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Speaker 1: These are really old number.

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Speaker 2: I mean I was going to say that, like this

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Speaker 2: is two years old. When did they find this in

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Speaker 2: like Tutencarmen's pyramid or something.

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Speaker 1: In short, they helped turn tech from a headache into

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Speaker 1: a strategic asset. And we're back episode one zero four.

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Speaker 1: Where are you?

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Speaker 2: I mean tel Aviv? Still my voice is a bit croaky,

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Speaker 2: which he sounds pretty good. Oh that's good. I kind

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Speaker 2: of got this weird just going to sleep for twenty

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Speaker 2: four hours illness, and I think I'm largely better. But

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Speaker 2: if I sound croaky, that's what it is. I haven't

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Speaker 2: had any big party nights, so.

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Speaker 1: You haven't got much news for us coming from tel Aviv.

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Speaker 1: How's the startup? Seeing young there? It's good.

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Speaker 2: I did have the greatest experience of my life. In fact,

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Speaker 2: while I was obviousing this podcast, Well, you're not going

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Speaker 2: to like this experience I was. I was out for

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Speaker 2: dinner with a friend of mine and some other people.

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Speaker 2: His business actually is pretty interesting. He's got the I

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Speaker 2: think you might I might have spoken about him before.

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Speaker 2: He's got a business that is called Yona, which is

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Speaker 2: effectively bed bases that are made out of like environmentally

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Speaker 2: friendly cardboard that he sells director consumer in Australia.

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Speaker 1: And his US. How's that guy, how's that business guy?

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Speaker 1: I think it's good.

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Speaker 2: Like you know, basically everyone would rather it was like

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Speaker 2: COVID lockdowns, but I think in general, like it's growing

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Speaker 2: and he's just released a new product and you know,

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Speaker 2: I think it's doing well, you know. And so we're

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Speaker 2: at for dinner, and then we finished dinners with my

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Speaker 2: son as well, and as we were leaving, there's a

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Speaker 2: lot of people from Australia floating around tele Aviv at

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Speaker 2: the moment, and someone came over. A woman came over,

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Speaker 2: and I didn't know how. She introduced herself and introduced

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Speaker 2: my son, introduced himself, and then she said the greatest

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Speaker 2: words ever to me. She said, to me are YouTube

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Speaker 2: brothers me and my son. I mean, that was honestly

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Speaker 2: the highlight of my life, to which my son very

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Speaker 2: quickly said, no, that's my dad and his life well.

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Speaker 2: And then she said to me, you look much too

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Speaker 2: young to be his dad. And my first thought was,

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Speaker 2: I cannot wait to tell Adam this story after these

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Speaker 2: incessive claims of your youthfulness. And the funniest bit of

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Speaker 2: all is that as my son walked away with me

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Speaker 2: from the conversation. He said to me, come on bro.

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Speaker 2: So that was That's now top the list of experiences

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Speaker 2: in my life.

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Speaker 1: I think about fifty thousand listeners. I'm not sure all

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Speaker 1: that many will believe this story, but we'll leave it

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Speaker 1: to maybe put it about LinkedIn.

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Speaker 2: It's a plausible story that may indicate that this particular

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Speaker 2: person needs to go for an eye test relatively urgently.

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Speaker 2: I think so this an Australian. Australian was Australian Australia, which

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Speaker 2: she found in the pod. Considering she had no idea

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Speaker 2: who I was, I'd have to probably go for a

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Speaker 2: no on that one, which is definitely that many times too.

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Speaker 2: It's just dead two times two. I think that one

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Speaker 2: episode should be dead two times one hundred by itself.

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Speaker 2: Everything else pales in comparison.

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Speaker 1: Anything more happened to you are here in television? What else?

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Speaker 1: I mean, Like the city is pumping.

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Speaker 2: I've been meeting lots of sports, tech businesses and other

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Speaker 2: tech businesses, you know. I mean, I would say it's

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Speaker 2: remarkable that the economy is so resilient considering what's going on,

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Speaker 2: and I think it's probably harder for founders to raise capital.

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Speaker 2: But in general it feels the vibe here is very,

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Speaker 2: very positive overall, like this is always a very optimistic,

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Speaker 2: happy city. I have to say, And what's what about you?

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Speaker 2: What's your story? You're in cold Melbourne right, it's very

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Speaker 2: cold in Melbourne. I'm heading to Gold Coast Star tomorrow

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Speaker 2: see our friends at SeaWorld. But before I go, I

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Speaker 2: was in. I visited our store Yesterda. Actually I needed

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Speaker 2: my my iPhone. So you are the most Before you

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Speaker 2: tell your iPhone story, I just want to say you

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Speaker 2: are the singular most frequent visitor to SeaWorld full stop.

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Speaker 2: I'm not sure the manager goes more frequently than you do.

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Speaker 2: So we go on this is pretty like, how many

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Speaker 2: visits a year are you taking to SeaWorld?

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Speaker 1: We go once a year. We go once a year,

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Speaker 1: which feels like a lot, because since since we've done

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Speaker 1: this podcast is my third trip, so it feels like

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Speaker 1: a lot. But it's actually not that much. Our phone's

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Speaker 1: almost two years old. I managed to so I smashed the

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Speaker 1: front I don't know a year ago, got that replace

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Speaker 1: and it was a bit of alldeal and I talked

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Speaker 1: about it on the pod and then somehow, despite having

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Speaker 1: an Apple case, I managed to smash the back with

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Speaker 1: the case on. So how that happened I don't know.

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Speaker 1: So anyway, I need to get the back. Obviously the

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Speaker 1: back is less important in the front, but I need

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Speaker 1: to get the back fixed at some point. And I

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Speaker 1: saw of Apple Care, so it's basically free.

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Speaker 2: If you've got Apple Care, you're almost obliged to smash

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Speaker 2: the phone from time to time, aren't you. Isn't that

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Speaker 2: how Apple Care works?

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Speaker 3: Well?

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Speaker 1: Funning off? But I've got Apple Care, jaz goes. I

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Speaker 1: don't get that they're going to ripping you off. It's pointless.

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Speaker 1: And I think Apple cares maybe three hundred bucks a year,

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Speaker 1: maybe two hundred bucks a year, can't remember is that costs,

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Speaker 1: but it's something like that, maybe even less. And since

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Speaker 1: I got it, I've broken my throne three times. It's

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Speaker 1: like two and a half grand worth of rectifications for

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Speaker 1: like six hundred bucks. So it's been a very high

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Speaker 1: ROI for me. But anyway, I went to get it fixed,

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Speaker 1: went in there and I said it was about ten

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Speaker 1: and ten thirty. They said it'd be finished by one,

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Speaker 1: which wasn't too bad. A couple two and a half

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Speaker 1: hours did some stuff was working from from the store.

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Speaker 1: Went to pick it up. I said it was ready,

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Speaker 1: which is great. They said, oh, you got to pay

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Speaker 1: an extra forty bucks. I said, that's a bit weird.

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Speaker 1: I thought Apple Care covers up anyway, forty bucks something

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Speaker 1: in the world. Went to pay the forty couldn't access

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Speaker 1: my phone because my credit cards obviously on my phone.

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Speaker 1: So I thought, oh, I can just go in and

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Speaker 1: get it. No, they wiped the phone as they do. Annoying,

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Speaker 1: but I'll go. I'll go and go into the phone.

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Speaker 1: I played my credit card and be done. Of course,

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Speaker 1: couldn't do that because I needed to completely re set,

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Speaker 1: like I had to upload the download the newest update

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Speaker 1: for some reason, even though I don't know why, they

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Speaker 1: couldn't have done that, So that was an extra That

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Speaker 1: was like half an hour. So it's been half an

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Speaker 1: hour uploading. I downloading the newest version of iOS or whatever.

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Speaker 1: It was annoying but whatever. And then went to load

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Speaker 1: the cards and so to do that, and I said, oh,

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Speaker 1: you know, you've got to start downloading or your cloud backup,

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Speaker 1: which I was doing. It's like fifty three gig or

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Speaker 1: something for me. Start doing that. And it just like crashed,

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Speaker 1: so I couldn't do anything. I couldn't get my could

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Speaker 1: get to my credit card. Eventually I got a guy

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Speaker 1: to help me and I was able to stop the

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Speaker 1: download and pay with credit card. Then to start that,

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Speaker 1: I needed to access a bunch of apps. So I

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Speaker 1: had to because I had to get like drive my

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Speaker 1: Tesla back. Went to download the Tesil app. Download the

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Speaker 1: tesilap went. I can't stop my car because I need

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Speaker 1: a bloody key, so I think it an uber had

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Speaker 1: drop my key to chase and that took an extra

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Speaker 1: half an hour. Key with whoever. Terrible. All my apps

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Speaker 1: aren't downloading, so they're sort of stuck. So I made

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Speaker 1: us download a couple of apps. Drove to the office.

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Speaker 1: Still can't download the apps anyway, took twelve hours download

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Speaker 1: the apps. Long story short is how can a business

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Speaker 1: that's historically so dedicated to the customer experience, especially under

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Speaker 1: Steve Jobs, become so opposite of that. This is just

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Speaker 1: like the worst customer experience, Like Steve jobsby turning in

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Speaker 1: his grave if he knew this was happening to every

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Speaker 1: iPhone customer when they literally go and get it replaced

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Speaker 1: at Apple It's just such a horrific exper I couldn't

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Speaker 1: get into our garage. At work, I couldn't get into

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Speaker 1: the office, I couldn't start the card. Like literally, your

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Speaker 1: whole life revolves around this phone and they make it

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Speaker 1: so hard for you to change it and fix it.

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Speaker 2: Yeah, so what do you think the main issue was?

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Speaker 2: Do you think the main issue? I mean, aside from

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Speaker 2: not being able to pay because your credit card was

202
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Speaker 2: on the phone and it got scrubbed, which they have

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Speaker 2: to do, right, you can't hold them accountable for that.

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Speaker 2: They're not going to leave when they reset it. Your

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Speaker 2: cards are going to get wiped off there and you're

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Speaker 2: going to have to reinstall them. I would have had

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Speaker 2: the same problem, by the way, like I never carry

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Speaker 2: credit cards around physical cards. But aside from that, the

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Speaker 2: main course of this problem essentially was the difficulty in

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Speaker 2: reinstalling the apps.

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Speaker 1: Really, that was probably not problem number one. And they

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Speaker 1: should also probably remind you bring a credit card because

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Speaker 1: you might need to pay something extra and if you're

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Speaker 1: using a Tesla or a Polestar or whatever, bring your

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Speaker 1: key for that. Like stuff that must happen to a

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Speaker 1: lot of peop people. They should just tell you to

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Speaker 1: tell you about that stuff.

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Speaker 2: Totally agree, so the whole So if you can imagine

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Speaker 2: like this experience. I mean, there is such a thing

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Speaker 2: called generative AI nowadays, which is quite useful in these situations,

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Speaker 2: although Apple doesn't seem hugely in favor of AI from

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Speaker 2: what I've seen. Essentially, they should engage with you and

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Speaker 2: say you're about you're going to bring your phone in

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Speaker 2: for a repair. Please be aware that any credit cards

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Speaker 2: you have on your phone will not work, so if

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Speaker 2: you want, if you're going to have to pay, bring

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Speaker 2: an alternate payment method, And all of the apps on

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Speaker 2: your phone will need to be reinstalled, So like, do

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Speaker 2: you have any of these common things? And then you

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Speaker 2: could even ask the AI agent some questions and they

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Speaker 2: could answer you. I completely agree. The problem to me

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Speaker 2: is not that this happened, because I think this is

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Speaker 2: more I mean the downloading thing. It is slow, That's

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Speaker 2: how it is. This is more a consequence of your

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Speaker 2: entire life being like you've got a lot of IoT

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Speaker 2: in your life, and so like key, yeah, exactly, doors open,

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Speaker 2: that's a consequence. The problem with this is actually much

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Speaker 2: simpler to solve. It is just enhancing the customer service interface.

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Speaker 2: For this experience.

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Speaker 1: And the other thing is, and I think they may

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Speaker 1: have fixed on the next version of the most recent

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Speaker 1: version of the phone, is why you need to wipe

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Speaker 1: the whole phone to replace the back cover, Like it's

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Speaker 1: not integral hardware. I wouldn't have thought like it should

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Speaker 1: be able to do it. Well they are now, I think,

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Speaker 1: but the old any version other than the most recent

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Speaker 1: that they wipe it. So it's just yes, that sounds

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Speaker 1: like they fixed it, but it's pretty frustrating that it

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Speaker 1: doesn't work for ninety five percent of the versions.

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Speaker 2: So this is a classic example of what's called like

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Speaker 2: a moment of truth. That's our customer experience. Professionals talk

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Speaker 2: about these types of events. So this like a moment

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Speaker 2: of truth. They could have created a ten out of

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Speaker 2: ten NET promoter with a good experience, because this is

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Speaker 2: quite stressful. Broken phone, got to send it in your

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Speaker 2: phone's your whole life. They can create a ten out

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Speaker 2: of ten, but just by the lack of communication and

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Speaker 2: engagement through the process, they've created a one out of ten.

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Speaker 2: And so I think that's a great example of why

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Speaker 2: these moments of truth are so fundamental. And also it

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Speaker 2: goes to show NET promoters, five six, sevens eights. I know,

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Speaker 2: like they only call seven and eight neutral on net promoter,

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Speaker 2: but like five six seven eight, five six seven especially,

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Speaker 2: it's kind of the same thing. All of that, like

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Speaker 2: that's been nothing zone, that's that's people don't care about

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Speaker 2: your business. And so ironically, my experience has always been

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Speaker 2: it's easier to turn a one into a ten than

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Speaker 2: like a five into a ten because fives don't care. Yeah,

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Speaker 2: but you're very aggrieved now, But I could turn you around.

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Speaker 2: If I was Apple now, I could turn you around.

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Speaker 2: I could turn you into a tent. I would just

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Speaker 2: have to call you and apologize and offer you something

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Speaker 2: and say we're gonna like fix this up. And it's

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Speaker 2: terrible that this happened to you. You just feel very

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Speaker 2: unloved and uncared about with a bad experience.

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Speaker 1: I think, interestingly, before this whole debacle, while I was

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Speaker 1: in the Apple store, I was looking around. It was

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Speaker 1: absolutely impacked, and it's a beautiful store. The chatter and

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Speaker 1: store is obviously the skylights, there's trees in their incredible

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Speaker 1: retail experience that obviously my experience post was shocking, but

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Speaker 1: the actual experience being in the store was unbelievable. I

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Speaker 1: went then downstairs, just happened to walk past the Samsung store,

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Speaker 1: which is a near our store, and it's obviously downstairs.

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Speaker 1: I no skylight, but it's all intents and purposes not

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Speaker 1: that different to the Apple Store. Like I got the

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Speaker 1: same sort of phone sitting there, but there was like

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Speaker 1: one person in there. It just felt so sad versus

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Speaker 1: the Apple store just thriving, and like it's probably not

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Speaker 1: sort of unfair to suggests that Apple's built up a

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Speaker 1: certain arrogance now, and they certainly built up in argant

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Speaker 1: in terms of how much they charged for the thirty

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Speaker 1: percent big they charged it. Obviously I've phoned app developers,

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Speaker 1: but they are such a dominant force in communications and

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Speaker 1: phones and hardware. Definitely, it just feels like they've got

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Speaker 1: the level of arrogance there. And this kind of thing

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Speaker 1: that happens. This is called resting on your brand, Laurels.

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Speaker 1: I think like essentially what they think is the brand

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Speaker 1: will carry the day, and so everything else has started slipping.

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Speaker 1: And yeah, you're right, Like the Samsung store is always empty,

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Speaker 1: the Microsoft store is somewhere in between. They're all trying

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Speaker 1: to replicate the Apple store. Experience they can't like. There

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Speaker 1: is something that Apple built was very special about that experience,

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Speaker 1: starting with the Genius Bar, which used to be incredible.

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Speaker 1: It's a bit worse now, I have to tell you, though,

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Speaker 1: generally the people in Apple are very friendly to deal

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Speaker 1: with and really try to help you. So I don't

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Speaker 1: find an issue with those people. I think this is more.

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Speaker 2: Yeah, no processes and systems, but the people are very

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Speaker 2: good in the store.

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Speaker 1: So while I was there, I wanted thing I need

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Speaker 1: to get large because it was at one o'clock and

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Speaker 1: I happened to have like a backpack and I had

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Speaker 1: twenty dollars in my backpack. I must have just had

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Speaker 1: left it in there. When was the last time you

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Speaker 1: paid with cash for something? Well, overseas in the US

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Speaker 1: and Israel, I will do it. In Australia. It would

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Speaker 1: do many years ago, many many years ago. I can't

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Speaker 1: remember the last time. To the point was I had

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Speaker 1: to ask that I went to like the sealer, some

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Speaker 1: sale john, I had to ask do you take cash?

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Speaker 1: I generally wasn't sure if they would take cash or not,

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Speaker 1: and it felt so weird handing over a twenty oh

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Speaker 1: and getting four dollars changed. How am I to go

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Speaker 1: to the four dollars changed?

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Speaker 2: Now are coins? I mean, I'm not a supporter of coins.

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Speaker 1: It's horrible. It was.

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Speaker 2: Yeah, it was an interesting experiencenyway, I know it's a

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Speaker 2: blast from the past. I totally agree. Although didn't you

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Speaker 2: find though that you were much more aware of what

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Speaker 2: had actually costs? Absolutely cash? That's what I found there

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Speaker 2: is I think I've mentioned this to you before. There

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Speaker 2: is research that says basically, you'll spend fifteen percent more

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Speaker 2: without noticing when you're using credit cards and especially like

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Speaker 2: Apple pay type payWave cards, Touch and Go.

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Speaker 1: I got it. We love talking about good and bad

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Speaker 1: customer service. Obviously we just talked about a bad one.

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Speaker 1: But Sarah, my friend Sarah, who's a great founder her

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Speaker 1: obviously listening to the pod, was listening to us talking

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Speaker 1: about customer service issues a couple of weeks ago, and

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Speaker 1: she sent me a customer services She bought a pair

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Speaker 1: of shoes from a young up and coming online shoe

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Speaker 1: retailer and a train business. Anyway, she sent them. Basically,

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Speaker 1: she brought some shoes that was a fully infrontable and

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Speaker 1: she said, oh, it just didn't fit or it didn't

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Speaker 1: look how I thought it. She would look, and she

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Speaker 1: just said I want a refund, clicked the refund box

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Speaker 1: and said not fit for purpose or whatever. They've sent

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Speaker 1: her a message back, I'm sorry to hear your wage

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Speaker 1: bill silver loafers and not quite right. I can certainly

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Speaker 1: understand your disappointment. Before you send them back. Is there

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Speaker 1: anything else would you would like to try? We're happy

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Speaker 1: to send you one to two different sizes or styles

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Speaker 1: so you can try them in the comfort of your home.

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Speaker 1: If you don't find the perfect fit, we'll cover the

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Speaker 1: cost of returning them to us. It's very easy. Of course.

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Speaker 1: If you simply want to return, that's not a problem.

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Speaker 1: Let me know and I'll forward you the details. What

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Speaker 1: do you reckon of that? Is that almost too good

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Speaker 1: customer service? Or is that sort of exactly what you

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Speaker 1: want from a bend.

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Speaker 2: Or well, it's good for the customer. I'm just not

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Speaker 2: sure how long that business is going to be in business, because, yeah,

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Speaker 2: free returns on apparel, especially shoes, isn't it is a

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Speaker 2: particular problem because well you wouldn't you know this because

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Speaker 2: you used to sell it, right, like the way you

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Speaker 2: have to deal with shoes don't come as a pair.

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Speaker 1: Yeah, it's terrible.

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Speaker 2: Come in six and I think, yeah, packs of six

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Speaker 2: and you got to break the pack and you're left

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Speaker 2: with them. It's that's why I never own another product

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Speaker 2: business like that. Again, I think there's a line of

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Speaker 2: customer service, which is we're going to go and pass

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Speaker 2: the one hundred percent experience for the customer, but not

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Speaker 2: damage our business in the process, because one of the

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Speaker 2: things I always try to communicate to people in business

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Speaker 2: is that you can't deliver more than one hundred percent.

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Speaker 2: And customer service is a great example. If I make

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Speaker 2: you one hundred percent happy as a customer and I

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Speaker 2: do three more great things, I don't get to make

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Speaker 2: you one hundred and thirty percent happy, You're still one

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Speaker 2: hundred percent happy. And so I think it's finding the

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Speaker 2: line where I make you entirely happy but also continue

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Speaker 2: to have a business that can make money and can thrive.

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Speaker 1: Arguably, so Apple's the other extreme and that they've sort

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Speaker 1: of got this almost semi monopoly in over phones that

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Speaker 1: they can afford to make you thirty percent happy and

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Speaker 1: you still go back. So it's I think it's very

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Speaker 1: much depends on the product. But you're right, like I

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Speaker 1: think you can definitely overservice a customer, and that actually

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Speaker 1: doesn't help other customers because then then other customers aren't

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Speaker 1: potentially getting helped at all. So I think there definitely

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Speaker 1: is a line, and it comes to the value capture

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Speaker 1: value creation piece. You don't want to give so much

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Speaker 1: value to the customer that you actually can't run the business.

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Speaker 2: By the way, return to an apparel is a nightmare.

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Speaker 2: Like I think this idea that says it's all free returns,

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Speaker 2: I've said this many times before, it's all coming to

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Speaker 2: an end. It's all coming You can't anymore buy a

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Speaker 2: piece of clothing in three sizes, figure out which one's

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Speaker 2: good for you, and return the other two for free.

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Speaker 2: Like that is all coming to an end, and as

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Speaker 2: it should, right, Like, Yeah, it's bad for business, it's

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Speaker 2: bad for the environment, it's bad for it's a wastage.

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Speaker 1: It's just it's terrible, totally totally, speaking of good and

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Speaker 1: bad customer service, we have special guest appearance for Mike

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Speaker 1: who has got a bit of a customer service story. Mike,

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Speaker 1: what happens to you today?

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Speaker 3: I had an interesting experience because I obviously I'm a

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Speaker 3: big gamer and on the side of what I do

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Speaker 3: for a living. I do some coverage of gaming and

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Speaker 3: writing and video content. So I pre ordered my switch to,

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Speaker 3: which came out today.

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Speaker 1: Mike, does that mean all your gaming pursarees are tax deductible?

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Speaker 1: Is that the whole purpose? This's a little side hustle

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Speaker 1: of yours.

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Speaker 3: Well, I mean yeah, depends who you ask, but according

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Speaker 3: to my accountant, yes.

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Speaker 1: So I rang.

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Speaker 3: I rang the store last night and I said, I'm

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Speaker 3: coming first thing in the morning at seven am to

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Speaker 3: pick it up.

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Speaker 4: Is it has it arrived? Is it there? And it

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Speaker 4: was Yep, it's arrived.

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Speaker 1: It's there.

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Speaker 3: Come in straight away and pick it up. And I

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Speaker 3: get in and I say, hi, I'm here to pick

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Speaker 3: up my switch to, and they go, oh, okay. They're

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Speaker 3: spending five ten minutes out the back, and eventually they

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Speaker 3: come out and say, yeah, I don't think we've got them.

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Speaker 3: I think head office must have made a mistake. And

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Speaker 3: I said, oh, but I rang yesterday and I'm pretty

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Speaker 3: sure I spoke to you and you told me that

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Speaker 3: you were looking.

434
00:19:37,080 --> 00:19:39,320
Speaker 4: At my order and it was its same guy. It

435
00:19:39,440 --> 00:19:40,280
Speaker 4: was the same guy.

436
00:19:40,600 --> 00:19:43,000
Speaker 1: And how many people it's like one guy work at

437
00:19:43,000 --> 00:19:43,320
Speaker 1: this store.

438
00:19:43,520 --> 00:19:46,400
Speaker 3: Yeah, and then you know, they said, we can't find

439
00:19:46,400 --> 00:19:47,879
Speaker 3: and we're going to keep looking, and I was I

440
00:19:47,920 --> 00:19:50,480
Speaker 3: was a little bit frustrated because this is why I

441
00:19:50,560 --> 00:19:54,439
Speaker 3: pre ordered, and they took my money straight away. I

442
00:19:54,520 --> 00:19:57,360
Speaker 3: was waiting around for fifteen twenty minutes. I actually ended

443
00:19:57,440 --> 00:20:00,399
Speaker 3: up calling a different retailer and saying, hey, I like,

444
00:20:00,720 --> 00:20:02,520
Speaker 3: am I able to buy the product from you?

