When are founder-CEOs no longer necessary? June 26, 2026

25:56So it makes it better than it otherwise would be. we can still we can like so we can hope and pray for people figuring out better ways to do things but we can probably stop sailing into the wind by doing some of this other nonsense stuff that that makes it makes it harder as well 100 i think that's that that's and you're not saying this at all but i think this is why i think why the polly's love to sort of say it it's like well it's productivity's fault we need to if you if that was more than we wouldn't have these problems Like, that's true, but we also wouldn't have these problems if you weren't, you know, spending like drunken sailors and rah, rah, rah.

26:35Like there's, there are two forces working at odds there as well. So like just, that's what I sort of mean when I say get out of the way. It's sort of, you've got to be careful with language like that because it makes you sound like laissez-faire, anarcho-capitalistic kind of whatever. But it's not, it's really just a matter of like, there's no number of committees that will crack the egg on this one. and when I say get out of the way, stop doing things that are counterproductive to the very goal that we're all achieving here, which is being able to get more for less. Just be thoughtful about what you're doing.

27:07The one thing I will say, I know you don't mean this either, mate, but just to add to that conversation and people thinking about it is, you mentioned that the profit motive and people do stuff because they want to make things better and that's absolutely true. I do think, and I have no good answer for this one because I never know how much is enough and too much, but there is also a role of government funded science or university research science, which is not necessarily a for-profit objective. think about some of the stuff that came from the defense department in the u.s or from universities around the world uh cochlear csl you know and not you know again i'm not saying like you said i'm not saying you didn't say this we meant the alternative just to leave that also open of when we say government getting out of the way it's not hey don't invest in science or don't invest in research or don't support those sort of activities or endeavors necessarily i mean again i i never know how much is too much how much not enough mate if you took a zero off the research budget i added one i couldn't i couldn't make a case i couldn't make an objective case for either right the more money you spend the more things you're likely to develop just kind of lower averages and you know yeah they've got the infinite number of monkeys right there's one monkey 10 monkeys a million monkeys at some point you do shakespeare so there's directionally a justification for more but again speaking of efficiency and this is the other thing made in productivity part of the productivity challenge in australia is we've chosen to invest money in un or not non-productive spending because we've decided that social outcomes are worthwhile and i'm not going to say they're not worthwhile.

28:26We just have to recognise there are implications for that and dragging people from the more productive as in economic value creating to a caring role, for example, totally justified, needed, whatever, whatever. But there are also decisions that we make which, you know, and you and I have joked a lot about, you know, when I'm retired I'm going to have zero productivity and, you know, and I'm going to love it. But that is still the question is that balance needs to be struck around what government spends money on, whether it is caring, whether it is healthcare, whether it is research and development.

28:59Those things are impossible questions to answer objectively and can only be answered subjectively, hopefully, with some balance, which keeps the idea of keeping the economic engine going so we can fund some of these things and kind of try to find the right balance of not, you know, collapsing under its own weight while at the same time not being such heartless bastards that it's all about, you know, survival of the fittest and the rest of you can get stuffed. It's a difficult challenge. I'm not going to defend the current government or, frankly, the last government either, other than just to say it's easy economically to talk about this sort of stuff.

29:31The non-economic stuff you have to include because it's part of society and life, and then you have to make some trade-offs, and that's a much harder thing to objectively make a call on. Subjectively, we all have views, but we just think neurology is a subjective endeavour. Yes. Well, well. Okay, give me a but. No, I don't disagree. it's a question of framing. So at this point in time, should we do X, Y, and Z? And that's entirely stupid. We don't know. I think where I would say it's a little bit different is retrospectively. We've got to, Friedman says this, you've got to judge government policy on its outcomes, not its intentions.

30:10And I think that's where a lot of confusion and unnecessary argument happens between people. Because you'll say, well, I don't know if I fully agree with the way the NDIS, for example, it's a good example, is implemented. Oh, you don't care about people? I'm like, no, no, no, no. The intention's good. The intention's fantastic. We're all on the same page there. The execution is what matters. And so when you have things that a huge amount of money is spent, and then we can look backward and say, well, in fact, that's kind of big part of what we do for our day job. What's the return on investment for this?

30:48We do it for businesses, but you can do it for government just as easily. And I think that's also something we've got to be careful about too, with some of the incredible things that have come out of publicly funded science. My wife was in that area for a while and it was sort of, you know, what am I trying to say here? It needs to be looked at in aggregate. If I have money and shares in a company and they burn through a hundred million dollars in shareholder capital and finally develop a product that over its entire lifespan develop returns. And let's just, you know, adjust it all for inflation and discount rates and all that kind of stuff.

31:23And he gets$50 million in payback. It's like, well, that was bad investment, bad investment. Yeah. But look, they made the thing that was great. It was like, yeah, but they also didn't. So, so, okay, great. What Wi-Fi came out of Australia. Bluetooth was it? Oh, I forget. One of the, one of the two. Wi-Fi definitely. Yeah. I think it was Wi-Fi, yeah. You know, and people will point to that. And I'm not trying to, I'm really not trying to be curmudgeonly and difficult and negative, but it's sort of like, to me, it's sort of like great, but what you need to do is you need to add it. And I haven't done it either.

31:54I haven't done it either. So I'm not even trying to presuppose that it is a waste, but I'm just trying to make sure that we frame it properly. Again, just to reiterate the point, it's not the intention that we've got to judge. It's the outcome. And it's not just the outcome in regard to let's just cherry pick the winners and forget everything else. And you're not saying this, of course, you're not, but I'm just, I'm just, I'm making the point, but it's sort of like, yeah, but if you're spending ungodly sums of money and we're getting a very poor return on it, I would say it was a bad program. It was just objectively, no question was a bad program that, you know, one good thing came out of it, but we tipped a whole bunch of money into a black hole with zero return.

32:31It was like, I don't know if I, and then the other hard part of it as well is like, there's the counterfactual. There's the - That's exactly right. Would have Wi-Fi never been invented if it wasn't for the Australian government's research and development grant program? Yeah. I don't know. Maybe it would have taken a lot longer. I don't know. I'm not - It sounds like I'm trying to suggest, oh, it would have anyway and it was complete waste. I'm not. I'm just saying we don't know. Yeah. We can't know. And so these things are very, very, very hard to judge. and to your original point, particularly in advance, then it is entirely subjective.

