02,560
Speaker 1: think of the basically, I'm trying to argue against you

1866
01:23:02,640 --> 01:23:03,760
Speaker 1: on this, right, So I'm trying to think of that,

1867
01:23:03,880 --> 01:23:07,120
Speaker 1: what's the what's the canon narrative? What's the counter narrative

1868
01:23:07,160 --> 01:23:09,519
Speaker 1: of this? Like how could this all be fine? And

1869
01:23:10,640 --> 01:23:12,439
Speaker 1: and so it's a good I mean it's a good question,

1870
01:23:12,520 --> 01:23:14,720
Speaker 1: like how could it all be fine? Well if the

1871
01:23:14,800 --> 01:23:18,479
Speaker 1: economy has suddenly turned around? Because basically this business I

1872
01:23:18,600 --> 01:23:21,479
Speaker 1: know that the prevailing narrative, or at least in a

1873
01:23:21,560 --> 01:23:24,720
Speaker 1: lot of corners, the prevailing narrative is this was just

1874
01:23:24,760 --> 01:23:27,560
Speaker 1: an arbitrage play on like what international.

1875
01:23:27,120 --> 01:23:29,760
Speaker 2: Refunds and duties the minimist thing in the US which

1876
01:23:29,800 --> 01:23:31,200
Speaker 2: Trump got rid of to his credit.

1877
01:23:31,800 --> 01:23:35,160
Speaker 1: And so do you think that is the predominant cause

1878
01:23:35,720 --> 01:23:38,160
Speaker 1: of like I don't know, the straw that broke the

1879
01:23:38,240 --> 01:23:40,400
Speaker 1: camel's back on this. They're removing the diminists or do

1880
01:23:40,439 --> 01:23:43,439
Speaker 1: you think it's because the economy going south was really

1881
01:23:43,479 --> 01:23:47,200
Speaker 1: already hurting this business? Right? Luxury goods are not selling well.

1882
01:23:47,280 --> 01:23:50,320
Speaker 2: These guys are discannons though, so they should benefit someone.

1883
01:23:50,880 --> 01:23:53,400
Speaker 1: But if people are not buying Louis Vuitton or pret I.

1884
01:23:53,400 --> 01:23:56,040
Speaker 2: Claim they were, when when LVMH and all the other

1885
01:23:56,080 --> 01:23:59,160
Speaker 2: businesses struggling like a year ago, I think they share

1886
01:23:59,200 --> 01:24:03,240
Speaker 2: price like member Bucci's owner are caring a massive brick

1887
01:24:03,280 --> 01:24:06,800
Speaker 2: down grade. Yes, se I was claiming they were flying

1888
01:24:06,840 --> 01:24:07,200
Speaker 2: and growing.

1889
01:24:07,400 --> 01:24:09,720
Speaker 1: Well, I think that was so. I think that might

1890
01:24:09,760 --> 01:24:11,240
Speaker 1: have been true on the basis of what you just

1891
01:24:11,320 --> 01:24:14,599
Speaker 1: said then, which is when people begin to start pulling

1892
01:24:14,680 --> 01:24:17,760
Speaker 1: back their spend on luxury brands, they'll turn to the discounters.

1893
01:24:18,000 --> 01:24:20,000
Speaker 1: It feels to me we may now be past that

1894
01:24:20,080 --> 01:24:21,559
Speaker 1: point where people are just trying.

1895
01:24:21,600 --> 01:24:24,320
Speaker 2: I disagree now. I think I look at our numbers

1896
01:24:24,840 --> 01:24:26,559
Speaker 2: that we're training as well as well.

1897
01:24:26,680 --> 01:24:29,439
Speaker 1: You're an experience though you're not you're not tangible. Yeah, but.

1898
01:24:30,960 --> 01:24:35,000
Speaker 2: Like good business. I don't believe the macro excuse. I

1899
01:24:35,080 --> 01:24:37,479
Speaker 2: think this is purely this business was a refund duty

1900
01:24:38,040 --> 01:24:41,559
Speaker 2: arbitrage play that they were. They were, I'll give them

1901
01:24:41,560 --> 01:24:43,920
Speaker 2: a little bit credit. They were shrewdly exploiting some laws

1902
01:24:43,960 --> 01:24:45,559
Speaker 2: that weren't laws.

1903
01:24:46,160 --> 01:24:54,040
Speaker 1: But before the Dominimus loophole was unwound, was already starting

1904
01:24:54,080 --> 01:24:54,719
Speaker 1: to do poorly.

1905
01:24:55,400 --> 01:24:57,479
Speaker 2: The remember there's the refund thing, how there was a

1906
01:24:57,520 --> 01:25:00,040
Speaker 2: few the way they treated refunds. We were all so

1907
01:25:00,240 --> 01:25:02,839
Speaker 2: me and many others, the hedge fund guys were very susped.

