Mailbag, incl: What to do with employee shares? January 11, 2026

23:40just needs to be true that money is... We went from pounds to lings and pence to dollars. And someone would have said, but there's some downsides to that. It's like, well, we all change, so you can... The downsides will absolutely... And by the way, if you don't adopt, you're going to jail, so there is that. There is that. True to violence does really achieve a lot. It does achieve some outcomes. I would just argue that, yes, the downsides or drawbacks will absolutely impact the rate of adoption, but the rate of adoption is what will determine whether or not it moves ahead regardless of whether or not those things can be solved to our individual satisfaction.

24:16Whatever issues I got the Australian dollar, I mean, well, Andrew would say, and I would agree, that the fact that there are more Australian dollars printed regularly makes the Australian dollar a less good solution than a sound money standard. Why is it adopted? For all the reasons that we've talked about. The Australian dollar didn't have to convince, Andrew didn't have to be convinced the Australian dollar was better to use it. Why? Because that was all that was available. So that's the challenge, right? I never had a choice. Right, exactly. So your thoughts? Yeah, I mean, Gab's absolutely right.

24:48I mean, no government in their right mind or banker is ever going to advocate for this. I mean, just think about it for a second. If you're a bank and the government has given you a licence to literally print money or virtually, digitally print money, Are you going to go, nah, I don't like that. I want to go to something where I can't do that. Of course not. And they're going to tell you, I mean, you know, what did the horse industry do when the car came along? Right, exactly. What did the fax machine industry do when the internet came along? Like no one who is being disrupted goes, this is a brilliant idea.

25:22Kodak invented the digital camera and then buried it, right? Because it's like this really undermines our business. Now, does anyone outside of that vested interest think that digital cameras were a bad idea? I know it's an incredibly brilliant idea, right? So, yes, I do not expect them at all to advocate for this. In fact, they're already going for the CBTCs and they'll all be done because of criminals and pedophiles and all the usual nonsense and the rest of it and for your safety. And here are these advantages. but it becomes pretty scary when the government can know what you're spending, when you're spending it, control how you spend it.

26:02And it's not, people will go, yes, but the government will never do that. And it's just like, well, look outside of your little privilege bubble. It's like generally that is the status quo in most places in the world. And it might not be this government or the next government, but can you guarantee that for the rest of time? Because once that genie's out of the bottle, you know, like someone will, who predicted Trump 20 years ago? That's the US. That's the home of freedom. Simpsons, we know the answer. Well, this is okay, but who answered? But that is a joke. I know, I know. Right? And could you imagine someone like that?

26:36Yep. And I don't know, but it's just like do I want to make a bet that from now until eternity the powers that be that govern our country will always act in the most prudent, honest, fair fashion? That's a big bet. And particularly when you look at history and go, is that trust has been breached every single time. Power corrupts and absolute power corrupts absolutely. It's one of the great pieces of wisdom from our time. So they're going to push for that. Now, we do it for all the right reasons, right? But the classic mistake people make is that they think that the only way this can happen is by it gets decreed on high.

27:13And look at Airbnb. Look at Uber. Uber, yeah, yeah. It just happened. And then everyone, this is great. I love this. This is much better. It was technically illegal. It was illegal. And then it became politically suicide to advocating. What politician is going to get up there and say, we're banning Airbnb and Uber? And it's like, no, we all love it. I know not everyone does, but, you know, bear with me. Everyone loved it. So we're going to do it. Don't forget in the very early days, history is so informative, in the very early days of the internet there were questions around how that should be run.

27:49And there are still debates to this day as to whether we should have a free and open internet or should it be gatekept by government? Oh, my goodness, can we please? What a dark, dark Orwellian nightmare we'll enter into if that was the case, right? Ask China. Ask China. Ask North Korea. Like they're the examples, right? Like we have seen this movie before. And anyway, so what you have here is you have what Hayek called a sly roundabout way, right, which is people are adopting it for its own intrinsic utility value. And it doesn't really matter at all. It doesn't amount to a mountain of beans when there's like three weirdos on the internet.

28:29But now you've got to a stage where there are literally hundreds of thousands, if not millions of people in Australia who take it seriously. It's still a small percentage. But if that grows, you've said yourself, you can over-intellectualise this, but at a point it's just all about adoption. If that adopts, that's the thing you've got to watch. If adoption continues to grow, it just gets to a point where it's political suicide to oppose it. The US is further along this path with something like 5 % to 10%, depending on how you measure it, if US citizens hold Bitcoin, or at least through a Coinbase account or something like that.

29:01Elizabeth Warren and the Democrats for a while started to really sort of fight that. And it just ended up crushing them because it turned out that the people who were very passionate for this kind of stuff just absolutely turned on them. And everyone else just really didn't care. It wasn't a major issue for them. So it's like there was no political upside to do it. And then Trump, for all his faults, he got his finger on the pulse sort of saying, all I have to do is say some nice things about Bitcoin and I'm going to win a massive amount of votes. So it's a groundswell, bottom-up, organic kind of movement, I would say.

29:32And it just, that will get to a point where we just have it. And it's not going to appear one day and we're just going to change the rules. It'll go through an evolution like fiat money did as well. We probably have our dollar backed by some version, you know, like some ratio against it. It'll take decades to play out, you know. But I, look, I think there is nothing more powerful than an idea whose time has come. And unless you're a banker or a politician, it's just a very extractive value prop to say, hey, would you like something that no one can seize or steal or censor or inflate away and that you can use however you want and that there's no middleman.

30:11They're like, yeah, it sounds pretty good. Now, in a world with prudent fiscal and monetary policy, it's not really solving a problem. In the current state of affairs, it solves a massive problem, right? It's also, again, my argument to Gab is just it doesn't matter whether you agree with those things or not. If enough people do, the groundswell won't. To your point, there are downsides to the internet. I'm not sure about the internet because there might be people who use it to sell drugs and have, you know, horrible... There might not be, there are. No, I'm saying beforehand. Maybe we shouldn't have the internet because of these things.

30:45There might be these problems. Yeah, there might be. So I don't think we should have the internet in case those things are true. Now, I'm not saying you're right or wrong. All I'm saying is it happened regardless. And those things absolutely did happen and they were awful, awful things. And at the same time, it was adopted because enough people thought it was useful or worth using. And so we have the internet. And it's not a perfect analogy, but it's just the questions are really important questions around how we would transition, what the world would look like, what we should allow for, plan for, do as governments and individuals, those things are all true.

31:16And if enough people think they have problems, Gab, that won't happen. But if not enough people think they have problems or they're happy to accept those problems in exchange for the other stuff that comes with it, then that's how the change will be made. Bitcoin doesn't – very few emergent technology or emergent phenomena need to tick off boxes to justify themselves. They emerge because they emerge because they get effectively a groundswell, a network effect, a momentum of their own, that tends to be enough. No, no, I'm not saying that'll be Bitcoin either, by the way. I'm much less convinced that the end of the day will get there.

31:46But if it happens, it won't happen because people tick those boxes and solve every one of those problems. Yes, this is now absolutely problem-free, trouble-free, consequence-free, therefore we should do it. It'll happen either because enough people will do it regardless or because it's considered to be worth the downsides because the upsides are much greater. That's how those things end up. Totally. And I don't want to tell you to think. You might think, yeah, I just don't think adoption or growth. I was like, okay, cool, don't do it, right? Like that's the thing. But if it is going to, and here's the weird thing about it, it's very opposite to how we would ever think about most investments, which is that the bigger it gets, the more people that use it, the more the utility increases, the more the value proposition increases.