33:07All we can do is go, I guess, I think, maybe, let's try it. It seems like it. I just tend to be a little bit more harsh, I suppose, in the retrospective to sort of say, well, I can point to my greatest hits. It's like stock pickers talking about all the ones that went to the moon or the gambler that, oh, I had this great night at the casino. I was like, yeah, but that doesn't really matter. it doesn't what really matters is is is the average i think that's important point too mate because the average is important when you think about you know was the particular program or the particular whatever it's kind of like you know uh i picked a losing stock therefore i'm a rubbish stock because i should never pick stocks again it's like well no on average it's okay so this is this is where it gets really hard and this is kind of why we need high quality public servants and bureaucrats as well as politicians but i guess i mean more in terms of program design and delivery which is largely a public service or, you know, bureaucrat, researcher, scientist, depending on what field we're talking about.

34:05And it's where I don't take any exception with Friedman's view other than the degree to which it can be misused, which is judged by its outcomes for sure, which just says this particular program was implemented badly. And NDS, let's go with that, right? It's been an absolute balls-ups. It's been a terrible, terrible result for all the reasons. Designed terribly, whatever. What it says is the NDS was a terrible program. What it doesn't say is we shouldn't spend X amount of money looking after people with disability. 100 % agree. And that's kind of where we've got to kind of, you know, you say it's judge the intention, which is, was it a good intention to look after people with disability?

34:37Yes. Should we keep doing that? Well, yes, even though the program failed. And that's where we need to just, and again, we've spent a lot of time saying that. Of course, correct. Right, exactly. Which is, this is still a worthy goal. Let's stop hitting our heads against the brick wall, but also let's not say, yeah, we try to look after people with disability. It turns out we can't do that. They're on their own. And again, I know you're going to say that. But it's important to differentiate the specific program from the objective. And this is where I know it's a pipe dream, I don't say it all the time, but I would honestly have a group of former senior public servants whose job it was to come back and just spend their entire rest of their working lives working through removing waste, duplication inefficiencies, just because that's where you make the same job.

35:19So it's unaligned to a department, just in the national interest, and again, it's a pipe dream, right? But let's assume we could get the Alan Fells and the Glenn Stevens and the, I don't know, I pick your, I don't know, enough public service to know. But people who don't need the money, who are doing it because they genuinely believe in public service and their job is like, right, guys, here's the thing. We don't want to get rid of the service. They've been doing it in public life for a long time. They definitely don't need the money. Right, exactly. We don't want to get rid of the service. We don't want to look after the people.

35:43Just help us do what we're doing better. You know, I'm asking, don't be ideological. I'm not saying, don't say can this program because the program isn't, the objective isn't justified. Can the program if there's a better way to do it, cut the cost if there's better ways to spend the money, get rid of waste if you can get rid of the waste. If there's inefficiency, duplication, grab that, do something with that. That's where the doge thing in the US was such a shame because they made it ideological and effectively poisoned any effort now to push towards government efficiency. It was Department of Government Efficiency, the doge.

36:11And it was Elon Musk being stupid with the name and it was just the chainsaw and it became so ridiculously pantomime-ish that it's spoiled, it's poisoned the world for everybody else, right? You can't suggest that now, oh, you want to do the Elon Musk thing. Like, no, I just, you know, I don't say everyone, not no one cares what I think. I'm just anti-waste. Why is that controversial to say I'm anti-waste? Exactly, exactly. It really shouldn't be that hard. I mean, everyone on any part of the spectrum, political spectrum. Actually, no, I'm for waste. Yeah, like think about what it's, I 100 % agree.

36:42I think what you're saying there is any kind of capital allocation decision, whether that be from a business or a government, needs to have contact with base reality. And that's why business is really good at doing it because we all, everything we are talking about here actually comes back to investing and business, right? Because someone somewhere has gone, I've got an idea for a business. I reckon if I can set up a lemonade stand on my main street here, I will be able to sell enough to cover my costs and to make it worth my while. Will you? Are you right? There is exactly and only, precisely one way to know if you are right, and that is to try it.

37:19That's the only way. And let's say you do it and it doesn't work. You're wrong. There's no maybe I'm going to know. I'm not trying. I'm not doing it. You're wrong. And the fact that you are wrong means that you're bleeding through your available capital. So that's what I say, contact with base reality. I have a vision of the world. I have a vision of what I could change in the world, and I can do this in a sustainable, viable way. And it's like, oh, I was wrong. Oh, okay, so I will stop doing that. Now, and I'm really going to try and use my language carefully here because it really isn't an ideological thing.

37:53It's just really a statement of the fact. When it becomes public money, you don't have that because someone makes a decision, money gets spent, and it's not really tested in that same way. If it's a failure, I mean, how many things have been, I think, with a bit of distance, a bit of water under the bridge, we got obviously a failure and a waste of time. But that admission usually takes a long, long, long time. Yeah. Right? And a lot of money can be wasted in between. So it's why whether or not we have a wise council of elders, as you suggest, or some other thing, it's just that's the nature of the problem is that when you remove that feedback mechanism, we can all intuit as best as we can.

38:40And some people are better at it than others. And that doesn't mean we can't try and we shouldn't try. We absolutely should. We just can't know, but we need – I think that's what I would try and do as a general North Star principle for any sort of public spending programs is try and have a feedback mechanism in there. Not a feedback mechanism based on vibes and feelings, you know, a feedback mechanism based on what are the KPIs here? What are we trying to do? Milestones. What will reveal this? And if it's not working, let's stop doing the thing that's not working. That's all I'm saying. That's all I'm saying.

39:14Absolutely. And I wouldn't even, and I'm not even saying that from a, you idiots, you're so dumb, you should have known. I'm really not because I'm a very big defender of businesses who try things and fail because it's like that's the only way to figure it out. Where I get critical is when you just keep throwing good money after bad for a business. Like that's just dumb. Stop wasting my money. Stop trying to build your empire, Mr. or Mrs. CEO, because you're just torching all of our hard savings here. And it's applying the same measure to public spending as well. That's all it is. That's all it is.

