Atlassian Buys Again, EA Games Breaks LBO Record, SCA Seven Governance Mess, Australia's Most Famous Family, Cameo and Catapult Hits the Big Time

26:37Well done. Did you see that app that briefly hit number two on the app charts last week? Do you know what I'm talking about? Mike, do you know what I'm talking about? No. I do because I read the run sheet. I didn't before that. So it's an app about something to do with like buying phone call recordings to sell to AI? Yeah, exactly. It's called Neon. So this was an app that it's a pretty interesting idea, arguably pretty stupid idea. So basically the company would offer you$30, up to$30 per day to make calls. So they'll pay you$30 a day to make calls using their app. They would then use the transcript and sell the transcript to LLMs to monetize for AI inferral learning or training or whatever it is.

27:21And this app hit number two on the App Store somehow. It only had a pretty short time in the sun because literally the following day, Neon was forced offline after a security flaw allowed anyone to access the phone numbers, call recordings, and transcripts of any other user. So clearly, they didn't quite get their security right. But what do you think of this, Adi? would you use an app paying you 30 bucks a day if it could have all your transcripts? Well, I wouldn't, but I want to say this. It's$30 more than AI generally is going to charge you for taking your content and using it to train its models.

27:57So like, what are the options? Have your stuff sucked up for nothing and have your IP infringed or hand it over for$30 a day? You know, in the early days of the world wide web i say early it wasn't that early but it was before the dot-com crash um i guess that was pretty early um there was something called all advantage and it was a toolbar that you uploaded and it would pay you for browsing the internet and they would show you ads in the toolbar needless to say it didn't survive the dot-com crash but it feels like everything old is new again like it just feels like that again this is just one more thing that makes me feel like I'm jumped into DeLorean and back in 1999.

28:39Like this is so 99. That was the first thing I thought of is this is, could you get a more, it lasted a day. You've got OpenAI doing these Ponzi schemes like Lucent and Nortel used to do from NVIDIA giving OpenAI money and then spending it back with NVIDIA. It was this great meme that Trung had talking about OpenAI NVIDIA transactions. You know, you know, you've got those like power boards, electric power boards. It's just the plug of the power board being plugged back into the thing. And that was what the transaction was. That's very funny. I did – by the way, you see how boring this podcast would be if I read the run sheet?

29:14Like you asked this question and Mike immediately knew the answer because he read the run sheet. And, like, I think it's appropriate for the producer to read the run sheet. I'm all supportive of that. But how boring would it be if I actually knew what you were talking about from time to time? So, like, so that's boring. Also, I haven't used that app. I did – just as a tangent, I did use an app like – I don't think I used Cameo, but it was an app like that where you pay some money to a celebrity to record a message to someone. Who was the celebrity? It was actually – it was someone from 30 Rock, as it happens.

29:46I have. But like – Tina Fey. It wasn't Tina Fey. That would have been good. It was a big character. But like it cost me like$100 to get this guy to record this stuff. And like it was really good. It's a great business. And so I don't know about the business model. It's a great business. I love it. It's a pretty cool business. It's a great business. I think it's great. Yeah, I love it. I love it. I would definitely use it again. Hopefully, get you on Cameo at some point, giving people birthday wishes. You know, the amount of money, like there were some pretty, I would say, B-list celebrities on there, and they were only charging two and a half thousand Australian dollars to record a message.

30:23I thought that was shockingly low. Who was these? Which kind of people? I mean, it's not like Chris Hemsworth. Well, he's A-list. Yeah. Yeah, I'm saying it's not someone that level. B-list. B-list. like a level down. Who would you deem B-list? Maybe I'd say people who are in their 60s and 70s that used to be on the A-list. Like that would be an example who you would have heard of and you'd say, oh my God, like that person who was in, you know, so that would be an equivalent. I kind of think of - Like Glenn Ridge who used to host South Century, would he be B-list or he was D-list? He would be D-list.

30:58But I mean, he's probably a lovely guy, let me say that. And I don't want to - He's a lovely guy, he's a great guy. I don't want letter bombs in my mail, but like - You're about like Elf from Home and Away, his B-list, right? No, I'm talking about American B-list. Okay, American people. Elf from Home and Away, if he did it, he would charge$200. Serious? I'd definitely get Elf for 200 marks. Yeah, yeah. Like, that's what I'm saying to you. I can't believe how cheap all of this is. It's unbelievably cheap. I'm trying to think of who someone would be - I'm trying to think of a B-list US celeb. You know what your homework is?

31:29You go on there, you have a look who the people are, and you'll be amazed and you can rave about it next week and then tell me everything that you hate about it okay i did can i just tell you something i discovered during the week which blew my mind it blew my mind and it's got to do with you adam so i never well not never but very rarely do i go on insta except to check the ads that businesses are running but i went on there and then i saw it suggested you now i don't really friend people on insta but i thought let's see what Adam's doing on Insta. Now, Mike, have you seen Adam's Insta? No, I haven't actually.

32:07Who is this guy? You are dressed so well. Like you are so fashionable and you are hanging out. There was one photo of you with Natalie Bessingthwaite. Matt Bass, friend of Luxury Escapes. I mean, you would not believe this, Mike. This guy that we see here, he's got a complete alter ego on Insta. And like, I don't know which is the real guy. Like, which is the real you? Is this the real you that we're dealing with? Because you were so stylish. You were hanging out with all these celebs. Yeah, I recognized that it was you, but I thought this could be AI generated. That's why I'm a D-list celeb. I'll do cameos 50 bucks.

32:51I'm sure. Oh, you are definitely not D-list based on your Insta feed. I can tell you that. what's Natalie Bassingflett doing nowadays she's still singing she does a lot of stuff but she's on our Luxury Scapes TV show now on Foxtel and Vinge number two non-sport show on the network ah there you go if you want to watch some travel porn that is the place to go it's actually doing really well so thank you Nat Bass and obviously Cam Datto and Miguel are two of our big stars Becky Gimney comes on it so we've got a few great talent that help us out which is fantastic you have to ask them if they went on to Cameo or the like Like, how much would they charge for, like, a congratulations greeting?

33:30That would be interesting. Next time, you don't have to ring them and ask them. But next time you see them, say to them, do you use this thing? Like, what would you charge for your time? How much would you charge? Just how curious.

33:40I reckon. See, the thing is, I would charge an amount of money that nobody would pay. So that's my problem, right? Oh, but it takes two minutes. So it's not a lot of hassle. No, it doesn't take two minutes. But you can't say something dumb. You have to think about what you're going to say. And you write all of this info about the person that it's for that they try to weave into it. Five minutes then. I'm pretty sure these people have the same spiel every time. I'm glad they're making new material. 20 minutes. So what would I charge for 20 minutes? No way it's 20 minutes. Nah. All right, 15. I can actually answer your question because Natalie Bassing-Sweight is on Cameo.