32:29So don't forget we went from literally zero to$2 US trillion in market value against bans, against opposition, against all kinds of regulatory walls and, you know, like every single thing that was thrown against it. So in 2025, this thing, the risk-reward proposition has never been better, you know, and if we can go to, like, as I say, 5 % of the world's largest economy going adopting in the face of those wins and now the technology's better, the regulation's better, you've got corporate America adopting, It's like, okay, it could stop, but every day that it doesn't stop, the odds of it succeeding increase.

33:07I'm not saying that it's a slam dunk, but it's more of a slam dunk today than it has ever been. And if it still exists next year and it has continued to fulfil its promise of I will exist and I will allow anyone to use me and I will strictly obey these rules, then the value proposition increases again and again and again, and it's a black hole. So I don't know. I don't know. But if that stops, then it's all a bust. Now, are we going to be quick? We weren't as quick as we could. No, no, not you at all. I was talking for at least as long as you were. Igor has a follow-up Bitcoin question, though, which we'll answer in part and we'll move on.

33:45Okay. Other kind of monetary issues, though, which are interesting, so I'm looking forward to the next question as well. Igor says, hi, gents, long-time listener, second-time knee-bender and ring-kisser. May there be many more, Igor. Well, we'd like nothing more than a bit of just, you know, adulation. So instead of doing it again, I would just say Bitcoin and hope that alone will get my question answered. Yes, my question is about Bitcoin. I've just started learning and investigating the subject after seeing the adoption rates increasing around the world. We just talked about that. I've listened with pleasure to Andrew's many passionate monologues or was it rants about the subject and lately Scott's conversion to the dark side.

34:19But I have to build my own belief and understanding, which I know you will love, Ram. That is always true. now have started that journey. My question's actually for Scott as a Bitcoin newbie. Oh, good. He limbers up, stretches, flexes, but would also like to hear Andrew's view on the sub. Jeez, Eagle, come on. Why did you decide, asks Eagle, to purchase the actual coin instead of just buying a pure Bitcoin ETF? It seems that an ETF would be much easier and more secure than either leaving the coins on the exchange or hot wallet or having a number of cold wallets for backups. The ETF would have an ongoing management fee, but buying a number of cold wallets would also be a cost.

34:57The only advantage I can think of is that if you wanted to pay for something using Bitcoin, you can't do that with the ETF. Is that the only reason or am I missing something? I'm a little paranoid about keeping something that can be very valuable on a hardware device, even if it is duplicated off-site, so I wanted to find out Scott's views on the subject. Thank you for a very enjoyable and informative podcast, and please consider increasing the frequency to three times a week and the length to two-plus hours. Happy holidays, Igor. Don't, don't, Igor. Right? Don't. There is a very long one coming up.

35:30Next Friday as we've pre-recorded. It's a doozy, but hopefully enjoyable. Really good question, Igor. I will say to you that for now, for me, I am absolutely agnostic as to what I will end up doing. As I said, I made a small investment in Bitcoin. I'm not being falsely modest or anything else. It's a small position. Not tiny, but small. I have that currently in a hot wallet.

35:57I started... Hot wallet just quickly is one that's connected. Thank you, mate. Is connected to the internet. Yep. A bit of software just says there's many coins I've got. Just on your phone? How many stats I've got. Yeah, on the phone. Yeah, yeah. Yeah. I'm agnostic ego and I'm learning. I am... Rem likes this. I think you said I'm the only person you knew who started mining Bitcoin before owning any. Yeah. Which is absolutely true. And the reason I did that was because I wanted to start to understand, not the technology and the cryptography to like PhD level, because I'm never going to do that, right?

36:30It's not the thing. But I wanted to investigate and I wanted to learn from myself how it worked. And you generally speaking, you learn best by teaching actually. But second to that, you learn best by doing and then by reading or watching. And so I figured I'd learn by doing. And so I bought a little Bidax. mine. Don't do this. It's stupid. But I've stood around that kind of almost a scam, right? Because the chance of actually mining a Bitcoin with these things is so stupidly small as to kind of hold out false hope. But the idea was I set up a Bitcoin node, I bought a miner, I connected it to originally a shared pool and then a private pool.

37:07I'm not going to bother explaining this stuff. If it makes sense to you, it makes sense to you. If it does, it doesn't. You can learn about this in a million other places. I'm not going to do it justice. It's a tangent on a tangent on a tangent to go down that path here. But I wanted to use the machinery of Bitcoin to learn about it. And that's kind of how I got to that place. Now, at the same time, I'm not going cold wallet either, right? So I'm not doing the true believer, Bitcoin, your money, your coins, your keys, your passphrase, whatever, your seed. What's the official phrase for that one, Ram?

37:38Not your keys, not your coins. There we go. So I've got a small amount in it. If I had a larger amount, I would be really torn. you got um rem will have a view um i'll ask you for in a second there's part of me that because i'm a share investor and because like you egor i mean you're talking about language mate you're saying like you know um you'd be concerned uh where's the where's the phrase here i'm a little paranoid about people that can be very valuable on a hardware device even if it's duplicated off-site yeah me too like and rem will say now it's easy to do this and whatever i the the the the emotional hurdle for me to get over to do that is pretty bloody large right and why probably because I'm used to banking and I'm used to chest registered chair ownership and I'm used to having a known, ironically, known trusted database of ownership that I can resort to should I need it.

38:25And that's exactly the opposite of Bitcoin's promise, at least in the absolute, you know, kind of diehard version of it, which is all mine. No one can take it off me, you know, bearer instrument, all that. So I get all that, right? I'm not going to make this a long answer because we've done enough on Bitcoin already, but I'm with you, mate. I would be, I might take my a small Bitcoin ownership and put it in a cold wallet for fun at some point, just do what happens. By the way, the cost of the wallet would be a meaningfully large fraction of my ownership. So at some point it would be a stupid thing to do mathematically, but I might do it again, just to have the experience of, okay, this is what it does, this is how it works.

39:00So I am unlikely to keep a large event a hot wallet. Very, very, very unlikely. I'm more likely to either use a Bitcoin ETF or use a cold wallet because the hot wallet's the worst of both towards in a lot of ways, right? It's convenient, which is great, but it's neither completely secure nor is it completely, you know, protected in the way. It's secure in either case. I neither have that claim to someone saying, please give back my Bitcoin, I got hacked, or on the flip side saying, I've got it, no one can take it away. There's nothing too hack, I have it, you know, preferably buried in the backyard, not the true, but you know what I mean.

39:33So I don't know, mate. I don't know. I have no idea. I'm happy to keep people updated if they want as I continue how I buy some more and what I do with it. frankly not knowing what to do with actually stopping me buying more probably at some at some level not not not overtly not only but if i think about like do i want to have that much in bitcoin if i do i've got to then work out what where i want to do it do i really feel like it i am absolutely i'm as paranoid as you ego probably more about screwing this thing up and losing the proverbial gold nugget like you know where was that where was that passphrase what i do with it and and again andrew's got lots of i can i can see him smile he's like well how hard is it just do this right and i get it 12 words i don't get it it's like i can understand it's like oh it's 50 bucks worth oh maybe i'll lose it it's like hey here's generational wealth all you need to do is write down these words that's it but if i lose it if i forget if i can't remember where i wrote them down i know this is going to happen i like at one level i get it on the other hand i'm like there is a non-zero chance of a zero outcome if i if this up excuse my my allusion to a bad word But, like, gone, gone.