1908
01:25:02,840 --> 01:25:04,400
Speaker 2: I've been specially this business for four years. I just

1909
01:25:04,439 --> 01:25:06,639
Speaker 2: didn't think of it didn't because we had a business

1910
01:25:06,720 --> 01:25:09,000
Speaker 2: like this that didn't work. And that's not just I

1911
01:25:09,040 --> 01:25:11,320
Speaker 2: think we're amazing business people, but I just know how

1912
01:25:11,360 --> 01:25:14,120
Speaker 2: hard these businesses are to run. And Dean had zero

1913
01:25:14,240 --> 01:25:16,519
Speaker 2: back that Dean was running this tiny interbat that nobody

1914
01:25:16,560 --> 01:25:19,639
Speaker 2: had heard of. It was like irrelevant small business. Suddenly

1915
01:25:19,760 --> 01:25:22,200
Speaker 2: this guy was running a two billion dollar business. Allegedly.

1916
01:25:22,520 --> 01:25:24,519
Speaker 2: Nothing about this made sense. It didn't take a genius

1917
01:25:24,560 --> 01:25:27,599
Speaker 2: to work this out. You had Phil and cat Rock

1918
01:25:27,640 --> 01:25:29,600
Speaker 2: and all these people going out saying how good this

1919
01:25:29,680 --> 01:25:31,840
Speaker 2: guy was and how smart this guy was. This thing

1920
01:25:31,960 --> 01:25:34,519
Speaker 2: was always a mirage, and it's taken to now and

1921
01:25:34,920 --> 01:25:36,560
Speaker 2: we're literally in its death throws. Now this is the

1922
01:25:36,720 --> 01:25:39,799
Speaker 2: the body is literally convulsing and you're giving it CPR

1923
01:25:40,479 --> 01:25:43,280
Speaker 2: and you're saying clear, but the heartbeat zero. And I

1924
01:25:43,320 --> 01:25:45,280
Speaker 2: don't think this heartbeats coming back, it.

1925
01:25:45,400 --> 01:25:49,519
Speaker 1: May well go to zero. I don't we probably I'm

1926
01:25:49,520 --> 01:25:51,160
Speaker 1: probably not as far down the road with you as

1927
01:25:51,280 --> 01:25:57,280
Speaker 1: like it's definitely a carcass. But like, but I think that, like,

1928
01:25:57,520 --> 01:26:04,160
Speaker 1: I just think it was who recently are darling to

1929
01:26:04,360 --> 01:26:07,559
Speaker 1: not be able to raise the first round of rescue capital?

1930
01:26:07,880 --> 01:26:10,000
Speaker 1: Maybe that's my view on this, but I could be wrong.

1931
01:26:10,360 --> 01:26:13,759
Speaker 1: But my view is it was recently enough something special

1932
01:26:14,200 --> 01:26:16,760
Speaker 1: that they'll figure out away if they need to, which

1933
01:26:16,760 --> 01:26:18,840
Speaker 1: I suspect they're going to need to raise capital to

1934
01:26:19,479 --> 01:26:22,320
Speaker 1: do a very cheap round and be able to rest

1935
01:26:22,400 --> 01:26:24,920
Speaker 1: the money and then you know, can they pull a

1936
01:26:25,000 --> 01:26:26,800
Speaker 1: rabbit out of the hat with this? I mean, I've

1937
01:26:26,840 --> 01:26:29,280
Speaker 1: seen more dramatic things happen, but it feels to me

1938
01:26:29,640 --> 01:26:33,280
Speaker 1: like it's really not looking good for this business. I

1939
01:26:33,360 --> 01:26:34,040
Speaker 1: agree with you on that.

1940
01:26:34,240 --> 01:26:35,920
Speaker 2: So I think the problem we have is I'm the

1941
01:26:36,000 --> 01:26:39,240
Speaker 2: current so currently share price of twenty six cents markap

1942
01:26:39,280 --> 01:26:43,800
Speaker 2: of ninety seven million dollars. If they raise it ten cents,

1943
01:26:44,000 --> 01:26:46,880
Speaker 2: which is you think is the absolute maximum they could

1944
01:26:46,880 --> 01:26:49,680
Speaker 2: get a raise at it, for that's a raise on

1945
01:26:49,800 --> 01:26:54,599
Speaker 2: evaluation of forty million dollars, give or take. They need

1946
01:26:54,640 --> 01:27:00,280
Speaker 2: to raise probably ten million dollars minimum like minimum, the

1947
01:27:00,400 --> 01:27:02,479
Speaker 2: numbers is, the math doesn't math here. I just don't

1948
01:27:02,520 --> 01:27:04,080
Speaker 2: think it doesn't make sense.

1949
01:27:04,280 --> 01:27:06,880
Speaker 1: What they're going to need to do is raise twenty

1950
01:27:06,960 --> 01:27:09,559
Speaker 1: plus percentlete twenty plus percent of the company. If they

1951
01:27:09,600 --> 01:27:14,080
Speaker 1: have to raise and start cutting costs dramatically and then

1952
01:27:14,120 --> 01:27:16,600
Speaker 1: figure out away for the revenue to exceed the expenses.