39:50And what you want is some way to kind of be able to just go, okay, it was a good idea. And, yes, there was really good intent behind it, but it's not working. That doesn't mean we put you up on the gallows and, you know, we get the pitchforks and talk. No, absolutely not. But it just means recognize it, course correct, and let's get close to it. That's how business works. That's how life works. And that's how we need to have it work in this system as well. And just like other than the blah, blah, blah, no, it works. It's great. It's great. It's great because of ideology and vibes. It's like, yeah, what?

40:23You are going to get yourself into a huge amount of trouble and you're going to cause a huge amount of very real world pain for a lot of people when you ignore that feedback is all I'm saying. That's a great point, man. I think there's also a responsibility on the rest of us. And I guess I'm talking about pollies in particular, but even the rest of us who are hopefully, well, there's too many rusted ons in the world. But, you know, why don't we do that in the political and government's realm? Because the opposition of the day, not capital opposition, if we have a party, whichever ideology is on the other side of that, it's like, aha, you were wrong and you suck and you're terrible at this and I'm better and I knew the answers and I was right.

40:54And it becomes this win-lose problem rather than an idea. As you say, mate, every company should be trying new things and if you fail, you go, cool, we tried five things, three of them worked, let's keep going. In a political and social realm, unfortunately, the way we have our such partisan politics is you win three, you lose two. That's a win. Do more of that. Except the answer becomes you screwed up those two things. You wasted this much money on those programs. You put$100 million in this program. It didn't work and you stopped doing it. And the incentive is actually keep doing it, press on, ignore the failure because otherwise you have to say I'm cancelling because it doesn't work and I wasted the money, but I'm going to try again over here.

41:28That is not something that we can and we're prepared to let our police say even if they wanted to. And, again, the blame is absolutely on them for not doing the right thing, but it's on us for rewarding bad behaviours. And we kind of got to stop doing that. Otherwise, we shouldn't be surprised when we get the things we incentivise. Yep. I mean, how many, I don't want to suggest it's a lot, but I know for a fact The Fool has launched products that didn't stick. Oh, yeah. And what did you do? You stopped doing it. You're like, oh, this thing over here is working. I'm my own business. I sort of started it with a certain idea in mind.

41:58I completely fell flat in its face and pivoted to something else. It's just like, you know, it wasn't the plan, but it's just like stop doing the thing that's not working. That's it. That's the thing, you know. I'll tell people, we'll go back a lot of years because it feels like ancient history now. The Motley Fool started as a free website that was ad supported. And it turns out when the venture capital money dried up and the advertisers went away in 1999, we kind of went, I wasn't here at the time, at least I was a customer, I wasn't an employee. We kind of went, huh, turns out you can't run a business like the Motley Fool ad supported only.

42:27You need to have paying members who are prepared to pay for the advice you're giving. Then we pivoted to a new model. We would have crashed and burned and we'd be no longer without a move to a subscription membership model. It was the only way we could pay the bills. And that's to your point, mate. We could have said, well, it doesn't matter. We started this way. We're going to die this way, and so be it. Or you can say, you know, circumstances have changed. I have to confront the reality that's in front of me because doing anything else would be mad. Let's stop doing the stuff that isn't working.

42:54We had a massive round of layoffs, unfortunately. But the reality was the model didn't – it wasn't as successful. We couldn't run a business. The market didn't want what you were selling. That's it. At that price. No one is wrong here. You know, it was a good idea. And people said, I don't want what you're selling. It's not a, we've got to get over the moral dimension of that. If you're outraged by that, then I'm going to start making products and you just have to buy every single one. That's right. I'm going to make you buy them. Because are you really against me? It's absolutely a lot of the government, to be fair.

43:22Don't you want, you know? Yeah, but I mean, it's so, that's all it is. It's all it is. And it's a very, very straightforward thing. And as I say, you see a lot of this in some of the academic circles and some of the soft sciences. These people are so isolated in their little worlds, you know, and it's sort of like, again, it's that lack of contact with base reality. Everything becomes framed through a rhetorical device more than I tried this thing in the universe. You sort of win the argument and not actually improve things. Yeah. Yeah, exactly. And it's like, I watched a really good, I went to a thing the other day on, people were talking about the, is it natural to have property rights?

44:08Okay. The academics are, it's a whole other thing. It's a fascinating thing, I think. And someone just killed the argument straight away and said, if you don't think that property rights are a natural phenomena, try taking a banana off a gorilla. And I just thought, yeah. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

44:34Mates, we're not going to do – well, I'm not going to do forecasts. You can, although I don't suppose you will. But plenty of people have. Let's talk about house prices for a minute because I think most of our listeners are smart people. They probably work this out. We've talked about it a bit in different contexts. A bit. Yeah, but no, more about it of kind of what's going on now, right? So the forecast at Domain are out this morning. We're recording this on Thursday, the 25th of June. Same house price could fall 7%. We've seen forecasts of 3%, 5%, 10%. 7 % is a Tuesday for me. Like, get over yourself.

45:07Ooh, 7%. Well, but here's political poison, right? So Claire O 'Neill, the housing minister, used the word correction on housing prices, right, and got absolutely savaged. And the kind of, again, we're in this world of political spin and rubbish on both sides, by the way, trying to tag her with something and then her party spitting it out again. And kind of the question was, did she made a technical correction like the way we'd use it in the share market? Did she mean prices fall? And Jim Chalmers had to come out and say something. It just, it blew up into some ridiculous thing because someone used a word which, you know, it was all about the point scoring, not what actually was said.

45:40But it's kind of worth... And it's back to that. We want houses to be more affordable. We just don't want prices to go down. That's exactly, that's exactly. That's why they won't say it. They will not say it out loud for everything else that's going on. How is that working out for them? How is that messaging working out for them? Because Australia is clearly so dumb as to not be able to connect the dots on that, right? Except that maybe, I don't know. I don't think it's clearly not working. I don't think it is. I think people have just largely given up on the majors. It's just like, stop telling me.