40:34Like, do I really want to take that chance? So, anyway, Igor, great question. Hot wallet for now, small amount of money. If I was to go larger, I would either do cold wallet or ETF. Hot wallet is, in my mind, the best of both worlds on one level. Security-wise, it's probably the worst of both worlds. I'm sure there are worse worlds. I know there's not. Yeah, I don't have an answer for it, Igor. I wish I did. I will keep thinking about it. I'll keep planning. I'll keep trying to work it out. But it's also, I said to Andrew, one of the great things, why there's upside for people is because this is still really clunky and early, right?

41:06The user-friendliness is improving dramatically. This is the internet in 1994. That's what we're dealing with right now. You type in your own, you know, what's the code called? Seed phrase? No, the numbers you type instead of a domain name. Oh, the IP address. IP address, yeah. You type your own IP address in and you make your own connections to the internet. It's really, like I'm trying to set up this bloody Bitcoin miner thing, right? I'm like, so hang on, what's a public pool? and what's a Bitcoin node and what's a Lightning network? And how? It's like, I don't, like, no, this, and again, I did it.

41:35Why? Because I wanted to know what I knew what I was doing. That was the point. But I'm doing this thinking, God, this is hard. No wonder some people are just not this far along yet. And at some point, it'll either get easier, but more likely it'll just become more convenient by using, as Ram said a million times, the Combank will have a, you convert to Bitcoin. It's already a thousand times easier than it was, even four years ago. It's just like. Anyway. There's no right, look. There's no wrong answer. There's no wrong answer. Do what you want. The only wrong answer is zero. That's my view on it.

42:04And, look, I won't articulate the case here. I wouldn't suggest anyone who's unsure to, like, back up the truck and liquidate everything. Definitely do not do that. But it's just like, you know, at this point in time to just be on zero and to parrot a bunch of falsehoods that you might have read from five years ago is just ignorant. I would... That's the wrong move. Yeah, people have different views. Do whatever's right for you. I don't care. All I will say is it's not as hard as you think, right? All of us use the internet. Every day, all of us use the internet, you know? How many websites have you built, Igor?

42:44Like, you know, what, if you ever built a browser and run that all, you don't even need to know it's abstraction. That is the key to technological advancement is we invent new ways of doing things and then we abstract above it. And, you know, we're driving these cars around today and there's this, like, the very bottom of it, there's, like, a bit of fuel exploding. There's a lot of difference, a lot of levels between that and the wheels turning around while you listen to Queen as you cruise down the M4 at 110 k's an hour. Like, you know. Is it Andrew's life? Oh, I don't really understand how the piston, the fuel injection works and the turbo, so I just thought I'm not comfortable.

43:22It's like you don't need to know. You don't need to know. He's not saying that. that's not your issue. No, I know, I know, but it's just like a lot of people will make that criticism as well and they'll look up. I think it's a very noble and worthy kind of pursuit to try and wrap your head around a lot of this stuff just because it's in and of itself interesting even if you never do anything with it, right? It's just one of the biggest breakthroughs in computer science, you know, of the last hundred years. It's a mind blow and so it's interesting. But as I said, I think on the hard money episode, everyone jumps on a plane and not a single one of us really understand lift dynamics and airframe construction and jet turbines.

44:05Like none of us do, right? Like, but it's just like all you need to do is go see that massive thing in the sky that flies. Do you want to get on it? Yeah. You know, and that's all you have to do with Bitcoin. Like there it is. It exists. Never been hacked. It works seamlessly. Do you want to participate in it? Then yeah. Okay, do it. It can be super easy or it can be super advanced. Choose your own adventure. Go for the thing that's right for you. And also, don't forget, it's not a set in stone kind of thing. It's not like once you make a decision, well, you're not going to be saying in 2040, well, I made this decision in 2025 and that's it.

44:35You know, who runs their own email server these days? Like no one. And yet we all did at the beginning. And I remember when Hotmail came along, I was like, wow, it was a revelation that I could log onto a website and I could access my email from there. Like what? It was just, it just, yeah. So anyway, do what you want. Do what you want, Igor. or just don't be on zero. Maybe a listener, a female listener. She identifies herself as a no-name, so we will refer to you as a female listener. By the way, love our female listeners. Thank you for listening. Thank you for being part of the money world in some small way.

45:06Thank you for doing more of it because there's not enough women who are taking control of their own finances, and I love that you are, and thank you for listening. Please keep my name anonymous, she starts with, and we have love the podcast, and I especially don't encourage you. I like listening to a good rant, says our listener. Can you please explain, using some concrete examples, now, yes, but also this is audio, so it's harder, what is meant by the phrase, inflate debt away. It's been mentioned numerous times over the years on the podcast, and I may have a slightly better grasp of when I first heard you say it, but I'm sure I still don't have a full understanding.

45:41I loved being debt-free. I've gone into debt this year to build a home, and I plan to return to being debt-free after settlement of my current home next month. Thanks for your time, a female listener. Inflate debt away. What does that mean, right? You've got to remember that the money and the debt is all just a unit of account which really just relates to human time and effort. That's all it is. I work a certain job. I get paid a certain amount per hour. That's all it is. For a whole bunch of reasons we won't get into but which we regularly touch on on this podcast, the money supply continually expands, which means that inflation is a thing, which means that prices always go up, which is the other way of saying that the value of the currency always goes down.

46:33So if it's the year 2025, I'm going to borrow a million dollars from ANZ and it's going to be a 30-year loan, it's going to be interest only, I'm going to pay the interest for 30 years and then in the end I'm going to pay a million dollars back. I will bet you$1 ,000 million trillion at this point in time that that money that you are paying back in 30 years' time does not have anywhere near the same purchasing power. And that just means that you're going to have, like, you know, you will be doing, presumably, let's not get too futuristic here, but presumably doing the same 40-hour kind of week, but you'll be paid a lot more in nominal terms.

47:09Right. In purchasing power terms, it probably will be a little bit of a wash. It can get darker on that front if you want. But, you know, and that's what really matters here. You know, why is it that I could buy a meat pie for 15 cents in 1962 and now it cost me$7? I mean, that's how you inflate the debt away. Inflation is horrible for savers, horrible. Because I put my money under the mattress and in 10 years' time I've lost half the purchasing power. That's a terrible deal. But for the debt holders, and let's not forget, we're all in debt, all of us, you know, and if not you directly, good on you, although my view on that has changed, but the public officials that represent you are drowning in debt and we're adding more and more to it.

47:56It's a great thing. It's a great thing for the money to lose its value because it just means in real terms. And it's in the name, real. Like, in other words, if you're not talking about in real terms, you're talking up in made-up terms and that's the only thing that really matters, right? So in real terms, the money is getting worth less and less and less and less and that means it's easier and easier and easier to pay back the debt. Let's say that you're earning$100 ,000 in the year 2025. When I first entered the workforce, that was incredible. You were doing really well. That was an incredible package.

48:34Top 3%, 4 % of people earn that sort of money. Yeah. Airline pilots, GPs and not many other people. Yeah, I mean, you know, most teachers after a few years will be on. I'm not having a lot of teachers at any way, shape or form. I just mention them because they're my wife's one and they are notoriously underpaid. But could you imagine saying to a teacher, what,$100 ,000? Oh, you're minting it. That's such a high amount. I'm like, no, you're clearly not, right? Because there's someone over there who works in HR or marketing or something else that's on$400 ,000 a year, or God forbid insurance broke, mortgage broking or real estate agent.