445
00:20:02,560 --> 00:20:05,080
Speaker 4: And they said there's a huge line here. Anyway.

446
00:20:05,160 --> 00:20:06,960
Speaker 3: I ended up saying, hey, if you don't have it,

447
00:20:07,000 --> 00:20:09,200
Speaker 3: can I please just have a refund and they said,

448
00:20:09,280 --> 00:20:11,520
Speaker 3: oh yeah, just just give us a couple more minutes.

449
00:20:11,920 --> 00:20:14,239
Speaker 3: And then about five minutes later, so I'd probably been

450
00:20:14,280 --> 00:20:17,240
Speaker 3: waiting for about half an hour, the guy came out

451
00:20:17,240 --> 00:20:19,000
Speaker 3: and he's like, oh, I found one, here you go,

452
00:20:19,080 --> 00:20:21,160
Speaker 3: and he just gave it to me and.

453
00:20:21,359 --> 00:20:22,320
Speaker 4: Just let me have it.

454
00:20:22,400 --> 00:20:25,880
Speaker 3: So it was a it was a really sour start,

455
00:20:25,960 --> 00:20:28,760
Speaker 3: but yeah, I do have it in my hands, But

456
00:20:28,800 --> 00:20:31,880
Speaker 3: it was it was a really strange thing to ring

457
00:20:31,960 --> 00:20:35,080
Speaker 3: the store in advance, have it confirmed that my order

458
00:20:35,160 --> 00:20:37,240
Speaker 3: was there, and then be in that situation.

459
00:20:37,640 --> 00:20:40,359
Speaker 1: I didn't know if Office Works even sold gaming stuff.

460
00:20:40,400 --> 00:20:41,800
Speaker 1: Is this new or they always sold it?

461
00:20:42,119 --> 00:20:43,320
Speaker 4: I think it is a new thing.

462
00:20:43,359 --> 00:20:45,920
Speaker 3: As well, And that's actually why I pre ordered from them,

463
00:20:45,920 --> 00:20:48,679
Speaker 3: because I didn't think there would be many people going

464
00:20:48,720 --> 00:20:50,280
Speaker 3: to get it there, so I thought it would be

465
00:20:50,359 --> 00:20:52,600
Speaker 3: a good way for me to ask to get one, yeah,

466
00:20:52,680 --> 00:20:54,399
Speaker 3: get it first and not have to wait in line.

467
00:20:54,520 --> 00:20:57,000
Speaker 2: So my son is here with me and he's literally

468
00:20:57,040 --> 00:21:00,280
Speaker 2: about to go off to the Nintendo store in tell Viv,

469
00:21:00,600 --> 00:21:03,240
Speaker 2: which he tells me because of a licensing agreement with

470
00:21:03,280 --> 00:21:07,000
Speaker 2: some Israeli organization, it's the only Nintendo store outside the

471
00:21:07,080 --> 00:21:09,800
Speaker 2: US and Japan, and so he's about to go there.

472
00:21:09,800 --> 00:21:11,520
Speaker 2: But he said last night when they did a midnight

473
00:21:11,600 --> 00:21:13,800
Speaker 2: launch event, there were two thousand people that turned up

474
00:21:13,800 --> 00:21:16,160
Speaker 2: to the mall for the mid for the midnight launch event.

475
00:21:16,240 --> 00:21:18,400
Speaker 2: So it's been very, very very popular.

476
00:21:19,200 --> 00:21:21,840
Speaker 1: Quats your views on the suite all important review? Can

477
00:21:21,840 --> 00:21:23,640
Speaker 1: you can you reveal to us? I just feel your

478
00:21:23,680 --> 00:21:25,160
Speaker 1: personal listeners.

479
00:21:24,720 --> 00:21:29,200
Speaker 3: Really quick thoughts like it's it's a much sturdier, nicer

480
00:21:29,240 --> 00:21:31,720
Speaker 3: to hold console than the switch. I feel like the

481
00:21:31,760 --> 00:21:35,080
Speaker 3: original switch felt quite plasticy and lightweight, a bit like

482
00:21:35,119 --> 00:21:40,000
Speaker 3: a toy, and this feels quite sophisticated. It feels really sturdy.

483
00:21:40,920 --> 00:21:43,200
Speaker 3: I haven't had heaps of time to play it because

484
00:21:43,200 --> 00:21:46,879
Speaker 3: we've actually been recording all day, but hopefully tomorrow I

485
00:21:46,880 --> 00:21:48,399
Speaker 3: have a bit more time to play with it. But

486
00:21:48,440 --> 00:21:51,399
Speaker 3: I really think it's a huge step up, and it

487
00:21:51,440 --> 00:21:52,680
Speaker 3: feels really nice.

488
00:21:52,760 --> 00:21:54,280
Speaker 1: When you said you had stuff on today and you

489
00:21:54,320 --> 00:21:55,679
Speaker 1: couldn't record, I thought it was because you had like

490
00:21:55,680 --> 00:21:59,119
Speaker 1: important other podcasts. No.

491
00:21:59,280 --> 00:22:00,320
Speaker 4: I actually was to.

492
00:22:00,280 --> 00:22:02,040
Speaker 3: Go to the movies, but then I didn't want to

493
00:22:02,080 --> 00:22:04,160
Speaker 3: go to the movie anymore, so I decided to come

494
00:22:04,160 --> 00:22:05,520
Speaker 3: and record with you guys.

495
00:22:06,640 --> 00:22:09,800
Speaker 1: I'm very honored that we ranked above movies and switch

496
00:22:09,840 --> 00:22:10,200
Speaker 1: To test.

497
00:22:10,320 --> 00:22:13,200
Speaker 2: Yeah, Liam is very jealous about you having that switch

498
00:22:13,280 --> 00:22:16,879
Speaker 2: To already, and he's on the way to go, as

499
00:22:16,880 --> 00:22:19,439
Speaker 2: I said, go to the Nintendo store and play the

500
00:22:19,480 --> 00:22:21,520
Speaker 2: Switch To. I think he's collecting it with the mates

501
00:22:21,520 --> 00:22:24,119
Speaker 2: and there's a whole thing going on there and every

502
00:22:24,160 --> 00:22:27,439
Speaker 2: single day at least for the last four weeks. I mean,

503
00:22:27,480 --> 00:22:29,480
Speaker 2: he's pre ordered in Australia, so when we come back,

504
00:22:29,520 --> 00:22:31,280
Speaker 2: he's going to grab his. In fact, I think someone's

505
00:22:31,280 --> 00:22:35,480
Speaker 2: picking up for him. But I've heard a count a

506
00:22:35,600 --> 00:22:39,520
Speaker 2: daily countdown with they've been putting out updates right of

507
00:22:39,560 --> 00:22:41,760
Speaker 2: like little things about the switch over the course of

508
00:22:41,800 --> 00:22:45,240
Speaker 2: the last week's Nintendo every day, but dumb updates right

509
00:22:45,280 --> 00:22:47,479
Speaker 2: like he is a three day render of the cable

510
00:22:47,520 --> 00:22:49,880
Speaker 2: that plugs into the switch and crazy things like that.

511
00:22:50,040 --> 00:22:52,600
Speaker 2: So yes, I've heard a countdown. I think this is

512
00:22:53,760 --> 00:22:55,919
Speaker 2: It feels like it's actually going to be huge, to

513
00:22:55,960 --> 00:22:58,720
Speaker 2: be honest, like that, that's what it's shaping up to be.

514
00:22:59,200 --> 00:23:01,560
Speaker 2: I think under mentally it's a much better device than

515
00:23:01,560 --> 00:23:03,040
Speaker 2: the device that they built eight years ago.

516
00:23:03,320 --> 00:23:06,200
Speaker 3: Well, can I just quickly add the one thing I

517
00:23:06,240 --> 00:23:09,240
Speaker 3: really liked about it is pretty much as soon as

518
00:23:09,280 --> 00:23:11,560
Speaker 3: I took it out of the box and signed into

519
00:23:11,680 --> 00:23:15,320
Speaker 3: my Nintendo account, all of the games that I already

520
00:23:15,400 --> 00:23:18,600
Speaker 3: own on my original switch I can play on this

521
00:23:19,040 --> 00:23:23,520
Speaker 3: straight away. That was an amazing thing to experience because

522
00:23:23,920 --> 00:23:26,240
Speaker 3: I don't have to go and buy any new games

523
00:23:26,280 --> 00:23:28,600
Speaker 3: at first, Like I could just play everything I already OpEd.

524
00:23:28,640 --> 00:23:30,399
Speaker 1: Maybe they give Apple to advice on setting up in

525
00:23:30,400 --> 00:23:31,400
Speaker 1: the your devices.

526
00:23:31,480 --> 00:23:33,480
Speaker 2: Didn't make a difference to the games when you were

527
00:23:33,520 --> 00:23:34,600
Speaker 2: playing them on the switch.

528
00:23:34,320 --> 00:23:36,200
Speaker 4: To they perform a lot better.

529
00:23:36,280 --> 00:23:40,880
Speaker 3: They are much higher performance running at a higher frame rate.

530
00:23:40,960 --> 00:23:44,800
Speaker 3: So yes, and it was noticeably different because I think

531
00:23:44,840 --> 00:23:48,400
Speaker 3: the original switch had the industry had evolved so much

532
00:23:48,440 --> 00:23:52,439
Speaker 3: that the new games on switch were really running quite poorly,

533
00:23:52,520 --> 00:23:54,720
Speaker 3: I felt, But on the switch to they're running great,

534
00:23:54,840 --> 00:23:58,160
Speaker 3: So I'm really excited to experience more of it.

535
00:23:58,240 --> 00:24:00,639
Speaker 1: Well, the market certainly thinks this is a good product.

536
00:24:00,680 --> 00:24:03,240
Speaker 1: Nintendo share prices up thirty five percent this year and

537
00:24:03,280 --> 00:24:05,280
Speaker 1: twenty seven percent in the last six months, which is

538
00:24:05,400 --> 00:24:08,439
Speaker 1: significantly better than a lot of the market. So the

539
00:24:08,480 --> 00:24:11,119
Speaker 1: market seems to like the story. Sounds like a big

540
00:24:11,160 --> 00:24:13,199
Speaker 1: thumbs up for Mike. I was me before we got

541
00:24:13,200 --> 00:24:14,879
Speaker 1: the big story. Just one quick note. We talked about it.

542
00:24:15,280 --> 00:24:17,440
Speaker 1: I ran to it about interest rates well pretty much

543
00:24:17,440 --> 00:24:20,640
Speaker 1: every week, but about two weeks ago when the RBA,

544
00:24:21,160 --> 00:24:24,600
Speaker 1: for some unknown reason decided to reduce rates despite every

545
00:24:24,600 --> 00:24:27,240
Speaker 1: economic indicator saying they shouldn't reduce rates. What we've seen

546
00:24:27,320 --> 00:24:31,440
Speaker 1: the last really, the last month, unsurprisingly, is house prices

547
00:24:31,600 --> 00:24:34,760
Speaker 1: have hit another record high. They've rebounded back from a

548
00:24:34,800 --> 00:24:37,880
Speaker 1: temporarily low earlier this year, and this is exactly what

549
00:24:38,000 --> 00:24:41,119
Speaker 1: we expected. What happened is interest rates the ultimate demand

550
00:24:41,160 --> 00:24:43,080
Speaker 1: side driver. As soon as you drop interest rates, house

551
00:24:43,080 --> 00:24:44,920
Speaker 1: prices go up. It's been the story of the last

552
00:24:45,400 --> 00:24:48,080
Speaker 1: twenty three years in Australia and this is no exception.

553
00:24:48,200 --> 00:24:50,359
Speaker 1: We are seeing, and the instrates will continue to go.

554
00:24:50,520 --> 00:24:52,560
Speaker 1: This is this is the impact of the last interest

555
00:24:52,600 --> 00:24:54,919
Speaker 1: rate drop. We haven't even seen the impact of the

556
00:24:54,960 --> 00:24:55,840
Speaker 1: next interest rate drop.

557
00:24:56,000 --> 00:24:58,000
Speaker 2: Yeah, well it's not just the drop, right, it's just

558
00:24:58,000 --> 00:25:01,040
Speaker 2: this anticipation of the like people think there are going

559
00:25:01,119 --> 00:25:03,639
Speaker 2: to be multiple rate cuts now, and so this is

560
00:25:03,680 --> 00:25:05,720
Speaker 2: like the opposite to jaw boning inflation.

561
00:25:05,880 --> 00:25:06,040
Speaker 1: Right.

562
00:25:06,080 --> 00:25:07,760
Speaker 2: If you make people feel like there are more rate

563
00:25:07,840 --> 00:25:09,720
Speaker 2: cuts on the way, then they start behaving as if

564
00:25:09,720 --> 00:25:11,639
Speaker 2: those rate cuts have happened. And I think that is

565
00:25:11,680 --> 00:25:12,840
Speaker 2: what's happened to property price.

566
00:25:13,040 --> 00:25:15,119
Speaker 1: Very true. Only this is just another blow to anyone

567
00:25:15,160 --> 00:25:18,520
Speaker 1: age under forty, just another transfer of wealth away from

568
00:25:18,760 --> 00:25:22,640
Speaker 1: young people towards people who own multiple properties, really investment properties.

569
00:25:22,760 --> 00:25:24,159
Speaker 1: I went to on more other than to say that

570
00:25:24,200 --> 00:25:26,919
Speaker 1: our thesis been born out in literary amount of weeks.

571
00:25:27,000 --> 00:25:30,680
Speaker 1: So just a massive indictment on the RBA which continues

572
00:25:30,720 --> 00:25:32,520
Speaker 1: to do the wrong thing by young Australians.

573
00:25:32,520 --> 00:25:33,760
Speaker 2: So then we give a few bits of news you

574
00:25:33,840 --> 00:25:35,320
Speaker 2: might have come across this week. You can tell me

575
00:25:35,359 --> 00:25:39,040
Speaker 2: if you saw this. Firstly, did you see the group

576
00:25:39,160 --> 00:25:40,720
Speaker 2: cee of Country Road is gone?

577
00:25:40,960 --> 00:25:43,120
Speaker 1: I did see that. What a disaster. The country Road

578
00:25:43,119 --> 00:25:45,040
Speaker 1: has been in the last what is it twelve years

579
00:25:45,080 --> 00:25:46,840
Speaker 1: since since war Wors of South Africa bought it.

580
00:25:46,880 --> 00:25:49,119
Speaker 2: I mean, they've got a few brands in that business obviously.

581
00:25:49,320 --> 00:25:51,919
Speaker 2: I remember, like you, a country Road that used to

582
00:25:51,960 --> 00:25:54,320
Speaker 2: be there were some brands that were like the premium

583
00:25:54,359 --> 00:25:57,920
Speaker 2: Australian brands. Country Road Oroton was another one. Oroton is

584
00:25:57,960 --> 00:26:00,000
Speaker 2: going through a process of trying to resurrect that brand,

585
00:26:00,119 --> 00:26:03,000
Speaker 2: as we've discussed previously. I mean, I think Country Road

586
00:26:03,080 --> 00:26:06,199
Speaker 2: can be resurrected. I'm just not sure it can be

587
00:26:06,280 --> 00:26:09,439
Speaker 2: resurrected by the people that they're putting into resurrect it.

588
00:26:09,760 --> 00:26:12,000
Speaker 2: Like I think that it needs to capture a younger

589
00:26:12,040 --> 00:26:13,720
Speaker 2: audience and reposition itself.

590
00:26:13,880 --> 00:26:16,760
Speaker 1: It's an interesting question and a question for you is

591
00:26:17,680 --> 00:26:20,480
Speaker 1: what does it take for a brand to die or

592
00:26:20,640 --> 00:26:23,280
Speaker 1: not so much die, just become an irrelevance. It feels

593
00:26:23,280 --> 00:26:27,320
Speaker 1: to me like country Road has become largely irrelevant. It

594
00:26:27,359 --> 00:26:29,359
Speaker 1: was a great brand ten years ago. I think now

595
00:26:29,840 --> 00:26:31,680
Speaker 1: I don't think it's a brand that people even is

596
00:26:31,760 --> 00:26:35,680
Speaker 1: in people's consideration set in many cases, I think been

597
00:26:35,720 --> 00:26:38,040
Speaker 1: overtaken by other brands. It's sort of this weird sort

598
00:26:38,080 --> 00:26:40,600
Speaker 1: of relatively premium price point. Is it a brand that's

599
00:26:40,640 --> 00:26:42,360
Speaker 1: dead and can't be resuscitated, No, I don't think.

600
00:26:42,359 --> 00:26:44,399
Speaker 2: I mean it just goes to show how powerful brand

601
00:26:44,400 --> 00:26:47,159
Speaker 2: equity is the fact that this thing has really been

602
00:26:47,200 --> 00:26:51,080
Speaker 2: a basket case for fifteen years, probably declining, but it's

603
00:26:51,119 --> 00:26:54,320
Speaker 2: still got tons of stores. People are still buying from it.

604
00:26:54,320 --> 00:26:56,600
Speaker 2: It's got real revenue. I mean, it struggles to make money.

605
00:26:57,160 --> 00:26:59,920
Speaker 2: I think that these brands can keep going for as

606
00:27:00,000 --> 00:27:02,280
Speaker 2: the cohort of people grew up and this was a

607
00:27:02,320 --> 00:27:05,480
Speaker 2: premium brand and they're not dead, Like they're still alive

608
00:27:05,560 --> 00:27:07,560
Speaker 2: that cohort, and so for as long as they're alive,

609
00:27:07,680 --> 00:27:09,480
Speaker 2: they're going to keep buying this brand, because I think

610
00:27:09,520 --> 00:27:11,440
Speaker 2: a lot of people just buy the brands that were

611
00:27:11,480 --> 00:27:13,639
Speaker 2: cool when they were younger, and they just keep sticking

612
00:27:13,640 --> 00:27:17,560
Speaker 2: with those brands, especially men. But I do think this brand,

613
00:27:17,600 --> 00:27:21,520
Speaker 2: to me, feels like it has no obvious market position

614
00:27:22,119 --> 00:27:25,320
Speaker 2: and it doesn't really know what market position it's trying

615
00:27:25,359 --> 00:27:27,120
Speaker 2: to have in the market. And I think that's really

616
00:27:27,119 --> 00:27:28,639
Speaker 2: what it has to figure out, like who is it

617
00:27:28,680 --> 00:27:32,879
Speaker 2: competing with and what does the brand represent? Because just

618
00:27:33,160 --> 00:27:35,320
Speaker 2: there was a time when you could get a white

619
00:27:35,320 --> 00:27:37,280
Speaker 2: T shirt and put a country road sticker on it,

620
00:27:37,320 --> 00:27:39,720
Speaker 2: and you could triple the price of like adjust Genes

621
00:27:39,840 --> 00:27:42,800
Speaker 2: or something T shirt. I'm not sure that exists anymore, right,

622
00:27:42,840 --> 00:27:45,000
Speaker 2: and so they have to re establish what the brand

623
00:27:45,119 --> 00:27:45,760
Speaker 2: stands for.

624
00:27:45,920 --> 00:27:48,440
Speaker 1: Totally doesn't exist, like, it doesn't become close to existing.

625
00:27:48,600 --> 00:27:51,399
Speaker 2: Yeah, but heritage brands. That means brands with a history

626
00:27:51,440 --> 00:27:54,320
Speaker 2: they can point back to. Generally, in my view, you

627
00:27:54,359 --> 00:27:57,560
Speaker 2: can resuscitate those brands. It just takes the right person

628
00:27:57,600 --> 00:28:01,760
Speaker 2: to resuscitate them, and you need to heavily lean into

629
00:28:02,000 --> 00:28:05,160
Speaker 2: like the historical heritage nature of those brands. I think

630
00:28:05,160 --> 00:28:07,560
Speaker 2: it's possible. I think it's unlikely. Yeah, well it definitely

631
00:28:07,560 --> 00:28:10,280
Speaker 2: will be very unlikely. With the CEO that just left,

632
00:28:10,320 --> 00:28:11,679
Speaker 2: I'll give you another bit of news. I'm going to

633
00:28:11,680 --> 00:28:14,000
Speaker 2: say a name, and you can say, tell me whether

634
00:28:14,040 --> 00:28:16,399
Speaker 2: you've heard this name. Well you've heard it, tell me

635
00:28:16,400 --> 00:28:18,840
Speaker 2: if you can remember what company he was associated with.

636
00:28:19,200 --> 00:28:20,159
Speaker 2: Joel McDonald.

637
00:28:20,280 --> 00:28:22,800
Speaker 1: I know because I wrote many articles about these schunks.

638
00:28:22,920 --> 00:28:24,080
Speaker 1: A company called get.

639
00:28:23,840 --> 00:28:28,480
Speaker 2: Swift exactly, and so ex footballer maybe Melbourne Football Club.

640
00:28:28,280 --> 00:28:30,560
Speaker 1: Football and I think briefly Brisbane, and I think we

641
00:28:30,560 --> 00:28:33,320
Speaker 1: can actually say because I'm pretty sure they were effectly

642
00:28:33,320 --> 00:28:36,000
Speaker 1: convicted of a crime. So him and Bain Hunter, who

643
00:28:36,040 --> 00:28:39,120
Speaker 1: has looked like the brains behind the operation, effectively criminal,

644
00:28:39,200 --> 00:28:42,200
Speaker 1: was bad from being director's significant fines was I didn't pay,

645
00:28:42,920 --> 00:28:46,720
Speaker 1: fled to apparently somewhere like Bogota. What a disaster this

646
00:28:46,720 --> 00:28:48,200
Speaker 1: has been. I don't know if they were convicted of

647
00:28:48,200 --> 00:28:49,920
Speaker 1: a crime. I know Joe, I'll tell you what he's

648
00:28:49,960 --> 00:28:52,560
Speaker 1: doing now, which will make you smile. But Joel McDonald,

649
00:28:52,800 --> 00:28:55,640
Speaker 1: I know he was banned from being a company director

650
00:28:55,680 --> 00:28:58,000
Speaker 1: for eight years, twelve years something like that. So I

651
00:28:58,000 --> 00:28:59,360
Speaker 1: don't know if that was a crime or if that

652
00:28:59,400 --> 00:29:01,160
Speaker 1: was a civil So we shouldn't say it was a

653
00:29:01,160 --> 00:29:04,520
Speaker 1: crime because I don't know. And he didn't flee to Columbia.

654
00:29:04,760 --> 00:29:08,480
Speaker 1: He fled to Miami, which is probably much nicer on

655
00:29:08,520 --> 00:29:12,320
Speaker 1: the beach there. And he's reinvented himself. He's now forty

656
00:29:12,360 --> 00:29:14,280
Speaker 1: years old. And I just wrote an article and so

657
00:29:14,400 --> 00:29:16,920
Speaker 1: this is a guy who at one stage was worth

658
00:29:17,080 --> 00:29:19,200
Speaker 1: a couple of one hundred million dollars on paper with

659
00:29:19,360 --> 00:29:22,240
Speaker 1: get swift. And I think the judge, do you remember

660
00:29:22,240 --> 00:29:24,880
Speaker 1: who the judge was in the case, A very famous

661
00:29:24,960 --> 00:29:28,479
Speaker 1: federal court judge Michael Lee wasn't it correct? Correct? So

662
00:29:28,520 --> 00:29:29,200
Speaker 1: that's who it is.

663
00:29:29,760 --> 00:29:33,400
Speaker 2: And so he basically pretty much said the reason that

664
00:29:33,480 --> 00:29:36,040
Speaker 2: these people got rich was not about running the business.