34:19I've just looked it up. Do you guys want to guess her fee? Okay, yeah. $500. I was going to have$500. It's$750. All right, pretty close. She probably gets$500 of that or a bit more, but there's going to be a clip, right? Yeah, for sure. 200 % or whatever it is. Yeah. So, yeah, I think that seems about right. Don't you think – so there's no way I would do it for less than$500. No way. I'll do$1 ,000. Yeah, I wouldn't do it. I think the same. I think I wouldn't do it for less than$1 ,000. So if they can get Natalie Bass in Thwaites. That's good value. Yeah, Nat Bass is big. I love it. If they can get it for$750 or they can get me for$1 ,000, I don't think it's going to be a tough choice for them.

34:56I'm going to get not one cent. Exactly. Maybe a few listeners. That's about it. Can I move on to some tech news that happened during the week? And big for you guys, what do you reckon I'm talking about? Oh, the privatization of EA Sports, of EA Electronic Arts. Yeah. That's an interesting story. I'm happy we're talking about this. Yeah. It was on the run sheet, which you'd look at. But EA has agreed to sell itself to a group of private investors in a deal that they used to make out of Battlefield and Madden NFL at$55 billion US, which if completed, and it's not guaranteed to complete, obviously, but probably will, will be the largest LBO leveraged buyout in history.

35:29Can you think of, do you remember what was the biggest LBO back in 1989? It's one of the most famous business books. R.J. Arnabisco? R.J. Arnabisco. Oh, Mike would not have known that answer. You should say the name of the book. Everybody should read that book. Barbarians at the Gate, one of the greatest business books ever written by a couple of Wall Street journalists, Byron Burrows and someone else, two Wall Street Journal. Great book. So Saudi Arabia's public investment fund, which obviously already owns a big stake in AI, Jared Kushner's affinity partners, it's just enough to be confused with Josh Kushner, who runs Thrive, and private equity firm Silver Lake, a massive growth fund, came together to buy the popular video game maker with a combination of$36 million cash.

36:10Billion, you mean? $36 billion. Billion, sorry. And$20 billion in debt financed by JP Morgan. I presume they'll syndicate that. EA shareholders will receive$200 per share, a premium of 25%. The company hasn't been doing that well. It had numerous rounds of layoffs and been seeking new areas of growth to inspire players who have gravitated to the free-to-play franchises rather than splash out$80 for a new title. A dear Mike, AME experts, over to you. Well, I just want to say what a great business this is and also what a terrible business it is. So it's a great business because I think its revenue is like$7 billion or something like that, USD.

36:47and I think it keeps one and a half bill or something like that. So it's running at 15 % to 20 % like post-tax margins and net margins. Its gross profit is, it's really 70 % high. Its gross profit is, because it's a bit of cogs, is$5.9 billion and its operating income is$1.5. There's a bit of tax, but yeah. So that is a great business, okay? Like, I mean, anytime, people were so dismissive of video games for so long. I can't believe how dumb I was not to just buy every one of these video games companies. It was so obvious to me that this was going to become a big area because like watching passive entertainment, I find so hopeless compared to actually being part of the action.

37:29It was obvious to me that like this was going to be the growing area and any time anyone talks about video games, anyone involved in business should be interested because this is by far the biggest entertainment medium on earth. In fact, it's as big as probably all the other entertainment media put together, not including social media. So this is crazy. That's the good thing about EA, and it's got some great franchises. The terrible thing about EA is it doesn't grow. So this business just hasn't grown, essentially. Actually shrunk last year, so it got worse. We can call it flat, though. It's basically flat.

38:04You're right. Operating Hummer was actually completely flat. You're right. Yeah. And so that's the bad thing about it. And then there's another good thing about it, which makes this transaction timing very weird do you know what like there's a part a and part b so mike do you know what people are excited about with ea at the moment what game people are excited about it's i mean i mainly know them for their sports games so i know you know they got rid of the fifa relationship and that's called ea fc or something yeah yeah well i think i think you want to charge them too much right yeah probably but so so battlefield 6 is about to launch and like the last two there's like a shooting i don't really play like realistic army games i don't like the whole concept but like i thought you did no i play i like i like i'm happy to shoot things that are not realistic i don't like shooting people like i think like war is bad and i don't like it's simulated yeah fair enough but um but basically these last two battlefields have bombed and but battlefield Battlefield 6 has got crazy good reviews and they think it's going to be huge and it's going to be a significant driver of revenue for EA.

39:12But the downside is that in not very long, people are expecting a much anticipated game from Rockstar, which is a division of Take-Two Interactive, which will become the biggest listed games. It was the biggest company by value until this takeover bid for EA. So you know the rock star game that's coming out, Mike? GTA 6. Grand Theft Auto? Yes, GTA 6. And so GTA 6 almost... Did you know, I got that one odd idea, Mr Gaming? Yes, well done. No, I'm very impressed by that and shocked. Well, you said Grand Theft Auto, which was the title four games ago. But that's all right. That's like directionally correct.

39:52And so I'll give you full points for that, okay, because it's you. and the thing is that GTA 6 without doubt is going to suck all the oxygen out of anybody who's interested in a AAA game that involves shooting and so I think that's the risk to EA's Battlefield 6 is that it gets overshadowed but the thing is that there's a crazy big transaction it was basically Jared Kushner using the connections that he made when he was working for Trump with the Saudis and convincing them to invest in this thing and putting himself in the middle of it. It's a very smart slash maybe not what I'd call entirely above board.

40:35It's crony capitalism. It's crony capitalism. This Trump administration now is the absolute, like TikTok for a tenth of its value to his mates, his big donors. You've got this happening now. This is less bad, obviously, than TikTok. And I think EA, this is a really interesting business. I'm not like, you know, 25 % is a big premium. I think the price to earnings ratio on this transaction is, well, you can work it out. It's$50 billion on a$1.5 billion dollar. It's like 50 times. Give or take 50 times, maybe 45 times. Yeah, it's pretty high. 40 to 50, yeah. It's a pay of, so that's very high for a business like this.

41:10So I think they should succeed, but it's very interesting. What do you think about, let's use, we'll just compare everything to Canva, okay? Okay, so Canva has got, let's say, three bill of ARR slash revenue. This has got seven and a half. Canva's growing at 50%, let's call it 40 probably. This generates one and a half bill of free cash, this business. Half a bill of that, I think, is because of salaries paid with stock. But if it's real profit, that profit's real because that's gap profit. Yeah, it's real profit. It's not make-believe. And so, like, how do you feel about, how many Canva's is one EA worth?

41:54What do you think? Well, I think - Or vice versa, right? It's so hard to compare. It could be less than one. Canva's a growth company that's flying. Like, 40 % growth is just incredible growth at this scale versus a business that's flatlining and could shrink. Like, if you look at EA, it's a very legacy, and you guys know it better than me, but it's a very legacy business. It has sporting games. FIFA's been around since the 90s. This is a legacy game. People are moving to new for that. That's a heritage brand. It's terrible at mobile. I don't think it does anything in mobile, and everything's moving mobile.