46:08It's also happening. It's just patently not true. Like, I just come out and say it at a point, right? It's like, yeah, you wanted housing to be more affordable. We did this. It's coming. Yeah, I don't want to get into the merits of the strategy or whatever. But let's just call a spade a shovel, you know? Like it's not – I don't – Except that I don't want to get the policies of it other than to kind of – it seems just to flesh out because Saul Leslake was interviewed in the Sydney Morning Herald, the ex-ANZ economist. He's been an independent economist now for years. Interviewed in the paper on last Saturday, I think it was.

46:39And he basically said, here's the problem. There's 11 million Australians with homes – or voters with homes, sorry. And there's 150 ,000 first-time buyers every year. And that combination is a pretty politically difficult one. So when you say in passing, in which you kind of did a shorthand, it was like, you want house prices to come down? I suspect a government, the government, is saying, well, we need to try and fix affordability for young people. But we know if we said that politically, it'd be dramatically unpopular because we know what people are going to say, which is we don't want our house prices to come down.

47:10We've seen headlines in the paper. Financial commentators have been talking about the last couple of days. Oh, house prices are falling. They're wrecking your wealth. when you're comparing cohorts. I mean, you know, I think the government wants to solve a problem without actually having to tell the rest of us that prices are going to come down for exactly that reason, that politically maybe it is genuinely unparalleled. You're talking about spin and it is absolutely spin, but I do wonder if it wasn't that. Would Australians vote for more affordable, cheaper housing? I'm not sure we would. Speaking of coming down, there's that rain.

47:42Can you hear the rain? Yeah, sorry. Oh, yeah. Oh, my God. Yeah, yeah, yeah. No, it's nice. It's like the white noise machine you have to help you go to sleep. Like a juggling Zen garden. Brabling Brook or rainforest rain or whatever. Yeah, mate, it's interesting. I mean, let's see what will happen. I've certainly had my fingers burnt on trying to predict house prices before, so I'm the last source of authority that you'd want on any of this. But, I mean, I say it as a homeowner. I really hope for future generations that prices do come down a little bit. I know that's going to be a real, like it feels like a middle finger to those that are in the market.

48:25But I'd also say that that is the nature of markets, whether it's a property market or share market or any market, the market doesn't owe you nothing. You've made a bet. You've made an investment. But it's a bet, right? You've said, I think I can spend this much money and I can get this much of a return. And you might be right, you might be wrong. I don't know. Again, there's precisely one way to figure that out and you can try it. But this, what I find so fascinating with the property market is that it feels like people act as if they have been wronged if prices don't go up, that the market, quote unquote, owes them a return.

49:02And this isn't me trying to be heartless. I'm really not. I'm just saying, if I change the word house with Bitcoin, you know it's like no one would would be picking up what i'm what i'm throwing out there it's like well i bought it at this and now it's down and the government should do it was like dude you you took a bet on something it hasn't worked out for you and that's welcome to investing i don't know what to do that someone there was two parties to that transaction the other person was right you were wrong you know next time it might be the other way around i don't know what it is that we expect that it is some kind of right to exist that I will borrow, you know, at five to 10 X leverage on this thing.

49:46And if it doesn't go up immediately and significantly, and the government doesn't do everything it can to support my wealth creation efforts, that there has been some sort of social injustice. It just, you don't get the gains without, without the risk. But as soon as you take away the risk, it's just like, well, it's, it's a moral hazard. We've got a name for this, It leads to very, very, very bad things is all I'm saying. So I don't know if domain is right. There's been all kinds of prognostications and forecasts on the housing market. We'll see. My general long-term view is that they can't go up at the same rate as they have historically just because of maths.

50:24And I won't unpack that again. Yeah. But, yeah, I'm going to make no friends by saying this. And I say it as a homeowner. I hope prices come down. Me too. It actually shouldn't matter. It actually shouldn't matter for your own home, like unless you were thinking you're moving. And even if you were thinking you're moving, the house that you're going to buy into is going to be cheaper as well. Unless you're downsizing and trying to take money out, it makes absolutely zero difference. I completely agree. You make the very valid point, a very logical point, mate, except that, and not that you're wrong in the slightest, but when it comes to the real world, it only works if voters actually think the same way.

50:58Because if your view is they should do something and I'll vote them out if they don't, then you've got to, I mean, it's democracy at one level. It's just, you know, it is what it is, right? That's, you know, what else? A bit like shareholders. Michelle's vote for and tell management to do something. You do what the boss tells you. Voters say, well, if you don't fix my house price, I'm going to vote for them. The mistake is with us as much as the pollies, but that's the dance to doing it. I'm not defending the government. I'm not defending the previous government. John Howard famously said no one's ever come up and complaining about house prices going up.

51:27I mean, that's been the framework in Australia for 40 years and arguably that compounding has created even more expectation. And you're not wrong. Everybody should think the way you do and we shouldn't be expecting government to fix it, except if we are and they offer all the pressure. That's what I always say to my wife. Everyone should think like I do. I thank you for saying that. That would solve the problem. That would solve the problem. Mate, well, yes, I think. And so I'm wary of opening your tangent. I'll say very quickly and then you can jump in. Just to set the scene, higher inflation and falling real wages, more importantly, should mean houses are, house prices fall, put downward pressure on price.

52:10I won't say they will fall because it's, yeah. But so what are the things that are pushing prices down? If I've got less money after tax and after inflation, I can't afford to spend as much on repayments. So that's the first thing. Second thing is interest rates go up. So I can't afford, the repayments that I make can't afford the same house. And then the tax changes for negative gearing in capital gains tax mean that investors are going to be less likely to be able to spend the same amount of money at an auction or a sale. And those three things together should put downward pressure on prices by definition.

52:42There's less money available and the money that is available has more of it goes into interest than repaying the principal. So the amount you can borrow is less on for all those three reasons. By the way, as a fourth this week, I think it might be going to parliament today as we record this on Thursday, but the government announced that they don't deal with the Greens, and SMSFs are going to be banned from borrowing for residential property as well. So you throw all that, and that's kind of the fourth thing. It's a subset of the capital gains, negative gearing changes. But that stuff in total should put downward pressure on prices.