665
00:29:36,120 --> 00:29:39,080
Speaker 2: It was just about sending information into the market that

666
00:29:39,200 --> 00:29:41,560
Speaker 2: wasn't honest to push the share price up. And so

667
00:29:42,000 --> 00:29:45,640
Speaker 2: that was scathing. And so they kind of fled, and

668
00:29:45,720 --> 00:29:47,080
Speaker 2: or I don't think they fled, I just didn't. I

669
00:29:47,120 --> 00:29:49,880
Speaker 2: think Joel McDonald stayed in the US and he's re

670
00:29:50,000 --> 00:29:53,520
Speaker 2: emerged now as I don't know Canada, I don't know, Well,

671
00:29:53,560 --> 00:29:55,840
Speaker 2: he was in the US, so he was in Miami,

672
00:29:56,320 --> 00:29:59,880
Speaker 2: and so he's gone through his pain and he's now

673
00:30:00,400 --> 00:30:03,080
Speaker 2: a life coach and so you can go and engage

674
00:30:03,080 --> 00:30:07,200
Speaker 2: his services and he'll help you with business, with life decisions. Now,

675
00:30:07,240 --> 00:30:10,000
Speaker 2: I've got no doubt this guy went through emotional hell

676
00:30:10,720 --> 00:30:12,800
Speaker 2: going from you know, being in the Young Rich List

677
00:30:12,800 --> 00:30:16,080
Speaker 2: to zero in the record time just about he should

678
00:30:16,120 --> 00:30:18,240
Speaker 2: never have been in the Young Rich List with that business.

679
00:30:18,480 --> 00:30:22,800
Speaker 2: And I think that any honest history of this cost debarcle,

680
00:30:23,000 --> 00:30:26,880
Speaker 2: as you would call it, would have to include the

681
00:30:26,880 --> 00:30:29,480
Speaker 2: fact that there may never have been a real business

682
00:30:29,520 --> 00:30:33,120
Speaker 2: behind here, and it was just a series of press

683
00:30:33,160 --> 00:30:36,360
Speaker 2: releases and asx announcements that seemed to push up that price.

684
00:30:36,520 --> 00:30:38,000
Speaker 2: Well quite literally what it was.

685
00:30:38,080 --> 00:30:41,640
Speaker 1: They were making announcements that basically said they had deals

686
00:30:41,640 --> 00:30:43,880
Speaker 1: with Amazon, etc. And they didn't have a deal. They

687
00:30:43,920 --> 00:30:46,960
Speaker 1: had like a trial. So I actually wrote I'm just

688
00:30:46,960 --> 00:30:50,880
Speaker 1: looking at I wrote in twenty eighteen about this, and

689
00:30:50,920 --> 00:30:54,120
Speaker 1: I said it was felt like nineteen hiney nine. Still

690
00:30:54,240 --> 00:30:59,680
Speaker 1: still does. But basically I said, ASEX market get swift

691
00:30:59,760 --> 00:31:02,360
Speaker 1: was itself as software of a service, and it seems

692
00:31:02,360 --> 00:31:04,200
Speaker 1: to be very good at building high but ultily informing

693
00:31:04,240 --> 00:31:06,400
Speaker 1: the market every time it signs a contract, whether binding

694
00:31:06,440 --> 00:31:08,720
Speaker 1: or not, without actually specifying how much revenue, if any,

695
00:31:08,720 --> 00:31:11,440
Speaker 1: will be derived. So it was so obvious that this

696
00:31:11,480 --> 00:31:14,120
Speaker 1: thing was a shunk. I said. The problem gets with

697
00:31:14,240 --> 00:31:16,560
Speaker 1: virtually has no revenue. Total cash flow was a milely

698
00:31:16,600 --> 00:31:19,200
Speaker 1: two hundred and ninety thousand, and wiringly, industry is side

699
00:31:19,200 --> 00:31:22,000
Speaker 1: to suggest that gets with technology it's decidedly average. So

700
00:31:22,080 --> 00:31:25,320
Speaker 1: this was the most obvious sham ever. So it's hard

701
00:31:25,360 --> 00:31:27,520
Speaker 1: to feel too sorry for investors, like not that McDonald

702
00:31:27,560 --> 00:31:29,800
Speaker 1: and Hunt to deserve any sympathy, but it's hard to

703
00:31:29,800 --> 00:31:31,640
Speaker 1: feel too sorry for investors who fell for this because

704
00:31:31,680 --> 00:31:32,960
Speaker 1: this was so obvious that.

705
00:31:32,920 --> 00:31:37,440
Speaker 2: Well, I've them very tempted to get some business mentoring

706
00:31:37,600 --> 00:31:41,160
Speaker 2: from Joel McDonald because I would be quite intrigued to

707
00:31:41,280 --> 00:31:44,560
Speaker 2: know what the advice is that he would give, because

708
00:31:44,600 --> 00:31:46,680
Speaker 2: you know, people that have been through the flames of

709
00:31:46,720 --> 00:31:50,880
Speaker 2: hell deservedly or undeservedly, like I think probably in this

710
00:31:50,960 --> 00:31:54,800
Speaker 2: case there was some deservedness about the fall. But people

711
00:31:54,840 --> 00:31:57,080
Speaker 2: that have been through the flames of hell often they

712
00:31:57,160 --> 00:32:01,640
Speaker 2: learn quite wise things and come out the back much wiser.

713
00:32:02,320 --> 00:32:05,000
Speaker 2: And I'll be very intrigued to know whether he's come

714
00:32:05,040 --> 00:32:06,840
Speaker 2: out wise because the article that I read it was

715
00:32:06,840 --> 00:32:09,320
Speaker 2: like in the Herald Son something like that. I mean,

716
00:32:09,920 --> 00:32:11,400
Speaker 2: it kind of poked a bit of fun at the

717
00:32:11,400 --> 00:32:13,680
Speaker 2: whole concept of John McDonald doing this. But I am

718
00:32:13,760 --> 00:32:17,720
Speaker 2: genuinely interested to know what sort of mentoring advice he

719
00:32:17,760 --> 00:32:20,600
Speaker 2: would give, having gone through the experiences that he's done.

720
00:32:20,640 --> 00:32:22,760
Speaker 2: So if I do it and he if he agrees

721
00:32:22,800 --> 00:32:25,080
Speaker 2: to it, then I'll let you know what the wisdom

722
00:32:25,160 --> 00:32:27,680
Speaker 2: is that he shared with me, and I'll keep an

723
00:32:27,680 --> 00:32:30,240
Speaker 2: open mind with it. I'll keep an open mind with it.

724
00:32:30,440 --> 00:32:33,440
Speaker 1: Justice Lee found that McDonald was knowingly involved in twenty

725
00:32:33,480 --> 00:32:36,760
Speaker 1: of twenty two continuous disclosure breaches. Three of the misleading

726
00:32:36,760 --> 00:32:40,000
Speaker 1: in sective contraventions had breached director's duty. So yeah, it

727
00:32:40,120 --> 00:32:41,920
Speaker 1: was a civil action not a criminal action. But it's

728
00:32:41,920 --> 00:32:44,480
Speaker 1: a pretty fine line there, and it's obviously easier for

729
00:32:44,560 --> 00:32:46,400
Speaker 1: ASID to get a win on the civil stuff. So

730
00:32:46,960 --> 00:32:50,440
Speaker 1: they got absolutely creamed on that stuff, which is pretty

731
00:32:50,520 --> 00:32:52,600
Speaker 1: rare because ASID don't go after too many people these days,

732
00:32:52,600 --> 00:32:55,960
Speaker 1: to be honest, So I ask for prosecuting this case.

733
00:32:56,240 --> 00:32:57,640
Speaker 1: Would have been good if he sent it a more

734
00:32:57,680 --> 00:32:59,280
Speaker 1: serious ratification, though.

735
00:32:59,280 --> 00:33:02,480
Speaker 2: I think that Justice Lee made some comment along the

736
00:33:02,560 --> 00:33:05,640
Speaker 2: lines of that these people were much less interested. I

737
00:33:05,680 --> 00:33:08,360
Speaker 2: think it was actually specifically about Jill McDonald, much less

738
00:33:08,360 --> 00:33:11,440
Speaker 2: interested or aware of director's duties and much more so

739
00:33:11,560 --> 00:33:15,320
Speaker 2: in making money. And I think it's probably probably an

740
00:33:15,360 --> 00:33:16,240
Speaker 2: accurate summary.

741
00:33:16,280 --> 00:33:19,880
Speaker 1: Who were Justice Lee's famous quote from the Bruce Lamman case.

742
00:33:20,160 --> 00:33:22,080
Speaker 1: He ended up suing Channel ten and a bunch of

743
00:33:22,080 --> 00:33:24,440
Speaker 1: people for I think defamation, and Justice Lee he's got

744
00:33:24,440 --> 00:33:27,480
Speaker 1: this great turn of phrase, made that infamous comment. Bruce

745
00:33:27,520 --> 00:33:29,360
Speaker 1: Leammon made the mistake of going back for his hat

746
00:33:29,560 --> 00:33:32,040
Speaker 1: in one of the great legal judgments of our the

747
00:33:32,080 --> 00:33:34,640
Speaker 1: last decade, I Reckon when he famously soon for depot

748
00:33:34,640 --> 00:33:36,520
Speaker 1: after he got away with the first one Justice League

749
00:33:36,520 --> 00:33:39,160
Speaker 1: probably the pre eminent judge in Australia at the moment.

750
00:33:39,200 --> 00:33:41,600
Speaker 2: He's got a great turn of phrase and I'm fairly

751
00:33:41,640 --> 00:33:46,240
Speaker 2: confident he doesn't lack self confidence, so it's very enjoyable

752
00:33:46,280 --> 00:33:49,160
Speaker 2: to listen to his rules. There was so much news

753
00:33:49,200 --> 00:33:51,800
Speaker 2: actually in Australia this week. I'm trying to just give

754
00:33:51,800 --> 00:33:55,720
Speaker 2: you the short ones. So Kohala no IPO blamed it

755
00:33:55,760 --> 00:33:58,800
Speaker 2: on Tariff's. I'm not sure it was the fault of Tariff's.

756
00:33:58,840 --> 00:34:00,120
Speaker 2: I felt like it was going to be tough to

757
00:34:00,160 --> 00:34:03,000
Speaker 2: get an IPO away. I think they were hoping they

758
00:34:03,080 --> 00:34:05,200
Speaker 2: might be the next viewed as the next Templan Webster.

759
00:34:05,360 --> 00:34:07,600
Speaker 2: Maybe we'll talk about Temple Webster a bit later, but

760
00:34:07,800 --> 00:34:10,480
Speaker 2: alas they were not viewed as the next Temple in

761
00:34:10,520 --> 00:34:14,080
Speaker 2: Webster buy investors today, so they continue to trying to

762
00:34:14,080 --> 00:34:17,080
Speaker 2: look for an exit at some point in time. It's

763
00:34:17,080 --> 00:34:19,880
Speaker 2: actually a pretty decent business. I think it might end

764
00:34:19,960 --> 00:34:23,040
Speaker 2: up being a good business. Like I genuinely think that

765
00:34:23,080 --> 00:34:25,279
Speaker 2: business might end up being a good business. Like they're

766
00:34:25,320 --> 00:34:27,759
Speaker 2: growing and they're focused on making money. I think it

767
00:34:27,760 --> 00:34:30,360
Speaker 2: would be nice if they may improve their products. But

768
00:34:30,400 --> 00:34:32,919
Speaker 2: I think, I mean like they might do that down

769
00:34:32,920 --> 00:34:35,360
Speaker 2: the track. I think that they've built a nice brand.

770
00:34:36,000 --> 00:34:38,319
Speaker 2: I'm not dismissive of that business at all. I think

771
00:34:38,320 --> 00:34:40,319
Speaker 2: they did one of the hardest things to do. They

772
00:34:40,400 --> 00:34:44,480
Speaker 2: started as a strong brand etc. One point zero, which

773
00:34:44,600 --> 00:34:47,400
Speaker 2: is burn cash and lose money to build the brand

774
00:34:47,440 --> 00:34:50,520
Speaker 2: and everything will be okay. Almost all of those companies

775
00:34:50,560 --> 00:34:53,120
Speaker 2: went broke or lost ninety nine percent of their value,

776
00:34:54,200 --> 00:34:56,560
Speaker 2: and like All Birds is probably the classic example of

777
00:34:56,600 --> 00:34:59,000
Speaker 2: losing nine er percent, but Casper in the US, which

778
00:34:59,040 --> 00:35:01,799
Speaker 2: Kohala copied, I think it's fair to say they went

779
00:35:01,840 --> 00:35:03,799
Speaker 2: down a similar path, right, they lost most of the value.

780
00:35:03,840 --> 00:35:06,440
Speaker 2: And I think Kohala has done an extremely difficult thing,

781
00:35:06,480 --> 00:35:09,319
Speaker 2: which is to basically say, all right, we need to

782
00:35:09,320 --> 00:35:11,279
Speaker 2: figure out a way to stop losing money and try

783
00:35:11,280 --> 00:35:14,840
Speaker 2: to start making some whilst continuing to grow. And they've

784
00:35:15,320 --> 00:35:18,080
Speaker 2: executed a lot of that strategy. So yeah, I'm not

785
00:35:18,120 --> 00:35:21,080
Speaker 2: disparaging of that business at all. I am disparaging of

786
00:35:21,120 --> 00:35:25,520
Speaker 2: this though. Do you know how David Jones and Maya

787
00:35:25,760 --> 00:35:28,399
Speaker 2: are planning to compete against each other? Did you see

788
00:35:28,400 --> 00:35:31,920
Speaker 2: that bit of news? They've both got the same genius idea.

789
00:35:32,360 --> 00:35:34,719
Speaker 1: Well, that was massive news and I got contacted by

790
00:35:34,719 --> 00:35:37,040
Speaker 1: a number of people. So I'm presume you talking about

791
00:35:37,080 --> 00:35:39,759
Speaker 1: the points hook up between David Jones and Quantus Frequent

792
00:35:39,760 --> 00:35:40,960
Speaker 1: Flyer Quantus Loyalty.

793
00:35:41,160 --> 00:35:45,000
Speaker 2: So Olivia Worth has gone into Maya from Quantus Loyalty

794
00:35:45,840 --> 00:35:49,879
Speaker 2: and she is turning Maya into a loyalty centric type

795
00:35:49,920 --> 00:35:52,839
Speaker 2: of offering, and David Jones has said, well, we should

796
00:35:52,880 --> 00:35:55,480
Speaker 2: turn our business into a loyalty centric type of offering,

797
00:35:55,520 --> 00:35:58,560
Speaker 2: which they had various tie ups in the past. Yeah,

798
00:35:58,560 --> 00:36:01,640
Speaker 2: and they've gone and done a deal with Quantus Frequent Flyers.

799
00:36:02,760 --> 00:36:05,719
Speaker 2: And I can't think of anything that engenders less loyalty

800
00:36:05,880 --> 00:36:09,960
Speaker 2: to a business than them giving away loyalty to another

801
00:36:10,120 --> 00:36:13,040
Speaker 2: brand when you purchase from them. I mean, it is

802
00:36:13,120 --> 00:36:16,000
Speaker 2: just a bizarre concept, Like can you imagine the dynamic

803
00:36:16,080 --> 00:36:18,880
Speaker 2: of buying from David Jones because you get Quantus points.

804
00:36:19,120 --> 00:36:23,239
Speaker 2: It would mean that buying a commoditized product, when everybody's

805
00:36:23,239 --> 00:36:25,759
Speaker 2: price was the same, you would go and buy from

806
00:36:25,840 --> 00:36:28,560
Speaker 2: them because they give you points, Which is this just

807
00:36:28,640 --> 00:36:31,480
Speaker 2: the equivalent of them eroding what little bit of margin

808
00:36:31,520 --> 00:36:34,759
Speaker 2: they have anyway on that commoditized product. And I don't

809
00:36:34,760 --> 00:36:37,879
Speaker 2: really think that engenders any loyalty to David Jones. It's

810
00:36:37,920 --> 00:36:39,279
Speaker 2: just part of CAC, isn't it.

811
00:36:39,640 --> 00:36:43,000
Speaker 1: I think you're being a little bit harsh on DJs

812
00:36:43,040 --> 00:36:46,920
Speaker 1: and maya heir. They're giving points to a completely different business.

813
00:36:46,960 --> 00:36:49,399
Speaker 1: So it's like, it's not as if DJ is giving

814
00:36:49,480 --> 00:36:51,800
Speaker 1: loyalty points to a business that competes with DJs, like

815
00:36:51,880 --> 00:36:54,640
Speaker 1: Quantus doesn't compete with David Jones. Well, it's got a marketplace,

816
00:36:54,719 --> 00:36:56,000
Speaker 1: it doesn't really compete with David Jones.

817
00:36:56,040 --> 00:36:59,239
Speaker 2: Well I'd rather they give loyalty points to themselves, Like

818
00:36:59,400 --> 00:37:01,879
Speaker 2: what like, how is that the game to play?

819
00:37:02,080 --> 00:37:03,719
Speaker 1: There was a business that tried this. Have you heard

820
00:37:03,719 --> 00:37:06,120
Speaker 1: of thisiness called Woolworth's who did the exact thing that

821
00:37:06,160 --> 00:37:09,000
Speaker 1: youre talking about. They had everyday rewards, had to hook

822
00:37:09,080 --> 00:37:12,359
Speaker 1: up with quantas. Woolworths got rid of Quantus create their

823
00:37:12,360 --> 00:37:14,160
Speaker 1: own Like I said, okay, now all you can do

824
00:37:14,239 --> 00:37:16,759
Speaker 1: is use everyday rewards, and customers hated it and they

825
00:37:17,200 --> 00:37:19,400
Speaker 1: turned away from woolworth So Wilwors were forced to go

826
00:37:19,480 --> 00:37:22,520
Speaker 1: back to Quantus. So the explanation for that, and so

827
00:37:22,560 --> 00:37:25,520
Speaker 1: will Worth exactly what you said, and the market said no, no, no,

828
00:37:25,600 --> 00:37:28,360
Speaker 1: this isn't right. And the explanation for that is, and

829
00:37:28,360 --> 00:37:30,160
Speaker 1: this is the credit to Quantus, who have built an

830
00:37:30,239 --> 00:37:33,720
Speaker 1: incredible currency with their frequent fly points, is that people

831
00:37:33,800 --> 00:37:36,040
Speaker 1: value Quantus points more whole than they value other points.

832
00:37:36,360 --> 00:37:38,919
Speaker 1: So it actually makes it a proced favor Quantus point

833
00:37:38,960 --> 00:37:39,400
Speaker 1: is higher.

834
00:37:39,480 --> 00:37:42,680
Speaker 2: Yes, that's fine. I'm not saying that Quantus is the

835
00:37:42,719 --> 00:37:45,880
Speaker 2: wrong partner. What I'm saying is that your point is

836
00:37:45,880 --> 00:37:49,359
Speaker 2: the perfect illustration of what I'm saying. Woolworths doesn't get

837
00:37:49,360 --> 00:37:52,480
Speaker 2: any loyalty to those Quantus points, like people look at

838
00:37:52,480 --> 00:37:54,960
Speaker 2: who's cheaper or where they want to shop or and

839
00:37:55,280 --> 00:37:57,640
Speaker 2: the thing with like you could say Flybys, you know

840
00:37:57,719 --> 00:38:00,120
Speaker 2: they I think Flyways might push to virgin think I

841
00:38:00,120 --> 00:38:02,480
Speaker 2: think so. I think you can actually get status credits

842
00:38:02,520 --> 00:38:04,680
Speaker 2: from fly Bys to Vergon. And the thing is this,

843
00:38:04,920 --> 00:38:07,520
Speaker 2: there's a difference between a good strategy and good execution.

844
00:38:07,680 --> 00:38:10,319
Speaker 2: And the problem with these supermarkets is the execution of

845
00:38:10,360 --> 00:38:13,040
Speaker 2: their strategies on points is actually very poor and that's

846
00:38:13,040 --> 00:38:14,920
Speaker 2: why they just will wors goes back to the easy

847
00:38:14,920 --> 00:38:18,160
Speaker 2: option of Quantus. But I maintain it does not engender

848
00:38:18,480 --> 00:38:21,520
Speaker 2: loyalty to the brand that's doing the selling. It is

849
00:38:21,719 --> 00:38:24,720
Speaker 2: just cack it is just an extra cost of selling.

850
00:38:24,960 --> 00:38:27,160
Speaker 2: I mean, we can go back to the core fundamentals

851
00:38:27,160 --> 00:38:30,319
Speaker 2: of Hamilton Helmer on this discussion. So what does a

852
00:38:30,360 --> 00:38:33,799
Speaker 2: brand give you? It gives you pricing power, reduce CAC

853
00:38:33,880 --> 00:38:36,759
Speaker 2: and then what I've come to now call forgiveness. That's

854
00:38:36,840 --> 00:38:40,239
Speaker 2: my description of the third one. And so does the

855
00:38:40,280 --> 00:38:43,200
Speaker 2: quantus points give will Words pricing power? Definitely not. People

856
00:38:43,200 --> 00:38:44,600
Speaker 2: are not going to pay more at will Wors because

857
00:38:44,600 --> 00:38:46,640
Speaker 2: they get contus points. Does it reduce their CACK? I

858
00:38:46,640 --> 00:38:48,920
Speaker 2: would argue it actually increases their CAC because they have

859
00:38:48,920 --> 00:38:52,200
Speaker 2: to pay these quantus points. And does it get them forgiveness?

860
00:38:52,239 --> 00:38:55,960
Speaker 1: No? I think of being blase on the second point,

861
00:38:55,960 --> 00:38:59,080
Speaker 1: on the CAC point, I think that's where it is impactful.

862
00:38:59,400 --> 00:39:02,920
Speaker 1: And I'm not sure you're right. I think and quantus

863
00:39:02,920 --> 00:39:05,440
Speaker 1: are smart, We're Worse are smart that that they're a

864
00:39:05,480 --> 00:39:10,000
Speaker 1: really smart business. I think because quantus points are perceived

865
00:39:10,040 --> 00:39:14,280
Speaker 1: in value so highly that a brand like Worst can benefit.

866
00:39:14,600 --> 00:39:17,840
Speaker 1: The cost of a quantus point is called one. Probably

867
00:39:17,880 --> 00:39:20,960
Speaker 1: costs will worse just over one percent, just probably one

868
00:39:20,960 --> 00:39:24,239
Speaker 1: point is my guess. Their view, and I'm presume there's

869
00:39:24,239 --> 00:39:26,239
Speaker 1: some data that backs up this view. Is that that

870
00:39:26,320 --> 00:39:29,600
Speaker 1: cost is a cheaper cost than other forms of customer acquisition.

871
00:39:29,719 --> 00:39:32,680
Speaker 2: Well, you're probably right about that, but like, I'm not

872
00:39:32,719 --> 00:39:36,800
Speaker 2: sure that exactly qualifies as brand equity. But my biggest

873
00:39:36,880 --> 00:39:39,960
Speaker 2: complaint about David Jones and Meyer is this, Their core

874
00:39:40,080 --> 00:39:44,239
Speaker 2: problem is that they're a mini Internet when there's the

875
00:39:44,280 --> 00:39:47,879
Speaker 2: real Internet floating around. That's their core problem. And so

876
00:39:48,320 --> 00:39:50,239
Speaker 2: how do they go and get people to buy from

877
00:39:50,320 --> 00:39:54,680
Speaker 2: them in proper margin ways? Because the challenge is I

878
00:39:54,760 --> 00:39:57,560
Speaker 2: go online, I search, I find where things are cheapest.

879
00:39:57,719 --> 00:39:59,319
Speaker 2: And so one thing they do is they hope for

880
00:39:59,360 --> 00:40:03,400
Speaker 2: passing traffic in malls and so that's definitely a legitimate strategy.

881
00:40:03,840 --> 00:40:07,200
Speaker 2: But I just over and over cannot believe that these

882
00:40:07,239 --> 00:40:11,000
Speaker 2: brands have not gone on it and made some acquisitions

883
00:40:11,080 --> 00:40:14,359
Speaker 2: in the director consumer space and said, oh, you love

884
00:40:14,440 --> 00:40:17,600
Speaker 2: this brand and DTC, the place you can buy that

885
00:40:17,680 --> 00:40:20,640
Speaker 2: from is Meyer. Like Meyer is now the place that

886
00:40:20,719 --> 00:40:23,600
Speaker 2: has this brand and just get you know, some weak

887
00:40:23,719 --> 00:40:26,120
Speaker 2: version of cornered resource, which we could probably better call

888
00:40:26,160 --> 00:40:30,000
Speaker 2: it just exclusivity. And I know that was a historical plan,

889
00:40:30,160 --> 00:40:32,200
Speaker 2: but the truth is, if if like that was why

890
00:40:32,239 --> 00:40:34,800
Speaker 2: Meyer bought some of these other brands historically, et cetera.