49:07You know, it's like, it's the money. It's the money. And so this is why I think these ideas of being debt-free really made sense in a fiscally responsible world, in a hard money world. It's a really great thing to sort of aim for. But in an inflationary world, I've really come to the view that one of my biggest mistakes I made in my adult life was having that outlook, was doing, I paid my hex debt back as quickly as I could. What was I thinking? It was an interest-free loan. It was like non-recautal. I said, what? Why would I pay that back? It's certainly not more than I have to. And I would much rather pay it back in 10 years' time than now, one, because of the opportunity cost and the time value of money, but also just because of inflation as well.

49:49Whatever I'm paying you back in another 10 years' time in terms of how much effort I need to expend to get that money is a very, very different calculus. So it's not easy, and that's why it's such a pernicious kind of system that we have because it is slowly, we had this debate, is it theft or is it tax? I don't know. It's not a good thing, though. It's a very sneaky way of extracting value from the populace. And that's one thing that rich people generally understand because they've got the money to employ good financial advisors. I mean, Elon Musk and Jeff Bezos and Zuckerberg all have loans.

50:27Let me just let that hang in the air there for a moment. It's like, well, why would they have loans? They're worth trillions of dollars. It's like, yeah, because they're not idiots, because they would take out the loan, spend it on the power yacht and pay it back slowly over time. And they know that the rate of inflation on their asset price is going to vastly outstrip whatever interest cost there is going to be. Elon never sells his stock if he wants to buy something. He just lends against it. It's ridiculous. It's stupid. It has all kinds of unintended consequences, but that's the system in which we find ourselves.

50:56And unfortunately, by shunning debt, you put yourself at a disadvantage. Now, I have to quickly add there are different kinds of debt, like a credit card debt is very different to a very low rate of interest, you know, line of credit on your home. They're very, very different things here. So yes, debt can be very, very bad. But the kind of debt that you can get against the house, I would just say, have a think about that. Particularly if you, what are you paying on your mortgage, what, 4.67%, something like that? Like, if you're going to be 20 % leverage, put it into an ETF, you'll probably get 9%, 10%, 11 % over time.

51:35Like, this is free money. It's free money. This is why the system is so bad at the moment, right? The rich get richer. It's like, this is a big part of the reason why, because they know how to make the fiat money system work in their favour. And by paying off the debt and shunning debt, noble and sensible as it is in a sane world, in an insane world, it's actually the wrong move. What do you think? I'm loathe of who you go over the ground we've come for. I'm happy to take the certainty of no debt over the possibility that I beat inflation over time and just don't. 5 % LVR on your home. I bother.

52:15I don't need to. I'm not going to. I don't need to win that game that badly. I'm happier just to have less debt and deal with it. I mean, each to their own, but at least intellectually, you know you're leaving money on the table. Yeah, well, probably. I wouldn't say risk-free, but as risk-free as you can possibly get, right? I'm going to give a relatively concrete example of inflating debt away using wages, and wages aren't the same as inflation. So when we say inflate debt away, it's a slightly different thing, but wages are a nice proxy for an example. And just because the numbers work nicely, I'll use it roughly.

52:52In 1978, the average income was about$37 ,000 in Australia. Now, men and women, different, a whole different era, all that kind of good stuff, right? Today, average wages are about$100 ,000, okay? So just keep those two numbers in your head for a second, according to the ABS. Using that information, if you'd have bought a house, and I'll make my life just easy because the house price, house and land was roughly about$40 ,000 in kind of the outer suburban areas of Sydney back in 1978. So you earn, I'm going to make an image here, you earn 40 grand a year, you pay 40 grand for a house. Now, you would have paid the mortgage off by now because it's 30, 50 years later almost, but just stick with me.

53:34Your income has grown to now be worth two and a half times the price you paid for the house. If you're just still paying off a loan today, and God forbid they have a 50-year mortgage, but if you were, you have two and a half times increased your pay but your mortgage the loan value hasn't increased a dollar a single dollar now there's a principal and interest loans and blah blah blah and it gets it gets more complex because the rate you pay and the rate of inflation to actually interact they don't always inflate debt away because the repayments go up at the same rate or can go up the same rate so you've got to be you've got to be a little bit careful how you assume but on a principle basis alone, the fact that incomes grow, but your debt dollar value stays the same is effectively what we're talking about in a very concrete term.

54:18Now, as I said, wages aren't inflation and there are costs to debt that people kind of ignore sometimes and go, well, it's not the same amount of money. It's like, yeah, well, how much interest do you pay in the meantime? So you've got to do those maths properly. And we can't do that in audio because it's just too bloody hard. But essentially, as long as your growth in purchasing power, so wages, exceeds the growth in interest you would otherwise be paying, you're ahead. And that's kind of what it means. So the debt stays the same dollar value in nominal terms. The number of$100 notes you've got to hand over stays the same.

54:50But your earning capacity increases dramatically. Now, both because, by the way, and that's the average wage, doesn't account for promotions during your working life and all that kind of stuff. So it's all a bit different. But, you know, you can imagine a young home buyer buying in 30 years ago, 1995, and they've got, hang on, I can borrow, what was the average price then? $2.50? 300 grand? Much less than it is now. Right, so call it 250 grand. I earned 50. I'm borrowing 250. Now I'm earning 150 maybe because I've got average wage plus I've got a promotion. So you can see how if the wage grows faster than the asset value, you've got that, sorry, not the asset value, the debt, and the debt doesn't grow because it's fixed.

55:27The longer and the more prices go up, the easier it is to pay back that debt. So that's kind of the idea. If your wage doesn't grow, it doesn't matter that inflation happens. In fact, you're worse off. So you can't assume all debt gets inflated away because it does come down to the ability of the borrower to repay and to keep up with the cost of those repayments. So it's not universal. At a government level, which is kind of where we generally tend to use it, the idea is the government borrows a trillion dollars. We've got a trillion dollars worth of debt now. If GDP grew really, really quickly and the loan value didn't grow, the government's getting more and more and more money and can pay back that debt.

56:07using future dollars and today's borrowed amount. It's really hard to do in words rather than numbers. But you're talking even in nominal terms there as well. Real terms is what the matter. That's the thing. So GDP is generally, as quoted, is the real thing. That's true. You know, so it's sort of like that's the key here. It's distinguishing between a number, a nominal number, and what that number represents. And you have to adjust it because that's the only same thing to do. I don't really care. If you want to put a, we've used the example before, if you go to South Korea, all of a sudden you're dealing in one and, you know, a hamburger is 10 ,000 won or you go to yen or go to any number of currencies.

56:48Like it just doesn't, I got no conception is that a high amount or is it a low amount? And the answer is it's all arbitrary. It actually doesn't really matter. You know, I'm just going to multiply all the Aussie, everyone gets a hundredfold the extra money, prices go up a hundredfold. What's changed? Nothing has changed. But nominally the price has changed. And it's like, we love to talk about nominal, but it's like, I don't even care about that. How much time do I have to exchange my energy, my labor, what I would otherwise be doing, spending time with family and friends to get the things that I want?