42:27So obviously there's console, which it's still strong in. But this is not a business I've been paying 50 times earnings for. This is a business that feels like it should be like 10 to 50. And this is a business that they've been trying to sell this business for decades. And I know that Saudi's had a stake in it already, and I think there's probably a bit more at play. and Saudi Arabia are obviously big investors in sport now. So there's probably an element they'll use this for a bit more sport washing potentially. So it's less about financial return for the Saudis. But this again, we talked about RGI Nabisco a minute ago and that famous buyout, which was by far the biggest private equity buyout, the biggest LBO.

43:03It was one of the first really big LBOs in 1989. This feels like that again. When you've sort of hitting, you've got people getting paid to make phone calls. you've got the biggest LBO in history at$50 billion. You've got JP Morgan giving$20 billion in debt. This business doesn't make that much money. It's a legacy old school business, a bit like RJ Anabisco was. Everything about this economy feels bubbly. Yeah. I mean, I'd rather own this business than Canva just because of the business. Not because I think it's a better business. I would just rather own it because of what it does. You'd better have owned Canva and bought the games.

43:37No, I just think it would be unbelievable to be in this world, but it is very hit-driven and very stressful. Canva still needs to more than double to get to their revenue. I think they're worth about the same. That's a year and a half away. It's not. It's harder to grow off a higher base. But I think, what's Canva worth now? 60 bill? Is this worth 50 bill? I think that's about right. I think Canva's a better business than this. I think Canva would be double to triple this value. That's extreme. I wouldn't have thought that. but no red canva list it'll be you won't there'll be no control premium because they'll presumably maintain but presumably cliff mel um maintain control and can retain control so this is a control purchase it's a bit different but it feels it feels like a copy evaluation well we need to see how much cash canva actually makes right because we can see how much cash this business makes sure like yeah it's not a debt you can you can buy a lot of stuff with one and a half billion dollars like it gives you an opportunity to to like grow your can you not buy what it's up with 55 billion dollars which is what they're paying for it no you can but what i mean is people it seems to me that in the world of tech people don't put a high enough value on free cash generation like mega free cash generation because that one and a half bill it can go to shareholders but also or it can be used to grow the business.

44:59And so that is a huge advantage in these situations. And people don't seem to really care about, oh, we're generating some free cash versus this is actually raining money. No, I agree with you. What you want, as we know from Rule of 40, you want free cash and you want growth. So you want, and this is the perfect Warren Buffett business, you want a business that needs lots and lots of cash and you can invest that cash and grow even faster. That's the dream business. The worst kind of business is a business that, But yeah, it generates not the worst kind of business that loses cash. But a much less good kind of business is a business that, yeah, makes good cash.

45:33But if you put the cash back in, the ROI or ROE is terrible. And you actually earn cash putting it back in, which is what I'm concerned about. This business is not growing. Which is what you're saying. So basically, you take the cash, you put it back in in the form of equity, which is effectively just giving more money to your own company. And you don't get a good enough return on that equity because the money that's coming out of the business maybe hasn't changed, all you've done is kind of diluted it down. It would probably be more of a return on capital in that situation, but whatever, like it's the same concept.

46:06So yeah, I agree. All right. Well, it's a very interesting story. I really find it fascinating. Yeah. We'll track it closely. We're going to go a quick, quick break. We're back with some really good stories after the break.

46:23And we're back. And Adi, you want to talk about, There's some breaking news, relatively breaking news last week. Southern Cross, Austereo, the big radio podcast, Goliath, and obviously radio station owner, is merging with Seven Media, the once great, now much diminished owner of television stations around Australia, of course famously owned by control, I should say, by the Stokes family. Kerry Stokes, the effectively founder of the business, has a great love of TV. Ryan, his son, could not care less about TV. and this business is, and so Stokes is effectively selling control down. So SCA will be the dominant partner.

46:57So I do, what are your views on this somewhat controversial transaction? Well, Mike, I don't want to comment on whether I think it's a good or bad transaction because I don't know. Mike used to work for Southern Cross basically, didn't you? Yeah, I worked there for about eight years across the radio and podcast divisions. I thought you were like 25. When did you start working with this joint? I got in pretty early. They've got a little known coal mines business and he started working there when he was eight. But I guess, yeah, my career, I'm really grateful because, you know, my career started in radio and I, yeah, I started working across the Triple M and Fox FM brands when I was in my sort of early mid-20s before I pivoted into podcasting.

47:45But, yeah, I had a long time there. Remember, we filmed a few episodes of my last pod in the listener studios, if you recall. We did. We did. Conveniently close to your office. Very cool. Like I'm looking at it right now, actually. So this is what I want to talk about with this transaction. Not the quality of the transaction itself, but what's actually going on. Because I think it's very problematic and it needs, the ASX is reviewing the process, but they should hurry up. I'm not sure if it's the ASX or ASIC. So essentially... The ASX. The ASX, yeah. So seven shareholders are going to swap their shares for SCA shares.

48:33Sounds simple. It's not simple. And the reason it's not simple is this. The transaction is being structured as a scheme of arrangement on the seven side. Scheme of arrangement in simple terms just means the shareholders get together and they say, we're going to agree to a rearrangement of the way that our company is structured. And what needs to happen for that to pass is that 75 % of shareholders by value and 50 % of shareholders by number of shareholders that are not involved in the transaction need to vote in favor because you're rearranging a company. And so that's what needs to happen. And the way they're rearranging their company is that they're swapping seven shares for SCA shares.

49:26And so you need to make sure that you tick the boxes to run this scheme of arrangement properly. And then you go to the Supreme Court and you show the scheme of arrangement to the Supreme Court and the Supreme Court signs off on it if they believe that the scheme is fair and no one is being disadvantaged unfairly by the scheme. So that sounds all very great for seven shareholders. But now we go across to the SCA shareholders and unfortunately, they are not involved in the scheme of arrangement because their business is not being reorganized. all their business is doing is issuing a huge mountain of new shares to seven shareholders, which ultimately is going to dilute them as shareholders in SCA and the combined entity, and force them to accept seven as part of the business.

50:26Now, you might say, well, hang on a second. I'm sophisticated in ASX listing rules. I know that you can't issue more than 15 % new shares without shareholders voting on the issue of new shares. And this is issuing almost 50 % new shares. I say almost, I'm going to come back to almost. Do you know why no vote is required to issue almost 50 % new shares? It's not because it was a waiver, was it? Well, it's an exception. So I can be very precise on this. I think it's listing rule 7.2. I thought so. Okay, 7.1 is the one that James Harder used, yeah. Yeah, well, James Hardy was similar, but they got a waiver because it was international.

51:08That was what was different. But these are two Australian businesses, and there's an exception, and this is the exception. If a court approves a scheme of arrangement, you don't need shareholder approval. However, so that's bad news for SCA shareholders, so they don't get asked. However, if your company is going to be taken over more than 50%, then you get to have a vote, and then there's some compulsory requirements for the other party. However, I think that there's like one share short of 50 % or something that's being issued here. Yeah, exactly. 49%. Yeah, 51%. Yeah, precisely the right number of shares are being issued.