53:11Housing should be less affordable than it was. Prices should be lower than they were as a result of these things. On the other side of the ledger, you've got effectively two versions of the same thing, which is housing vacancies are still stupidly low, less than 1 % in at least two or three capital cities around the country. And at that sort of level, it's a bit like full employment, right? It's like at that sort of level, the chance that the person who wants the home can get the right home for them. I've got four kids that I want to bed sick, or I'm a single person that I want to buy a five-bedroom home 48 kilometres from the city.

53:41You know, the mismatch is, it's less efficient allocation when there's a limited supply or limited demand in this case, but there's plenty of demand. So that's the one thing that's kind of pushing prices up is there is still a significant, I wouldn't say undersupply, but there's no excess supply. So that's keeping a floor on prices to some degree because you've got to have somewhere to live. So you're going to have to pay the asking price. If there's two people bidding for the same house, then the least undesperate person, the more desperate person is going to get it. And again, we've talked a lot about population growth.

54:15I don't want to keep banging on about that. You want to have slightly reviews on the long term, but the short term we're pretty aligned, which is just when you're adding household formation faster than dwelling completions. And I feel like I'm being unnecessarily jargony, but I'm not being really specific. It's not population numbers. It's the number of families, the number of groups who want a home, not the number of people. One person in a one-person family or five people in a family only do one dwelling each. So it's household formation. And dwelling completions, literally, not so many are we announcing, how many are we building, but how many are made available.

54:46What got finished yesterday and can take someone today those two things are putting up a pressure on prices and largely that's just kind of the maths they're the inputs there may be others but i'm not thinking of but largely that's the maths and so we shouldn't be surprised by the way the immigration numbers apparently are falling still total population growing a bit like inflation population is growing but at a slower rate um so that's that that will reduce the again speaking of counterfactuals what would the pressure that It would have happened if we'd had the same number of people coming to the country.

55:19But other than that, and dwellings aren't growing particularly quickly, so that's not really helping. But if you kind of push all that maths together, it is no surprise that relative to where we've been, but certainly relative to where we otherwise would be without those things, prices are likely to have less pressure, less upward pressure on them, maybe fall for exactly those reasons. Yeah. I mean, supply and demand, it's so obvious. Yeah. I mean, we brought in 300 ,000 people, net migration figures last year. So it's about, I often hear it compared to the population of Canberra or something.

55:51When you put it in those terms, it is rather stark. It's kind of mad, but yeah. You know? And again, you get silly conversations off the back of that and there's all kinds of sort of moralising there. But it is really just a numbers game at the end of it. You said before, I mean, I'm a big Australia person. So I actually think, you know, we've got a lot of land and opportunity and, you know, a lot of competitive advantages in one way. So I'm not against a bigger Australia and welcome everyone from all over the world if they want to put their shoulder to the wheel and help drive the nation forward.

56:27But can we just like ease back on it until we build some more houses? That just feels like the lowest hanging fruit that you could possibly. But there's, I mean, the cynic in me is kind of like, you don't need to be a genius to work out this. It's just like, well, to your exact point. That's the thing. It puts down with pressure on prices. Like, yeah, but I don't want the house market to crash on my watch. Well, let's just keep it pumping for a little bit longer, right? And GDP on top of that, by the way, you add those two things together. You don't want a recession. You don't want house prices to fall because they're political poisons.

56:57So what do you do? You just turn on the population tap and let it run. Yeah. It's so easy to do, right? And the consequences will be felt not by them, but by people who can't find a home or have to pay more for a home or all the things that come with that. Mate, let's finish off with a conversation that we're going to only touch the specifics of for legal reasons. And we've talked a little bit before about management teams and we've talked a little bit before about founders. Now, Richard White is in the news again this week for a reason we're not going to go into. It's about his personal life, but it may or may not, those allegations, I don't think of allegations, they're just investigations I think for now.

57:30So I want to be really careful, right? So this is not about Richard White necessarily, other than there is a chance that depending on how this goes, even if there is no legal action, shareholders may decide they don't want him running the company. This is WiseTech, the freight logistics software company. And if that's the case, by the way, last time he had some private life issues that kind of spilled into the public domain. He was forced out by the then board. Eventually, he cast his shares, maybe not formally, and other large shareholders said, actually, we want him back and we'll get rid of the board instead because we think he's worth something to the business.

58:01Now there's more issues, more potential legal challenges, which may not, again, come to pass. I want to be, again, I'm not going to talk about this other than people are saying what's been reported, and that's fine. But the question kind of, you and I, again, we've got being off air pulling the curtain back. We're kind of talking about the value of that. I think it's fair to say I'm certainly a big fan of founder CEOs, largely because the data tends to support, they tend to get better results. But not everyone and not all the time and not necessarily after a certain point. We've seen Apple, you know, Steve Jobs was the only one who could run Apple and they fired him, then brought him back to run the company.

58:36But then he handed over to Tim Cook and the company went fantastically well. In contrast, there's a couple of US examples. Starbucks, Howard Schultz started the company. I think he resigned to CEO twice, three times eventually. But he resigned twice and had to come back each time because the company kind of fell over under the new CEO. So he came back and took the reins and fixed things up and then left and had the same problem. A business called, I'm trying to remember it now, Infamedia. Infamedia, it was in Australia. A little tech company. Again, same kind of thing. The founder stepped aside, new management took over, and I'm not, again, alleging any wrongdoing or even incapacity by those management teams.

59:11It just so happened that the results went badly, and so the old CEO came back and took over. And so there's some real questions about the value and investors having to make a decision about the real value of founders and when they are either more of a burden than a benefit, but even just generally, how much do we put stock in the value of the founder? When does their influence, I don't say wane, but when is it at its maximum? When can we afford to step aside? I don't know that I know the answer, mate, but I know you've got some thoughts. Yeah, well, I certainly don't have any answers, but it's an interesting one.

