Ask Us Anything: Hiding Failures on LinkedIn? + Milking opportunities where your business succeeds publicly!

0:00I'm Adam Schwab. I'm Adir Shifflin. And this is The Contrarians with Adam and Adir.

0:08And we are back. Episode 180, Ask Us Anything. We love getting your questions. Mark, over to you. First question this week comes in from Dwayne on LinkedIn. Dwayne asks, what do you think of the$10 billion drop in global marketplace valuations on the back of Rightmove blaming their poor performance on AI? That's a good question. I've actually dealt with this question a bit because I think high pages might have copped a little tail end of this bit. Definitely realestate.com.au and car sales, et cetera, have copped it. For people that aren't familiar with this, which is probably most people, it's slightly okay.

0:49Including myself. Yeah. So Rightmove, which is a UK business. It's a UK version of realestate.com essentially. So they had some performance problems and they basically put out, like part of their announcement was essentially talking about the role of AI in causing their problems. And I think the angle they were trying to take is they're well positioned to deal with this AI challenge to their business, but that is not the way global markets saw it. And it just sent this wave of panic through global marketplace businesses, listed marketplace businesses and they all got absolutely pummeled because they the way that you know the market is as jittery as can possibly be right now about ai you can't like no matter which side of ai you're on whether you're a customer of ai or a company making the chips you can't do everyone's worried about something either they're worried that you're going to be wiped out of business or that the insatiable demand for ai is going to end like you can't win at the moment and so the consequence of this is everyone just panicked that marketplaces were going to be slaughtered by AI without really, like there were all these theses that floated around.

2:00They're all fairly hopeless. Basically, it was on the back of, you know, panicking that right move set of the, you know, it's already here. Like the tornado is already here, batten down the hatches kind of thing. I think it's quite dumb, is my view. Like marketplaces are some of the best protected businesses from AI. Like they have two sides to them. It's extremely hard to get the two sides on board. You don't even know which side you're supposed to start with most of the time. Once you get there, it's very hard to assail the leader in the space. It's why most marketplaces are, if they're not winner takes all, their winner takes most.

2:35That's why you see dominant marketplaces in industries. And so you think about what AI could do to this. So I can write the code faster. Well, that's a joke. That's not the advantage that marketplaces have, the code. or I can go and if I'm going to sell my house, maybe I'll sell it directly through a chat bot. So how might that play out? It will play out where you go and say, I'm looking for this house, some details, have a chat, can you go and find me the house? That's all great, that side of the marketplace. The problem is how the house is going to get on there. People are going to upload their houses into these large language models and even if they do, you know, there's a whole industry that is designed to make your house look much better than it actually is so that you get more money for it.

3:21And so I just feel that whatever people are worried about with AI, this should not be anywhere near the top of the list that people have with AI. Yeah, we've talked about it before. So there's, of course, SaaS companies, the Atlassians, the Zeros, the whatever, who we think there's definitely going to be seed compression. There's probably going to be revenue margin compression down the track. So I think with the SaaSpocalypse or the SaaScrash, I think there's an element of legitimacy behind that. I don't get the marketplace version of the SaaS crash. It makes no sense. Like you look at businesses like REA, like car sales, like Rightmove in the UK.

3:55These businesses have, as you said, solved the chicken and the egg problem, have got buyers and sellers in one place. I don't see how AI disrupts this business at all. If anything, AI is a positive because it reduces their development costs because the biggest cost in these businesses is people. It reduces their people cost significantly or they can build much cooler stuff that people use the platform more. So I think in my sector, the travel sector, that there's more of a risk, although I still think the risk is low in that you can go to brand.com, you can go to marriott.com and potentially use an agent to buy it, cutting out an online travel agent.

4:24So I think OTAs like Expedia and Booking are a little bit at risk, but I think it's relatively minor. I think the REAs, car groups, the Rightmoves, the Zooplas are not at risk at all. I think it's a positive. I think the only thing that can be said is there were definitely some marketplaces and Seeker's the one that jumps to mind that were grossly overvalued, that weren't growing. Seeker's going backwards and was valued on a huge PE multiple. I understand why that was taken to the woodshare, but I don't get these real estate businesses that are really great franchises that were taken to the red.