51:50And what this means, and obviously this is no accident, This has been deliberately structured. Of course. Yeah. The only reason people use schemes is to screw over shareholders. I was a lawyer who worked on these schemes arrangements. You can do it by takeover where you need 90 % or a scheme where you need 75 % essentially. And people go for schemes that couldn't get the 90%. And you don't, yeah. And so the thing is that I don't think they're only done to screw over shareholders because sometimes it's going to be very messy getting all of these shareholders. And so you might call that screwing over shareholders.

52:22I would more call it, you know, that's trying to speed up the process. But in this case, it is very unclear that SCA shareholders would vote in favor of issuing all of these shares to seven. And the board of directors has said, we're doing what's required for this scheme of arrangement. That is getting an independent experts report. And so all of this dilution of close to 50 % and having seven, I'm going to say foisted on them, whether they like it or not, all of that is going to be determined by company directors and an independent experts report. And the argument is that, well, they do have recourse.

53:07They can vote out the directors. That's their recourse. Or they could sue the directors or what. I mean, and so the thing is this. if you vote out the directors that's if you don't want this deal and you vote out directors that's closing the gate after the horse's bolted too bad right and and who's going to sue the directors i mean this will be a hiding to nothing suing the director waste of money yeah exactly it takes three years to resolve and what's the point and the court that is being asked to approve the scheme of arrangement because i thought maybe and directors have insurance insurance and maybe i would say well the court would say well this is not fair but that's not the court's job the court's job is just to decide on the scheme of arrangement and whether it ticks the boxes.

53:45And I think this scheme is going to tick the boxes. And so this is really not a fair situation for shareholders in a company. And my view is, would be, they're currently reviewing this listing rule and this exemption. My view is you can't put shareholders in a position where this happens to them. You agree with that? I assume you agree with this. Oh, totally. Yeah. I think the whole point is, and it's the same as James Hardy, If the deal was such a good deal, put it to shareholders and let shareholders vote it through. Like the only reason we're doing this is they think that shareholders won't support it.

54:17And if you're doing something that you think the majority of shareholders don't support, why are you doing it? Like it's, did you see the article in the AFR? AFR love printing articles or sort of op-eds from lawyers and the odd banker. Did you see a couple of lawyers from Malletons, the blue-blooded law firm of blue-blooded law firms in Australia? Nicola Charleston and Will Heath, I think Will could actually be my year at uni, they probably wrote, and I obviously used to be a corporate lawyer, but if you were saying what's the difference between corporate lawyers and prostitutes, you'd probably say prostitutes have more honor.

54:51Otherwise, pretty similar. And probably earn their money more decently. But anyway. Let's just say the disclaimer to any corporate lawyers that listen to this podcast, I don't agree, Adam. As a former corporate lawyer. So this is that I won't talk about the whole article, but Will and Nicola gave three reasons why, essentially why you're wrong and why these inverted commas loopholes should be able to continue to exist. First, the first reason they said, Australian listed companies and offices are subject to very strict statutory, in director's case, fiduciary duties that require them to act in good faith and best interest the company.

55:23When was the last time a director was sued for anything by ASIC? Like you basically, you could bankrupt the company and you'd still barely get done. So that was just ridiculous. So reason one, embarrassing. Reason two, shareholders in Australian companies are well protected by a robust regime of shareholder rights. Listed companies, to your point, enjoy the right to boast at least annually on a two strikes resolution. Problem with this, Adir, two strikes isn't binding. It's a useless piece of junk that doesn't actually have any ramifications. Well, I would say maybe I would argue on this point that two strikes and rolling the board, if shareholders really were against this en masse, they wouldn't re-elect the same board.

56:05But the problem is, in general, that is not the most effective mechanism because on the few occasions it's occurred, the directors have all just been re-elected. Of course. And the horse has a milling bolt here. The horse has died of old age by the time this has happened. And the third reason they claim is the so-called loopholes have always been publicly available to shareholders as a whole. Well, yes, they have, but the rules are the rules, and the ASX thing gives the loophole. That's a crazy reason. They're called a loophole for a reason. If you buy shares in this company, we can hit you in the head with a brick.

56:38Oh, well, now we're throwing a brick in your head, but you saw it was in the thing. We're allowed to throw a brick at your head, right? I mean, it's ridiculous. I think there are protections in listed companies. that rule where you have to go to a shareholder vote for 15%, that doesn't exist in private companies. So that is unique to listed companies. Private companies have their own rules. I think they'll have a shareholders agreement that specifies what you can and can't do. You might need 75 % of shareholders to do that kind of thing. Often you do. There's nothing enshrined like this in law.

57:09You have to use the CORPS Act to go after it. And I can tell you from first-hand experience, like the Corpse Act is largely in the hands of whatever a judge decides on the day in my experience. And so what I do think though, you might say, because like I think in a sense it's weird for me to argue this because I'm like the chairman of a ASX listed company, right? It's a company now in the ASX 200. And so you might expect that I would just try to defend any power that directors can have. But fundamentally, I've always believed that businesses do best when they take care of all of their stakeholders.

57:48That includes customers. That also includes shareholders. And I have to tell you, like I learned that the hard way when the market hated me, the shareholders, and I hated them back. I took a moment and I thought, hang on a second. Like this is one of the customers of the company. Like they're buying our shares. and if they're all telling me the product is no good, then maybe I should think about what we're doing with the product and at least how I can communicate it better if not actually improve the product. Well, at least just in your case, just in your case, just jump in. Your board, between you and I'm sure you're on the board anymore, but you and certainly the founders own a chunk of the company, so you are the shareholders.

58:26I know, but we don't own the majority of the company. The three of us collectively, me, my own 20 % collectively. That's material. That's very material for an ASIC. So you guys treat the company like it's your own versus a lot of these clowns and James Hardy, the absolute high watermark of malfeasance. They didn't like Aaron Erder and whoever that chairwoman is. Don't treat the company. They treat the company like a play thing and as a way to enrich themselves and expensive shareholders. And you guys, the opposite at Catapult, you absolutely look after shareholders. And so that's very nice for you to say.

58:56So I think the thing with, you know, the argument saying it's not a loophole and it was there is whatever you want to call it, it actually is an exemption. It's called an exemption. And I think that this exemption shouldn't exist. I think that if you're going to dilute shareholders by more than 15%, just remove this exemption. Just make sure that there has to be a shareholder vote. You've already got the mechanism in there to facilitate it. Just remove the exemption. Totally. I think the biggest issue with this merger is leaving aside the fact that the poor SCA shareholders don't get a vote. And some SCA shareholders in fairness are in favor of this, but obviously not all are.

59:32I think one called it diversification. I think the question is both SCA and 7 have been brilliant businesses over their journey. They've both been sort of faced with a really difficult, probably the last five or 10 years of media environment where it's just been a torrid time because Google and Meta have eaten the lunch of traditional media companies. So The question is, does putting two poorly performing businesses, well, SEA has been much better performing in the last year and they've got the great podcast business, but two legacy media businesses that have been on a downhill trajectory for almost two decades or certainly a decade, does putting two struggling businesses together make sense?