891
00:40:35,280 --> 00:40:38,480
Speaker 2: It just seems to me there remains no compelling reason

892
00:40:38,520 --> 00:40:41,360
Speaker 2: to go into these department stores relative to just buying

893
00:40:41,400 --> 00:40:42,320
Speaker 2: stuff on the internet.

894
00:40:42,560 --> 00:40:44,200
Speaker 1: I think in terms of your points, because going back

895
00:40:44,239 --> 00:40:46,160
Speaker 1: a few seconds to your points thing like, as you

896
00:40:46,200 --> 00:40:48,239
Speaker 1: know I've talked about on the show, we used to

897
00:40:48,280 --> 00:40:51,040
Speaker 1: partner with Quantas, then we partner with Virgin. I wouldn't

898
00:40:51,040 --> 00:40:52,759
Speaker 1: be a verse to partner with the airlines again. But

899
00:40:52,920 --> 00:40:54,719
Speaker 1: what we did was we create our own loyalty so

900
00:40:54,800 --> 00:40:57,680
Speaker 1: people earn and burn mutual escapes points. But I think

901
00:40:57,680 --> 00:40:59,319
Speaker 1: to your earlier point, you were saying, well, hat does

902
00:40:59,360 --> 00:41:01,919
Speaker 1: points impact loyalty? And my view is that the urn

903
00:41:01,960 --> 00:41:05,239
Speaker 1: burn is actually not about loyalty. It's about behavioral economics,

904
00:41:05,360 --> 00:41:09,200
Speaker 1: and it's about giving customers nudges and small it's effectly

905
00:41:09,200 --> 00:41:12,000
Speaker 1: a cacplay, and it's about giving customers small incentives to

906
00:41:12,000 --> 00:41:15,000
Speaker 1: purchase through us. When they're buying it. Maybe they're buying

907
00:41:15,000 --> 00:41:16,919
Speaker 1: commoetized product, maybe they're not, maybe they're buying a corner

908
00:41:16,960 --> 00:41:19,319
Speaker 1: resource product. But there's a reason to come back to us,

909
00:41:19,360 --> 00:41:21,640
Speaker 1: and they're getting a small reward for doing it. Versus

910
00:41:21,640 --> 00:41:23,359
Speaker 1: we also have a status credit part of the program.

911
00:41:23,400 --> 00:41:25,600
Speaker 1: Where you're getting satus question. That's about the switching costs

912
00:41:25,600 --> 00:41:27,680
Speaker 1: and loyalty. So there's sort of two elements to these

913
00:41:27,680 --> 00:41:30,960
Speaker 1: loyalty plans. And I wouldn't confuse thean burn with the

914
00:41:31,000 --> 00:41:33,360
Speaker 1: status credits cause both serve two very separate functions.

915
00:41:33,520 --> 00:41:35,239
Speaker 2: So well, that's a great point, that's a good way

916
00:41:35,280 --> 00:41:38,360
Speaker 2: to think about it. I definitely think at quantas the

917
00:41:38,400 --> 00:41:41,600
Speaker 2: status credits drive much more loyalty than the points. There's

918
00:41:41,640 --> 00:41:44,120
Speaker 2: no doubt about that. I mean, people are crazy about

919
00:41:44,120 --> 00:41:47,040
Speaker 2: those status credits. Yeah, that's the switching cost and that's

920
00:41:47,239 --> 00:41:49,120
Speaker 2: what we built it. And the very very last bit

921
00:41:49,160 --> 00:41:51,640
Speaker 2: of news in Australia, which is actually a couple of

922
00:41:51,640 --> 00:41:53,080
Speaker 2: weeks old now, but it just I think it was

923
00:41:53,160 --> 00:41:56,880
Speaker 2: launched last week, is that Brett Blundy launched this competitive

924
00:41:56,960 --> 00:42:00,600
Speaker 2: brand to Lingerie and Peter Alexander and all sorts of stuff.

925
00:42:01,000 --> 00:42:02,759
Speaker 2: It's called I don't even know how to pronounce it,

926
00:42:02,960 --> 00:42:06,879
Speaker 2: l e ays Lees. The point is they're going kind

927
00:42:06,880 --> 00:42:11,560
Speaker 2: of massive store rollout. I think ray Etoi is involved

928
00:42:11,560 --> 00:42:14,319
Speaker 2: in it as well as Brett Lundy. Okay, this is

929
00:42:14,440 --> 00:42:19,200
Speaker 2: like a pretty interesting threat to some of the existing

930
00:42:19,280 --> 00:42:23,120
Speaker 2: brands in Australia, like Peter Alexander, like you know, he

931
00:42:23,200 --> 00:42:26,000
Speaker 2: owned Haney Burdette. Obviously Brett Blundey as well started with

932
00:42:26,040 --> 00:42:29,080
Speaker 2: Bras and Things. Blundey has said many times he doesn't

933
00:42:29,120 --> 00:42:32,600
Speaker 2: do any business that doesn't have international potential. I can't

934
00:42:32,640 --> 00:42:35,839
Speaker 2: remember him starting a business for many years. I mean

935
00:42:35,880 --> 00:42:38,399
Speaker 2: he started Sanity and Bras and Things, and I don't

936
00:42:38,440 --> 00:42:40,480
Speaker 2: know if he started anything else apart from that. He

937
00:42:40,560 --> 00:42:41,799
Speaker 2: generally invests in things.

938
00:42:41,840 --> 00:42:43,440
Speaker 1: Did he start let me so, did he buy it?

939
00:42:43,719 --> 00:42:46,759
Speaker 2: I think he bought into that when it was relatively small,

940
00:42:46,800 --> 00:42:49,520
Speaker 2: which is what he often does. But starting from scratch

941
00:42:49,560 --> 00:42:52,680
Speaker 2: with a big investment, losing money to get it moving,

942
00:42:52,840 --> 00:42:55,200
Speaker 2: I mean, it's interesting that's the road he's going down.

943
00:42:55,280 --> 00:42:57,680
Speaker 2: He must think that he's spotted an opportunity that nobody

944
00:42:57,760 --> 00:43:01,120
Speaker 2: else has caught onto and he's he's going to aggressively

945
00:43:01,160 --> 00:43:03,040
Speaker 2: try and grow it. But it's definitely one to watch,

946
00:43:03,080 --> 00:43:05,000
Speaker 2: like I think it might shake up that category.

947
00:43:05,080 --> 00:43:07,800
Speaker 1: He doesn't get much wrong Bratt, so it wouldn't surprise

948
00:43:07,840 --> 00:43:09,279
Speaker 1: me at all if if he does well here, because

949
00:43:09,280 --> 00:43:12,520
Speaker 1: he's got as good a record obviously him solely the

950
00:43:12,560 --> 00:43:15,719
Speaker 1: two Douyenn's of Australian retail so we're not surprised me

951
00:43:15,719 --> 00:43:17,240
Speaker 1: in this slice this becomes a big success.

952
00:43:17,440 --> 00:43:19,120
Speaker 2: Well, it is a bit of a hymn against solely

953
00:43:19,160 --> 00:43:21,560
Speaker 2: on this one, right, because Peter Alexander is ripe for

954
00:43:21,840 --> 00:43:25,080
Speaker 2: being attacked at the moment, and so I think that

955
00:43:25,080 --> 00:43:27,680
Speaker 2: that will be very interesting and Peter Alexander being I mean,

956
00:43:27,719 --> 00:43:30,040
Speaker 2: it's not going to happen overnight. But if Peter Alexander

957
00:43:30,120 --> 00:43:33,879
Speaker 2: does suffer at the hands of this new brand, that's

958
00:43:33,960 --> 00:43:36,680
Speaker 2: big problems from Premiere because Smigel is not doing the

959
00:43:36,719 --> 00:43:39,560
Speaker 2: heavy lifting at Premiere. It's Peter Alexander that's doing it,

960
00:43:39,680 --> 00:43:42,880
Speaker 2: and so that needs to keep firing really for Premier

961
00:43:42,920 --> 00:43:44,000
Speaker 2: to keep growing the way it is.

962
00:43:44,239 --> 00:43:46,480
Speaker 1: Absolutely, and that's probably why Premier is training at it,

963
00:43:46,719 --> 00:43:49,440
Speaker 1: we think at pretty discount of price because there's some

964
00:43:49,440 --> 00:43:52,239
Speaker 1: real issues that it's two engine rooms. Yeah, so we'll

965
00:43:52,280 --> 00:43:53,960
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966
00:43:54,000 --> 00:43:57,640
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1001
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1002
00:46:09,960 --> 00:46:11,600
Speaker 1: talk about I'm not sure if you saw this idea,

1003
00:46:11,640 --> 00:46:15,680
Speaker 1: but Mecha last week dropped its calendar year twenty twenty

1004
00:46:15,680 --> 00:46:19,239
Speaker 1: three financials to Ask and the business reported a really

1005
00:46:19,280 --> 00:46:22,320
Speaker 1: strong rising sales to one point two billion, up around

1006
00:46:22,360 --> 00:46:24,160
Speaker 1: twenty five percent from nine to seventy one million the

1007
00:46:24,160 --> 00:46:27,440
Speaker 1: prior year. Marri In mind, these are really old numbers,

1008
00:46:27,440 --> 00:46:30,200
Speaker 1: so this is sort of This year ended eighteen months ago.

1009
00:46:30,239 --> 00:46:31,799
Speaker 2: I mean I was going to say that, like, this

1010
00:46:31,920 --> 00:46:33,560
Speaker 2: is two years old. Where did they find this in

1011
00:46:33,640 --> 00:46:37,080
Speaker 2: like Tutin Carmen's pyramid or something like. I mean, it's

1012
00:46:37,719 --> 00:46:38,680
Speaker 2: that's pretty much the point.

1013
00:46:38,760 --> 00:46:42,000
Speaker 1: So, and Mecca hasn't released twenty twenty four results yet

1014
00:46:42,560 --> 00:46:45,360
Speaker 1: on these results were legally due within four months at

1015
00:46:45,360 --> 00:46:47,040
Speaker 1: the end of financial years, so they were due what

1016
00:46:47,200 --> 00:46:50,319
Speaker 1: thirty aprils for As you know, I love Mecca and

1017
00:46:50,360 --> 00:46:52,240
Speaker 1: I love Joe and Pete, but this is really surprising.

1018
00:46:52,239 --> 00:46:54,040
Speaker 1: This is the Australian has been all over this. So

1019
00:46:54,080 --> 00:46:56,840
Speaker 1: obviously revenue was a great number, but surprisingly the business

1020
00:46:56,960 --> 00:46:59,200
Speaker 1: can is eighteen months old. But the business reported a

1021
00:46:59,200 --> 00:47:02,840
Speaker 1: pretty temperate growth for twenty twenty three of only three percent,

1022
00:47:03,320 --> 00:47:06,480
Speaker 1: grew to twenty eight million net profits. I still a

1023
00:47:06,600 --> 00:47:10,040
Speaker 1: very profitable business, but I found that really surprising given

1024
00:47:10,160 --> 00:47:13,320
Speaker 1: just how well it grew on a top line basis.

1025
00:47:13,440 --> 00:47:15,080
Speaker 2: So what did you say The net profit was twenty

1026
00:47:15,120 --> 00:47:17,759
Speaker 2: eight million? Yeah, so basically didn't move. It moved at

1027
00:47:17,760 --> 00:47:20,279
Speaker 2: sub inflation that year. So are you telling me that

1028
00:47:20,400 --> 00:47:22,560
Speaker 2: all of the effort to sell one point two billion

1029
00:47:22,600 --> 00:47:25,920
Speaker 2: dollars of stuff produces twenty eight million dollars of what

1030
00:47:26,160 --> 00:47:28,200
Speaker 2: end patters and pat Yeah, all right, well that's so,

1031
00:47:28,320 --> 00:47:31,239
Speaker 2: what's that multiplied by one point four to two or

1032
00:47:31,239 --> 00:47:33,480
Speaker 2: something to just put the tax back into it and

1033
00:47:33,520 --> 00:47:36,560
Speaker 2: so take it north of forty. I mean, it's amazing

1034
00:47:36,600 --> 00:47:38,520
Speaker 2: how low the margins are. I mean it's running on

1035
00:47:38,600 --> 00:47:41,759
Speaker 2: three to four percent pretext profit margins.

1036
00:47:42,000 --> 00:47:44,759
Speaker 1: Well, also, what's what's surprising is they grew like to grow.

1037
00:47:45,080 --> 00:47:48,200
Speaker 1: They're obviously at scale nine to seventy million. Previous years

1038
00:47:48,200 --> 00:47:51,400
Speaker 1: at scale, they grew two hundred and two hundred and

1039
00:47:51,440 --> 00:47:55,839
Speaker 1: thirty million dollars of revenue and of that only one

1040
00:47:55,880 --> 00:47:57,479
Speaker 1: million dropped to the bottom line.

1041
00:47:57,480 --> 00:48:00,880
Speaker 2: Well, you know, that is my favorite metric with grew businesses. Like,

1042
00:48:01,040 --> 00:48:05,319
Speaker 2: my favorite metric is what percentage of incremental revenue hits

1043
00:48:05,320 --> 00:48:08,520
Speaker 2: the profit? And the answer is one over two hundred

1044
00:48:08,560 --> 00:48:10,799
Speaker 2: and thirty. As you can work out that is less

1045
00:48:10,840 --> 00:48:13,200
Speaker 2: than half a percent. The shame having some sort of

1046
00:48:13,200 --> 00:48:16,759
Speaker 2: fat wire against Mecca. It also reported that it's ambitious

1047
00:48:16,800 --> 00:48:20,920
Speaker 2: flagship store in Berk Street in Melbourne, featuring a mechaversity

1048
00:48:21,040 --> 00:48:24,960
Speaker 2: auditoriumf lecture salon and apothetic carey in a Heritage list

1049
00:48:24,960 --> 00:48:27,160
Speaker 2: of building, has hit a speed bump. Site was meant

1050
00:48:27,160 --> 00:48:29,120
Speaker 2: to be open in May, but a Mecha spokesman said

1051
00:48:29,160 --> 00:48:31,759
Speaker 2: will open later this year. Meca Accounts also said the

1052
00:48:31,760 --> 00:48:33,560
Speaker 2: company took an extra seventy million dollars in debt in

1053
00:48:33,600 --> 00:48:36,400
Speaker 2: twenty three to three, increasing it's borrowing to three twenty

1054
00:48:36,440 --> 00:48:38,879
Speaker 2: four million, and no dividend was paid, and had paid

1055
00:48:38,920 --> 00:48:41,839
Speaker 2: really big dividends previously, so this is And obviously twenty

1056
00:48:41,840 --> 00:48:43,920
Speaker 2: twenty five has been released yet. And these are ASSEIC

1057
00:48:44,040 --> 00:48:46,600
Speaker 2: filings though, right, so these might not be Like, this

1058
00:48:46,760 --> 00:48:51,560
Speaker 2: is not the equivalent of a company producing an income statement,

1059
00:48:51,640 --> 00:48:54,120
Speaker 2: let's say, for an ASX listed company, because you don't

1060
00:48:54,120 --> 00:48:56,319
Speaker 2: know if there are entities that are not included in

1061
00:48:56,400 --> 00:48:59,360
Speaker 2: this filing. And I would just take this following with

1062
00:48:59,400 --> 00:49:02,400
Speaker 2: a slight grain of salt, but directionally, I think you

1063
00:49:02,400 --> 00:49:05,840
Speaker 2: could probably if it's similar to previous years, you could

1064
00:49:06,160 --> 00:49:08,640
Speaker 2: deduce something about the growth of the business from this.

1065
00:49:08,680 --> 00:49:10,480
Speaker 2: And obviously we both wought make it to succeed, like

1066
00:49:10,520 --> 00:49:12,279
Speaker 2: we both think it's a tremendous business, and we hope

1067
00:49:12,280 --> 00:49:13,160
Speaker 2: we wish it success.

1068
00:49:13,239 --> 00:49:15,279
Speaker 1: Yeah, you know how much I love this business and

1069
00:49:15,280 --> 00:49:17,640
Speaker 1: how much I love the founders. I just I couldn't

1070
00:49:17,880 --> 00:49:21,600
Speaker 1: believe these numbers and let's hope there's other things that play.

1071
00:49:21,640 --> 00:49:24,280
Speaker 1: But the way is that the rich list and everyone's

1072
00:49:24,600 --> 00:49:27,040
Speaker 1: vowing it at one billion plus, there's that two billion

1073
00:49:27,080 --> 00:49:28,640
Speaker 1: number banded around that was just a bit of a

1074
00:49:28,719 --> 00:49:30,920
Speaker 1: sort of marketing number. But even at one billion, and

1075
00:49:31,040 --> 00:49:32,560
Speaker 1: you talk about this all the time, and we've seen

1076
00:49:32,560 --> 00:49:34,560
Speaker 1: the reverse at Catapult, when you guys been able to

1077
00:49:34,600 --> 00:49:37,560
Speaker 1: really widen the jaws. But Mecha is a business that

1078
00:49:37,640 --> 00:49:41,319
Speaker 1: now should be scaling profitability significantly. I thought it'd be

1079
00:49:41,320 --> 00:49:43,400
Speaker 1: making sort of basically one hundred million bucks at this

1080
00:49:43,480 --> 00:49:46,080
Speaker 1: level of revenue. For a business at that sort of level,

1081
00:49:46,480 --> 00:49:49,399
Speaker 1: it's surprising that it's not given its its customer love.

1082
00:49:49,800 --> 00:49:51,600
Speaker 1: Given it's got all that corner, all its powers, it's

1083
00:49:51,600 --> 00:49:54,120
Speaker 1: got scale, it's got corner resource, it's got brand, it's

1084
00:49:54,160 --> 00:49:56,279
Speaker 1: got some great competitive advantages.

1085
00:49:56,000 --> 00:49:59,480
Speaker 2: And never discann never disca you can only buy certain

1086
00:49:59,520 --> 00:50:02,760
Speaker 2: products at Mecca, like they've cornered the market on brands.

1087
00:50:03,680 --> 00:50:06,600
Speaker 2: That's why I just feel that this is dubious. Like

1088
00:50:06,840 --> 00:50:08,799
Speaker 2: I find it hard to believe that a business that

1089
00:50:08,840 --> 00:50:11,680
Speaker 2: does all of the things that we've just described and

1090
00:50:11,800 --> 00:50:14,680
Speaker 2: has a loyal customer base that repeat purchases like there

1091
00:50:14,719 --> 00:50:16,840
Speaker 2: is so much loyalty to this brand. Yeah, so the

1092
00:50:16,920 --> 00:50:21,040
Speaker 2: cat can't be crazy, like where is this money going?

1093
00:50:21,520 --> 00:50:24,000
Speaker 2: Like it just feels hard to understand me.

1094
00:50:24,200 --> 00:50:26,120
Speaker 1: Yeah, to miss hope. Hopefully the twenty twenty four the

1095
00:50:26,160 --> 00:50:28,239
Speaker 1: twenty twenty four number should drop pretty soon, given these

1096
00:50:28,280 --> 00:50:31,080
Speaker 1: strains all over them, and that's due. And I think

1097
00:50:31,120 --> 00:50:33,640
Speaker 1: Gena Earnhardt once didn't submit her numbers for like five years,

1098
00:50:33,640 --> 00:50:36,439
Speaker 1: but I'll be surprised if Mecca don't because they're pretty

1099
00:50:36,520 --> 00:50:39,120
Speaker 1: upstanding citizen usually. So hopefully this gets sort of can

1100
00:50:39,120 --> 00:50:41,319
Speaker 1: Hopefully the twenty twenty four numbers reveal sort of some

1101
00:50:41,360 --> 00:50:43,520
Speaker 1: massive profit growth of sort of what fifty million or

1102
00:50:43,520 --> 00:50:46,200
Speaker 1: something like that. That's that's sort of what we think it

1103
00:50:46,200 --> 00:50:48,920
Speaker 1: should be. At a minimum, good retailers should be spinning

1104
00:50:48,920 --> 00:50:52,239
Speaker 1: off at more than a five percent five percent eaveit March,

1105
00:50:52,320 --> 00:50:52,719
Speaker 1: I'm sure.

1106
00:50:52,880 --> 00:50:56,520
Speaker 2: But sometimes you have these weird lodgments with aciquare you

1107
00:50:56,520 --> 00:51:00,960
Speaker 2: know Harris Farms, the supermarket business, they had this absolute

1108
00:51:01,080 --> 00:51:03,680
Speaker 2: bomb of a year, like as in Terrance, I think

1109
00:51:03,680 --> 00:51:06,239
Speaker 2: in twenty three or something, but then they basically said, oh,

1110
00:51:06,280 --> 00:51:09,920
Speaker 2: because we invested in this stuff, like it looked disastrous frankly,

1111
00:51:10,440 --> 00:51:13,160
Speaker 2: but like presumably it's not as disastrous as it looks,

1112
00:51:13,160 --> 00:51:15,000
Speaker 2: because they seem to be pretty rich. And I think

1113
00:51:15,000 --> 00:51:17,600
Speaker 2: the year after they went back to printing cash. So, like,

1114
00:51:18,040 --> 00:51:21,120
Speaker 2: you know what, when I think about one point two bill,

1115
00:51:21,600 --> 00:51:23,320
Speaker 2: and then I think about what are the key expenses?

1116
00:51:23,360 --> 00:51:25,440
Speaker 2: So they've got like the cogs they're going to but

1117
00:51:25,680 --> 00:51:28,680
Speaker 2: like their gross margins got they've got to be thirty

1118
00:51:28,680 --> 00:51:31,000
Speaker 2: five or forty percent, don't they could be high because

1119
00:51:31,000 --> 00:51:34,480
Speaker 2: they've got these cornered products, right and so, and then

1120
00:51:34,520 --> 00:51:36,960
Speaker 2: what are they paying for that? Surely the predominant other

1121
00:51:37,040 --> 00:51:40,040
Speaker 2: cost is just going to be store rent and staff, right,

1122
00:51:40,120 --> 00:51:41,880
Speaker 2: like actual physical store costs.

1123
00:51:42,800 --> 00:51:43,440
Speaker 1: I just it.

1124
00:51:43,440 --> 00:51:47,239
Speaker 2: Feels hard to me to imagine that if you've got

1125
00:51:47,360 --> 00:51:51,080
Speaker 2: foot let's even just say thirty five percent left after cogs,

1126
00:51:51,320 --> 00:51:53,719
Speaker 2: all of these other things they're eating thirty one or

1127
00:51:53,760 --> 00:51:56,080
Speaker 2: thirty two percent of your top line, that one third

1128
00:51:56,080 --> 00:51:58,240
Speaker 2: of your revenue is going to be consumed by stores,

1129
00:51:58,280 --> 00:52:02,400
Speaker 2: people and general expense. It just it feels like a lot.

1130
00:52:02,640 --> 00:52:04,239
Speaker 2: But yeah, I wish, yeah, would be interesting to know

1131
00:52:04,360 --> 00:52:05,759
Speaker 2: the answer to it. So that's why I'm a bit

1132
00:52:05,880 --> 00:52:07,800
Speaker 2: kind of suspicious about these results.

1133
00:52:07,840 --> 00:52:10,319
Speaker 1: Yeah, let's move on to another business that is much

1134
00:52:10,360 --> 00:52:13,240
Speaker 1: more broadway these days. Have he had a business called Article.

1135
00:52:13,480 --> 00:52:16,280
Speaker 2: I absolutely know what that business is talking about, businesses

1136
00:52:16,320 --> 00:52:18,720
Speaker 2: whose price has completely bombed.

1137
00:52:19,000 --> 00:52:21,400
Speaker 1: It was the Red Bubble. That's their business. It was

1138
00:52:21,440 --> 00:52:23,120
Speaker 1: Red Bubble. And I'm not sure if you heard the

1139
00:52:23,120 --> 00:52:26,440
Speaker 1: news last week, but as of Monday and rear windows

1140
00:52:26,440 --> 00:52:29,480
Speaker 1: been all over this. But former Amazon executive Vec Kumar

1141
00:52:29,960 --> 00:52:33,040
Speaker 1: has stepped into the role of group CEO. So Kumar

1142
00:52:33,160 --> 00:52:36,000
Speaker 1: had been running the marketplace business at Article, and before

1143
00:52:36,000 --> 00:52:38,520
Speaker 1: that had been running that quite successful tea public business

1144
00:52:38,520 --> 00:52:42,320
Speaker 1: that Article bought. As a result of this, the founder,

1145
00:52:42,440 --> 00:52:46,280
Speaker 1: Martin Hosking, who himself had been reappointed CEO, obviously departed.