59:48The one thought I've got is that it can be the same business in name and in purpose, but can be a very different business in a lot of other ways. Like, so when, you know, when you're in your, the proverbial garage and it's you and a couple, you know, three or four other people, the founder CEO there is, is everything. They're in marketing, they're in sales, they're in product development, they're in everything. Right. And then you get to a stage where you've got an office on every continent and there's 10 ,000 people that work there. It's just a very different business. And, and, and often the skillset that got you to the position that you are at is a different skillset.

1:00:28That's a great point. You know, like managing a very big multinational conglomerate is very different to a small sort of scrappy sort of startup. And you see that a lot too. You see where people are really good at getting things off the ground, just terrible at running very large enterprises because they, they can't let go of the reins. They got, you can't, it's very hard to micromanage 10 ,000 staff. And they just get they just get over their skis and it's very very hard to do um so there's that there's also there's also um pros and cons like there's there can be someone who can be an absolute rainmaker but that has to be balanced off against other certain negatives um you know and it's sort of like you're really good at this thing we love you doing that that's great i guess we can turn a bit of a blind eye to this or that or we can tolerate some less, you know, some unsavory kind of not illegal or we should never tolerate that, but perfectly legal but unsavory things like I guess.

1:01:25And you've got to be – this is very – it's very easy, very easy to kind of be black and white and absolute in this. But the world is messy and I've always said, you know, it's like never meet your heroes. Never meet your heroes because you'll find – once you get to know them, you'll recognize that they have all the human frailties as the rest of them. they'll probably annoy you in 15 different ways you didn't think possible. You know? Yep.

1:01:52Well, I guess what I'm saying is if you set a too high a bar, you'll never buy anything. Yeah. I'm only going to invest in, you know, I'm looking for that saint of a CEO that is an absolute rainmaker and is a moral bastion of, you know, just the highest standards of human character. I was like, well, let me get back to me when you find a company like that because they don't exist. So let's just be real here. And there are compromises, just how much of a compromise you want to take. In the case of WiseTech, I don't know. I mean, that's something for every individual shareholder to determine for themselves.

1:02:26How much secret sauce is Richard bringing to the business? Does that offset some of the other things that might be considered a little bit unsavory by some people? That's a hard one. I mean, the market is clearly saying something at this point in time. Shares are down 60-something, 70%, like a lot, right, from their high over 18 months ago. I should say that's not all just the allegations that relatively new the shares fell at 16 % this week when they came out. So there's something which is not just about Richard White, it's about tech and the SaaSpocalypse and other things as well. Oh, a whole range of other factors.

1:03:00Yeah, but you make a good point that at some point the question is, how much is that CEO worth? And you've got to weigh that up. Yep, yep. And I'll shut up, but the last point I was going to make was just that at a certain size, I just don't know how much secret sauce you can possibly bring to the business. I've long said, or is really increasingly believing it more and more, the culture is what the CEO is really one of their main jobs to do. And it's this airy fairy sort of thing that you can't put your finger on and whatever. But I think if you've got a good culture and the leader gets hit by the proverbial bus, the business should be okay.

1:03:43I mean, Buffett always talks about you want a business a ham sandwich can run because one day a ham sandwich is going to run it, right? And so I do wonder, particularly when you get to the size of something like WiseTech, it's sort of like, were the attributes that made that a success in the first place or the attributes from the founder still as relevant as they were? I don't know. I don't know. You've talked about some really good examples of Starbucks. Well, clearly, even at scale, that seemed to be an issue. But yeah, I feel as though if you've done a good job at one of your core responsibilities, which is setting a very good culture, it actually shouldn't matter.

1:04:20And again, Buffett's the perfect example here, right? When he's retiring, he's stepping back this year. When he finally has nothing to do with it whatsoever, I suspect, and who knows, time will tell, but I suspect Berkshire's got many decades of success in front of it. is that because the heirs are as good as Buffett and Munger? Well, that's a pretty high bar. I'm not saying they're not, but it's a high. Almost certainly not by definition, but. Yeah, it's almost certainly not. But Charlie and Warren just set such an incredible culture as to not make it dependent on the individual genius of one or just a small handful of people.

1:04:59So I don't know. It's a long waffling range of thoughts there. It's really good thoughts. You know the thing I really want? So here's two things, right? I was going to say I want people to recognise that human nature is weird and that's true. It's also almost certainly unchangeable because it's human nature. But it also gives us an opportunity as investors. And I think the ability to think rationally and independently, it sounds really arrogant when we say, oh, I know all the answers. I think better than other people, so I'm going to be successful, right? So I get the arrogance of that. So here's the thing about the Richard White type scenarios.

1:05:36It's not unreasonable to say I know a thing and I have to have a view about that thing or I should have a view about that thing. It's appropriate, right? Because I know it. So I can't unknow it. And in fact, I know it means I'm not obliged to have a view, but I probably should for my own sake, have a think about what that means. And so I think that's all true. What I would say, though, in addition is you mentioned the point about never meet your heroes. there are going to be scores of CEOs out there who have other unsavoury things in their lives that we don't know. Yeah. And yes, if you know, you know, and so you're obliged to consider it.

1:06:11But it's also worth just remembering that just because you don't know about the other things doesn't mean they don't exist. And so this is not about Richard Wilder, about the standards you hold individuals to. It's about when you invest. You say, well, I know this thing, I'm going to avoid it. Logical, right? It makes perfect. I'm not saying don't. I'm just saying you know it, which is fine. Richard White, whatever he's alleged to have done, was doing it when you didn't think he was doing it. So you're prepared to invest in his company. And what I want people to kind of keep in mind is let's assume there's a non-inconsequential number or proportion of company CEOs, senior managers, board directors, whatever, whatever, also doing those sorts of things.

1:06:51Or just incompetent in ways you don't know. Or have personality quirks you don't know. Black Brewery. Right? They're like the salary CEO. Google that, folks. But, yeah, that's the thing, right? And so, yes, of course, when it comes out, you should then put it factory in your thinking. But also just think about the risks you're taking, the level of certainty you think you have, you know, about a founder CEO who apparently is, you know,

1:07:18I'm trying to avoid using proverbial comments with inappropriate language. When certain things don't stink and it's like, you know, oh, this guy's amazing. he's this and he's that and the other. You mentioned Not Many Heroes. The Snowball about Buffett is a great book, right? Yeah. And he didn't like it in the end. He was pretty unhappy with his biography because it was like, so here's the stuff that he wasn't necessarily as savoury about. Nothing illegal, but, you know, not a great dad and not particularly available and not a particularly great husband from the sound of it. I'm not going to badmouth the guy, but the book is pretty clear and no one challenged the facts, right?