1:00:10I think is a real question. Yeah. Does putting a legacy radio business that's doing okay together with a legacy free-to-air TV business that's not, like, do you really get economies of scale? I saw the diversification comment. The paper attributed that or the guy attributed that to Peter Lynch. But I thought it was Buffett's comment, isn't it? I think it's both. Right. What have I meant to say first? I mean, I do agree. It is a problem. Like, diversifying, if you've got something that's not too good and you buy something else that's not too good, there better be a reason why putting them together makes it better and not just having two not too good things to give you an even bigger headache.

1:00:52It reminds me, the irony is, remember when Nine bought, it was 2GB and 3W, I think with the old Macquarie Media Assets, there was this big thing, they bought it from Singo, and there was all investment bankers feasting at the trough here, and they said, what a great deal, there's all these synergies, and now what's happening, Nine's basically giving this business away. So at the same time, One Nine will basically take anything for their radio business, which is probably a better radio. Like AW is a dominant station in Victoria. It's a great business. So we've got Nine doing one thing and Seven doing the exact opposite.

1:01:24It's bizarre. SCA doing the opposite. And you've got the super canny Ryan Stokes who, by all reports, hates this whole Seven media thing. He just wants to own businesses that make money. He doesn't care about the influence that Kerry loved so much. And Ryan's, I think, one of the best CEOs in the country. He's done an amazing job at Seven. Well, I think he would care about the influence if there was still influence. I think there still is. Although they've got the West Australian, right? Yeah, the West Australia, they own West. That's got influence. Yeah, they own the West. That's got influence, for sure.

1:01:55And then the Sunday Times as well. I think it's the same. But you just said to me 20 % of a company, of a public company, is material and has influence. And Kerry Stokes will still own 20 % of this merged company. So, yeah, he won't be the chairman, but no one's going to do things that he doesn't want them to do when he owns 20 % behind the scenes. Yeah, that's true. He's still going to have plenty of power. Yeah. It's more that Ryan, I think Ryan just doesn't care about this business. He cares about the big groffer generators like Boral and those great parts of Seven that have done, obviously, the Caterpillar business.

1:02:25And Caterpillar's its own business, right? It's a different business now. Yeah, Caterpillar, they're in the rights to Caterpillar in Australia and I think parts of Asia. Yeah, but not in this vehicle. They put it in another vehicle. I thought it was right. Okay, it's their own problem. I don't think it's part of 7 West Meter. I think they broke it away. Yeah, you could be right. It's been an amazing story, that Stokes story. And this is, it feels like they're foisting their stuff onto SCA and SCA guys don't get a vote, which I can't understand why. And it may be the case that the SCA shareholders would have voted in favor of it.

1:02:54I think that makes it all the worse. I think directors not allowing a vote just makes no sense at all. It baffles me. Well, where have you heard a billionaire splitting off his favorite assets from his less favorite assets and foisting the less favorite assets onto some other company? You talking about our friend Solomon Liu? You talking about him? It might have happened in retail not that long ago. And so I think, listen, in fairness, I do think those retail brands are probably better than this Seven West Media brand. because nothing's as bad. What's as bad as free-to-air TV in the 21st century?

1:03:36At least free-to-air still makes a chunk of EBITDA. It's not like it's dead. It's one of those legacies. It's like a Yellow Pages 10 years ago. It's got to spin off cash for a little while, but then it won't. The question is when that music stops. Just speaking of ASX businesses, I understand Catapult has joined the exclusive club of the ASX 200. We did. It was actually a very big surprise because, so the ASX 200 is like the 200, I guess, like it's not really the 200 most valuable businesses on the ASX. It's you take the market cap and you multiply it by free cash, free float, sorry. But like we could call it a proxy for the 200 most valuable businesses.

1:04:19And so they changed the rules on who gets in. like historically you had to come in at number 187 in order to get in because they didn't want you to drop out straight away I guess and there were some other requirements anyway they they changed them they did a rebalance and then we we missed out but we didn't know by how much and then two companies merged and so they put one more company in but and then we were like is that going to be us and we missed out and we were like oh I think we're 201 and then just now one more gold company merged before the final announcement and so we ended up popping up into the asx 200 which you know i have to say like a lot of people have sent me very lovely messages and i get why it feels like a milestone to me it doesn't feel like much it feels like well we just have to keep doing what we're doing and keep growing the business but what's interesting about this is that already a whole heap of people have reached out to me from this world of like broking and banking and whatever that hadn't previously.

1:05:27So you're much more on the radar as an ASX 200 company. You're much more on the radar for governance and proxies as an ASX 200 company. Yeah. I think it will be interesting to see like how this impacts things. Obviously, we're in the index now, which meant like if you're an index fund ASX 200, you've got to buy catapult shares. Although not many because we're not much of the index, right? Like we're a tiny part of the index. Just looking at your share price, I don't know if you've seen, since we've been recording, you've cracked the$2 billion mark. So congratulations for that. When we started the podcast, which is like barely two, not even two years, oh no, just over two years ago, I think you were trading at circa, what, 10X in that time or sort of 8X maybe?

1:06:11So anybody who'd listened to the pod and bought in could have made an enormous amount of money. I know Mike's loaded up a couple million bucks of shares and is now. Yeah, that's what he tells me. So I think the most important lesson about what you just said is that success is non-linear. And what I mean by that is that for the five years before this happened, we basically bled. Now, for two of those, so that was, you know, there was some COVID in there or whatever. That was more than five years ago. So maybe I'll say for eight years we bled or seven years. And for some of that time, we were probably doing the wrong thing, to be honest.

1:06:52But for the three years before now, like the last three, I think we were largely doing the right thing. The market just didn't believe necessarily that we were doing the right thing or they wanted to see more evidence or they hadn't paid attention. Like so few shares were traded in us for so long, like such low liquidity. that's like the that's the curse of being publicly listed and then all of a sudden now like the value that we think was being built all along finally people are seeing that value in the stock and it moves very quickly but you know what i'd like say to people constantly is if you think you're doing the right thing like obviously check and like recheck but if you think strategically you're doing the right thing if you think tactically you're executing the right thing believe in the process and trust the process because like value creation is non-linear it doesn't go up in a nice smooth x y equals x curve like it all of a sudden spikes and um and i think that's the lesson i've mostly learned out of this to be honest well you think companies are valued based on two multiple things but really based on their earnings and their earnings growth and the multiple so So the earnings, the multiple, those earnings.

1:08:05And you guys had obviously approaching very strong earnings. You see earnings coming through, but the business didn't give you the multiple that you clearly deserve because you probably hadn't earned that trust yet to your earlier point. And you had to work to earn that trust. I think if you look at the analogy, it's pretty clear. Our friends at Kogan who had a rollercoaster ride since I'd listed seven or eight years ago, and the market hates them now. But this is a business that could be making$50,$60 million EBITDA in a couple of years and is valued at$350 million. I mean, we've got Temple and Webster Bay at almost$3 billion that makes sort of a fraction of that.