57:19Yen, won, Bitcoin, I don't really care. I just want to spend less time and effort to get the things that I want, right? And that's the only way to look at things. And that's why I always bring it back to real terms here. But when you're talking about debt and inflating it away, that debt is nominal. That debt does not get inflation adjusted. It's a beautiful thing. Once you understand it, it's kind of like, oh, my gosh, yes, I wish I'd understood this 30 years ago. Look at all the people in Australia who have done really well from an investment perspective. You all know it because we've all got them in our family, people listening to it right now.

57:54Bought an investment property, value went up, they used the equity as collateral against a new loan, they bought another one. Every other week the AFR or the, you know, telly is writing a story about the 28-year-old who's got 12 different investment problems. They put 50 grand in and then the rest is just funny money just being, you know, multiplied up. It's kind of like that's stupid, it's unfair, there's no value created, it's hyper risky, there's all kinds of unrecognised risks that are in all of this kind of stuff. But what they are doing is just intelligently playing the game. You know, well, let me walk that back.

58:33Intelligent in the sense that there is no forced reckoning at some point, and so far it's been a pretty good bet, and given the incentive structure, they will do everything they can to pursue that. So it's just why, look, Scott's at one end of the spectrum, I'm not at the other because I don't do that kind of stuff and I don't have a high LVR. but you need to at least reconcile the reality of it because you are doing yourself a disservice by being debt-free, which is madness, which is madness. I would say relative disservice rather than actual disservice. I mean, you're not costing yourself any money.

59:15Well, everyone else is doing it. You're doing yourself a disservice. Yeah, maybe. I don't know. You go see a financial planner or an accountant who tells you not to buy a negatively geared investment property. I will challenge you on that. I'm going to be fine. Doing yourself a service is like, you know, it's the enough thing. Could I have more? Yes. So is that a service? Not everyone's you though, dude. You know, like other people are trying to get ahead in life. You're 50 years of age. You know, you've had a good run. I'm not trying to take anything away from you, but there's a 24-year-old listening who doesn't have the capital base, who is in this system, who is, you know, is like, well, I'm happy for you Scott that you've got enough but I don't I'm making the point that a disservice doesn't necessarily mean you're going to be you're going to cost yourself absolute money, you're missing an upside rather than costing yourself real money by not doing it I'm probably being pedantic.

1:00:10I'm trying to distinguish between this will hurt you financially versus you will miss the opportunity to help yourself financially. And it's a continuum is all I'm trying. Sure, sure, sure. Yep, yep. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener. Hey, let's move on to a question from Tim, who obviously is a basketball fan, who says, G'day, Scotty Pippen and Andrew Bogut. I've started receiving share rights from my employer. These things vest over a few years, and then I get to choose where to turn them into actual shares. Which sounds simple, until I realise there's tax, timing, strategy, and general existential dread involved.

1:00:53Good problems to have, I know, says Tim. A few things I'd love some high-level, non-specific, of course, guidance on. One, when do people normally convert vested share rights? Is there some magical framework for deciding whether to hit the button immediately, or let them sit there like forgotten leftovers? Two, if someone has a family trust or SMSF, how do people generally decide where the shares should end up once they're exercised? And three, any general wisdom on not accidentally ending up with 98 % of my net worth tied to the company that already controls my calendar? I totally understand you can't give personal advice.

1:01:29I'm just looking for big picture principles so I can pretend I know what I'm doing. Cheers and love your work, Tim. Well, the first one is it depends on the structure of the preference share or the convertibility of it, right? It's effectively a call option, which is basically gives you the right, but not the obligation to pay a set price for shares. Now, if you work for a listed company, you know exactly what they're worth because you can just check the market. If it's not, then there'll probably be an internal market that gets created once a year or once every couple of years. Yeah, and so you can go, well, and then the calculus is, in each case, the calculus is pretty simple.

1:02:03I've got the opportunity to buy this share at$10 and I know that the market price or the company mandated price is$20. I'll take that. Definitely take that.

1:02:18However, there will be situations where once vested you have a set holding period. You can't just convert and dump. In which case then you're taking risk, right? Because it's like, oh, I pay 10 and I get a share worth 20. Yeah, okay, I'm going to do it. Great. Can I sell it? No, you've got to wait two years. Okay. In two years' time, it's worth zero. Right. Or 100. Or 100. I don't know. Yep. So you have to make a, like any investment, you have to make a calculus on what you think the company is going to be worth. Is this going to be worth more? If there is no requirement to exercise, in other words, if you can hold that option for a time, maybe it gets better and better and better and better.

1:03:02Yeah. And maybe you can write out part of the vesting period in the interim. The company gets to structure these however they want, which is why I'm finding it hard to answer it because you'd need to look at the terms and conditions as to what it is. But if it is something that you can immediately sell, that's the calculus. Just like is it worth, can I spend$1 and get$2 in exchange or whatever it happens to be? Then, yeah, if you can, do it. And then if you still like the company, keep the shares. And if you don't, then dump them and take the cash and put it into something else. It's hard. I will say, Tim, get financial advice, please.

1:03:38For the love of God, get financial advice. Don't do anything based on what we say. A couple of thoughts from me. Generally speaking, if I know the tax correctly, and I may not, so get financial advice, get tax advice, please go see an accountant. The exercise, I think, is taxable income. So if you pay 10 and they're worth 20, I think you pay income tax on the difference and then capital gains tax on anything from there and above. And you pay the tax on the conversion instantly, even if you don't sell the shares. That is a trick, do they? Right. So there's some cash flow things to be really, really thoughtful about, Tim.

1:04:16And I'm pretty sure it's income tax on the difference between the price you pay and the rights price you're offered. So to Ram's point, I think it's the case that if I pay$10 for shares that are immediately at$20, when I exercise the right, I acquire$20 shares and even though I pay$10 for them, I think I pay income tax at that point on the conversion. I can't remember to find out. What I do know is that the tax is payable on conversion, not on sale. So you have an immediate cash flow requirement and you hear a lot of people, the ASX directors and sales sell for a lot of reasons. But there are a heap of CEOs in public companies who will put in ASX releases or ASX updates saying, I have sold my shares to meet tax obligations.

1:05:01And generally it's that. It's like, hey, here's a free million shares. And the ATO goes, beauty, we'll take half that in tax, please. And the CEO goes, but I was given shares, not cash. The ATO says, I don't care. And so they have to sell some cash to basic, sell some shares to basically get the cash to pay the tax bill. So please be careful of that. Your second question, if someone has a family trust or SMSF, How do you decide where the share should end up once they're exercised? Be very, very, very, very, very careful. It's almost certain that unless your company grants those shares to the trust or the SMSF in the first instance, you are, and even under tax law it's likely because you're the person who's earning the income, you are being compensated for your work.

1:05:43You can't say, well, the SMSF was given those shares by the company. It's almost, and again, I'm a tax lawyer, so again, usual disclaimers, like I don't mean let no boring I mean please for the love of god don't do anything based on what I say use it as a way to ask good questions your accountant um I can't imagine a scenario in which the ATO will let you say well I was earning the income but they got the SMSF got the shares so what's going to happen they're going to be vested in your name then transferred in your from your name to that structure in which case guess what more tax obligations if the shares have gone up or down um so you can't decide to my understanding where they should go you can transfer them for your own name to there, but that's a separate transaction rather than the result of any exercising of those rights.