4:56So, right move's now trading on a multiple of 16. It feels cheap. It's gone back to 2018 share price. There is a bit more, it's not REA, we should know. So, right move does have some competition, Zooplas, and there's more competition in the UK. So, it's not the winner-take-all market that really REA, yes, you've got domain, but they're barely a competitor. So I think there's some market dynamic issues, but I agree. I think this whole marketplace apocalypse is grossly overdone. I think there's some great buyers out there in marketplace land. The likes of car sales, the likes of REA now are finally, after many years, looking viable after they weren't.

5:32So, yeah, I think this is a great question and I think the market's got this one wrong. By the way, you know OpenAI, I think, if I'm not mistaken, that there was an announcement they made a few, like half a year ago, where they launched their own jobs marketplace as this kind of like, you know, tepid attempt to counteract some of the job displacement that AI is causing. I haven't heard another word about this jobs marketplace. Yeah, of course. And so if the biggest, most exciting company in AI is can't do anything with a two-sided marketplace in the last six months, you haven't heard of it. Like these are not where the core worries should be about AI.

6:08No, absolutely. They can't build either side. They're not going to build the demand or the supply side. So there's not even a chance that LM is going to disrupt jobs, real estate, cars. Like they are, in my mind, extremely safe. And I think they're massive winners from the AI efficiency boom that we're seeing already. We're seeing businesses where we write more than 50 % of code with AI, far more efficient. These guys would be equally efficient. So I think the only real risk is these businesses are legacy businesses. Now there's probably a fair bit of fat around them. So I think that needs to be cut off.

6:38But as a sort of sector, I'm not worried about them at all. Agreed. Mike, question number two. Question number two this week comes in via email to Matthew from Matthew Newton, who says, hi, Adam Adir, love the show. We're also in travel and we've just been ranked very highly in the AFR Fast 100 list. You guys know what it's like to appear in these lists. So beyond being a nice achievement for the team and a credibility signal to show guests, do you have any tips to milk moments like these? Matt from Leatherback Travel. You're going to answer this question, Adam, but I just want to take a moment to acknowledge what an honest question this is.

7:19I love this question. We did this thing, basically, it might just all be fluff, but how do we milk it? That is absolutely the right question to ask. So congratulations, Matt, on hitting the top 100. That's fantastic. Just looking at Leatherback Travel build communities of travelers. They are – it looks like a – I'm just trying to look exactly what they do. It looks like a touring business. They've got multiple brands. I think I may have even spoken to Matt in the past. It looks like it's doing really well. So congratulations, family owned and run with Matt and Rebecca. They've got teams across the world.

7:50So obviously fantastic business and congrats, guys. I think it's a great achievement and something to be proud of. and we entered a lot. We don't really do them anymore, but certainly for the first five or six years of their business, we got a huge thrill when we ever got recognized in the AFR list or a BW list or a smart company list as it was. I think we were number one a few times and it was huge for staff. I think where it's really helpful, and you didn't mention it, is in attracting staff. I think people understandably, there's this great myth that when you do a job interview with someone that you're assessing them and you forget that they're assessing you, especially if it's a really talented person who's got a job somewhere.

8:31So someone's going to take a risk and leave their current job. They want to make sure that the business they're going to isn't about to go under or isn't not able to pay you or can't pay the bonus or whatever. So I think these kind of recognitions are fantastic to attract great, talented staff. And businesses like ours, the travel business and the business idea runs, are very people-dependent. and you need to have great people to push the business forward as clearly as clearly leatherback has and to keep growing as a business you need to keep great great people and be able to show potential team members that you're a really credible business that you're one of the top fastest growing business in australia it's really helpful it's also really great for for customers you can put on your website as a trust indicator uh so i think these essentially these um newspapers the afr's etc lend you their brand and you should make the most of it you should leverage off the brand of a stronger, more powerful 150-year-old brand as much you can.

9:23And I think the competitions are great. I think they can be gamed a bit. I've seen a lot of people win these comps dubiously. So I think there's always something to sort of – I'm sure this isn't the case here. But I've seen people who – businesses who shouldn't have won win. But let's say make the most of it. It's a great achievement. No doubt that it's well-deserved in this case. And, yeah, for potential staff, potential customers, I think it's fantastic. I do. Well, we can say one way. I agree with everything you just said I'll talk about the advantage in a slightly different way which has already started like over the course of your dissertation just now you probably mentioned Leatherback what five times and there's tens of thousands of people listening to this podcast and it's a consumer business so like he's already done a good job of milking it to get it onto the podcast and to get us talking about it like would we have been speaking about this if he hadn't just started off his his email with I got into the top 100 of AFR?