1:08:36So the market can love you, the market can hate you. And ultimately, as a business operator, you can just focus on what you can control, which is the cash flows of that business. Well, investors have a thesis that they developed about a business, which is just like a theory. Maybe you could call it a narrative of why they believe in something. And they need to trust you to deliver on that thesis. And there's a thesis in Temple and Webster. and Templar and Webster is delivering on that thesis. We're bearish on the thesis, but that is why their share price is worth so much, frankly. I also think like this ASX 200, we live in a world that uses base 10.

1:09:14We count to nine and then we say 10. And this was not always the case, right? Like our clock does not run to base 10. It runs to base 60. And so basically, as a consequence of being in base 10, we have an asx 100 200 300 and it's just arbitrary like if they would have said it's an asx 150 we wouldn't be in it right so like i think you have to like what i think the other lesson i've learned over the years is like you're never as amazing or as terrible as you think you are and nothing is ever as good or as bad as you think it is and like you just have to kind of stay balanced with these kind of things i definitely think that's our attitude internally in the business As Scott Galloway says, and he said this during the pandemic, the early days, nothing's as good as it seems, nothing's as bad as it seems.

1:10:01I think the only exception that being your biceps, which are as good as they seem, but otherwise - Well, they're not. That's a great example. You oversell my biceps. People see it. You just set me up for disappointment. I look at your dress sense, and that's not as bad as it seems, because then I look on Insta, and there's a whole different goal on Insta. Is it really that good? That's the question. Possibly the reason why you thought I was dressed so well with some of those photos, I was actually dressed, in a couple of photos, I was dressed by arguably a man who was named the most stylish man in Melbourne, Christian Kimber.

1:10:32So Christian, who's a good friend of ours, and his beautiful wife, Ren, who helps run the business, have got a great, probably one of the great fashion businesses in Australia, sort of men's fashion businesses. I think opening a Sydney store soon, if I'm not talking out of school, but they were very kind and dressed me for that, which is why I was dressed far more nicely than I usually am. Can I just move on? Let's talk about Atlassian. We're having time for the deep dive. We'll push the deep dive for next week. So talk about our favorite company, Australian tech, and friend of the pod, Atlassian, who last week continues acquisition, binge paying a billion US to buy US software firm DX in a deal that Atlassian says will help but cement it as a leading player in the AI era.

1:11:14This came a week after, a few weeks after, Atlassian paid US$610 million to buy an AI web browser business. DX is a five-year-old company that makes so-called developer intelligence platform allowing companies to measure productivity and satisfaction of their costly software engineers. Mike said this represented a big step forward for its products. The market didn't love the acquisition though, which came on the back of a series of scathing articles about Mike Cannon Brooks in the Australian newspaper. Atlassian share price has dropped to $150 a share, which is down 55 % since February. And it's actually probably one of the only large tech business in the States that's below its Liberation Day levels.

1:11:53Its market cap is down 70 % since its 2020 on peak, which has been a massive win for the Catrini's portfolio, of course. Adir, what do you reckon is purchase? I kind of just glimpsed it and I didn't deep dive into it. Oh, it's really 55%. Forget the 70, that was a peak, but 55 % since Feb's a pretty big drop. While their share price, I know it's down whatever you said, 70 % or whatever, 50 % from whatever. I still think the share price is not low, let's call it. And so if your share price is at a level that you think might not be that high in the future, and you're not on the way up necessarily, then it's a good time to use that stock to make acquisitions.

1:12:36I presume these, like, did the acquirer take most of it in stock or you don't know? It kind of doesn't matter because you raise money anyway if you want to pay it in cash. But, you know, they might have to raise at a discount if they raise money. I'm not sure if people want to keep giving them money given that their share price is falling. They paid it in cash and restricted stock. All right. So it would be interesting to know the mix, right? I mean, I guess they'll have to disclose the mix. I think that Atlassian should be buying businesses that are growing at a decent clip and that are generating profitability and are synergistic to their business.

1:13:13And if they overpay for that business, I could live with it because I think they're overpaying with overvalued stock. And so does this business fulfill those requirements? Well, I think the question is, is this business capable of actually growing itself? like it's been buying stuff you know bought what was it trello or what was that business that bought that basically i bought that um hip monk or hip chat hip chat business hip months travel business hip chat which is the original slack it's bought a bunch of stuff has any of the stuff that bought actually been any good well that's a great question i mean you know generally speaking acquisitions are earnings destructive i can slightly boast and say we're very aware of this at Catapult and our acquisitions have been strong historically but like we are paranoid about the risk of value destruction and so we've got like pretty like we make our we build our own internal projections on what businesses are going to do after we acquire them and then we hold management to account on those projections I think one of the craziest things in the world is people that buy businesses on the basis of the projections that have been produced by the target company it's like is anything less plausible than a company you're buying telling you to price them on their future earnings and then providing you with their future earnings like it's bizarre to me that that's how people buy companies and so i think you know that was a good question you asked about atlassian because like the null hypothesis would be that um the acquisitions made by any company are value destructive over time and so i don't know but i have to tell you i'm not opposed to atlassian buying good stuff because their stock is still worth a lot of money and they should be buying i think the question the question is should a company that's never really like some businesses are great acquirers like most acquisitions lose money but there's some businesses who do really well like maybe the abc remember capital cities that that eventually merged with abc and disney bought the whole lot they're a great acquirer there's some really good business who can do it really well and obviously warren buffett at berkshire is the classic guy but these guys have never been up with like their legacy CGU business, for all my criticism at Lassian, is still an incredible franchise.

1:15:25It's got amazing switching costs, churns, it grows, expansion revenue, it's a bit of a cash cow. We think the valuation is crazy, but the core business is a great business. If all they focused on was this core business, got rid of all the costs, got rid of all the R &D, earned a couple billion dollars a year in income, you'd be a great little business, a great$30,$40 billion business that I wouldn't complain about. But they keep doing this stuff and the market feels like it's getting they're tolerating this the market just tolerated this these sort of largesse and now scott's gone and the market loves scott and it just feels like the market's like really losing 55 drop in eight months is catastrophic is this i don't like we talk a lot about atlassian like i don't really care about atlassian just because like no i tell you why i say that like Basically, it's a business that, to me, it's very obvious what they have to do, which is cut costs, make profit, grow the core business.

1:16:25Yeah. Yeah. Focus on your great friends. Like I used to in 2015. I feel like we've said this for a year and a half. I feel like we've said they're reticent to do it because it risks a sudden drop in the share price because the narrative changes. but frankly at this point in time trying to maintain the narrative hasn't supported their share price so it just becomes more obvious to me that they have to transition and make money they could make a ton of money like they generate billions of dollars of revenue they could make a ton of money and we think they can make a couple of billion like you cut a billion in cost yeah obviously losing money now we think they can make a couple billion and they're growing like the corp is still growing expansion revenue and so the reason i find this a bit boring not Not the conversation.