1953
01:27:16,880 --> 01:27:19,040
Speaker 2: Yeah, I just can't see it happening. The exception is

1954
01:27:19,080 --> 01:27:21,080
Speaker 2: Dean takes a private and if I'm maybe take a

1955
01:27:21,080 --> 01:27:23,200
Speaker 2: private for one cent or two cents, probably not a

1956
01:27:23,240 --> 01:27:25,519
Speaker 2: bad deal. He's got plenty of actually costs him nothing.

1957
01:27:25,680 --> 01:27:30,599
Speaker 2: On that note, great episode, idea, controversial, fiery episode, dis greeno.

1958
01:27:30,600 --> 01:27:32,519
Speaker 2: If you'll see who who comes out on top on

1959
01:27:32,600 --> 01:27:34,120
Speaker 2: this stuff? I think you agree with here.

1960
01:27:34,240 --> 01:27:36,720
Speaker 1: Yeah, well, someone has to take the counter position. There

1961
01:27:36,840 --> 01:27:40,200
Speaker 1: is nothing more contrarian than me trying to figure out

1962
01:27:40,280 --> 01:27:42,000
Speaker 1: reasons why setare is.

1963
01:27:42,040 --> 01:27:43,960
Speaker 2: Going to be going back to the mood. I know,

1964
01:27:44,439 --> 01:27:46,920
Speaker 2: I'm madly that I'm now sadly the non contrarian on

1965
01:27:47,000 --> 01:27:49,960
Speaker 2: this not a place I like to be. Thank you

1966
01:27:50,080 --> 01:27:53,080
Speaker 2: Mike getting up early, Thank your idea for dialing in

1967
01:27:53,200 --> 01:27:56,519
Speaker 2: for NYC. Hopefully with each other in person next week

1968
01:27:56,560 --> 01:27:57,400
Speaker 2: looking thoward.

1969
01:27:57,120 --> 01:28:01,519
Speaker 1: To him, I did.

1970
01:28:01,680 --> 01:28:04,080
Speaker 2: Did you know one of my favorite businesses, net Wealth,

1971
01:28:04,240 --> 01:28:07,559
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1972
01:28:07,600 --> 01:28:10,160
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1973
01:28:10,280 --> 01:28:13,120
Speaker 1: I'm actually about to start using net Wealth's investment account,

1974
01:28:13,200 --> 01:28:15,600
Speaker 1: which is perfect for self managed super funds. I can

1975
01:28:15,680 --> 01:28:16,840
Speaker 1: see why you like them so much.

1976
01:28:16,960 --> 01:28:19,920
Speaker 2: And let's talk about their Wealth Accelerator Investment account, which

1977
01:28:19,920 --> 01:28:22,160
Speaker 2: allows you to invest in a wide range of assets

1978
01:28:22,280 --> 01:28:26,080
Speaker 2: via a simple online platform. You can access sixteen international

1979
01:28:26,120 --> 01:28:29,160
Speaker 2: exchanges including NASDEK all the way to London and more,

1980
01:28:29,400 --> 01:28:31,880
Speaker 2: as well as seven hundred managed funds and a huge

1981
01:28:32,040 --> 01:28:36,080
Speaker 2: range of international and domestic ETFs, bonds and other exclusive

1982
01:28:36,160 --> 01:28:39,639
Speaker 2: investments For wholesale investors. It even allows you to choose

1983
01:28:39,640 --> 01:28:41,600
Speaker 2: from a huge range of turn deposits to get the

1984
01:28:41,680 --> 01:28:44,759
Speaker 2: best interest rate without having to deal with banks separately.

1985
01:28:45,040 --> 01:28:48,360
Speaker 1: I love how net Wealth lets you add alternative investments

1986
01:28:48,479 --> 01:28:51,560
Speaker 1: like venture capital, which is great for angel investors.

1987
01:28:51,160 --> 01:28:53,840
Speaker 2: And I've done exactly that. I've combined my fifteen early

1988
01:28:53,920 --> 01:28:56,519
Speaker 2: stage investments and all my VC and managed funds in

1989
01:28:56,560 --> 01:29:00,400
Speaker 2: the one place. It makes tax reporting super easy, hours

1990
01:29:00,400 --> 01:29:02,600
Speaker 2: getting my tax turned done, and net Wealth does it

1991
01:29:02,640 --> 01:29:04,880
Speaker 2: all with pretty much to click of a button. Plus,

1992
01:29:04,960 --> 01:29:07,439
Speaker 2: there are so many reports that allow me to monitor performance.

1993
01:29:07,800 --> 01:29:10,960
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1994
01:29:10,960 --> 01:29:13,560
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1995
01:29:13,600 --> 01:29:17,240
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1996
01:29:17,400 --> 01:29:20,639
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1997
01:29:20,760 --> 01:29:23,040
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1998
01:29:23,120 --> 01:29:26,280
Speaker 2: important disclaimers. Remember always seek financial advice.