10:19Probably not. I mean, so that is absolutely the right way to use this. I would say you should milk this for all the PR it's worth because it gives you something that differentiates you from everyone else that is basically yelling to a whole lot of publications, look at me. And the publication needs to kind of have a headline and a first paragraph that gets, everyone gets clicks. And I don't want to diminish the AFR to something that just gets clicks, but everyone is trying to make a dollar. And the way media makes a dollar is to get people to read its articles so that it can get subscribers and get advertisers.

10:58And an article that features one of Australia's fastest growing companies, blah, blah, blah, that is much likely to get someone to engage with it than an article that says, like one of the many travel businesses in Australia just did this. like that is it's just a fact and so i would say like adam you've just said a really great way of using it for staff acquisition retention and so on motivation i completely agree that would be the number one and number two for me i'm always trying to get pr you're the master at getting pr and so like i think you should um really go bananas in the next few months at letting as many you can't just say you should write about me because i'm the fastest one of the fastest growing businesses in Australia.

11:42You have to have some other hook. So you need to come up with 10 different hooks for 10 different stories. But those stories should be like Leatherback, one of Australia's fastest growing companies, according to the Financial Review, just had this amazing thing. And you should do that 10 different versions of it. And I think that you just use this to grow your customer base and your awareness. That's how I'd use it. And congratulations. I think in that last piece, it's great to enter these competitions because if you don't enter them, you don't win it. They're virtually always self-nominated. So unless you enter them, it often takes a little bit of work.

12:16It's not like a one click. You've got to spend half an hour, hour, multiple hours to do it. But I know like we enter, so Grant does the all-star band. I actually saw Grant at the fashion festival a few nights ago. So he does a fan, it's basically the who's who of e-commerce in Australia goes there. And you've got massive brands. And we've won it two years in a row, going for a third in a row. and the team, myself included, it's an incredible thrill winning that and you think, oh, Adam, what do you care? You've got a decent-sized business. What do you care about winning this stuff? You care. We care about winning it and you're competing against massive businesses, the JB Hi-Fis, the David Joneses, like great businesses you compete against and Flight Centre and all like amazing businesses we look up to.

12:59So we get a huge thrill out of it but unless you enter it, you can't win it. So you've got to be prepared to not win everyone. but my advice to any lots of founders listening to the show especially this episode is enter as many as you can and get more and more experience and no doubt you'll get there eventually if you don't win this one you'll win the next one but just put your hat I agree you know what list I want to see no one's going to be nominating for this list it has to be investigative the top 10 fastest shrinking businesses in Australia that is an interesting list to see I got a few nominations for that so I think a few of our favourites in the pod might be on that Like, yeah, revenue going backwards faster.

13:36So I agree with everything you've just said. Like, we're in alignment on this and well done and good luck milking this over the next, you know, 12 months because that's your window. Congrats, Matt. We'll go to a super quick break back in no time at all.

13:58And we're back, Mike, question number three. All right, final question this week comes in on LinkedIn in from Richard Anderson. He asks, I love the show, particularly the deep dives of transactions events. My question is this. I recently happened to check a former chair of a former ASX 200 listed company I worked for that has been through an existential 24 months. This chair has actually removed the business to which she was chair for three and a half years, during which time she presided over a loss of market cap of$800 million and subsequently of a further$1 billion market cap loss. What I found in her LinkedIn is that she has removed the business from her experience.

14:44I find this simply completely unacceptable. Failures should not be hidden. Ironically, it is exactly how the business was led in my view. What are your thoughts and have you seen this before? That's a good question. Let's not speculate on the name of the business or who it is like because the question stands on its own two feet which is how do you feel about people removing disasters from their LinkedIn profile and so you and I Adam have both had businesses that haven't worked out we haven't had disasters thank goodness although you never know what the future holds hopefully we won't the things that haven't gone well for me I leave them on my LinkedIn profile.