1:17:11I actually think you should take a look at your view on whether their acquisitions have been accretive to revenue and earnings. We know they haven't because if you look at, they've shut a bunch of them down and it's still the core Jira product that's the main part of that business, like Confluence to an extent. But they've tried to build this suite like Microsoft, but it's not really Microsoft because most of the products are no good except for Jira. But what's their relationship to Slack? So Slack was a competitor. So HipChat was the first Slack and Slack just killed it. And Slack obviously got bought by Salesforce for$27 billion.

1:17:43So the price that Slack got sold for is actually similar to what Atlassian's now,$39 billion US, and Slack got sold for$27 billion US. So it's actually getting pretty close to what Slack sold for, which is just one small part of what Atlassian actually had owned in HipChat. So that's one of almost the greatest failures. It's a shame for them that when their valuation was not at the highest, that they didn't go and just buy - $100 billion US. Yeah. Yeah, they should have just bought Slack, right? Like that would have been the obvious thing. Like I often find companies try to buy a number two or a number three and usually it doesn't work.

1:18:19Usually the best thing to do if a player is relatively dominant in the space is overpay for them, like pay a full price, which is the Warren Buffett view of the world, frankly, right? Which is the Charlie Munger view. The Charlie Munger view of the world. You just got to pay for quality. And so that's the reason I find it a bit boring, these discussions about lessing because it's so obvious to us what they need to be doing and they won't do it. I think one day they'll do it. Getting to the point, if the share price drops to, it hits like 30 billion, that's at the point where they'd be better off making 2 billion a year.

1:18:50They'll get a high valuation. That's right. So we're getting, we're almost at that point. We're almost at the point where I'm no longer, like, I think they'll change strategy, which is why. But like, if they don't change strategy, they'll go down to 10 billion because eventually this business isn't making money. But they did change strategy and do the idea, shift in strategy of cutting costs and making a couple of billion. They'd actually go up to$20 billion plus. So there is potential here. They just keep blowing money on stupid stuff that just doesn't make any sense. So I can't comment about whether this is stupid or not because actually I have no idea.

1:19:23But I can comment that I think everybody would be happier if they transition to profitability. what surprises me most about them is that invest that employees continue to take stock-based compensation because the share price is plummeting what they do is they let the employees sell shares in three months so it's not really that's fake stock-based compensation because they can sell it so quickly they call it stock-based compensation but it's still it's still less than they thought they had well yeah you wouldn't be happy i don't think anybody i don't dropped 55 % in six months or eight months. This is astonishing drop of value.

1:20:06Really coinciding with our friend John Stensholtz sort of blistering pieces on Mark that have really damaged, I think damaged, and my understanding is there's a fat wire on Larry Davis style fat wire on John Stensholtz's head. So he can't go near the private jet terminal at the moment because he might get, you know, he's all right out of the room. I know there's a whole heap of, there's a whole, like i've got i generally i'm positive on mcb like i don't know him but like i generally am positive like it will listen anyone who's a billionaire or multi-billionaire their idiosyncrasies are going to be coming out front and center that's the honest truth about things okay because too many people around you like uh yes people and just go along with you the trick if you're going to be a multi-billionaire probably is give it away and certainly don't let people know that you've got it, which is very hard when people like John are running around.

1:20:58Speaking of John, I saw John walk out of the Olympic room, you know, the big fancy AFL function for the grand final. Obviously, he wasn't in there. He was in the next bay. And I saw John stride down as the game was about to start along with his billionaire mates and the who's who of corporate Australia. So despite the fat lie, John, he's doing pretty well. Well, I always get asked, like, you know, because of the catapult relationship, like, how come I don't try and get into that world? yeah why aren't you getting that world like i love the business of sport but if i'm gonna watch sport and have fun like that's not the way to do it and like that and i just you know what i'll like i don't know i'll think about it but like the thing is i don't really find that environment very appealing i find it a bit stressful and ultimately when you look at it maybe this is something that people don't realize but like you know there are some things in life where if you pay money it's very beautiful and it's different to the to like what people that don't pay a lot of money experience travel would be one of those things okay but when you go into this olympic room like it's the same experience that you'd have at the local footy club like the chairs are not amazing.

1:22:14The tables are not amazing. The food is not amazing. There's still queues out the front. There's still like... Oh, there's no queues. No, for the food. There's queues for the food. There is. There's queues for food. No, it's table service. It's this joint. It depends which part of it, like the pre or the post or the... I don't really understand what's amazing about it. I think the main thing that people find amazing is that they've been invited into the inner sanctum of so-called power okay yeah it's same chairman's club like the best part of the chairman's club is telling people who are at the chairman's club the actual club itself is not a different anywhere else like it's it's like a 30 restaurant yeah and so like yeah i agree with that and so i mean like yeah whatever like the same as the like i assume the first lounge is internationally is pretty similar to the Chairman's Club.

1:23:09And so I think it's an interesting question about what, like, is it really good for business? Or is it people just wanting to feel special being a part of these things? And I don't know. Like, for some people, like for Hutchie, he probably needs to be in there for business reasons because that's his relationship. And I think Hachi was sitting a few seats away. He was in the – we were in, like, the next Bay Across through Hutchie, ironically. and he was there with his beautiful wife. I think obviously Hachi is so well-connected anyway that it probably doesn't make that much difference to him. So I'm wondering if it's good for business for Catafull because the thing is this, our revenue in Australia, like I love the AFL as an organisation to deal with and I especially love it like, I guess a lot of criticism at the moment, but I think it's run very professionally despite what it looks like to the outside world sometimes.

1:24:05And I think it's one of the better run leagues in the world. And I especially love it. And this is true of the NRL as well. I especially love it because the teams are generally not privately owned. They're not at all in the AFL, really. The teams are not privately owned. And the AFL is the custodian of grassroots footy as well. And that is almost globally unique. The NRL has a lot of similarities to that. and there is something very special about Australian leagues. But dollar-wise, it's not very consequential globally to catapult revenue, although it is obviously special because it's where we came from.

1:24:39And so, yeah, I'm debating whether I try to do a push to get into these kind of things. But really, I'd much rather spend time with Andrew Dillon one-on-one and have a conversation about stuff than being in this room full of people that are mostly just excited about being in the room and some people are flexing and some people are nice. It's just not my world that I like. I think they're going to criticize the AFL in totality. If you look at the two teams that played last Saturday, they've won 10 flags in the last 25, throwing Hawthorne another four. So 14 of the last 25 premierships run by three teams.

1:25:18Yeah. Really what had been, my namesake, Alan Schwab in the 80s and Ross Oakley and then Wayne Jackson really created this, alongside the NFL, probably the most equal league in the world, which is what was so great about the AFL. And they're really in the last, this is obviously not Gil's fault and even Gil because they were later in that sort of, I really, I think, put a lot of blame on Andrew Dimitriou and his free agency, and that's really what caused it. But we've had two or three teams dominant, which is really, it goes against that sort of egalitarian motive of the AFL. So they've really failed there.