1:06:24You have to as the employee. Now, if you're employed under a company structure, maybe it's different. I don't really know how that would work. But if you're paid individually, I'm absolutely certain the ATO would say, no, no, no, no, no. You did the work. You got the shares. You can't pretend your SMSF somehow got the shares from the company and you did the work. So I would be very, very, very, very surprised if the ATO didn't make you meet the tax obligations. Now, once you've got them, if I've got an SMSF, if the Motley Fool gave me shares and I paid, exercised the rights or whatever, and they don't, but let's say I did, and I then transferred to my SMSF, assuming I was allowed to do that by the private company I work for, I've never actually asked the question, there will be a transfer and that's a taxable event.

1:07:07So, again, be careful there. General wisdom on not accidentally ending with 90 % of your net worth tied to the company you already control, who controls your calendar?

1:07:18I'm a big fan of regret minimisation, as everybody knows. If you had not any of your wealth tied to the company you work for and that company it was, NVIDIA, over the last five years, that's a very, very good problem to have, as you rightly say. I personally wouldn't want to have meaningful amounts of my net worth tied up with the company I work for for my income. Not because I think that Motley Fool is a great example, right? We're a private company. I have a small number of Motley Fool shares. I've sold some Motley Fool shares in the past. I don't want 100 % of my wealth. It was never 100 % of my wealth tied up with the Motley Fool.

1:07:53Great business, love it. Maybe they fire me tomorrow. Maybe the company, something bad happens. Not going to, but do I need to take that risk? No. I'm a big fan of Buffett's line of people risking what they have and need for what they don't have and don't need. Could it go up more? Yes. Would I want in that? Even if it was Nvidia, would it suck that I sold some of my shares and the shares then went up 15-fold? You bet it would. badly, suck badly. Or it could be work for Lehman Brothers where that actually happened and then that company went broke. And you lost your job and you lost your wealth.

1:08:22You're saying, yeah, you're getting from exactly zero. Last Buffett is, well, it's been a while between Buffett quotes, mate. Don't go back to square one. So for me, I would diversify because diversification is smarter than being concentrated in particularly a single entity. You're betting it all on black. And I shouldn't even say that. It's not a 50-50 chance, right? Maybe it's a 90-10 chance. Maybe it's a 95-5 chance. In that case, in 5 % of the cases, you lose everything. Do you want to take that risk with your family's wealth? I don't, so I wouldn't. Other people might say, oh, I'll roll the dice on sticking all in the one company and hoping that company does really, really, really well.

1:08:55As Andrew said, though, you know the company, right? So you know how likely that is and what the trade-offs are. Yep. Anything else you want to add? No, I think you covered it well. Very kind, thank you. um question from alec he says uh to scott and andrew's motley full money mailbag i like that alec here again thank you for your answer to my question about alliance aviation andrew mentioned that my question was why people joining why people join straw man to discuss the small caps that no one else is as a shareholder i was at the time desperately looking for analysis of what on earth was going on and searching the web and the financial review for information and insight at the time of the CEO's resignation, followed by a record-breaking share price plunge that no one was talking about.

1:09:48Oh, Alec, you must have paid, Alec. Now I've gained delayed access to the discussion at the time on strawman.com, Australia's premier online investment club, I can say I 100 % agree since he's a hugely valuable resource to anyone interested in micro and small stocks. You always joke about it between you, but could you explain how straw man came about and what has been your biggest highlight? Sounds like such a Dorothy Dexter. I'm just trying to get the email address. Maybe it was Andrew's email address. I would have been more subtle if it was me. How did straw man come about and what has been your biggest highlight of insights gained over the years to get you to buy into a winner in real life?

1:10:29Now, strawman.com is, of course, Australia's premier online investment club. Can I say, Andrew was the subject of a conversation on The Good Oil, the other podcast that I do, where I just interview people. I interviewed Andrew about Straw Man. It was a long time ago. We should actually do another one, mate. Yeah. But, yes, so if you want the full version, I mean, for a while, Andrew will talk for a while now than it was then. If you want the full version, check out The Good Oil. You can scroll. It's a long, years ago now. But check it out. Andrew was there. Maybe last year. I don't know. Was it?

1:10:57No. Really? 2024, I want to say, yeah. Well, that'd be two years ago, then, wouldn't it? Well, we'd actually suppose you're right. Yeah, so you're right. You're right. Anyway, I'll give you. Yes, so check that out. In the meantime, Andrew, give us the potted version. How exactly did Straw Man come about? It was the realisation of massive imposter syndrome and the crushing reality of self-doubt as an investor. So I ran Motley Fool Dividend Investor for a while. You did. Very well too. And we had forums there and you'd sort of, you'd do your best, you'd put out a recommendation and then everyone on the forums would tell you why you're an idiot.

1:11:35And, but what, what I recognized from that was actually really valuable. I mean, no man is an island and you only know what you know, and no matter how much due diligence or how thorough you care to be, it's just, you just tend to miss stuff. And I, it was remarkable how much wisdom there is out there and not necessarily that, you know, there'd be someone who perhaps has never worked in finance and doesn't know how to do a discounted cash flow model, but may have spent 30 years working in the aviation industry and knows exactly how those businesses work. And it was like, oh, Andrew, what you failed to understand is this.

1:12:08And so I thought it'd be really cool is rather than making me the spotlight, why don't we just have everyone can be their own newsletter and then we'll just let track records build. And it's just sort of like, why listen to me when you can listen to another straw man member who's got a far better return than I have over a longer period of time, of which there are many, right? But it was really just trying to, and the reason it was called Strawman or is called Strawman was the idea that is fundamental to my view on life really is that if you can't destroy an investment idea, it must be a good idea, right?

1:12:42So it doesn't really fit the definition of what a strawman argument is, but it's the internet and you've got to have a cool sounding name. But it was that idea of, hey, I like this. Now I want people to crap all over it. Not because I'm a masochist, but because if I'm wrong, I'm wrong, right? Like that's the reality of you. You are either right or you are wrong. And there are two ways to find out. One, you can put your money at risk and see how it goes. The other is you can have other people try and poke holes in it or just give you other insights and information that you might not have come across yourself.

1:13:18And, and I have, I have, I have avoided, I think people like to talk about the winners, which is nice. But for me, the greater value personally has been the things I didn't invest in, or I got out of a lot sooner, because there was enough people on strike. What are you doing? I don't even want to mention names. There was some certain companies like, this is a bad idea. It's a bad idea. No, no, no, guys, listen, listen, hear me out. and they were right and they were right and so that that's that's the short version of it i i i wanted i wanted to get away from i wanted to uh have a more collaborative approach and i wanted to build a brains trust up of people that could that could help me get to the truth the best investment i've made in the last few years i never would have come across but but um shout out to dr pete is that's his username he pitched a a little company a while ago it was like it made a hell of a lot of sense.

1:14:11The community weighed in, we uncovered a lot of stuff. We spoke to the CEO, one of the best investments I've ever made, right? I never would have come across that otherwise. And the other thing is as well, just to very quickly point out, it's just sort of like we very, very heavily lean into the idea of all care, no responsibility. I just, it's your money. No one cares about it more than you. I'm not going to tell you what to do with it. I'll give you my two cents. You go off and you make your own opinion and vice versa. So I can't guarantee anything. We don't make any return promises. In fact, we stay a mile away from that kind of stuff.

1:14:41But I do guarantee that you'll be challenged in your thinking and you may come across some ideas that you otherwise wouldn't have. And if that's valuable, then great. I like that. I want to go, I want to just double down or follow up with a question about the business itself because that's fine as an idea, right? I wish as an investor there was a thing. But it wasn't just that. You're an entrepreneur at heart. You've already had one business before. This was the second rodeo. And it was also the... Sucker for punishment. Yeah. Well, it was also the observation that there was, I'll say a business scenario.