1:07:47He was human. He was human. Exactly. I'm not even making excuses. Like every single one of us have got things we probably prefer the rest of the world not to know about, right? I'll go out there and say that. You might. I'm perfect. But other people, I can accept other people that have problems. But that's what I mean, right? And so you kind of go, and all I'm doing is fleshing out your point about don't be your heroes, but in the investing context of, assume that there's a very good chance that the people you think you like, who you think are great, and probably still are great at their jobs, maybe not be very nice people, may have rough edges, may be doing the wrong thing, You may be making bad decisions.

1:08:21And so, again, this is not to defend or say you should ignore allegations about people because if you know you know, then you know you know, right? Of course. And if you know, you know. I'm not saying ignore it. It's just trying to draw that line between, you know, you don't know but it's still happening is very real. And just keep that in context because if you're only looking for perfect people, what you're really saying to yourself is, I want people whose bad stuff I don't yet know rather Other than people know bad stuff. And human nature, we shortcut that. Andrew, he's like a guy. Every time I chat with him, he's this and that.

1:08:55He's like, yeah, well, I don't know when he turns off the podcast and he kicks the dog and he yells at the neighbour and he, you know. And it's like, well, I didn't know that about him. I thought he was just a good guy. And so. Other way around. Kick the neighbour and yell at the dog more likely. Poor neighbours. Imagine being Andrew Page's neighbours, Finn. No, I'm kidding, mate. I'm kidding. But that's what I mean. Because, you know, we don't know those things. And so we are inclined to give those. We hear our worship a little bit. Again, your point, I'm just flushing out your point, right? And just remember that because don't assume because you don't know the bad stuff, the bad stuff doesn't exist.

1:09:26And let that put some context on everything you do as an investor. Because sometimes, I'm not going to, again, I'm just talking about wise tech, but if you know the bad stuff, then at least you know it. Where's the surprise? Where's the downside? Where's the upset? Where's the risk? Again, there might still be more risk on top of that. But you're not taking any more risk than you were a day ago when you didn't know the thing. and just let that inform your thinking in terms of your levels of expectation. Don't expect your leaders to be 100 % perfect. They're not. So expect them to be, he's only going to mislead you and cause likely responses or reactions from you when things don't go as you expect.

1:10:05Does that make sense? I can't quite really nail the point. It's not easy. I mean, where it gets real. It's real, even though you don't know it. My point is the math stuff happens when you don't know it. So don't assume just because you don't know everything's okay. And that doesn't mean don't invest. It just means make your peace with your investing in businesses that have imperfect people running them. And you'll be surprised occasionally because that's life. Yeah. I mean, I've had a lot of these conversations of getting an EV recently because people are very quick to tell me, put moral judgments on certain automobile manufacturers.

1:10:38I find it hilarious. Yeah, yeah. The conversation will go something like this. Hey, you got a new car. What did you get? oh, BYD, oh, thank God you didn't get a Tesla because Elon's a rah-rah-rah. I was like, yeah, because the CCP is just... Upstanding fine. Yeah, that's right. You know, it's like, well, what's our standard here? It's an interesting one. It's so true, mate. That's so true. You know? And I guess where it matters, this stuff, is that it's not that perfection should be your standard, but there is a point where it's kind of like where the leopard has revealed their spots, and these spots don't change, you know, and it's kind of like, hey, now this is not in response to any individual person, just a more purely theoretical kind of construct.

1:11:23But if you have revealed yourself to be not of a less, not very savoury character in various domains, gosh, this is hard, what else are you doing wrong, right? Like there are, that's where I can look at certain issues with CEOs and kind of go, well, I don't expect you to be perfect. But if you're happy, if your moral compass makes you perfectly comfortable with all of this, what else are you doing wrong? And there'll be some CEOs who's like, I just not even on my radar because while you're not perfect and I'm sure there's things about you I wouldn't like, I don't think you're involved in sex trafficking or something like that, right?

1:12:04Like I just, it's, there is a point at which it's not so much even about the thing that everyone's talking about, but the fact that you are the kind of person that was able to do that thing. And if you're able to do that thing, if that is ever proven to be true, then what else have you been doing? And, and it's, it's enough for me to sort of stay on the sidelines. So I think that's probably how you can draw a practical line from it. And that's something that each individual person will have to work out. And the other hard part of it is, is separating the individual from the business. Because the business is, in many cases, ASX companies, literally thousands, if not tens of thousands of people.

1:12:42Most of them really, really good human beings, you know. And it's like, do you besmirch an entire group of people because the person at the top isn't very savory? I mean, I've had interesting conversations before with, not to go too far off track here, but I, should I? Yeah, why not? It's like the podcast. It's about the time we do these things. Everyone just leaned into the pod machine. Correct. Turned up a little bit. Turned up. I like Michael Jackson's music. I like it. I think it's funky. It's got a beat. He can dance to it. I like the music. Now, there's a whole other side of that story that I don't even need to elaborate on.

1:13:25And this is, I mean, philosophers have been wrestling of this forever, right? It's just like, do you separate the art from the artist? Do you separate the business from the businessman, the business person? You know what I mean? And by the way, I don't have an answer. I don't have an answer for all of this kind of stuff other than just to say, yeah, it's really hard. And if you're expecting me and Scott to sort of tell you what to do here, you're wrong. Other than that previous point, which is if ever you get to a point where there's enough of a cloud to make you seriously question, just brought up the ability to make sound judgments, that's where it probably gets to a bit more of the pointy end and maybe step back a little bit.

1:14:10But that's a personal decision. No, for sure. Because we're in this sort of space already. I mean, beat it. Beat it. It's a great song, right? Like thriller. I mean, right? Hey, what did Michael Jackson say when he broke out with his girlfriend? Okay. It's not you. it was me.