15:26Generally speaking, I'm able to get exits for the things that don't go well, not always, but generally. So I don't write on my LinkedIn profile, this went terribly. But I do. And mostly the reason I don't write that, well, I was going to say, actually, let's be honest and say the number one reason I don't write that is because it's going to sound terrible. But the other really big reason I don't write that is because people have worked very hard to try and make it work. And a lot of things just don't work. And that's not the business of an asx 200 like that's a probably a bigger achievement in making that business not work but like um and so they're up there for all to see i don't remove them i've got like a hypocritical view on this answer which is number one i don't think i understand what the issue is with removing this and why it's dishonest to remove it and on the flip side i I totally understand why it would be removed and not there because a LinkedIn profile is like the cover of a book.

16:26You know when people say don't judge a book by its cover? And then all these publishers, they spend like a lot of money designing and printing covers of books to try and get you to judge the book just by the cover. And so the LinkedIn profile is the cover of a book. And if this company is on this person's LinkedIn profile, that is going to be one of the big factors that makes whoever's reading that decide if they're going to open that book or just move to the next book. So I get why it's not on there. My last comment is, what do I think about this as a marker for the way Australia deals with failure?

17:00I think if it was a founder, I would have more to say about that. But because this is a chair who didn't start an ASX 200 business, presumably, and is just overseeing it, I think this says less about Australia's attitude to failure than the nervousness about a chair in a public company world where people appointing directors just don't want to take any risk or have like any black marks against anyone, which is why you get a lot of these, you know, lack of risk taking, I would say, in some of these bigger companies. So that's my kind of hypocritical view on this. I think it's a great question. I'm similar to you.

17:42I'm probably a bit harsher on the, not the question asker, but the person subject of the question. I think I was just looking through my LinkedIn profile to make sure I haven't removed anything, but I don't think I've ever removed anything from LinkedIn. I've got private media on there that I'm not overly proud of now given it's completely ultra left stance. I've got Bookwell on there that we sold, but it was struggling at one point. I've got our Lux Everyday business. I've got multiple businesses there you wouldn't call overly successful. If this podcast, though, goes badly one day, that's getting scrubbed for sure, 100%.

18:13That is gone. It never gets scrubbed. Mike won't even put this podcast on his LinkedIn profile. No, I think this podcast is like the premier feature on my profile. It's the only thing on the profile. That's because you're terrified of Adam. It's okay. It's all right. We all are terrified of Adam. Let's just put it out there. I think it's highly dishonest. I think in the case where if you've got, and we talked about Peter James from Drone Shield. So Peter James has had this really successful career in many ways. He was obviously chair of Drone Shield. He was chair of Rand Computer Power. So he had some great successes in their map.

18:47Then he's had some abysmal failures and he removed the failures from his LinkedIn. I find that highly dishonest. Like if you've had some great successes, don't remove the – to me, the cover up here is worse than the crime. I think if you left it on there, if you left your failures on there, I'd read through and go, oh, Ideas had some great successes. A couple of things haven't worked, but A, he's honest. And B, he's clearly had more successes than failures. I think he's a great operator. if I find out that this person has done ABC and DEF, I find this person is just a liar. I find it dishonest.

19:19And I think, yeah, maybe you can get away with it. As you said, people only read the cover of the book. But you think if you're a director or a chairman and you're going for another chairman role, somebody's going to do some due diligence and find out you're a chairman of this other business that went badly and go, not only this person ran a business and went badly, I would have excused him or her for this. They also lied about it, covered it up. and in my view the cover up is absolutely the worst in the crime here and I think whoever does this, I would never hire as a director. I would never hire as an executive if I found out because I think I'd be much more concerned about their honesty than their capability.

19:53I've got no issue with the business going badly, to your point on failure, if it was bona fide and whatever. I have a big issue with someone covering it up and running from it. You know, I'm more sympathetic to that. The problem is if you want to be in the world of ASX 200 public company directors, if that's what you want your career to be, a career director, and that's a whole other story, but if that's what you want to do, there is essentially no tolerance for the unorthodox would be how I would describe that. There's plenty of tolerance for failure. Look at the Rio Tinto, Junk and Gorge directors.