1:15:13I don't mean that to sound mercenary, though I don't think you would mind the term, but that idea of it's, in my head I hear you saying there's nothing more powerful than an idea whose time has come. And so I'm trying to talk while I'm hearing you say that. You're not literally saying it, by the way, for anyone who's wondering. There's no secret microphone. I'm just, I'm thinking about it. But I guess I mean that in the context of you kind of, well, hang on, if I have this idea and if other people, Hot copper existed, right? Still does. Right? Motley Fool had forums, still does. It's worth every cent you pay for it.

1:15:48But the observation was not only... The joke there being it's free. Sorry. Sorry. I assume you're right. You probably should. If you're not paying, you're the product. Cheap at half the prices. I'll let you figure out what that means and how they make their money. But even that's not enough, right? Just because it's suboptimal doesn't mean there's a business going. And I think the combination you had was often solving your own problems is a really nice starting point for a business idea. It's like, well, hang on, if I get this problem, other people do too. And then you've built faithfully a community of people who are delivering on the hope you had because, again, without that, you had to be right that there were people who saw value as you did in that, who contributed value as well taking value from it, and for whom a relatively small, and I mean that in a positive, not a negative way, group of really committed people who said, we're all in this together and we see value in helping each other out.

1:16:44That I think was the, I want to say the more powerful insight. I think the insight itself was the thing you've just mentioned. But that's, you know, lots of good ideas that have business models. And you've managed to really latch onto something, which what people wanted was, don't want everyone, every man and his dog. You don't necessarily want to hear it from some trusted source or single point of whatever, but there were enough people who were going to say, yeah, you know what, we think you're right. We think there's something there. Both we're going to get value, we're going to contribute value.

1:17:12I think that's... This is very flattering. I'm very uncomfortable right now. You called it an investment club, I think. No, it's not. You're not. Yeah, true. But it evolved in a certain way. I mean, here's the reality of it, right? There's... I don't forget what the latest count is. There's less than 500 paying members. It's a tiny operation, right? It's really small. And we don't do anything in terms of growth whatsoever. So, and I am missing a million tricks in terms of a business. In other words, we don't do advertising. Yeah, come. You know, well, we don't upsell you. We don't cross sell you.

1:17:49The only corporate affiliation we have is with ShareSite, which is a portfolio tracking tool. And they give you a discount and I get trailing comm on that. It's like rounding. It doesn't make or break the business in any way, shape or form. But the point is that if this thing was about maximising money, I'm doing it in a really dumb way. But you get to a point where the, how do I say this?

1:18:19It is far more economically rational for me to manage my portfolio effectively than it is to maximise the cash flows of Strom. Nice. Because I've just reached a stage in life of, you know, working for a long time, saving up a lot of money, investing, just compounding, it works, right? It really works. And so it's sort of like what matters to me is time, is freedom, and is making sure I'm managing my portfolio well. And so the business has to be viable, right? I got to pay the bills. We're talking on Friday about shout out to the ASX and to Standard & Pause. Love your work. I love the price gouging.

1:19:03Thank you very much. But those masters have to be served and so do various other sort of expenses. So it's not a charity. Don't put me on a pedestal. There's no charitable thing in this whatsoever. I selfishly want to improve my investment returns and I want to do it through an entity that isn't bleeding cash. That's it. That's it, right? And it's just like what's really nice about it, though, is after – because you do have aspirations for, oh, this could be great. We'd go to the US and you start thinking about all this stuff and you think, wait a second. And this is just really simple. If this can just do nothing else but for the next 10 or 20 years that I'm doing this, then job done and that's it.

1:19:39So we're really basic. It's really simple. There's no bells and whistles. The tech's really average. Everything is, it is, you know, I mean. You're totally just not the marketing department, can't you? I just, I've stopped. It's just, I don't care. I'm at a point where I don't need to care about that stuff. And it's like, if you're after a shiny, cool app with lots of features and there's an AI integration and there's a charting package and there's 20-minute delayed price. Go somewhere else, right? We're not going to do it. And the entire asset of base of the company isn't even on the balance sheet.

1:20:11It's just the people that's there. And we've got a really good group of great investors and I owe them everything. But I hope that they hang around because hopefully they get the same kind of value. And if they stop hanging around, then we're doing something wrong. But that's the other thing I think. I talk to you off air a lot about this as well. I just think once you get ego and hubris out of the equation and you stop trying to grow for the sake of growth, we try because I need to be a big, successful businessman and all that kind of stuff. And you go, wait a second, I just hopefully create a bit of value because I would like this.

1:20:43And there's probably a tiny handful of people out there in Australia who would also like to do this. And if we can just sort of all help each other and we can manage our portfolios more effectively, if maybe if we can dodge one or two really bad ideas or maybe uncover one or two good ideas, job done. and that's all it will ever be. It's really boring. I mean, you give me this wonderful big up at the start of each episode of this thing that makes it sound like this huge thing. It's basically, if I was being generous, I would call it a lifestyle business. Only for those who like their Lamborghinis and super yachts.

1:21:15Like, you know, it's just such the crappest business. We're never going to list. It's never going to be. If I was to pay for someone to run it, I don't think there would be any dividends, right? Like it's, I'm not even being humble. I've just, I have made my peace with where I am in life. It's like this is just what it is and this is all it needs to be. That last bit is so huge, right? It's all it needs to be. Why am I going to risk investing, I don't know, I'm going to take$200 ,000 and try and build something really fancy and cool and you know this as well, mate. Like most of the operators in this space, The best way to make money is to bilk your clients out of money.

1:21:58Like that's how you do it. You make ridiculous promises. You sell them a bunch of, I won't swear, poo that they don't need and you have this really high rate of churn. You don't trade a lot or you, yeah, exactly. It's just like I don't want to do that. Not because I'm noble but because it just then all of a sudden I become hot copper. I want to be hot copper. So anyway, this is horrible. Let's go to a proper question. This is too self-referential. Thankfully for everybody, we've been going for an hour and 22 minutes, so we'll probably call it there. Okay, cool. Nice. It's nice to end on a note we get to talk about Australia's next unicorn business.

1:22:31Despite any humility, coming to a stock market near you, probably Cliff Obrecht, Melanie Perkins, Mark Kennenbrook, Sir Farquhar, Andrew Page. I'm just saying, I'm just saying there's a bracket there somewhere. If ever this business is written up in the AFR as like, either the entire economy has bombed or someone's taken asset at the AFR. I'm not even being humble. It's just the reality of the situation. And as humble as you are being, what I love about it is this is a nice, I love success stories generally. I like success stories for good people doing the right things and doing well by doing it.

1:23:12And you're right, it's not a trillion-dollar business as much as I laugh about. It's only a billion-dollar business and that's okay. but yeah it's it's there is you are providing a service your members value it your retention rates are very good i'm not going to give them why you've shared it with me separately um you are you're the only metric that matters for me is retention you're you have a loyal group of members who value what you provide and value each other and that's kind of what it comes down to right and that's its own success. I dare say if you're meaningfully bigger, you'd be probably run the risk of being hot copper.

1:23:50I mean, there is a quality and quantity thing and I think you've got the story right. You've talked about the people you hear from, the track record they've got, the conversations you have, the insights you learn from that stuff. That's where the value is, right? That's the quality over quantity. I think you're getting it right. Do you know the thing I really, the more I've done this, the more I really get angry, if anything, about it is that the business world these days, it's like when you start a business, the question is very quickly, what's the exit strategy? Yeah. And so this will make perfect sense.