1146
00:52:46,400 --> 00:52:48,480
Speaker 1: What do you reckon this business was worth in twenty

1147
00:52:48,560 --> 00:52:51,520
Speaker 1: twenty one, Oder, Well, I can tell you a story

1148
00:52:51,560 --> 00:52:54,759
Speaker 1: that starts a bit earlier. So in twenty nineteen, I

1149
00:52:54,840 --> 00:52:57,319
Speaker 1: was talking to analysts about this business and I said,

1150
00:52:57,320 --> 00:52:59,560
Speaker 1: I think this is a terrible business. It's like totally

1151
00:52:59,600 --> 00:53:02,839
Speaker 1: exposed the Amazon and basically sells vinyl stickers like it's

1152
00:53:02,880 --> 00:53:06,640
Speaker 1: an exaggeration, but like I thought, they had serious problems,

1153
00:53:06,760 --> 00:53:10,200
Speaker 1: and analysts largely agreed with me at the time. And

1154
00:53:10,239 --> 00:53:14,040
Speaker 1: then COVID came and they rocketed and then every and

1155
00:53:14,080 --> 00:53:15,400
Speaker 1: these analysts told me I was a more and I

1156
00:53:15,440 --> 00:53:17,880
Speaker 1: didn't understand the story but like being a contrum, and

1157
00:53:17,960 --> 00:53:20,560
Speaker 1: I felt perfectly fine about that. I'm like, well, let's

1158
00:53:20,560 --> 00:53:22,759
Speaker 1: just see what happens afterwards. And I think it's kind

1159
00:53:22,800 --> 00:53:25,160
Speaker 1: of gone back to the pre COVID story. It was

1160
00:53:25,200 --> 00:53:28,200
Speaker 1: probably a north of a billion dollar evaluation in COVID.

1161
00:53:28,480 --> 00:53:30,960
Speaker 1: Well we've gotten both of those directly right but actually wrong.

1162
00:53:31,000 --> 00:53:34,759
Speaker 1: It was worth almost two billion in twenty one, and

1163
00:53:34,800 --> 00:53:37,040
Speaker 1: this is after the business reported a forty two million

1164
00:53:37,080 --> 00:53:40,200
Speaker 1: dollar a half year profit. Incredibly, the entire business is

1165
00:53:40,239 --> 00:53:42,960
Speaker 1: now only worth fifty four million, so it was dropped

1166
00:53:42,960 --> 00:53:45,319
Speaker 1: on when is that ninety something percent? And now the.

1167
00:53:45,239 --> 00:53:47,720
Speaker 2: Business is worth about what it made in six months

1168
00:53:47,800 --> 00:53:50,200
Speaker 2: in profit. I would call it ninety seven and a

1169
00:53:50,280 --> 00:53:52,680
Speaker 2: half percent. Yeah, yeah, And it was worth thirty eight

1170
00:53:52,719 --> 00:53:54,839
Speaker 2: million a week ago. This is before Hosking and former

1171
00:53:54,920 --> 00:53:57,719
Speaker 2: chair and Ward were punted as CEO and chairman, respectively.

1172
00:53:57,960 --> 00:54:00,520
Speaker 2: And while article has been a disaster for almost everyone,

1173
00:54:00,560 --> 00:54:02,600
Speaker 2: there is one exception to this. And I've talked about

1174
00:54:02,600 --> 00:54:04,680
Speaker 2: this on the pod before and I've written about extensively.

1175
00:54:04,719 --> 00:54:07,520
Speaker 2: A bloke called Martin Hosking, as I mentioned the founder

1176
00:54:07,600 --> 00:54:10,080
Speaker 2: and former two time CEO Well, who managed what can

1177
00:54:10,160 --> 00:54:13,680
Speaker 2: only be described as exquisitely timed share sales. In October

1178
00:54:13,680 --> 00:54:16,560
Speaker 2: twenty twenty, Hosking sold six billion shares at five dollars

1179
00:54:16,600 --> 00:54:19,400
Speaker 2: fifty two each, netting thirty three million dollars, and at

1180
00:54:19,400 --> 00:54:21,239
Speaker 2: the time he said he had no intention to sell

1181
00:54:21,320 --> 00:54:23,600
Speaker 2: any further company shares in the their term, it remains

1182
00:54:23,640 --> 00:54:25,239
Speaker 2: fully committed to the long term.

1183
00:54:25,000 --> 00:54:27,480
Speaker 1: Goals and growth of the Red Bubble Group. And then

1184
00:54:27,560 --> 00:54:29,880
Speaker 1: less than a year later, so clearly Martin's view of

1185
00:54:29,920 --> 00:54:31,879
Speaker 1: long term is different to everyone else's view of long term.

1186
00:54:31,880 --> 00:54:34,200
Speaker 1: But less than years later, in September twenty twenty one,

1187
00:54:34,280 --> 00:54:36,719
Speaker 1: with a share price above four dollars, Hosking sold another

1188
00:54:36,760 --> 00:54:39,560
Speaker 1: twenty one million dollars worth of share, and incredibly, merely

1189
00:54:39,600 --> 00:54:42,439
Speaker 1: six weeks later, the business announced at catastrophic eighty five

1190
00:54:42,480 --> 00:54:46,719
Speaker 1: percent fall in EBITDA. So Martin Hosking collected fifty five

1191
00:54:46,800 --> 00:54:49,680
Speaker 1: million dollars while as a director those shares will were

1192
00:54:49,680 --> 00:54:52,279
Speaker 1: worth about five million dollars now and he's I think

1193
00:54:52,320 --> 00:54:55,160
Speaker 1: his remaining shares worth about seven million. Since the announcement,

1194
00:54:55,400 --> 00:54:57,880
Speaker 1: we did a couple of days, the share price rocketed

1195
00:54:57,960 --> 00:55:00,120
Speaker 1: forty three percent, but obviously it was so low that

1196
00:55:00,120 --> 00:55:03,120
Speaker 1: that kind of doesn't really matter. Are there any views

1197
00:55:03,120 --> 00:55:04,800
Speaker 1: on this absolute debarcle.

1198
00:55:04,920 --> 00:55:07,799
Speaker 2: Yeah, it's very hard for me to understand how this

1199
00:55:07,920 --> 00:55:10,000
Speaker 2: is going to be much of a business. I've met

1200
00:55:10,040 --> 00:55:11,600
Speaker 2: and Wad a couple of times, and I know the

1201
00:55:11,600 --> 00:55:14,719
Speaker 2: fin Review is a bit nasty about her. I think

1202
00:55:14,760 --> 00:55:16,600
Speaker 2: the Finn Review is not a big fan of and

1203
00:55:16,760 --> 00:55:19,160
Speaker 2: Ward at the moment. I think also they just want clicks.

1204
00:55:19,200 --> 00:55:21,719
Speaker 2: But in my couple of interactions with her, which were

1205
00:55:21,719 --> 00:55:24,359
Speaker 2: not very deep, but she was very lovely and I

1206
00:55:24,480 --> 00:55:26,120
Speaker 2: liked her and she was very pleasant to talk to.

1207
00:55:26,480 --> 00:55:28,319
Speaker 1: Maybe we organized that lunch and the one I went

1208
00:55:28,360 --> 00:55:30,879
Speaker 1: to and she was there, I think I sat next

1209
00:55:30,880 --> 00:55:31,120
Speaker 1: to her.

1210
00:55:31,280 --> 00:55:33,680
Speaker 2: On a side note of this whole story, I think

1211
00:55:33,960 --> 00:55:38,840
Speaker 2: targeting individuals so aggressively when they're not doing dodgy things.

1212
00:55:38,920 --> 00:55:41,960
Speaker 2: Maybe things are working out badly, but they're doing their best.

1213
00:55:42,080 --> 00:55:43,840
Speaker 2: I always say to you, I think there's a line

1214
00:55:43,920 --> 00:55:47,560
Speaker 2: somewhere that like, you know where, But I do think

1215
00:55:47,800 --> 00:55:50,640
Speaker 2: in this case, with this business, it's hard for me

1216
00:55:50,680 --> 00:55:52,520
Speaker 2: to see how this is going to become a something.

1217
00:55:52,640 --> 00:55:55,880
Speaker 1: Just Anward, I think just that the reason why Mark

1218
00:55:56,000 --> 00:55:57,680
Speaker 1: just know has gone so hard and she was obviously

1219
00:55:57,760 --> 00:55:59,960
Speaker 1: been sharing the Star Casino board.

1220
00:56:00,000 --> 00:56:02,760
Speaker 2: I should disclosed. That was a terrible decision, right, terrible.

1221
00:56:02,960 --> 00:56:05,000
Speaker 2: Well you can say that about and we were disclosed.

1222
00:56:05,040 --> 00:56:07,759
Speaker 1: We work. We start at actually escapes. But and like

1223
00:56:07,840 --> 00:56:10,279
Speaker 1: somebody's got a chair the it's like someone's got to

1224
00:56:10,280 --> 00:56:12,400
Speaker 1: be a lawyer for people on trial for murder. So

1225
00:56:12,520 --> 00:56:14,440
Speaker 1: somebody has to be a director this business. And if

1226
00:56:14,440 --> 00:56:17,040
Speaker 1: you look at the result at Star has been a

1227
00:56:17,040 --> 00:56:20,440
Speaker 1: great result. That's saved. The business has been like saved

1228
00:56:20,440 --> 00:56:22,080
Speaker 1: in many respects. Yes, the equity that he has dropped

1229
00:56:22,080 --> 00:56:24,680
Speaker 1: a lot, that wasn't An's fault. I think targeting her,

1230
00:56:24,760 --> 00:56:27,560
Speaker 1: targeting the person who takes on this incredibly difficult job

1231
00:56:27,560 --> 00:56:31,319
Speaker 1: effectively quasi administration of that business, I think that was

1232
00:56:31,600 --> 00:56:33,080
Speaker 1: that was really harsh and unfair.

1233
00:56:33,360 --> 00:56:35,080
Speaker 2: But as soon as I make it a good decision,

1234
00:56:35,239 --> 00:56:37,799
Speaker 2: Like I didn't say to you, she's bad for doing it,

1235
00:56:38,000 --> 00:56:39,920
Speaker 2: maybe you can argue she's good for doing it. What

1236
00:56:40,000 --> 00:56:41,640
Speaker 2: I said to you is I think as a person,

1237
00:56:41,680 --> 00:56:43,640
Speaker 2: like when you want to put your brand to things,

1238
00:56:43,960 --> 00:56:46,000
Speaker 2: it doesn't feel like that's the greatest thing to put

1239
00:56:46,000 --> 00:56:48,280
Speaker 2: your brand to right, Like, that's not a good decision.

1240
00:56:48,600 --> 00:56:50,319
Speaker 1: I personally, I think the fact that she's stuck it

1241
00:56:50,360 --> 00:56:52,600
Speaker 1: through and I think forty six boorded meetings in a year,

1242
00:56:52,760 --> 00:56:57,480
Speaker 1: that's that's an outstanding. That was crazy to read that, right,

1243
00:56:57,560 --> 00:57:01,040
Speaker 1: I could not believe that. Yeah, it's a doonishing. I

1244
00:57:01,080 --> 00:57:02,600
Speaker 1: agree with you. And if you look at her at

1245
00:57:02,640 --> 00:57:05,000
Speaker 1: Red Bubble, yes she shared Red Bubble again this disaster.

1246
00:57:05,040 --> 00:57:06,920
Speaker 1: There was nothing to do with her. I'm not sure why

1247
00:57:07,000 --> 00:57:09,200
Speaker 1: Mark was targeting her and not the guy who took

1248
00:57:09,200 --> 00:57:10,800
Speaker 1: fifty five million dollars out of the business while he

1249
00:57:10,880 --> 00:57:13,480
Speaker 1: was CEO and director and selling shares six before. He

1250
00:57:13,560 --> 00:57:16,240
Speaker 1: targeted the wrong guy, Mark, like, I thought, I love

1251
00:57:16,280 --> 00:57:18,080
Speaker 1: his writing, but I think too often he just goes

1252
00:57:18,080 --> 00:57:19,920
Speaker 1: after the wrong person. And this was the wrong He

1253
00:57:20,000 --> 00:57:21,720
Speaker 1: got the wrong target. Go after the guy with fifty

1254
00:57:21,720 --> 00:57:24,040
Speaker 1: five million bucks, not the poor director who got paid

1255
00:57:24,080 --> 00:57:24,880
Speaker 1: two hundred grand.

1256
00:57:25,120 --> 00:57:28,360
Speaker 2: I remember when and was appointed the chair of Red Bubble,

1257
00:57:28,360 --> 00:57:32,480
Speaker 2: and I know, like who organized that whole appointment, And

1258
00:57:32,520 --> 00:57:34,880
Speaker 2: I remember having a conversation at the time saying, I

1259
00:57:34,920 --> 00:57:37,080
Speaker 2: don't think this is the right company to become chair

1260
00:57:37,120 --> 00:57:40,240
Speaker 2: of because of the reasons that we've just been talking

1261
00:57:40,280 --> 00:57:42,880
Speaker 2: about and so I think there's a difference. And this

1262
00:57:42,960 --> 00:57:45,280
Speaker 2: is actually, this is exactly the point that I make

1263
00:57:45,360 --> 00:57:50,200
Speaker 2: about media commentary. I don't know what you call rear window,

1264
00:57:50,200 --> 00:57:51,880
Speaker 2: because the writing quality is very good, Like I don't

1265
00:57:51,880 --> 00:57:53,640
Speaker 2: want to call it a gossip whatever, but it's kind

1266
00:57:53,680 --> 00:57:56,960
Speaker 2: of like it's kind of like a bit of a look,

1267
00:57:57,360 --> 00:58:00,440
Speaker 2: a bit of a gossipy kind of business reporting, I guess.

1268
00:58:00,760 --> 00:58:02,400
Speaker 2: And if you're going to do that, I think maybe

1269
00:58:02,440 --> 00:58:04,440
Speaker 2: I think and would make the greatest choices of the

1270
00:58:04,440 --> 00:58:07,840
Speaker 2: businesses that she went to for her own career and reputation.

1271
00:58:08,200 --> 00:58:09,640
Speaker 2: I don't think it was terrible by the way. I

1272
00:58:09,640 --> 00:58:12,280
Speaker 2: think she's fine, but I think that is totally different

1273
00:58:12,760 --> 00:58:17,280
Speaker 2: to doing dodgy things, let alone illegal things, and the

1274
00:58:17,840 --> 00:58:20,720
Speaker 2: kind of scorn that gets poured on people like that

1275
00:58:20,840 --> 00:58:23,040
Speaker 2: kind of rear window scorn should be reserved for people

1276
00:58:23,080 --> 00:58:25,560
Speaker 2: who do dodgy and illegal things, not for people who

1277
00:58:25,560 --> 00:58:28,760
Speaker 2: maybe tried their best to run businesses that turned out

1278
00:58:28,800 --> 00:58:31,000
Speaker 2: to be not the easiest or greatest businesses to run

1279
00:58:31,120 --> 00:58:31,600
Speaker 2: or to chair.

1280
00:58:32,040 --> 00:58:33,720
Speaker 1: Exactly what I was saying, I think you go after

1281
00:58:33,760 --> 00:58:36,160
Speaker 1: the CEO who took the money. I love Marx's riding.

1282
00:58:36,160 --> 00:58:37,880
Speaker 1: I think he's a super talented. I think Joe's shoes

1283
00:58:37,960 --> 00:58:39,600
Speaker 1: impossible to feel. But he's done it as good a

1284
00:58:39,680 --> 00:58:41,480
Speaker 1: job as anybody could have. So he's a great writer,

1285
00:58:41,560 --> 00:58:43,920
Speaker 1: and I've always looked forward to reading and staff. But

1286
00:58:43,960 --> 00:58:45,920
Speaker 1: I think I'd just love him to pick the right

1287
00:58:45,960 --> 00:58:48,600
Speaker 1: target sometimes, and this was just I thought, really unfair.

1288
00:58:48,640 --> 00:58:50,520
Speaker 1: I'd love to have a go up like I've done

1289
00:58:50,600 --> 00:58:52,720
Speaker 1: multiple times. And Martin Hosking had a massive go at

1290
00:58:52,760 --> 00:58:55,280
Speaker 1: me on Twitter afterwards, and I laughed about it. And

1291
00:58:55,320 --> 00:58:58,680
Speaker 1: as he says, right, selling tens of millions dollars of shares,

1292
00:58:59,160 --> 00:59:00,919
Speaker 1: saying you're not going to sell shares and selling shares

1293
00:59:01,160 --> 00:59:03,480
Speaker 1: months later and eight six weeks later having eighty five

1294
00:59:03,520 --> 00:59:06,800
Speaker 1: percent profit drop, Like that's the thing I've been looking at,

1295
00:59:07,040 --> 00:59:08,400
Speaker 1: Not the chairperson.

1296
00:59:08,880 --> 00:59:11,960
Speaker 2: Well, you know, I met him in New York right

1297
00:59:12,000 --> 00:59:14,960
Speaker 2: after Covid and Travel had just started and the share

1298
00:59:15,040 --> 00:59:18,840
Speaker 2: price was still flying high. And once again another person

1299
00:59:18,880 --> 00:59:22,680
Speaker 2: who was very nice to talk to. And I didn't

1300
00:59:22,680 --> 00:59:25,160
Speaker 2: find him in any way arrogant. He's got a particular

1301
00:59:25,360 --> 00:59:28,280
Speaker 2: demeanor about him, but in no way was he arrogant

1302
00:59:28,360 --> 00:59:31,880
Speaker 2: or anything. But like everybody was gathering around him just

1303
00:59:31,960 --> 00:59:34,920
Speaker 2: telling him how fantastic he was and how great the

1304
00:59:34,960 --> 00:59:38,120
Speaker 2: business is, and it is easy to be This was

1305
00:59:38,120 --> 00:59:40,320
Speaker 2: in New York, just after COVID and it.

1306
00:59:40,240 --> 00:59:41,600
Speaker 1: Was at what event.

1307
00:59:41,880 --> 00:59:45,520
Speaker 2: I know, it was like going to meet like American investors,

1308
00:59:45,560 --> 00:59:48,600
Speaker 2: and I happened to like cross paths with him. And

1309
00:59:49,600 --> 00:59:52,720
Speaker 2: you know, it's easy to believe the hype when it's

1310
00:59:52,760 --> 00:59:55,160
Speaker 2: all being directed at you in this super positive kind

1311
00:59:55,200 --> 00:59:58,360
Speaker 2: of way. And that doesn't diminish what you say about

1312
00:59:58,440 --> 01:00:00,160
Speaker 2: you know, saying you're going to be long term and

1313
01:00:00,200 --> 01:00:02,960
Speaker 2: then selling a year later, although I will emphasize, like

1314
01:00:03,040 --> 01:00:05,800
Speaker 2: you know, on a balance sheet, the difference between short

1315
01:00:05,880 --> 01:00:08,760
Speaker 2: term and long term is over under a year. So

1316
01:00:08,880 --> 01:00:11,600
Speaker 2: but I take your point. I think effectively, if you're

1317
01:00:11,600 --> 01:00:14,040
Speaker 2: going to heap scored on people, you should keep it

1318
01:00:14,080 --> 01:00:16,360
Speaker 2: on people that have taken a lot of money off

1319
01:00:16,360 --> 01:00:19,480
Speaker 2: the table. Because it's kind of Joe's approach to all

1320
01:00:19,520 --> 01:00:22,080
Speaker 2: of this, really totally. And I sat next to Month.

1321
01:00:22,080 --> 01:00:24,000
Speaker 2: I don't even remember's once at a dinner. It was

1322
01:00:24,000 --> 01:00:28,160
Speaker 2: a striped dinner. And my view is less favorable than yours.

1323
01:00:28,320 --> 01:00:31,040
Speaker 2: Let's just say, well, maybe I'm just softer in my

1324
01:00:31,200 --> 01:00:32,680
Speaker 2: general opinion of people.

1325
01:00:33,280 --> 01:00:35,120
Speaker 1: Maybe you are. Maybe I can I can see the

1326
01:00:35,160 --> 01:00:38,280
Speaker 1: good in people. I think you should be going for

1327
01:00:38,320 --> 01:00:38,880
Speaker 1: the next pope.

1328
01:00:39,080 --> 01:00:41,440
Speaker 2: Well that's a good job, isn't it. There's a lot

1329
01:00:41,440 --> 01:00:43,160
Speaker 2: of downside to that. I'm not sure. I'm not keen

1330
01:00:43,200 --> 01:00:47,480
Speaker 2: on the uniform at all. Religion might be an issue

1331
01:00:47,480 --> 01:00:48,360
Speaker 2: as well well.

1332
01:00:48,400 --> 01:00:50,640
Speaker 1: On the retail theme. But of a retail themed episode,

1333
01:00:50,640 --> 01:00:54,840
Speaker 1: this one. JB. Hifei about three weeks ago announced continued growth,

1334
01:00:54,840 --> 01:00:57,480
Speaker 1: which is with this Australian business growing six percent year

1335
01:00:57,520 --> 01:01:00,560
Speaker 1: on year, New Zealand growing seven percent and the market

1336
01:01:00,720 --> 01:01:04,760
Speaker 1: just absolutely loves this business. The share price it basically

1337
01:01:04,760 --> 01:01:06,400
Speaker 1: goes up every week. It hit a record high one

1338
01:01:06,480 --> 01:01:09,440
Speaker 1: hundred and twelve dollars a share and eighteen it was

1339
01:01:09,480 --> 01:01:11,640
Speaker 1: training at twenty two dollars a share, so it's basically

1340
01:01:11,840 --> 01:01:14,480
Speaker 1: five more than five x in eight years.

1341
01:01:14,560 --> 01:01:17,760
Speaker 2: That's unbelievable return for a retailer, for a company that

1342
01:01:17,920 --> 01:01:19,680
Speaker 2: was already such a high market cap.

1343
01:01:19,800 --> 01:01:22,440
Speaker 1: Right yeah, And despite that growth, it's p multiple is

1344
01:01:22,440 --> 01:01:25,240
Speaker 1: only still twenty six, so whilst it's not low like

1345
01:01:25,320 --> 01:01:27,120
Speaker 1: West Farmers is a stety three or thirty four, so

1346
01:01:27,160 --> 01:01:29,360
Speaker 1: it's a trade at a discount to West Farmers.

1347
01:01:29,360 --> 01:01:32,400
Speaker 2: Bizarrely, all right, but we can say on this like

1348
01:01:32,560 --> 01:01:34,480
Speaker 2: just to keep this in perspective, because you know, there

1349
01:01:34,520 --> 01:01:37,280
Speaker 2: is some insanity as you keep saying that's going on

1350
01:01:37,320 --> 01:01:37,800
Speaker 2: in the market.

1351
01:01:37,840 --> 01:01:38,360
Speaker 1: At the moment.

1352
01:01:38,960 --> 01:01:42,720
Speaker 2: You're paying twenty six times earnings for a seven percent grower,

1353
01:01:43,200 --> 01:01:46,040
Speaker 2: probably with not the most massive mpact margins.

1354
01:01:46,080 --> 01:01:49,160
Speaker 1: It's my guess it's got. I think it's got. Okay,

1355
01:01:49,800 --> 01:01:51,920
Speaker 1: I think it's in the sort of single digits, but

1356
01:01:52,080 --> 01:01:54,760
Speaker 1: not low single digits. Is there impact margin? The business

1357
01:01:54,600 --> 01:01:57,280
Speaker 1: was actually found in back in nineteen seventy four by JB.

1358
01:01:57,440 --> 01:01:59,600
Speaker 1: John Barbuto in the Melbourne I A Kill or East.

1359
01:01:59,600 --> 01:02:03,240
Speaker 1: I think JB died relatively recently. The original concept was

1360
01:02:03,240 --> 01:02:05,560
Speaker 1: to deliver a specialist range of high fire equipment obviously

1361
01:02:05,640 --> 01:02:08,920
Speaker 1: JB High Fire and recorded music at Mowas prices. In

1362
01:02:08,960 --> 01:02:11,800
Speaker 1: eighty three, Barbudo sold the business to Richard Brewers, David

1363
01:02:11,840 --> 01:02:15,120
Speaker 1: Ryder and Peter Caserta, who began expanding into a chain.