1:14:31That was actually well done. That was very well done. Thank you. This joke could go in a number of different directions. Correct, correct. There you go. There's a little history at the end. I've never been a Jackson fan. I'm a strange cat. I've never been a Michael Jackson fan. Here's something I have to hand back my Australian citizenship for. I've never been an XS fan either. No, really? Yeah, yeah. I mean, fine. I just, I just, and not a dislike, not a hate, not like it just just you know sometimes this thing's just like a stretch past you yeah yeah yeah totally but you're right and that's you make it back to back to the point you're making you make a really good point this is this is absolutely where it's really hard back back to the original question you know we we think we know statistically and it's a small sample because it has to be founder ceos tend to do very well on average and the supposition is they bring things like a particular passion a particular way of doing things a particular insight a particular drive the culture you mentioned um whatever secret sauce led them to invent or create or discover or build the thing almost by definition when you get to that point you've done something right there is something in what you've done maybe it's luck and a lot of it always is but you have something about what you've done and separating out could i have done it could you have done it is only just that person who could do it and then once it's done could i have taken over what point could a so-called professional manager take over and go from there versus keeping the current person in the job because they just had that thing.

1:15:59You made that point. Where is that line? And I don't think we know. And this is what WiseTech shareholders are wrestling with right now is, you know, as I said the first time around, he was forced out. And then effectively the board was forced out and he was brought back in because the shareholders thought, you know what, for all of the things that we – maybe they don't even care. But if they did care about what he did in his personal life, they've gone, despite all that, net, net, you are worth having around. And Shell has made that decision, made that distinction for reasons that they didn't share publicly, but you can assume that as the foundry, maybe they figured out some secret sauce, whether it's programming skill or culture or management style or contacts or whatever those things are.

1:16:37And they're having the same conversation again. And it's a really, really difficult question. As I said, the Steve Jobs example is a great one. They fired him the first time. The company always went broke. He dies. Unfortunately, the second time around, Tim Cook takes over and spends more than a decade building this thing to one of the biggest companies in the world. And, you know, what's the difference? The stage of the company, the age of the company, the culture you'd frankly built by that point probably, the products, the product reputation. Probably a great degree of luck too. You just had an incredibly strong structural tailwind at your back as the entire population of planet Earth decided they wanted a smartphone.

1:17:13That was just, you were on the launch pad as the rocket was taking off. It's hard not to take anything. I'm really not trying to take anything away, But that's also, I mean, the number of sort of entrepreneurial geniuses that are out there is just like right place, right time, bro. That's, I mean, yes, you worked hard. Yes, you were very smart. Yes, you were very good. All of those kinds of things are true. But again, the counterfactual is plenty of smart, hardworking, visionary people you've never heard of, right? And it's like you just, you tried to build an electric car in 1985 and battery technology wasn't good.

1:17:45No one knows your name. You know, you tried to launch QuickFlix on the ASX in 2003 before broadband speeds were high enough. There's so much to that as well. I love that, mate. I mean, think about the Apple. Without 3G, there is no Apple iPhone of any significant size and scale. Without Wi-Fi, without Gorilla Glass, that almost unbreakable phone glass, right, where we're smashing phones all over the joint. The confluence of stuff that happened, almost back to your point about Wi-Fi itself being invented, that it can only be done at a certain point in time. And would it have been jobs? Would it have been somebody else?

1:18:21Would it have been discovered anyway? Those are all really good questions. I've made the argument before about telcos. We saw in the, I can't remember now, 20, I'd say 2012, 2013 kind of era, for a few years there, the cables, literally the internet traffic cables, I'm losing the words here. What am I coming up with, mate? The backhaul telecommunications, fibre optic cables. There you go. Thank you. Were being laid all through the country, right? and you didn't you you're one of your favorite uh one of my favorite expressions is you have the ability to fog a mirror right if you could fog a mirror as as a ceo of a telco you made a lot of money and i'm not for a second denigrating any of the people who made money during that period because they are some smart people and i don't know from the outside how much is like how much a skill how much is right place right time what i do know is if you look at the amcoms the m2s the Vocuses, the IINets, the TPGs, the Optuses, the Vodafones, at that time, they all made a fortune for a few years through that period.

1:19:17Why? Because the market wanted what they had to sell. And it was land grab stuff. Everyone wanted it. And you made money doing it. You just had to be there. You had to do what you were asked to do. And again, these people might, it's why even with CEOs, mate, I'm reluctant to give any CEOs, a bit like sports coaches actually, too much credit. If you've been at the same place for 10 years and only had one act, you've done well. I'm not going to take any credit away from you. I'm not going to criticize you, but I'm not going to say you're obviously a genius. Like, well, can I separate luck from circumstance?

1:19:47Can I separate hard work from the macro or the broader, you know, circumstance in which you operate? I can't. I'm not going to take it away from you, but unless you've done it for an extended period of time or preferably in a couple of places. The sports coaches that have won premierships in three clubs. Okay. You know, again, if you're one just in one, are you terrible? Well, no, I'm not saying that. But can you separate luck from skill from circumstance? No. If you've done it two or three times, two or three different companies, if you've built – Bevan Slater was a great example. He's built three, I think, big IT companies.

1:20:16Like, okay. At some point, you look at that and go, dude, you've got some ability to see around corners or at least see what's happening, take advantage of it, build a business to do it. That's impressive, right? If you've done one thing once, you're probably great. But you may not be. And giving people too much credit back to the founder-CEO thing, it's like, was it you? Or were you just in the right place at the right time? That's really hard to know. Yeah. Yep. I agree. All right. I think we are done, mate. Will you do me a favour and come back on Sunday? I will. I'm just going to get a cup of tea in first.

1:20:48Good idea. Pop a soothe or two in. You've done very well. Can I say, mate? You've done very well. So thank you for making the effort. If Andrew sounds better on Sunday, that's because we've already pre-recorded that one. So you'll have to wait another month to see whether he actually is well enough to do the next mailbag. I think you'll make it, but we'll see how we go. So in the meantime, mate, have your lemon, have your honey, get better and full on. Thanks, mate. 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.

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