1:24:26Oh, you're going to start a big, yeah, what are you going to do? We're going to do this. Oh, fantastic. And then, but it's always done with the view of selling it to someone else, either through a listing on a public market or by getting taken over. And so you will actually engineer the business to lose money, right? And the only thing that matters is all these vanity metrics, like eyeballs and user growth and click-throughs and this and that and the other. And it's like, where's the money? Don't worry about the money. I make the money when I sell out and I sell out because someone is going to buy it.

1:24:55Why are they going to buy it? If it's in this space, it's because they want the email addresses. They want you so they can flog you a bunch of stuff. Like that's the bottom line. And it's just like whatever business you're in, like why is it so corny and old fashioned to say, no, that's the business is the end in and of itself. It creates, it's so old fashioned. If you create value for someone else, they will willingly participate in the endeavor for their own selfish interests, right? Yeah, yeah. And what's the exit? There is no exit. The exit is I keep doing this because I'm helping people, I'm serving my fellow human beings, and I'm viable in the process.

1:25:35And if I do a really good job, I'm getting, I'm spending, I'm taking in more than I am spending, and it's a win, win, win, right? Like it's just, it's so obvious. And you see this, whether it's a small business or even it's the largest businesses listed on the public markets. It's like, look at the ASX. There's 2 ,200 companies. The vast majority of them lose money. The vast majority of them only stay in business because every so often they can just pass the hat around among shareholders. And it's always predicated on the next thing. We're going to grow. We're going to do this. And that's when, like, Valhalla is always over the horizon, you know, And it's like there are businesses on the ASX, though.

1:26:14It's just like they're the really quiet underachievers. They don't raise capital. They're not looking to expand into global markets or to, you know, integrate AI or to blah, blah, blah, whatever the latest buzz blockchain-y thing might happen to be. And, like, they're really out there and they're just sort of like, yeah, we provide a really good service to our customers. They're really happy. It keeps us afloat and we make money. so we employ people, we provide a livelihood for ourselves. It's a wonderful thing of beauty and yet these are the exact same, I know because I've talked to them, the same companies, they've got investment bankers and fund managers.

1:26:54That's right. I don't want to drop names here but there was one company that really stuck in my mind from earlier this year. They had built a proverbial founder-led business now worth a billion dollars plus. started out of his garage and he dropped something in a conversation which was all of the institutional investors are saying we should lower our product quality so we can, because the trouble is, the problem is, quote, unquote, the problem is when people buy our product, they don't need to repeat purchase for so long because the quality is too high. Yeah, right.

1:27:34Now, so the very thing that built their business and built the brand and built the loyal patronage of their customers was the exact same thing that the masters of the universe in the Armani suits and the big glass towers in the CBD, you know, with 15 letters behind their name, it's like these idiots that you would have seen on the big short, like those guys. Guys, definitely dudes. It's a sausage factory. Right. They're the ones giving you this brilliant advice. And the crazy thing is they're right. Because if you do really want to make as much money as quickly as possible, you do that. But you do that by effectively mining the pockets of your customers and doing a disservice.

1:28:16And it's just like the long term value is just absolutely eviscerated. But you bring it all forward. And that is the incentive structure a lot of these companies operate under. And it's just it's a tragedy on a variety of different fronts. and is it any wonder that people get so aggrieved with capitalism because under their conception of it and the evidence in front of them is like, yeah, this is a, I won't swear, bad system. And it's because of those poor incentives. Anyway, I don't know how I got that from straw man, but it's just like if anyone's out there who's got that entrepreneurial itch, don't overcomplicate it, don't listen to the VCs and don't listen to all those other stakeholders.

1:28:54Just create something of value. try and bootstrap it from yourself, retain as much control and ownership as you can. And if you create value, you cannot help but be successful. And success isn't necessarily listing on the ASX for a billion dollar valuation. Success is serving other people and making the world a better place. And yes, and yes, generating a profit for yourself. And the better you are at that, the better the value and the more efficiently you can deliver that value, the more successful you would be. Focus on that. And the other thing I would say is don't be the everything for everyone because you will always fail.

1:29:29It's just like, one, I think the thing that took a while for me to learn with Strongman is just like 99.9 % of investors are not going to pay a thousand bucks a year to be a part of an online club with a dinky bit of tech. Like it's ridiculous, but there's enough to make it worthwhile who will get it. So you're out there thinking, and I think a great place to start is what do you want? What do you, what would you pay for that you like? And it's like, I just love model steam engines, It's just my thing and no one does it, but I'm going to do this one thing really well and it's like the total addressable market might be tiny, but you'll do really well.

1:30:03One quick story, one quick story. There's a guy I used to know with another organisation who was massively into cycling and he started a clothing range specifically aimed at cyclists. So he's the bloke we blame for the mammals. The what? Middle-aged men and women. Oh, right, yeah, yeah. but very modest in so many different ways if you wanted to look at normal metrics. And he's been phenomenally successful in this hyper, hyper niche market that was bootstrapped up out of his basement, you know, more or less. And I don't know, I'm blathering at this point, but hopefully all of that helps because it's like with a lot of, and I know we've got a lot of financial planners who listen, so I am generalising here, but I think you will also agree there's a lot of bad actors in your space.

1:30:49there's a lot of also bad actors in this sort of space as well who will give you the wrong advice. And hopefully some of this will be helpful to you if you've got that itch that you need to scratch. Love it, mate. Really nicely put. I think it's great about the internet too, by the way, is the addressable market can be global now, right? Well, not only is it easy to do, but it's easy to reach people. So, yeah, you had to find X hundred people in your local area who would come to your shop or you could send your product to all. the ability of, you know, a viable business across a large enough group of people.

1:31:22If you've got something that's genuinely good, by the way, most small businesses fail, so let's not screw code it, let's not pretend. All you can do is find an idea and go and do it. But the cost to try has never been lower. Right, exactly, yeah. But you need a CRM system? Yeah, MailChimp. They go$30 a month. You need an accounting system? Boom, zero,$24 a month, whatever it is. You need this. It's all off the shelf. It's all off-the-shelf subscription kind of stuff. And I mean, don't get me wrong, it adds up. It really does add up. But it's sort of like it's very easy to kind of try and just start small.

1:31:54We've ordered a bunch of stuff for the kids. They won't listen to this. But there's some online phenomenon. Some ladies in Melbourne who make these sweets, these jelly-filled sweets. Getting out of the garage, phenomenally got a bit of viral sensation on TikTok. And it is everything that capitalism should be about. You know, they haven't had a privileged access to market because of their investment banker connections or anything. They had a passion for cooking. They had a great product. They used the internet to reach their audience and they were sold out. They were sold out early. And it's like I wish them every success in the world.

1:32:28If I could reach out to them and just like don't let that success be noticed because you'll have all of these middlemen come knocking on, oh, you realise that you could expend over here and we can lend you the credit to do this. And that's when things get really shaky. Beautiful. There you go. Strawman.com, Australia's premier online investment club, founded, run, overseen, gestated, nurtured by this man. Oh, come on. Andrew Page. All right. What? Enough. You want more? No. You want more? Are you not amused? Les. Are you not entertained? No. All right. That's it for this episode. We will see you next week.

1:33:04Until then. Go on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. general advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener. The Motley Fool operates under financial services license 400691.