1364
01:02:15,600 --> 01:02:18,240
Speaker 1: Under new ownership, the business grew rapidly, opening stores in

1365
01:02:18,280 --> 01:02:21,400
Speaker 1: Melbourne and Sydney, and by two thousand the chain had

1366
01:02:21,400 --> 01:02:23,280
Speaker 1: ten stores and was turning over one hundred and fifty

1367
01:02:23,320 --> 01:02:26,080
Speaker 1: million dollars. Wilorths actually looked at buying it in two

1368
01:02:26,080 --> 01:02:28,560
Speaker 1: thousand and then decided against it and the retailer was

1369
01:02:28,560 --> 01:02:30,680
Speaker 1: bought by Do you remember who bought it in two thousand.

1370
01:02:30,480 --> 01:02:32,000
Speaker 2: No, I've got no idea, but I know that there's

1371
01:02:32,000 --> 01:02:33,840
Speaker 2: a very big house and it is owned by someone

1372
01:02:33,840 --> 01:02:36,920
Speaker 2: that used to run JB. I think absolute mansion on

1373
01:02:37,040 --> 01:02:38,800
Speaker 2: danton On Road in Corefield.

1374
01:02:38,960 --> 01:02:41,200
Speaker 1: Was it not Richard Murray who used to be CEO?

1375
01:02:41,240 --> 01:02:43,720
Speaker 2: Potentially, I don't know. I don't think it's him anyway.

1376
01:02:43,760 --> 01:02:44,800
Speaker 2: Who to tell me who bought it?

1377
01:02:44,800 --> 01:02:47,240
Speaker 1: So one of mcruarie's private equity, like it's sort of

1378
01:02:47,280 --> 01:02:49,680
Speaker 1: in house private equity funds brought it and I actually

1379
01:02:49,680 --> 01:02:51,840
Speaker 1: took it to the ASX just like three years later,

1380
01:02:51,960 --> 01:02:55,800
Speaker 1: which was incredible for not a crazy evaluation. In July

1381
01:02:55,880 --> 01:02:57,960
Speaker 1: thousand and four, JB bought seventy percent of the clib

1382
01:02:58,000 --> 01:03:00,560
Speaker 1: Anthy's chain in Queensland, which is why it's actually quite

1383
01:03:00,600 --> 01:03:02,560
Speaker 1: dominant up there, and in two thousand and six they

1384
01:03:02,720 --> 01:03:05,520
Speaker 1: required the Hill and Stewart chain of eleven stores in

1385
01:03:05,560 --> 01:03:09,160
Speaker 1: New Zealand. In twenty sixteen, it brought the biggest exquisition

1386
01:03:09,200 --> 01:03:11,080
Speaker 1: of the Good Guys for eight hundred and seventy million

1387
01:03:11,120 --> 01:03:15,600
Speaker 1: dollars from the Mewer family and JB enlarged that shares

1388
01:03:16,040 --> 01:03:18,280
Speaker 1: a largest share of the home appliance retail market of

1389
01:03:18,280 --> 01:03:21,040
Speaker 1: twenty nine percent and of the consumer electronics retail market

1390
01:03:21,040 --> 01:03:22,040
Speaker 1: of twenty four percent.

1391
01:03:22,080 --> 01:03:23,840
Speaker 2: I told you before that I think, by the way,

1392
01:03:23,840 --> 01:03:26,560
Speaker 2: the good guys like they did not behave like JB highway.

1393
01:03:26,600 --> 01:03:28,479
Speaker 2: I told you I call them the bad guys. After

1394
01:03:28,520 --> 01:03:32,040
Speaker 2: my experiences with them, I think that their customer service

1395
01:03:32,120 --> 01:03:34,960
Speaker 2: and engagement the j this is, I mean, I'm talking

1396
01:03:35,320 --> 01:03:39,200
Speaker 2: three years ago, so might have changed the JB way,

1397
01:03:39,640 --> 01:03:42,320
Speaker 2: let's call it does not seem to have penetrated the

1398
01:03:42,480 --> 01:03:45,560
Speaker 2: armor of the good guys. They It felt very different

1399
01:03:45,600 --> 01:03:45,800
Speaker 2: to me.

1400
01:03:45,960 --> 01:03:47,600
Speaker 1: So just going on to your question before, so I

1401
01:03:47,600 --> 01:03:51,000
Speaker 1: look at their most recent so thirty first December numbers.

1402
01:03:51,040 --> 01:03:54,840
Speaker 1: They generated EBIT of four to twenty million on sales

1403
01:03:54,840 --> 01:03:57,840
Speaker 1: of five point six seven billion. This is obviously a

1404
01:03:57,840 --> 01:04:00,720
Speaker 1: few months five months ago, not the most recent. This

1405
01:04:00,760 --> 01:04:03,439
Speaker 1: isn't any report from February, but sort of the most

1406
01:04:03,480 --> 01:04:06,760
Speaker 1: recent half year so EBIT of four hundred and twenty

1407
01:04:06,920 --> 01:04:10,160
Speaker 1: on sales of five point six billion. So that's what

1408
01:04:11,000 --> 01:04:15,280
Speaker 1: eight percent margin EBIT margin, So pretty good for retailer

1409
01:04:15,800 --> 01:04:19,000
Speaker 1: that sell someone else's stuff. So let's talk powers on

1410
01:04:19,000 --> 01:04:22,600
Speaker 1: this business. I'm a huge JB hif I fan. And

1411
01:04:22,640 --> 01:04:24,800
Speaker 1: as the market is, what do we think, what do

1412
01:04:24,880 --> 01:04:25,680
Speaker 1: you think their powers are?

1413
01:04:25,920 --> 01:04:28,320
Speaker 2: Well, Best Boy it's got lots of problems in the US,

1414
01:04:28,440 --> 01:04:33,320
Speaker 2: like I think JB in their relative markets. JB is

1415
01:04:33,360 --> 01:04:36,760
Speaker 2: a much much better business in Australia than Best Buy

1416
01:04:37,080 --> 01:04:39,120
Speaker 2: is in the US. Like I think they've got issues

1417
01:04:39,120 --> 01:04:40,960
Speaker 2: in the US. I'd much rather own JB.

1418
01:04:41,000 --> 01:04:43,920
Speaker 1: And as they say, there's two types of businesses that

1419
01:04:43,920 --> 01:04:45,720
Speaker 1: can succeed. Is it a try and charge as much

1420
01:04:45,720 --> 01:04:47,720
Speaker 1: as they can and businesses try and charge as little

1421
01:04:47,720 --> 01:04:50,400
Speaker 1: as they can the walmarts. So JB is very much

1422
01:04:50,400 --> 01:04:53,560
Speaker 1: in the Walmart school. And like what they do so brilliantly,

1423
01:04:54,120 --> 01:04:56,240
Speaker 1: you know all that when they have the price, it

1424
01:04:56,240 --> 01:04:58,720
Speaker 1: looks like it's been handwritten, Like it looks like someone

1425
01:04:58,760 --> 01:05:01,600
Speaker 1: sort of discounting. As how, that's all obviously professionally done.

1426
01:05:01,640 --> 01:05:04,320
Speaker 1: That's no accident, that's all printed. The way they give

1427
01:05:04,360 --> 01:05:08,080
Speaker 1: the impression of giving great value when as you say,

1428
01:05:08,080 --> 01:05:11,400
Speaker 1: they're probably the same price as Maya, but you think

1429
01:05:11,400 --> 01:05:14,360
Speaker 1: you're getting just the yellow and black. It gives this

1430
01:05:14,520 --> 01:05:18,000
Speaker 1: great impression of great quality, great pricing. Don't you don't

1431
01:05:18,000 --> 01:05:20,080
Speaker 1: have to go anywhere else because we're the lowest price

1432
01:05:20,880 --> 01:05:22,720
Speaker 1: and you can trust us. We've got the best range.

1433
01:05:23,080 --> 01:05:25,120
Speaker 1: There's lots of lots of stores around. They do just

1434
01:05:25,160 --> 01:05:28,880
Speaker 1: that incredible job of giving the impression that you're saving

1435
01:05:28,920 --> 01:05:30,080
Speaker 1: money when you're probably not.

1436
01:05:30,400 --> 01:05:33,080
Speaker 2: Yeah, that was their whole business from I can you

1437
01:05:33,120 --> 01:05:35,840
Speaker 2: know one of the original JB high Fis could have

1438
01:05:35,880 --> 01:05:39,880
Speaker 2: been The original JB High Fi was on Nepean Highway

1439
01:05:39,920 --> 01:05:43,000
Speaker 2: in East Brighton. The first one was keen all right,

1440
01:05:43,400 --> 01:05:45,680
Speaker 2: what's one of the first few that JB and do

1441
01:05:45,720 --> 01:05:49,840
Speaker 2: you remember? Like their ads were like a glass window

1442
01:05:49,920 --> 01:05:52,200
Speaker 2: that said GB High Fi with a hammer being thrown.

1443
01:05:52,680 --> 01:05:56,560
Speaker 2: Like they were super focused on creating the vibe that

1444
01:05:56,640 --> 01:06:00,280
Speaker 2: you had found the cheapest, no food, to play, to

1445
01:06:00,320 --> 01:06:03,760
Speaker 2: buy CDs or records back in the day, right, So

1446
01:06:04,320 --> 01:06:07,600
Speaker 2: definitely that was their motivation. I think their stores are

1447
01:06:07,720 --> 01:06:11,640
Speaker 2: much nicer today than they were when they originally started

1448
01:06:11,640 --> 01:06:13,320
Speaker 2: that business model. They look much nicer.

1449
01:06:13,440 --> 01:06:15,800
Speaker 1: They had all those like CDs and tapes and record

1450
01:06:15,880 --> 01:06:19,240
Speaker 1: that was always looks messy and you've got that stuff implicitly,

1451
01:06:19,320 --> 01:06:21,560
Speaker 1: and I think what they've done so well is just

1452
01:06:21,720 --> 01:06:24,840
Speaker 1: keep up with consumer tastes. Like now they're a massive

1453
01:06:24,840 --> 01:06:26,840
Speaker 1: seller of apple products. For example, they never sold any

1454
01:06:26,840 --> 01:06:29,120
Speaker 1: apple products ten years ago. Yeah, they've just moved. They

1455
01:06:29,200 --> 01:06:32,480
Speaker 1: went from CDs and records to TVs to white wood

1456
01:06:32,480 --> 01:06:35,000
Speaker 1: and they've just been able to just pick that consumer

1457
01:06:35,080 --> 01:06:38,120
Speaker 1: mood before it happens. And they've seen definitely but Maya

1458
01:06:38,240 --> 01:06:41,120
Speaker 1: launched that big box competitor, like they've seen off everyone.

1459
01:06:41,280 --> 01:06:45,080
Speaker 1: They've just been an unbelievable story and so well run.

1460
01:06:45,120 --> 01:06:46,960
Speaker 1: And Terry Smart came back. So Terry Smart was running

1461
01:06:46,960 --> 01:06:49,280
Speaker 1: the business, handed over to Richard Murray. He came back.

1462
01:06:49,520 --> 01:06:51,640
Speaker 1: He'd have to be one of the best CEOs of

1463
01:06:51,640 --> 01:06:54,160
Speaker 1: the last two decades in Australia. This year price is

1464
01:06:54,200 --> 01:06:55,439
Speaker 1: up eighty five percent this year.

1465
01:06:55,560 --> 01:06:58,560
Speaker 2: So people tell me one of the powers of this business,

1466
01:06:58,600 --> 01:07:01,920
Speaker 2: I can't verify this, you know what? I hate this power?

1467
01:07:01,960 --> 01:07:03,400
Speaker 2: So which power am I talking about?

1468
01:07:03,720 --> 01:07:04,960
Speaker 1: Process power? Of course?

1469
01:07:05,360 --> 01:07:08,160
Speaker 2: And so but people, if you talk to analysts about

1470
01:07:08,160 --> 01:07:12,000
Speaker 2: this business, they will say JB hi Fi has some

1471
01:07:12,200 --> 01:07:16,600
Speaker 2: way of delivering a cost of selling, cost of sales

1472
01:07:17,040 --> 01:07:20,360
Speaker 2: that is just lower than their competitors, and they consistently

1473
01:07:20,520 --> 01:07:23,720
Speaker 2: squeeze out every extra cost, and so if you look

1474
01:07:23,760 --> 01:07:26,000
Speaker 2: at them and their competitors, somehow their cost of selling

1475
01:07:26,000 --> 01:07:28,680
Speaker 2: stuff is lower than their competitors. I've heard that for

1476
01:07:28,760 --> 01:07:31,080
Speaker 2: many years. I can't verify that it's true, but if

1477
01:07:31,120 --> 01:07:34,680
Speaker 2: that's true, I reckon that is heading into process power territory.

1478
01:07:34,800 --> 01:07:39,440
Speaker 1: Yeah, there's definitely some scale there, but other retailers have scale, So.

1479
01:07:39,960 --> 01:07:42,480
Speaker 2: No, it doesn't have a scale advantage against as competitors.

1480
01:07:42,680 --> 01:07:45,040
Speaker 1: Well, it probably is one of the biggest sellers of

1481
01:07:45,080 --> 01:07:48,680
Speaker 1: electronic product. Who's bigger in Australia Harving Norman, I don't

1482
01:07:48,680 --> 01:07:49,320
Speaker 1: think would be.

1483
01:07:50,520 --> 01:07:52,640
Speaker 2: Having Norman will get the same price that Well, it

1484
01:07:52,640 --> 01:07:55,160
Speaker 2: doesn't mean bigger like Harving Norman will be able to

1485
01:07:55,160 --> 01:07:59,080
Speaker 2: access the same scale benefits as Jbhiphi, So they're not

1486
01:07:59,080 --> 01:08:02,080
Speaker 2: going to outperform Norman based on scale. I actually think

1487
01:08:02,080 --> 01:08:04,400
Speaker 2: there is some sort of process power here. What else

1488
01:08:04,440 --> 01:08:09,040
Speaker 2: explains how they can just consistently outperform everyone over multiple CEOs,

1489
01:08:09,200 --> 01:08:12,680
Speaker 2: multiple leaders, multiple this is like four you know, there

1490
01:08:12,720 --> 01:08:15,640
Speaker 2: doesn't have to be more than one power like it

1491
01:08:15,680 --> 01:08:18,479
Speaker 2: can it can just all be explained by brand. That

1492
01:08:18,600 --> 01:08:21,160
Speaker 2: is a possibility, right, Like, there's not a lot of

1493
01:08:21,240 --> 01:08:22,839
Speaker 2: other magic to this business.

1494
01:08:23,080 --> 01:08:25,800
Speaker 1: We're talking about you generally need brand and something. I

1495
01:08:25,800 --> 01:08:28,519
Speaker 1: don't think and I think the only exceptions when we

1496
01:08:28,560 --> 01:08:31,120
Speaker 1: talked about just what those most can modernize those commodities, I.

1497
01:08:31,080 --> 01:08:34,559
Speaker 2: Don't think that's true. I disagree with that. You think

1498
01:08:34,600 --> 01:08:40,400
Speaker 2: about all of the other ones, like like network, NAP counterpositioning.

1499
01:08:39,880 --> 01:08:43,360
Speaker 1: No switching costs, no switching costs, no network, no switching

1500
01:08:43,400 --> 01:08:46,920
Speaker 1: costs zero. Yeah, no counterposition it's got to be I

1501
01:08:46,920 --> 01:08:48,800
Speaker 1: think there's actually I agree with those and I think

1502
01:08:48,800 --> 01:08:51,280
Speaker 1: there is process power here and I think cost Co

1503
01:08:51,439 --> 01:08:54,040
Speaker 1: and Warmer probably have a little bit of process power

1504
01:08:54,080 --> 01:08:57,440
Speaker 1: as well. I think there's great retails that can continue

1505
01:08:57,560 --> 01:08:59,320
Speaker 1: to be great. And we've seen what we've seen the

1506
01:08:59,320 --> 01:09:02,120
Speaker 1: opposite with my and David Jones. They don't have process

1507
01:09:02,160 --> 01:09:04,880
Speaker 1: power and they had scale. So the beauty of those

1508
01:09:04,920 --> 01:09:06,920
Speaker 1: departments is great scales. We have lots of people in

1509
01:09:06,920 --> 01:09:08,280
Speaker 1: the store, you can hire lots of people to work

1510
01:09:08,280 --> 01:09:10,080
Speaker 1: in the store, You get lots of products in there.

1511
01:09:10,280 --> 01:09:12,719
Speaker 1: And then as that scale unwinds, but like a negative

1512
01:09:12,720 --> 01:09:15,200
Speaker 1: capital unwinding, that those business why David Jones and may

1513
01:09:15,240 --> 01:09:18,160
Speaker 1: have struggles, have lost their scale power, so they've just

1514
01:09:18,200 --> 01:09:19,920
Speaker 1: got a bit of brand and not much else, but

1515
01:09:20,040 --> 01:09:22,960
Speaker 1: JB High Fi has some sort of secret source.

1516
01:09:23,200 --> 01:09:25,880
Speaker 2: They might, but you always go beyond the bread, like

1517
01:09:25,920 --> 01:09:28,640
Speaker 2: you can say this network effects, no scale economies, not

1518
01:09:28,720 --> 01:09:32,559
Speaker 2: against their competitors, switching costs, no CANNI positioning, no corded resource,

1519
01:09:32,640 --> 01:09:36,000
Speaker 2: no brand. Definitely process power. I know you're desperate to

1520
01:09:36,000 --> 01:09:39,080
Speaker 2: put that in, but I disagree with your idea that

1521
01:09:39,160 --> 01:09:41,679
Speaker 2: says you need a second power in order to build

1522
01:09:41,720 --> 01:09:43,559
Speaker 2: a great business, Like there are lots of big businesses

1523
01:09:43,560 --> 01:09:46,120
Speaker 2: that have no powers. We know that, and I think

1524
01:09:46,280 --> 01:09:49,799
Speaker 2: an incredible brand built over a long period of time

1525
01:09:50,280 --> 01:09:53,000
Speaker 2: that is, you know, let's say, better than anyone else

1526
01:09:53,040 --> 01:09:55,639
Speaker 2: in the category. I think that gets you a lot

1527
01:09:55,680 --> 01:09:58,840
Speaker 2: of mileage. I mean, you're buying commoditized products that you're

1528
01:09:58,840 --> 01:10:02,280
Speaker 2: selling for largely the same prices everyone else. What you

1529
01:10:02,360 --> 01:10:05,200
Speaker 2: need and you can't price it more aggressively. What you

1530
01:10:05,320 --> 01:10:08,479
Speaker 2: need is cheaper cack. Ideally with repeat customers, would be

1531
01:10:08,479 --> 01:10:11,040
Speaker 2: the best cack that don't actually have a cack attached

1532
01:10:11,040 --> 01:10:13,400
Speaker 2: to them. I think that's what brand gives you. And yeah,

1533
01:10:13,439 --> 01:10:15,599
Speaker 2: maybe there's some processing power of like we're really good

1534
01:10:15,640 --> 01:10:18,040
Speaker 2: at keeping the cost of sales down, But I think

1535
01:10:18,080 --> 01:10:21,080
Speaker 2: even if they didn't have that. The brand delivering lower

1536
01:10:21,200 --> 01:10:24,240
Speaker 2: such low cack might be enough for them to win

1537
01:10:24,280 --> 01:10:26,519
Speaker 2: the day. I mean there's also this concept which is

1538
01:10:27,000 --> 01:10:29,880
Speaker 2: they do have stores in good locations, and this power,

1539
01:10:29,920 --> 01:10:34,000
Speaker 2: which might be called like distribution intensity maybe you'd call it,

1540
01:10:34,360 --> 01:10:36,880
Speaker 2: that is not factored into seven powers. Like it's not

1541
01:10:36,920 --> 01:10:38,960
Speaker 2: a cornered resource because you can have stores in lots

1542
01:10:38,960 --> 01:10:42,320
Speaker 2: of different places, but they have a very big distribution footprints.

1543
01:10:42,479 --> 01:10:45,280
Speaker 1: What you're saying is having the best stores is a corner.

1544
01:10:45,360 --> 01:10:47,800
Speaker 1: Having the best locations is a cornered resource. I don't

1545
01:10:47,800 --> 01:10:48,360
Speaker 1: think they have that.

1546
01:10:48,479 --> 01:10:50,040
Speaker 2: I don't think I don't know that they've got the

1547
01:10:50,040 --> 01:10:52,559
Speaker 2: best locations. They've just got a ton of locations. But

1548
01:10:52,560 --> 01:10:54,160
Speaker 2: they don't even have that they do. They have a

1549
01:10:54,200 --> 01:10:56,320
Speaker 2: ton of locations, Yeah, but certain lots of way so

1550
01:10:56,439 --> 01:10:57,840
Speaker 2: as Maya, so as Myron.

1551
01:10:57,840 --> 01:10:59,240
Speaker 1: That's god. I wouldn't say that helps my.

1552
01:10:59,640 --> 01:11:02,120
Speaker 2: But is not really a head to head competitor with

1553
01:11:02,240 --> 01:11:05,000
Speaker 2: jbhi Fi. Like the range is nowhere near big enough.

1554
01:11:05,280 --> 01:11:07,160
Speaker 1: But one point it kind of was like if you

1555
01:11:07,200 --> 01:11:09,360
Speaker 1: go back twenty years, it was twenty years like Maya

1556
01:11:09,360 --> 01:11:11,360
Speaker 1: had a massive electoral and I think they were a

1557
01:11:11,360 --> 01:11:14,200
Speaker 1: good competitor, and then JB Killer has got process power.

1558
01:11:14,560 --> 01:11:16,920
Speaker 1: So that's the point. Like, I don't think brand. I

1559
01:11:16,960 --> 01:11:20,000
Speaker 1: don't think you can build a brand without some other

1560
01:11:20,080 --> 01:11:23,360
Speaker 1: sort of another power I think you need. How else

1561
01:11:23,360 --> 01:11:25,080
Speaker 1: do you build a brand? What? Just Abata?

1562
01:11:25,320 --> 01:11:28,080
Speaker 2: Yeah, your interesting question is you had Maya, you had

1563
01:11:28,160 --> 01:11:31,360
Speaker 2: jbihi Fi. They both had strong brands. They were both

1564
01:11:31,400 --> 01:11:36,800
Speaker 2: selling other people's commoditized products. Why has one thrived and

1565
01:11:36,840 --> 01:11:39,960
Speaker 2: one struggled? Well? One reason is Maya was predominantly selling

1566
01:11:40,080 --> 01:11:43,400
Speaker 2: I mean, their money was being made from perfume and cosmetics.

1567
01:11:43,439 --> 01:11:46,320
Speaker 2: That's where tons of their profit was coming from. That's

1568
01:11:46,360 --> 01:11:48,559
Speaker 2: a horrible category to have to sell in the age

1569
01:11:48,600 --> 01:11:51,000
Speaker 2: of the Internet. So I think that's one of their

1570
01:11:51,040 --> 01:11:54,439
Speaker 2: main problems. But yeah, it is a it could be

1571
01:11:54,520 --> 01:11:56,719
Speaker 2: product mixed that this is the issue. Although the flip

1572
01:11:56,720 --> 01:11:58,599
Speaker 2: side is we just talked about Meta seemed to be

1573
01:11:58,680 --> 01:12:01,920
Speaker 2: doing pretty well selling cosmetics and although they're not maybe

1574
01:12:01,920 --> 01:12:04,679
Speaker 2: not doing that well. So it is an interesting question.

1575
01:12:05,120 --> 01:12:07,479
Speaker 2: I do think that the fact that I can walk

1576
01:12:07,560 --> 01:12:12,040
Speaker 2: through Townhall station in Sydney and there's a jbhih Fi there,

1577
01:12:12,040 --> 01:12:13,720
Speaker 2: and if I say, oh, you know, I really want

1578
01:12:13,760 --> 01:12:16,479
Speaker 2: to get another wireless power bank from Signet, and I

1579
01:12:16,520 --> 01:12:19,519
Speaker 2: don't want to ask Jason for another freebie. I can

1580
01:12:19,560 --> 01:12:22,599
Speaker 2: go and walk into JB Hi Fi and it's right there,

1581
01:12:22,600 --> 01:12:24,360
Speaker 2: and I can purchase from them, And I'm actually telling

1582
01:12:24,360 --> 01:12:26,920
Speaker 2: you about a real experience that happened. That is why

1583
01:12:26,960 --> 01:12:29,759
Speaker 2: I bought from JB. And I was no percent price

1584
01:12:29,840 --> 01:12:32,200
Speaker 2: sensitive when I bought. I'm sure I just paid retail price.