20:27So you can do all sorts of bad stuff. So there's the most tolerant, as long as you don't step outside the ASX director line, then you're fine. if you get all the collapsed businesses in the world i don't care you just we say the same thing you just say it more emotionally i agree with you i agree in in fairness i don't want to get into the whole thing but in fairness to rio tinto and i should say like i i'm very close to simon mckeon who is one of those directors like at least they expressed contrition and didn't try and totally push it underneath the rug but like we are saying the same thing which is you need to be orthodox.

21:02And so one of the things about orthodoxy is that in Australia, failure is very unorthodox. You do not want to be associated with failure. And so we're slowly starting to learn how to accept failure in the startup sector. I say slowly because on the one hand, the startup sector trumpets about embracing failure. And on the other hand, everyone is terrified of founders that have failed at past funded businesses. But the startup sector is starting to embrace it. I completely understand beyond the ego of it, which I also understand. There's the ego of I don't want failures on my LinkedIn profile. But there's also if I want to be a company director of large ASX listed companies, I don't, maybe the way I don't want things on my LinkedIn profile.

21:47This is how I think about this. And I stole this viewpoint of someone else. I won't say his name. very smart guy, who said, there's only a certain number of questions that you want people to be able to ask about you in any given circumstance. And maybe that's two. You want them to ask two questions. How come this happened? And how come this happened? Two unorthodox things. And if it's five things, then you start sounding like you're making excuses or it's a trend or you've got something to hide and i think what a lot of these people are doing beyond the ego and like we can be honest like i certainly understand ego like so do you like this life right um but beyond that i think people are trying to minimize the number of uncomfortable questions that they're going to be asked by these recruiters that get hired to find company directors i think there's some of that going on as well yeah i get it but the problem is it's happened and i don't think you can just erase history and pretend it hasn't happened.

22:48Well, I reckon you can. Yeah, you'd rather it not have happened. Yeah. I think if you look at, and one of our faves who's an incredible operator, Danny Milham, who obviously back at Koala, I think he did an amazing job with Milk Run. It didn't succeed just because it was just too hard a business. But I look at him, he's got it on, he certainly, and you wouldn't expect him to, he's left it on, he's linked in for sure, and he's now killing it at Koala, doing really well. And I think that's exactly what you should be doing. I get more respect for Danny by putting it on there than if someone was to take it off.

23:17All right, but what are then people writing about him in the Fin Review? You see the articles. People basically go… But they've been writing about it anyway. It's not as if they forget about it because he didn't put it on his LinkedIn. All right, but he… Enough people remember. And he's now… Now he's known as the gun CEO of Kuala. He's not known as that, but he hasn't covered it up, is more my point. No, but he… That's a bit different, because he stood on the top of the biggest building with the loudest microphone, megaphone, and like trumpeted about milk runs. So he was never going to be able to escape that.

23:47I take your point that he's not running away from it and like I agree with you about that. But if you want to get an idea for how Australia feels about failure, it should be most embraced in the startup sector and the startup sector articles, the media articles about koala IPO-ing, write about investors being nervous that Danny like – was the CEO of the failed milk run and it burned a lot of cash very quickly. I haven't seen them write about that actually. Well, I've seen you some articles. I mean, it has been written about and I think it's so ridiculous and this is what creates a culture. Well, I said I wasn't going to whine about Australia's culture with regards to failure, but it's kind of unavoidable in this discussion.

24:29Like I do think it all stems from that core culture of saying what is the worst slash most failing thing that someone has ever done and whenever we write anything about them or say anything about them, let's keep bringing that up. Like, Firmus is a good example. There's enough negative things to say about Firmus without talking about this dude that went to prison and served time and did his time. But, like, they just basically – and, you know, I don't know when you send that right about Firmus. They basically start trying to joke about the fact that he went to jail in the headlines now. I hate that.

25:02Yes, I hate the fact that he's getting brought up for a guy who was a kid at the time. I think it comes down to Australia's tall poppy syndrome I think we idolize successful people but also love tearing them down. So I think there's a combination, this bizarre combination. In the States, as you talked about, it doesn't happen in the US. People are maybe too much so dietified and people ignore the failures. Here I think we pay too much attention to the failures. Yeah, I agree. I agree with you. So we can talk about this. It's good quality content. It's a fun conversation. but it's not going to change because the attitude towards failure in Australia, if it changes, it's been glacial, the changes that have happened so far.