1:25:50And that's a real knock on Dimitriou. It's weird, isn't it? Because I think one of the, you know, obviously Brisbane has won a lot of grand finals and they got some special treatment being an expansion club in Brisbane that is out. They weren't an expansion club, they got academy picks, essentially. And they were lucky with my other son, with the Ashcrofts. Really lucky. And so really, I think the salary cap is set up to try to equalize. The draft is set up to try to equalize. It just hasn't worked out for various reasons. Well, I don't think it's free agency that's killed it. I think, and I disagree with Andrew Bassett on this.

1:26:31Yes, he's right to point out there are inconsistencies. But when you say free agency, you mean a player is off contract and anybody can pay to buy them. but the amount you pay them. So unlike, like the amount you pay them still comes out of your salary cap. Yeah, the point is players aren't as greedy as what I think the AFL thought. So the AFL, I think, thought that the clubs would have paid free agents the most. So if a struggling team, if my team's in Kilda pay someone a little bit more, they'll be able to get a really good player. They can get a Patrick Dangerfield or Jeremy Cameron to pay a little bit more.

1:27:02But what it turned out is these really good players actually don't care that much about a few extra hundred grand. They want to win premierships. So they go to good clubs. and who we get. St. Kilda's recruiting these second-rate players and paying a fortune for them because good players don't want to come play for us. So I think St. Kilda was completely lost the plot here. But if you look at Geelong and Sydney and Hawthorne, these great clubs, they've built incredible teams using free agency but not paying top dollar because they can attract this great talent. And the AFL just never understood that.

1:27:29And this is Dimitriou, two CEOs ago who really stuffed it up. I should never bring in a free agency. It's completely unequaled to competition. AB brought in a coach. I told him not to bring in. He doesn't care about my view, obviously, but he brought in a coach that I disagree with and that coach performed worse than the previous coach. So like time has told and that it's going to get worse. Well, they've just made a whole lot of – I mean, I know we're going off on a Melbourne tangent, but I think it's a business. So time will tell if this succeeds or not, but I want to talk about clubs as a business because that's kind of interesting briefly.

1:28:02Like essentially, you've got an organization that for its influence in society is actually a relatively small business in terms of revenue and size. And employees, tiny, tiny businesses. And so they can't pay, certainly no CEO of an AFL club is getting paid$5 million a year. No coach is getting paid$5 million a year. In the US, in college, I mean, coaches are getting that contract and more. And so you've got relatively small organizations organizations and in my experience in clubs globally I want to talk specifically about the AFL fundamentally the number one contributor to winning championships I want to say it's whether they use catapult or not but in all seriousness the number one contributor is probably culture inside the organization that is the biggest determinant and we I've definitely seen globally like in the EPL, Leicester City won the premiership.

1:29:0623-1 or something? Yeah. With a pretty cheap team that people would have thought was mediocre going into the season. Obviously, they'd come up from the lower divisions. They'd won their way up. It's very unusual to get up from the lower divisions into the premiership, let alone stay in the premiership, let alone win the premiership. It's unheard of. and I think there was just something about the team culture there. I mean, that was a long-term catapult client, but there's something about the team culture that just transcends a group of great players. I think you're right on culture. I think Premier League is very different to AFL because there's no story cap.

1:29:44So I think if you, and there's a great book called, have you read Soccernomics, which is a great book on it? And basically there's 500 pages and they basically say whoever spends the most on players wins. And yeah, there's some exceptions with Leicester and stuff. that Leicester dropped down two years later. So almost always, and they basically said coaches are unimportant. Take out the really good coaches and the really bad coaches. Most coaches are kind of in the middle. All that matters at Premier League is how much you spend on money, how much money you spend on players. The difference in AFL is, to your point on salary cap, the salary cap equalizes that to some degree.

1:30:14So yeah, you've got good clubs who can pay a bit less for players because they've got people who want to pay for winning clubs, but it really is a lot about the culture. And a lot of what I've been critical of St. Fulter with is trying to buy players let alone the wrong player for trying to buy players doesn't create a culture what creates a culture is and you've seen it with sydney you've seen it with hawthorne you've seen it with geelong these clubs that build dynasties have great cultures of endure generations of players and the clubs that have been terrible the carlton's the guilders the essenians for two decades haven't been able to build that and security briefly with rewalt and and that generation but since then they just haven't had the right culture and hence have the right coaching staff and it's just been a rotten result for 20 years or 50 well i know this will be my last comment on this i like i know i know you'll probably disagree with this but i think we both know some of the people insidest kilda in on that board table around the board table i like some of those people a lot i think they're lovers of the team and they're highly capable individuals and I think they're making a big effort to send culture in the right direction.

1:31:21There's limits to what you can do as a director of the organisation. But I really hope that you're proven wrong and I really, I mean, I'm sure you do as well. Like you would love to be wrong and win a premiership. Yeah, I won't be, but I'd love to be. But yeah, I think that the number, there are a few things, well, this is not for this episode, but maybe in a future episode, Mike will remind me to talk, because he'll remind you to put on the run sheet. There's a whole lot of things that companies can learn from elite sporting organizations. And one of them is the centrality of culture in a winning organization.

1:31:59But there's lots more stuff as well that maybe we'll talk about another time. I think when you talk about culture, part of culture is being willing to sacrifice for a broader goal, which is take less money in the short term to win a premiership, which is what AFL players or basketball players or footballers do. You don't have premierships when you work for business. But the ability to work together to achieve goals, absolutely. And it's hard to define culture. It's a word that's always impossible to define. But for me, in our business, a great culture is a culture people want to be a part of and you can retain great talent without having to pay more.

1:32:37That's where the rubber hits the road with culture. You know, I think the number one place that I've seen culture play out is in the military and not at the top of the military, but at the level of the small unit in the military. And when you talk to soldiers about why they're risking their lives and fighting, in the beginning, big picture, it was kind of to protect our way of life and lifestyle. This is true in Australia. It's true in Israel. It's true in America where I've spoken to people. But on the battlefield, the reason they're risking their life and fighting is because they don't want to let down the other people in their squad or platoon that are relying on them to perform.

1:33:24And they do things where they risk their lives in the worst situations. People jump on grenades to protect other people in there and die from that. and that to me is like the hallmark of culture. When you are prepared to, it doesn't have to be literally, even figuratively bleed personally for the people around you so that you all succeed because you don't want to let them down. That to me is the pinnacle of culture. Yeah, I think that's a great call. On that note, we'll bid farewell. We will be back in person next week, which is great. Thank you, Mike, again for listening, sitting through as always.

1:34:01Thank you, I dear, for jumping on from Tel Aviv. And for doing a great job on the quiz again, Mike. Absolutely. The quiz king. Keep nailing it. My pleasure, guys. We will see everybody on Saturday, of course, for our Ask Us Anything episode. Thanks for listening in, as always.