1585
01:12:32,960 --> 01:12:35,479
Speaker 2: That was what did the brand get me there? Well,

1586
01:12:35,479 --> 01:12:38,000
Speaker 2: it definitely got me some trust, like I trusted buying

1587
01:12:38,040 --> 01:12:41,280
Speaker 2: from JB. But beyond that, it was just the convenience

1588
01:12:41,320 --> 01:12:45,040
Speaker 2: of the location next to me that made me purchase

1589
01:12:45,080 --> 01:12:47,760
Speaker 2: on that occasion. So I do think this distribution intensity

1590
01:12:47,840 --> 01:12:51,360
Speaker 2: does have an impact in in driving the success of

1591
01:12:51,360 --> 01:12:51,919
Speaker 2: a business.

1592
01:12:52,080 --> 01:12:55,200
Speaker 1: That's also, in JB's case, relatively recent. They obviously keep

1593
01:12:55,240 --> 01:12:57,680
Speaker 1: expanding their store camp, but ten years ago that was

1594
01:12:57,680 --> 01:12:59,640
Speaker 1: still an incredible business. They didn't have anywhere there as

1595
01:12:59,640 --> 01:13:02,960
Speaker 1: Meny store. So I'm just I'm not sold on that. Like,

1596
01:13:02,960 --> 01:13:05,640
Speaker 1: I think it's helpful, but I think what's built this

1597
01:13:05,760 --> 01:13:08,479
Speaker 1: incredible brand is that I think that analyst who told

1598
01:13:08,479 --> 01:13:10,320
Speaker 1: you was wrong on the money is the process power

1599
01:13:10,320 --> 01:13:13,960
Speaker 1: of that built They are generationally better operators than anyone

1600
01:13:14,000 --> 01:13:14,639
Speaker 1: else in this space.

1601
01:13:14,960 --> 01:13:17,000
Speaker 2: But like, you know, the thing is this, like why

1602
01:13:17,000 --> 01:13:20,720
Speaker 2: are people buying at twenty six times earnings? Like it's

1603
01:13:20,720 --> 01:13:22,599
Speaker 2: going to have a pretty low dividend yield. I mean,

1604
01:13:22,640 --> 01:13:25,840
Speaker 2: if it's trading at twenty six times earnings and I

1605
01:13:25,920 --> 01:13:28,240
Speaker 2: doubt it's paying out all of its earnings as dividends,

1606
01:13:28,880 --> 01:13:32,080
Speaker 2: it might be, but like then it's going to be

1607
01:13:32,200 --> 01:13:33,880
Speaker 2: you know, even if it did, it has been the

1608
01:13:33,960 --> 01:13:40,479
Speaker 2: four percent type yields fully framed. Like you know, I mean,

1609
01:13:41,040 --> 01:13:43,599
Speaker 2: I don't know exactly why people are paying twenty six

1610
01:13:43,640 --> 01:13:45,400
Speaker 2: times earnings. Maybe you would say, well, you have to

1611
01:13:45,439 --> 01:13:47,439
Speaker 2: overpay for a quality business.

1612
01:13:47,960 --> 01:13:50,719
Speaker 1: Well I'll tell you why, because it's a massive bubble.

1613
01:13:51,080 --> 01:13:54,040
Speaker 1: It's a massive bubble. And West Farmer's on thirty four times,

1614
01:13:54,320 --> 01:13:56,200
Speaker 1: Woors is on twenty four times, Coals is.

1615
01:13:56,200 --> 01:13:58,800
Speaker 2: On twenty six, Chemists Warehouse on fifty two times or

1616
01:13:58,840 --> 01:13:59,920
Speaker 2: whatever it is, right.

1617
01:14:00,040 --> 01:14:05,439
Speaker 1: I'll forget ye fifty more eight. Like JB is the

1618
01:14:05,439 --> 01:14:08,479
Speaker 1: best of all that bunch. There's some good operators in there,

1619
01:14:08,479 --> 01:14:11,519
Speaker 1: but JB's the standout. And bear in mind this is

1620
01:14:11,560 --> 01:14:13,400
Speaker 1: JB after ha's gone up eighty five percent this year,

1621
01:14:13,680 --> 01:14:17,080
Speaker 1: so that's after a big run. Relatively speaking, in this

1622
01:14:17,120 --> 01:14:19,559
Speaker 1: bubble world we live in. JB's far from the worst,

1623
01:14:19,680 --> 01:14:20,759
Speaker 1: is probably one of the best.

1624
01:14:20,840 --> 01:14:23,240
Speaker 2: Well, can maybe we can talk about a stock now

1625
01:14:23,720 --> 01:14:27,320
Speaker 2: that I don't think fits that particular characterization. But at

1626
01:14:27,320 --> 01:14:28,960
Speaker 2: some point you're going to tell me to get over it.

1627
01:14:29,040 --> 01:14:31,000
Speaker 2: And then, I mean, I doubt you'll tell me I'm wrong,

1628
01:14:31,439 --> 01:14:33,880
Speaker 2: But like the world continues to slap me in the

1629
01:14:33,880 --> 01:14:36,800
Speaker 2: face telling me that I'm wrong, and I don't think

1630
01:14:36,800 --> 01:14:40,439
Speaker 2: that I'm wrong. And obviously the stock I'm talking about, well,

1631
01:14:40,479 --> 01:14:42,400
Speaker 2: you know obviously what it is. It's Temple and Webster.

1632
01:14:43,520 --> 01:14:45,280
Speaker 2: And so I want to tell you something that came

1633
01:14:45,320 --> 01:14:47,800
Speaker 2: out this week. I'm gonna I'm not going to say

1634
01:14:47,800 --> 01:14:49,760
Speaker 2: where it came from, but there was an analyst, a

1635
01:14:49,880 --> 01:14:53,360
Speaker 2: very respected in my few analysts, that put out an

1636
01:14:53,439 --> 01:14:56,320
Speaker 2: upgrade to Temple and Webster. I feel like they may

1637
01:14:56,320 --> 01:14:59,080
Speaker 2: have had to put out this upgrade because the share

1638
01:14:59,120 --> 01:15:02,240
Speaker 2: price is currently tw twenty three dollars and there they

1639
01:15:02,240 --> 01:15:05,160
Speaker 2: were sitting at fourteen dollars. And like, there's one thing

1640
01:15:05,200 --> 01:15:07,120
Speaker 2: that's not great for an analyst, and that's kind of

1641
01:15:07,240 --> 01:15:09,360
Speaker 2: to get left behind, because the more you end up

1642
01:15:09,360 --> 01:15:11,320
Speaker 2: too high or too low. It becomes more and more

1643
01:15:11,320 --> 01:15:13,840
Speaker 2: of a conviction bet. And you know, analysts have to

1644
01:15:13,840 --> 01:15:16,360
Speaker 2: be careful with where their high conviction bets are. But

1645
01:15:16,560 --> 01:15:18,640
Speaker 2: like I got the feeling with this analyst that like

1646
01:15:18,720 --> 01:15:21,360
Speaker 2: they were trying to hedge as much as possible, Like

1647
01:15:21,760 --> 01:15:23,599
Speaker 2: this is price to perfection and a lot of things

1648
01:15:23,680 --> 01:15:26,559
Speaker 2: have to go right. They just raised their price target

1649
01:15:26,680 --> 01:15:29,639
Speaker 2: to twenty dollars. As I said to you, it's training

1650
01:15:29,680 --> 01:15:33,200
Speaker 2: on twenty three dollars. Twenty three dollars. Do you know

1651
01:15:33,240 --> 01:15:36,320
Speaker 2: what the market cap is on twenty three dollars that

1652
01:15:36,439 --> 01:15:39,000
Speaker 2: is currently training it? Well, I have a two billion

1653
01:15:39,040 --> 01:15:42,000
Speaker 2: in that level, so it's two point eight billion and

1654
01:15:42,040 --> 01:15:45,280
Speaker 2: its current price two point eight bill But don't worry.

1655
01:15:45,320 --> 01:15:46,960
Speaker 2: They've got one hundred and thirty three million dollars of

1656
01:15:46,960 --> 01:15:48,080
Speaker 2: cash on the balance sheet.

1657
01:15:48,160 --> 01:15:48,800
Speaker 1: So that's all right.

1658
01:15:49,520 --> 01:15:52,080
Speaker 2: And so I tell you why I just want to

1659
01:15:52,160 --> 01:15:55,320
Speaker 2: talk about this stock and why I still think that

1660
01:15:55,360 --> 01:15:57,760
Speaker 2: I'm right. Well, I think right as well, I know,

1661
01:15:57,800 --> 01:16:02,800
Speaker 2: but everybody else not only not only are we contraaring

1662
01:16:02,880 --> 01:16:06,320
Speaker 2: on this, but we actually look like morons on this

1663
01:16:06,880 --> 01:16:11,479
Speaker 2: because the share price appreciation in the last year has

1664
01:16:11,560 --> 01:16:16,479
Speaker 2: been it's pretty close to tripled and one hundred and

1665
01:16:16,520 --> 01:16:19,000
Speaker 2: forty percent, I think, and forty percent I thought it

1666
01:16:19,080 --> 01:16:20,760
Speaker 2: might have been down in the it.

1667
01:16:20,840 --> 01:16:23,559
Speaker 1: Was already it was already ten like a rip up.

1668
01:16:23,600 --> 01:16:25,400
Speaker 1: That might be right, It might have been higher. It

1669
01:16:25,439 --> 01:16:28,040
Speaker 1: was forty like intends we I think, because if you

1670
01:16:28,040 --> 01:16:29,720
Speaker 1: look a bit longer, like if you go so if

1671
01:16:29,720 --> 01:16:31,840
Speaker 1: you go back to twenty twenty three, so if you

1672
01:16:31,880 --> 01:16:34,800
Speaker 1: go back two years ago, exactly two years ago, it

1673
01:16:34,840 --> 01:16:37,519
Speaker 1: was three bucks a share or just like four bucks

1674
01:16:37,520 --> 01:16:40,320
Speaker 1: of share, so it's what six xt in two years.

1675
01:16:40,120 --> 01:16:42,800
Speaker 2: Which I thought that would be fine, but like this

1676
01:16:42,880 --> 01:16:45,800
Speaker 2: is a bit so just to recap templon Webster last

1677
01:16:45,880 --> 01:16:48,559
Speaker 2: year they made five hundred mili of revenue and I

1678
01:16:48,600 --> 01:16:51,639
Speaker 2: think they made GTB total that's what they books revenue,

1679
01:16:51,640 --> 01:16:54,439
Speaker 2: five hundred mili total value of stuff sold. And I

1680
01:16:54,439 --> 01:16:55,800
Speaker 2: think their profit at the end of it was a

1681
01:16:55,800 --> 01:16:57,960
Speaker 2: few million dollars. It was like a two percent epit

1682
01:16:58,040 --> 01:17:00,839
Speaker 2: DA margin or something in that vicinity. The target HIBITDA

1683
01:17:00,920 --> 01:17:03,160
Speaker 2: margin is one to three percent, Okay, I want to

1684
01:17:03,200 --> 01:17:03,679
Speaker 2: point that out.

1685
01:17:03,720 --> 01:17:04,240
Speaker 1: That's right.

1686
01:17:04,400 --> 01:17:07,000
Speaker 2: The first half of this year they grew revenue twenty

1687
01:17:07,040 --> 01:17:09,920
Speaker 2: three percent, and they did expand margins slightly, but the

1688
01:17:09,960 --> 01:17:12,439
Speaker 2: direction of their CAC over the last five years has

1689
01:17:12,479 --> 01:17:15,400
Speaker 2: been up. Now the AOV has also been up, but

1690
01:17:15,439 --> 01:17:17,240
Speaker 2: I think the CACK might have doubled over the last

1691
01:17:17,280 --> 01:17:21,559
Speaker 2: five years. So like, definitely they're not getting reduced CAC

1692
01:17:21,640 --> 01:17:25,559
Speaker 2: with scale, but they are expanding their margins. And to

1693
01:17:25,600 --> 01:17:29,120
Speaker 2: their credit, you know, they managed to go and keep

1694
01:17:30,160 --> 01:17:33,519
Speaker 2: nine to ten percent of that incremental revenue in H one,

1695
01:17:33,680 --> 01:17:35,599
Speaker 2: nine to ten percent of that flowed down to the

1696
01:17:35,600 --> 01:17:39,680
Speaker 2: EBITDA line, and so that's pretty good, Like that is

1697
01:17:39,760 --> 01:17:42,280
Speaker 2: much better than historical. But we should remember that H

1698
01:17:42,320 --> 01:17:43,920
Speaker 2: one and H two in this world are not the

1699
01:17:43,920 --> 01:17:48,559
Speaker 2: same world, Like they're different. And so what we ended

1700
01:17:48,600 --> 01:17:51,519
Speaker 2: up with at the half, just to provide some context,

1701
01:17:51,560 --> 01:17:53,599
Speaker 2: is I think that their profit went from like six

1702
01:17:53,680 --> 01:17:55,880
Speaker 2: mil to twelve mil or something at the half. So

1703
01:17:55,960 --> 01:17:59,479
Speaker 2: this is the size of business we're talking about. And

1704
01:17:59,560 --> 01:18:02,800
Speaker 2: the guide they gave is that they're aiming, as I said,

1705
01:18:02,800 --> 01:18:05,040
Speaker 2: for one to three percent EBITDA margins and if they

1706
01:18:05,040 --> 01:18:07,920
Speaker 2: grow twenty five percent this year, which they won't, like

1707
01:18:08,040 --> 01:18:09,479
Speaker 2: I do not think they're going to grow. They're not

1708
01:18:09,520 --> 01:18:10,200
Speaker 2: on track for that.

1709
01:18:10,360 --> 01:18:14,160
Speaker 1: Have you an update three weeks ago and they had

1710
01:18:14,520 --> 01:18:17,240
Speaker 1: since the half, I think half a date revenue is

1711
01:18:17,280 --> 01:18:20,160
Speaker 1: up eighteen percent, so that's that's the fifth of May,

1712
01:18:20,479 --> 01:18:23,679
Speaker 1: and since the first of March is up twenty three percent,

1713
01:18:23,920 --> 01:18:25,920
Speaker 1: so it's increased here.

1714
01:18:26,080 --> 01:18:28,080
Speaker 2: So let's play the miracle game here, because I always

1715
01:18:28,160 --> 01:18:30,160
Speaker 2: like to overestimate, right, because if I'm going to be critical,

1716
01:18:30,240 --> 01:18:34,000
Speaker 2: let's overestimate and say in the world's best case scenario, like,

1717
01:18:34,000 --> 01:18:36,639
Speaker 2: am I still right? And so let's say the revenue

1718
01:18:36,720 --> 01:18:39,280
Speaker 2: rises twenty five percent, so it goes to six hundred

1719
01:18:39,280 --> 01:18:41,040
Speaker 2: and twenty five mil for the year.

1720
01:18:41,080 --> 01:18:43,400
Speaker 1: Well, it won't be that because it's training under.

1721
01:18:43,200 --> 01:18:45,160
Speaker 2: That now I know, But that's fine. Let's say it's

1722
01:18:45,160 --> 01:18:47,280
Speaker 2: six to twenty five and they said they'll be at

1723
01:18:47,280 --> 01:18:49,360
Speaker 2: the top of the EBITDAR range, So let's give them

1724
01:18:49,360 --> 01:18:51,439
Speaker 2: three percent, and let's round up so I can use

1725
01:18:51,520 --> 01:18:55,120
Speaker 2: round numbers, and let's get twenty million dollars of EBITDA. Yeah,

1726
01:18:55,160 --> 01:19:01,719
Speaker 2: this is trading on two point eight billion dollars billion dollars.

1727
01:19:02,600 --> 01:19:04,719
Speaker 2: And so the research that came out that I saw

1728
01:19:04,800 --> 01:19:08,240
Speaker 2: that modeled this out to f y forty to try

1729
01:19:08,240 --> 01:19:10,160
Speaker 2: to justify the share price.

1730
01:19:10,640 --> 01:19:11,880
Speaker 1: Still couldn't quite get there.

1731
01:19:11,880 --> 01:19:13,680
Speaker 2: And as I said to in Fannis, I think the

1732
01:19:14,080 --> 01:19:16,760
Speaker 2: analyst was not totally committed, but was a bit caught

1733
01:19:16,800 --> 01:19:21,240
Speaker 2: on it. I just cannot understand. And so the thesis

1734
01:19:21,360 --> 01:19:24,680
Speaker 2: that they're pushing, I guess is this is going to

1735
01:19:24,720 --> 01:19:28,440
Speaker 2: be the dominant player in a once in a lifetime

1736
01:19:28,560 --> 01:19:31,519
Speaker 2: switch to online and they'll be able to achieve EBITDA

1737
01:19:31,720 --> 01:19:35,280
Speaker 2: margins of fifteen percent or maybe MPAC margins of whatever

1738
01:19:35,320 --> 01:19:38,559
Speaker 2: it is over the long term, and then suddenly two

1739
01:19:38,640 --> 01:19:42,160
Speaker 2: point eight billion dollars today will be justified. And you know,

1740
01:19:42,520 --> 01:19:45,200
Speaker 2: we could probably have them training on twenty times. But

1741
01:19:45,360 --> 01:19:48,800
Speaker 2: even if you work that out, I mean, in order

1742
01:19:48,840 --> 01:19:51,719
Speaker 2: to justify twenty times on two point eight billion dollars

1743
01:19:51,720 --> 01:19:54,000
Speaker 2: of earnings, it's one hundred and forty million dollars of

1744
01:19:54,080 --> 01:19:58,880
Speaker 2: impat I mean, that is pretty it will be pretty

1745
01:19:59,000 --> 01:20:00,719
Speaker 2: dramatic to get to that place.

1746
01:20:00,960 --> 01:20:04,160
Speaker 1: And so it's one hundred and forty times EBITDA multiple

1747
01:20:04,400 --> 01:20:07,000
Speaker 1: using your absolute best case number, which is not going

1748
01:20:07,080 --> 01:20:10,760
Speaker 1: to happen. It's not inconceived. And we think Mark's done

1749
01:20:10,760 --> 01:20:13,160
Speaker 1: a great job. We're not criticizing the guys running this business.

1750
01:20:13,160 --> 01:20:15,880
Speaker 1: They don't create the valuation. That's the ticket investors who

1751
01:20:15,920 --> 01:20:18,920
Speaker 1: do at all, speculators and these people people buying Temple

1752
01:20:18,920 --> 01:20:22,240
Speaker 1: webs are now aren't investors. Let's be clear that pure speculators,

1753
01:20:22,680 --> 01:20:24,559
Speaker 1: so we don't buy the managements done a great job.

1754
01:20:24,560 --> 01:20:28,080
Speaker 1: I think in a really tough category, they're outstanding. This

1755
01:20:28,120 --> 01:20:31,320
Speaker 1: business could feasibly drop ninety five percent and still be overvalued,

1756
01:20:31,720 --> 01:20:32,799
Speaker 1: like it is insane.

1757
01:20:32,960 --> 01:20:35,360
Speaker 2: Yeah, I was thinking about if you were in a

1758
01:20:35,439 --> 01:20:39,400
Speaker 2: private market for this business. So on my mega numbers

1759
01:20:39,520 --> 01:20:42,600
Speaker 2: twenty mil ebit. By the way, they do generate like

1760
01:20:42,640 --> 01:20:44,760
Speaker 2: a lot of free cash. I didn't look into it

1761
01:20:44,760 --> 01:20:47,719
Speaker 2: in that much detail. It might be inventory moving around,

1762
01:20:47,840 --> 01:20:51,120
Speaker 2: but like, I'm not exactly sure why you can't generate

1763
01:20:51,479 --> 01:20:54,760
Speaker 2: multiples of your ebitdas free cash forever like that. That

1764
01:20:54,920 --> 01:20:57,559
Speaker 2: just doesn't work like that. But basically, you've got a

1765
01:20:57,600 --> 01:20:59,960
Speaker 2: business at best, like my best numbers would do six

1766
01:21:00,120 --> 01:21:04,479
Speaker 2: twenty five revenue twenty mil ebita in private markets. I

1767
01:21:04,520 --> 01:21:07,840
Speaker 2: cannot see any situation where you could pay one more

1768
01:21:07,880 --> 01:21:10,960
Speaker 2: than one time's revenue for that business. I'm not even

1769
01:21:10,960 --> 01:21:12,320
Speaker 2: sure you could pay that for this business. But that

1770
01:21:12,360 --> 01:21:14,120
Speaker 2: would be six hundred and twenty five million dollars, So

1771
01:21:14,479 --> 01:21:17,240
Speaker 2: that is about I don't know, a bit less than

1772
01:21:17,240 --> 01:21:21,040
Speaker 2: a quarter of the current price, and so that would

1773
01:21:21,040 --> 01:21:23,360
Speaker 2: be let's call it an eighty percent fall on the

1774
01:21:23,400 --> 01:21:25,599
Speaker 2: share price. I think is where this business would say

1775
01:21:25,640 --> 01:21:26,880
Speaker 2: if it was private markets.

1776
01:21:27,040 --> 01:21:28,920
Speaker 1: I think it's been very like, look at I look

1777
01:21:28,920 --> 01:21:31,240
Speaker 1: at our business, and we're basically double these guys, and

1778
01:21:31,240 --> 01:21:33,080
Speaker 1: they might be very generous, right, that might be a

1779
01:21:33,080 --> 01:21:36,080
Speaker 1: generous valuation. We're pretty much double these guys in every metric,

1780
01:21:36,120 --> 01:21:38,840
Speaker 1: and I'm not varying us at a billion dollars. So

1781
01:21:39,160 --> 01:21:41,840
Speaker 1: it's like, this is I think this is a two

1782
01:21:41,880 --> 01:21:43,360
Speaker 1: to like I think we talked about this before, and

1783
01:21:43,400 --> 01:21:44,559
Speaker 1: I think you thought it was one hundred million doll

1784
01:21:44,560 --> 01:21:46,439
Speaker 1: I thought it was two hundred million dollar business. They've

1785
01:21:46,439 --> 01:21:49,360
Speaker 1: executed to that credit. Really well, it just doesn't This

1786
01:21:49,479 --> 01:21:53,080
Speaker 1: is just nonsensical, Like it's really well, completely nonsensical, this

1787
01:21:53,160 --> 01:21:55,680
Speaker 1: valuation and how analysts can be giving this kind of

1788
01:21:55,880 --> 01:21:59,320
Speaker 1: garbage saying that's justified. It's just like, do your job, guys.

1789
01:21:59,640 --> 01:22:02,960
Speaker 1: Even if share prices HI, don't put a number out

1790
01:22:03,040 --> 01:22:06,439
Speaker 1: that justifies these more on speculators bidding the price up,

1791
01:22:06,479 --> 01:22:08,599
Speaker 1: But do the right thing. Give it a valuations round

1792
01:22:08,560 --> 01:22:10,439
Speaker 1: about a million bucks and stand by it. Otherwise you're

1793
01:22:10,439 --> 01:22:12,519
Speaker 1: not doing a job. You're just a charlatan. And any

1794
01:22:12,520 --> 01:22:14,519
Speaker 1: analyst who puts evaluation of more than filming a million

1795
01:22:14,560 --> 01:22:15,360
Speaker 1: bucks is a charlton.

1796
01:22:15,400 --> 01:22:18,840
Speaker 2: And now I'll do rebuttal for that. So the job

1797
01:22:18,880 --> 01:22:23,040
Speaker 2: of the analyst really they're working in an investment banker brokerage,

1798
01:22:23,160 --> 01:22:26,400
Speaker 2: let's call it. And so the thing is, I said,

1799
01:22:26,479 --> 01:22:28,519
Speaker 2: last time we talked about Temple in the Webster that

1800
01:22:28,760 --> 01:22:32,519
Speaker 2: what an analyst said to me very cleverly, was this

1801
01:22:32,600 --> 01:22:35,719
Speaker 2: is the thesis that the believers have and until there's

1802
01:22:35,760 --> 01:22:39,080
Speaker 2: a slowing down of the growth rate or some disaster

1803
01:22:39,160 --> 01:22:42,479
Speaker 2: with the margins like as in they go to zero

1804
01:22:42,560 --> 01:22:45,880
Speaker 2: or negative, that won't disprove the thesis. And so the

1805
01:22:45,880 --> 01:22:47,640
Speaker 2: price will keep going up. And I said that last time,

1806
01:22:47,680 --> 01:22:49,760
Speaker 2: and I said, I think that person's right. I think

1807
01:22:49,800 --> 01:22:51,720
Speaker 2: the price is going to keep going up. Sure enough,

1808
01:22:51,760 --> 01:22:54,120
Speaker 2: it's kept going up. I think you should be softer

1809
01:22:54,200 --> 01:22:58,080
Speaker 2: on analysts, like they're doing an interesting juggle here. The

1810
01:22:58,120 --> 01:23:01,320
Speaker 2: ones that I know are actually very sophisticated and understanding

1811
01:23:01,320 --> 01:23:03,599
Speaker 2: how businesses run. I don't always agree with them. In fact,

1812
01:23:03,720 --> 01:23:06,360
Speaker 2: this is a business I particularly disagree with this analyst,

1813
01:23:06,400 --> 01:23:09,439
Speaker 2: not even before this research. But the truth is they're

1814
01:23:09,439 --> 01:23:12,280
Speaker 2: in a business that says, we're trying to figure out

1815
01:23:12,720 --> 01:23:15,960
Speaker 2: if we're not trying to do an absolute bit of

1816
01:23:16,080 --> 01:23:19,960
Speaker 2: due diligence valuation for a private equity buyer, We're trying

1817
01:23:19,960 --> 01:23:21,439
Speaker 2: to figure out if the share price is going to

1818
01:23:21,479 --> 01:23:24,839
Speaker 2: go up or down, because like that is the industry

1819
01:23:24,840 --> 01:23:27,160
Speaker 2: that we in, and I think that this share price

1820
01:23:27,200 --> 01:23:29,559
Speaker 2: is consistently going up, And to call and to say

1821
01:23:29,640 --> 01:23:31,640
Speaker 2: I think it's going to go down because it's overvalued,

1822
01:23:31,960 --> 01:23:33,840
Speaker 2: that might not be the right answer today. The right

1823
01:23:33,880 --> 01:23:36,120
Speaker 2: answer might be this momentum answer, which is, I think

1824
01:23:36,120 --> 01:23:38,800
Speaker 2: it's going to keep going up until this happens. And

1825
01:23:38,840 --> 01:23:41,439
Speaker 2: so I'm softer on analysts than you.

1826
01:23:42,080 --> 01:23:45,840
Speaker 1: Well, they can say that, they can say. Analysts can

1827
01:23:45,880 --> 01:23:49,040
Speaker 1: say this, my fundamental valuation with the business is two

1828
01:23:49,080 --> 01:23:50,960
Speaker 1: hundred million bucks or two hunred million bucks, but the

1829
01:23:51,000 --> 01:23:53,000
Speaker 1: market is valuing it at two billion. It's going up,

1830
01:23:53,160 --> 01:23:55,280
Speaker 1: and it could keep going up against what we think

1831
01:23:55,280 --> 01:23:59,320
Speaker 1: the intrinsic value. Is the analyst that said enyone's goodbye

1832
01:23:59,320 --> 01:24:02,559
Speaker 1: when it was one hundreds, I totally agree with what

1833
01:24:02,600 --> 01:24:03,160
Speaker 1: you just said.

1834
01:24:03,320 --> 01:24:06,400
Speaker 2: Like that is, I think that would be an unbelievably

1835
01:24:06,439 --> 01:24:08,759
Speaker 2: good if an analyst believe that, like what we believe

1836
01:24:09,040 --> 01:24:13,680
Speaker 2: that'd been unbelievably good research report to say on fundamentals,

1837
01:24:13,720 --> 01:24:16,439
Speaker 2: I think the valuations is but like this seems to

1838
01:24:16,479 --> 01:24:18,600
Speaker 2: be what's driving the share price at the moment. Is

1839
01:24:18,600 --> 01:24:21,839
Speaker 2: it possible it can get there. It's not impossible until

1840
01:24:21,920 --> 01:24:24,120
Speaker 2: there's evidence one way or the other, like that they

1841
01:24:24,120 --> 01:24:25,920
Speaker 2: will get there or they won't get there, and these

1842
01:24:25,920 --> 01:24:28,920
Speaker 2: are the evidence points, then the current trajectory of the

1843
01:24:29,000 --> 01:24:34,400
Speaker 2: stock will probably continue. I find it unbelievable the share price.

1844
01:24:34,479 --> 01:24:37,559
Speaker 2: Like I don't say that in a way other than literal,

1845
01:24:37,720 --> 01:24:41,160
Speaker 2: like it's actually unbelievable. I just want to say, Like,

1846
01:24:41,240 --> 01:24:43,960
Speaker 2: there's also another business called nick Scally. We think that's

1847
01:24:43,960 --> 01:24:44,799
Speaker 2: a very good business.

1848
01:24:44,920 --> 01:24:45,040
Speaker 1: Yea.

1849
01:24:45,360 --> 01:24:48,080
Speaker 2: Now it's a smaller business on the top line. Basically

1850
01:24:48,080 --> 01:24:51,040
Speaker 2: it started off about the same size on the revenue

1851
01:24:51,080 --> 01:24:54,200
Speaker 2: line as finished at the same size as Templar Webster

1852
01:24:54,400 --> 01:24:56,320
Speaker 2: at the end of twenty four but it's only growing

1853
01:24:56,360 --> 01:24:58,479
Speaker 2: ten percent, and so it grew ten percent. It's h

1854
01:24:58,520 --> 01:25:00,760
Speaker 2: one was two hundred and fifty one million dollars. But

1855
01:25:00,840 --> 01:25:04,360
Speaker 2: the difference is like it's it's and it's got some problems.

1856
01:25:04,360 --> 01:25:05,960
Speaker 2: Like I'm not saying that this is the perfect business

1857
01:25:06,040 --> 01:25:08,040
Speaker 2: like the UK is a low margin business for it,

1858
01:25:08,080 --> 01:25:11,360
Speaker 2: and like it's just emerging. But like there's a business

1859
01:25:11,600 --> 01:25:15,880
Speaker 2: that has gross margins north of sixty percent, So that's

1860
01:25:15,880 --> 01:25:18,559
Speaker 2: already music to my ears. The problem is it kind

1861
01:25:18,560 --> 01:25:21,519
Speaker 2: of falling gross margins because of this UK thing. But

1862
01:25:21,600 --> 01:25:25,120
Speaker 2: then it has like E but it keeps eighty million

1863
01:25:25,160 --> 01:25:28,439
Speaker 2: dollars of ebit. Yeah's basically on two hundred and fifty

1864
01:25:28,479 --> 01:25:31,160
Speaker 2: one mil and pays a four percent divid end. So

1865
01:25:31,200 --> 01:25:33,559
Speaker 2: you can have like Nick scale, you can buy this

1866
01:25:33,680 --> 01:25:37,479
Speaker 2: business for what sixty percent of the price of Temple

1867
01:25:37,520 --> 01:25:42,040
Speaker 2: and Webster. You and I would pay many multiples more

1868
01:25:42,600 --> 01:25:44,760
Speaker 2: for this business than template webs The.

1869
01:25:44,680 --> 01:25:47,840
Speaker 1: PA ratio is twenty three versus four hundred and fifty

1870
01:25:47,920 --> 01:25:50,000
Speaker 1: or something that tells the story.

1871
01:25:50,080 --> 01:25:51,840
Speaker 2: Yeah, I think it's only two hundred. Actually I think

1872
01:25:51,840 --> 01:25:54,000
Speaker 2: the p's only two hundred and something. But yes, I

1873
01:25:54,040 --> 01:25:57,680
Speaker 2: think it's trading on something like historicals. There's like a

1874
01:25:58,080 --> 01:26:03,400
Speaker 2: fifteen times ten to fifteen times price to earnings difference,

1875
01:26:03,920 --> 01:26:07,839
Speaker 2: not ten to fifteen difference, Yeah, ten to fifteen times difference.

1876
01:26:08,560 --> 01:26:12,639
Speaker 2: And so I think someone is crazy, and so either

1877
01:26:12,720 --> 01:26:15,360
Speaker 2: wear crazy. It's not impossible we're crazy, Like it's not

1878
01:26:15,400 --> 01:26:17,360
Speaker 2: the first time I've been wrong. You might say it's

1879
01:26:17,360 --> 01:26:19,599
Speaker 2: the first time you will have been this wrong. But

1880
01:26:20,040 --> 01:26:22,280
Speaker 2: I'm pretty confident neither of us are wrong here, Like

1881
01:26:23,920 --> 01:26:26,400
Speaker 2: I haven't been this confidence in Satire. And we remember

1882
01:26:26,400 --> 01:26:28,880
Speaker 2: every analyst was saying Satire was worth four bucks five bucks.

1883
01:26:29,040 --> 01:26:30,200
Speaker 2: I said it was four bucks. I said, this is

1884
01:26:30,200 --> 01:26:32,439
Speaker 2: the best shot I've ever seen. It's now thirty eight cents,

1885
01:26:32,640 --> 01:26:36,080
Speaker 2: so that's ninety percent. Everyone, not the best short that

1886
01:26:36,160 --> 01:26:40,000
Speaker 2: I've ever seen, because it'll be terrified to short this. Wow,

1887
01:26:40,080 --> 01:26:42,240
Speaker 2: can you short that? I mean short satire?

1888
01:26:43,320 --> 01:26:46,639
Speaker 1: You can be a great short yet from a theoretical sense,

1889
01:26:46,720 --> 01:26:48,760
Speaker 1: but there is the fault that was the opposite of

1890
01:26:48,760 --> 01:26:50,719
Speaker 1: a falling knife. It's a falling knife of a short

1891
01:26:50,760 --> 01:26:54,599
Speaker 1: that I'd be very concerned to short these lunar lunacy

1892
01:26:54,640 --> 01:26:56,840
Speaker 1: businesses because you never know when the memoranism is going

1893
01:26:56,840 --> 01:26:59,360
Speaker 1: to switch. But if you can afford to hold the short,

1894
01:26:59,439 --> 01:27:01,720
Speaker 1: this is a short because clearly this Bissons is going

1895
01:27:01,760 --> 01:27:04,720
Speaker 1: to drop significantly, not financial advice, just like sat I did.

1896
01:27:05,160 --> 01:27:07,120
Speaker 1: So there's no I've got yourro doubt.

1897
01:27:06,960 --> 01:27:09,679
Speaker 2: In my mind is at one stage, except you don't

1898
01:27:09,720 --> 01:27:12,320
Speaker 2: feel the same well, let's not get into this too deeply,

1899
01:27:12,360 --> 01:27:15,320
Speaker 2: but let's just say you don't feel the same like

1900
01:27:15,840 --> 01:27:20,760
Speaker 2: concerns about operating practices at templan Webster that you felt

1901
01:27:20,800 --> 01:27:23,439
Speaker 2: at SETI. Yes, yeah, it's Temple Websit is much better,

1902
01:27:23,680 --> 01:27:26,599
Speaker 2: much much better management, much much better business, much better

1903
01:27:26,640 --> 01:27:29,960
Speaker 2: better market. Like everything's better than satire. But in terms

1904
01:27:30,000 --> 01:27:32,959
Speaker 2: of overpricedness, if that's the similar. At one stage, Tesla

1905
01:27:33,320 --> 01:27:37,920
Speaker 2: was maybe what I would have called the greatest unshortable

1906
01:27:38,040 --> 01:27:41,360
Speaker 2: short because it was a religion. You couldn't short it,

1907
01:27:41,400 --> 01:27:44,200
Speaker 2: but you just knew this thing was creating. You just

1908
01:27:44,280 --> 01:27:45,920
Speaker 2: know that you're going to go broke holding on in

1909
01:27:45,960 --> 01:27:49,720
Speaker 2: the meantime. And so I think I think Temple and

1910
01:27:49,720 --> 01:27:52,880
Speaker 2: Webster is an unshortable short at the moment. I agree,

1911
01:27:53,000 --> 01:27:55,320
Speaker 2: And like Tesla's up eighty nine percent this year. Let's

1912
01:27:55,320 --> 01:27:57,800
Speaker 2: not forget it's worth that trillion, so Tesla's hasn't been

1913
01:27:58,120 --> 01:28:00,000
Speaker 2: like Tesla's still at near record highs.

1914
01:28:00,040 --> 01:28:02,880
Speaker 1: So we're in the greatest bubble since nineteen ninety nine.

1915
01:28:02,920 --> 01:28:06,280
Speaker 1: Like it briefly look like deflating after Liberation Day, but

1916
01:28:06,800 --> 01:28:08,760
Speaker 1: interest rates and all that kind of stuff pushed it back.

1917
01:28:08,840 --> 01:28:13,479
Speaker 1: Like this is just insanity every day and being as

1918
01:28:13,520 --> 01:28:16,840
Speaker 1: I said, pricing is determined by the marginal moron, and

1919
01:28:16,840 --> 01:28:18,960
Speaker 1: there's a lot of marginal morons out there. So this

1920
01:28:19,040 --> 01:28:21,280
Speaker 1: is the nine when everbody was saying Buffett was stupid,

1921
01:28:21,320 --> 01:28:23,519
Speaker 1: and Buffet was right, Like in two thousand and six

1922
01:28:23,520 --> 01:28:26,360
Speaker 1: when everybody said the value guys were stupid, they were right, Like,

1923
01:28:26,400 --> 01:28:28,519
Speaker 1: this is just another situation. Unfortunately, if you've got to

1924
01:28:28,520 --> 01:28:31,000
Speaker 1: live through this insanity, and it can take years for

1925
01:28:31,040 --> 01:28:33,080
Speaker 1: it to wash through, but eventually all the morons get

1926
01:28:33,320 --> 01:28:35,200
Speaker 1: washed out, blown up. But we've got to sit back

1927
01:28:35,240 --> 01:28:37,200
Speaker 1: and all we can do is talk about this and

1928
01:28:37,240 --> 01:28:39,160
Speaker 1: point it out and hopefully people listen to us. It

1929
01:28:39,200 --> 01:28:42,479
Speaker 1: might take a very long time. It generally, these massive

1930
01:28:42,479 --> 01:28:44,559
Speaker 1: booms tend to last a couple of years, but we've

1931
01:28:44,560 --> 01:28:46,800
Speaker 1: been this has been going awhile, so I'm not sure.

1932
01:28:47,360 --> 01:28:49,479
Speaker 1: We've seen some signs in the bond market that things

1933
01:28:49,479 --> 01:28:53,240
Speaker 1: aren't all too well. Like I'm not sure. It's hard

1934
01:28:53,280 --> 01:28:55,600
Speaker 1: to predict the timing of these, but I feel like

1935
01:28:55,640 --> 01:28:58,160
Speaker 1: we're coming to coming to midnight on this one. I

1936
01:28:58,160 --> 01:28:59,120
Speaker 1: hope I'm not proven wrong.

1937
01:28:59,160 --> 01:29:03,559
Speaker 2: Again, it's pretty rare that the party ends when interest

1938
01:29:03,640 --> 01:29:06,160
Speaker 2: rates are going down and people feel that interest rates

1939
01:29:06,200 --> 01:29:06,840
Speaker 2: are going down.

1940
01:29:07,000 --> 01:29:09,400
Speaker 1: True, but that there is that much slack.

1941
01:29:09,720 --> 01:29:12,559
Speaker 2: Usually interest rates going down drive the party or the

1942
01:29:12,600 --> 01:29:15,200
Speaker 2: party's already ended, and that's why they're putting interest rates down.

1943
01:29:15,200 --> 01:29:17,080
Speaker 1: Oh that's true. I think there isn't that they haven't

1944
01:29:17,120 --> 01:29:19,200
Speaker 1: got much to play with this time though. Remember in

1945
01:29:19,200 --> 01:29:21,280
Speaker 1: two thousand and sixty straights like seven eight percent, there

1946
01:29:21,320 --> 01:29:22,800
Speaker 1: was plenty to play with, or in two thousand and

1947
01:29:22,840 --> 01:29:25,680
Speaker 1: eight there's just less. There's less to play with this time,

1948
01:29:25,680 --> 01:29:27,840
Speaker 1: which is why I'm so critical the RBA going so early.

1949
01:29:27,880 --> 01:29:30,960
Speaker 1: They've got limited firepower and the RBA have blown fifty

1950
01:29:30,960 --> 01:29:34,320
Speaker 1: BIPs already for no reason. So that's another fed to

1951
01:29:34,360 --> 01:29:36,639
Speaker 1: their credit, to your own power. To his credit, isn't

1952
01:29:36,640 --> 01:29:39,040
Speaker 1: blowing his load too early, but the Australian the idiots

1953
01:29:39,080 --> 01:29:41,880
Speaker 1: running the RBA are. So that's a problem we have here.

1954
01:29:41,920 --> 01:29:43,720
Speaker 1: We're ready drop fifty BIPs, We've only got a few

1955
01:29:43,800 --> 01:29:46,559
Speaker 1: hundred BIPs to go, and that's a real problem.

1956
01:29:46,720 --> 01:29:48,680
Speaker 2: Well, you might be riding this horse for the next

1957
01:29:48,760 --> 01:29:51,760
Speaker 2: three years. I mean, you know, if they if the.

1958
01:29:51,880 --> 01:29:54,000
Speaker 1: We are called the contrarians, were not called the idiots,

1959
01:29:54,000 --> 01:29:56,280
Speaker 1: we called the contrarians. We may be idiots, but we're

1960
01:29:56,320 --> 01:29:56,800
Speaker 1: not called that.

1961
01:29:56,840 --> 01:29:59,280
Speaker 2: But you know, another word for another phrase for contrarian

1962
01:29:59,479 --> 01:30:03,160
Speaker 2: is too early. That is also true. Like it is

1963
01:30:03,320 --> 01:30:06,120
Speaker 2: very common if you're controlling to call it too early

1964
01:30:06,560 --> 01:30:10,840
Speaker 2: and to miss again right. So that is the core

1965
01:30:10,880 --> 01:30:13,840
Speaker 2: reason why our advice is not financialized, also the license reason.

1966
01:30:13,920 --> 01:30:16,519
Speaker 2: But like also even if like regardless, like if you're

1967
01:30:16,840 --> 01:30:19,960
Speaker 2: cynical and you're a contrarian, like you're often going to

1968
01:30:20,320 --> 01:30:22,799
Speaker 2: just call it too early and you get the direction

1969
01:30:22,920 --> 01:30:24,600
Speaker 2: right and the timing too early, and you miss the

1970
01:30:24,600 --> 01:30:26,599
Speaker 2: big boom in value creation.

1971
01:30:26,840 --> 01:30:29,439
Speaker 1: Which is why I don't actually shortstocks in this market,

1972
01:30:29,439 --> 01:30:31,800
Speaker 1: because even though I was very confidence attire and it

1973
01:30:31,840 --> 01:30:34,000
Speaker 1: dropped ninety percent plus and it will continue to drop,

1974
01:30:34,280 --> 01:30:35,880
Speaker 1: I didn't want to short it because, as you say,

1975
01:30:36,240 --> 01:30:38,200
Speaker 1: like you just have to sit on it for god

1976
01:30:38,240 --> 01:30:40,200
Speaker 1: knows how long. And that's not the business I'm in.

1977
01:30:40,200 --> 01:30:41,519
Speaker 1: But there are people who out there who do that

1978
01:30:41,560 --> 01:30:42,760
Speaker 1: and make good money.

1979
01:30:42,479 --> 01:30:45,519
Speaker 2: And well, maybe another way of saying it is the

1980
01:30:45,600 --> 01:30:48,360
Speaker 2: time to tell the time people are receptive to hearing

1981
01:30:48,400 --> 01:30:51,280
Speaker 2: about the evils of alcohol is not when they're all

1982
01:30:51,360 --> 01:30:54,320
Speaker 2: drunk and partying on the tables. And I think that's

1983
01:30:54,320 --> 01:30:56,680
Speaker 2: how I feel about the current time. On that note,

1984
01:30:56,720 --> 01:30:57,720
Speaker 2: I think we better wrap it up.

1985
01:30:57,960 --> 01:31:00,439
Speaker 1: It's getting pretty late here and you need to go

1986
01:31:00,479 --> 01:31:02,920
Speaker 1: and enjoy your day and tell me thank you Mike

1987
01:31:03,040 --> 01:31:05,920
Speaker 1: for sitting through this. Enjoy your switch to for next

1988
01:31:05,920 --> 01:31:08,759
Speaker 1: week if we went hear much from you and obviously

1989
01:31:08,880 --> 01:31:15,360
Speaker 1: enjoying your time up in Israel. I did did you

1990
01:31:15,400 --> 01:31:18,360
Speaker 1: know one of my favorite businesses, net Wealth, the ASX

1991
01:31:18,400 --> 01:31:21,920
Speaker 1: listed goliath founded in Melbourne, is giving an incredible offer

1992
01:31:22,439 --> 01:31:23,639
Speaker 1: just for Contrarian's listeners.

1993
01:31:23,720 --> 01:31:26,599
Speaker 2: I'm actually about to start using net Wealth's investment account,

1994
01:31:26,600 --> 01:31:29,080
Speaker 2: which is perfect for self made super funds. I can

1995
01:31:29,080 --> 01:31:30,320
Speaker 2: see why you like them so much.

1996
01:31:30,479 --> 01:31:33,679
Speaker 1: Let's talk about that Wealth Accelerator investment account, which allows

1997
01:31:33,680 --> 01:31:35,920
Speaker 1: you to invest in a wide range of assets via

1998
01:31:35,960 --> 01:31:40,120
Speaker 1: a simple online platform. You can access sixteen international exchanges

1999
01:31:40,160 --> 01:31:43,000
Speaker 1: including NASDAK all the way to London and more, as

2000
01:31:43,000 --> 01:31:45,799
Speaker 1: well as seven hundred managed funds and a huge range

2001
01:31:45,880 --> 01:31:50,120
Speaker 1: of international and domestic ETFs, bonds and other exclusive investments

2002
01:31:50,400 --> 01:31:53,200
Speaker 1: for wholesale investors. It even allows you to choose from

2003
01:31:53,200 --> 01:31:55,400
Speaker 1: a huge range of turn deposits to get the best

2004
01:31:55,439 --> 01:31:58,200
Speaker 1: interest rate without having to deal with banks separately.

2005
01:31:58,479 --> 01:32:02,879
Speaker 2: I love how Netwalth you add alternative investments like venture capital,

2006
01:32:02,920 --> 01:32:04,760
Speaker 2: which is great for angel investors, but.

2007
01:32:04,720 --> 01:32:07,679
Speaker 1: I've done exactly that. I've combined my fifteen early stage

2008
01:32:07,680 --> 01:32:10,080
Speaker 1: investments and all my VC and managed funds in the

2009
01:32:10,080 --> 01:32:13,840
Speaker 1: one place. It makes tax reporting super easy. Spent hours

2010
01:32:13,840 --> 01:32:16,040
Speaker 1: getting my tax turned done, and net Wealth does it

2011
01:32:16,080 --> 01:32:18,360
Speaker 1: all with pretty much the click of a button. Plus,

2012
01:32:18,400 --> 01:32:20,920
Speaker 1: there are so many reports that allow me to monitor performance.

2013
01:32:21,240 --> 01:32:24,400
Speaker 1: Exclusive to Contrarians listeners, Netwealth is giving up to twenty

2014
01:32:24,439 --> 01:32:27,000
Speaker 1: percent off their account admin feed. All you have to

2015
01:32:27,040 --> 01:32:30,800
Speaker 1: do is visit netwealth dot com dot au slash contrarians

2016
01:32:30,840 --> 01:32:34,080
Speaker 1: and follow the prompts terms and conditions, apply investment options

2017
01:32:34,160 --> 01:32:36,519
Speaker 1: vary by account and type, and check the website for

2018
01:32:36,560 --> 01:32:39,759
Speaker 1: important disclaimers. Remember always seek financial advice