GYG’s Blowout Result, Adir’s Luggage Startup, Sydney's Pullman Five and Culture Amp’s AI Fight

27:41So that guy's dad completely betrayed him with the photos. Another guy was also very good but his wife, so they figured out who his family was. Again, just by connecting the dots through hacked information that had bled onto the dark web. and there's tools that you can go and use to trawl through hacked information or you can do it manually. And the wife had basically left a review of a childcare facility on Google Maps. She'd left a review, which means it's pretty obvious where his young child goes to childcare. That is, in a place like Mexico, that is an enormous risk. In the US, a bit less so.

28:21But in Mexico, in places like Brazil, Like kidnapping is a real risk around these types of things. And so by far the biggest risk that executives generally face is how easy it is to put together very comprehensive pictures of exactly who they are and use that for identity fraud or to try and impersonate that person using deepfakes. and the reason I'm so hesitant to talk about where I am when I'm there is because it would be incredibly easy for someone to or much easier for someone to impersonate me or anyone else I mean you should have the same attitude if they're able to talk in detail about where I was as one of the hooks that they have and so what I'm trying to do is at least if someone's going to try and impersonate me or try to do identity theft at least try to make it hard for them which wipes out most of the people because most people are unsophisticated and I would say to you and to anyone that is in a senior position in a company go and google yourself go and look deeply go and figure out what people could know about you and how they could construct a version of you that they could impersonate because this is emerging as the single biggest infosec risk that exists in society with the emergence of deep fakes interesting if someone is you worry about that kind of stuff at all or not?

29:42Not really. If someone is hacked, where does the liability lie? Let's say someone hacks into your bank account and takes money out of the bank account. I would have thought that the bank is responsible there for the breach, not the customer for not having sufficient security measures, whether it's one-time pins or whatever else. I'm not sure you'd hold a customer responsible in that situation. Well, I'm not sure. I can't remember the company where this occurred. I think$14 million was transferred and effectively someone came and managed to put together a very sophisticated identity fraud of the CEO together with the deep fake of that CEO on Zoom or whatever they were using and got someone senior in accounts to transfer money out.

30:28They transferred$14 million over an extended period of time. No one is returning that money to the company because that is, I mean, maybe they've got cyber insurance. Well, that's somebody tricking somebody in the company. I'm more talking about an instance where somebody accesses a bank account or some sort without a transfer, if that makes sense. So I use your information to literally get straight into your bank account and transfer it straight out to mine or to a third party. In that case, I'm not sure. I think a bank might be responsible there for not having sufficient security. Yeah. so before i answer that question because that's a good question i do want to get you to think about this when you when you have got your accounts team sending money out someone is authorizing large transfers it may well not be you it may be someone in the finance team and very few companies processes have caught up with the reality of this new problem of phony authorizations that look completely real and you would think that in large companies or even in smaller companies there would be some kind of authentication outside the system so for example if I send you a message and say you need to transfer this money and it comes from me then you might just say yeah okay like you're you know you're my boss and that's your phone I'm going to transfer it really what you need to do is go outside that platform that's being used to provide the instruction and authenticate some other way either with a phone call or with a formalized structure where there's like two-factor authentication to authorize it, that basically is not being done.

32:08And so this is like really the huge InfoSec vulnerability. It's around the finance team and payments fraud. And it's less about hacking into things and more about like a sophisticated form of social engineering wrapped around these deep fakes and like OSINT-based identity fraud. That's the big risk. In terms of the bank, I think, so my understanding of this, having done some research around it, is it very much depends on the particular circumstances. answers. So if someone engages in credit card fraud, generally speaking, the bank will cover that. The exception is they'll try to get out of Apple Pay credit card fraud because they perceive Apple Pay as a very unsecure system because of the way it authenticates.

32:58And like, I've literally seen people and had an experience where someone that didn't even have an iPhone, their card was attached to an Apple Pay account and fraud was committed and the bank didn't want to pay like recover that money for them and I made sure they it did happen but it was not a simple process it was a legal process and so that was not easy but generally a bank will cover credit card fraud the next but if you keep going up and it get the sums of money get larger and let's say you start getting into business accounts if you've done dumb stuff that is against their policies for example um you've left credentials open or you've i mean people are probably not going to admit this right or you've shared something with someone that enables it to to leak out the bank will try to avoid reimbursing you for that like they will fight you for that and say that is your fault but they do not want to reimburse stuff like that and the biggest risk really that goes on in society today around infosec is maybe I'll say these two concepts quickly.

34:03There's a concept of privacy and a concept of security and they're not the same thing but they're closely linked. So your account might be secure, that means people can't hack into it, but in order for you to get into it and go through that security, I need to authenticate who you are. You keeping secret who you are, that's privacy. If the information leaks out about who you are and I can use that to authenticate, then a privacy breach is letting me get past security. It's not a security breach, that's a privacy breach. So these things are separate but interrelated and I think people don't understand that concept and they're too flippant about personal privacy, which leads me to the next point and I think this is the number one problem that exists in society today, people will go and they will take relatively small gains in convenience and in return they will trade off very large losses in privacy.

35:03And that is a lot of what's going on today. People whine about having to do two-factor authentication and taking an extra five seconds or using an authenticator app or whatever else because it's annoying. But actually privacy and security like those should be paramount in the age that we live in and people are too willing to give them up for slight increases in um inconvenience and i think if you were making dystopian movies 30 years ago it would never have occurred to you that the fastest way to undermine privacy and security in society is just to make everything a little bit easier for you if you're prepared to give it up.

35:43People would never have conceived that it would be given up voluntarily that readily. So I think that's the issue that's going on. Yeah. Let's move on. I think it's a great topic. And the biggest issue in Australia, certainly the biggest issue in Melbourne the last week has been the Pullman Five, the five Sydney Swans players who have been in a bit of strife. I won't go into the sort of details of what's been alleged right now, because I think most of our listeners will know about it, and we'll leave that for the tabloids and the footy press. But I think what I want to just touch on is a theme I've obviously talked a lot about on the show, and it's the chipping away at the presumption of innocence in this country, and it now goes all the way to the top.

36:26So last week, Government General Sam Mostyn, who essentially holds the highest position in the country, told the ABC, who else, that she was shocked and troubled by the allegations and expressed solidarity for the alleged sexual assault victim and empathised with all women across the football affected by the incident. Sam Mostert also said it was important to fully accept responsibility, be accountable and take appropriate action. The AFR said it well when it noted, commenting on active legal cases of the Government General where allegations are unproven, facts are highly uncertain and a police investigation is underway, is entering prickly territory.

37:00Of course, Mostert definitely wasn't the only person who commented on the case. She was obviously the most high profile and high positioned person, lots of publications and people have rushed to defend the alleged victim of the incident, with the only problem being the police have not only not charged anyone, they haven't actually interviewed anyone yet, and they're still running early investigations. And what we have is a complainant and an alleged victim. And when you start calling people actual victims, that certainly implies a pretty significant level of guilt. And we saw that early in the year with a horrendous case of the Geelong player, a guy called Tanner Broon who essentially was suspended at football for a year based on allegations that were proven to be completely fraudulent.

37:39Obviously not saying these allegations are the same, but we saw what happened when people rushed to judgment. Now, I'm not trying to cast doubt on the allegations. They will be played out in court or potentially in court and certainly through police investigations. But what I'm more saying is we're in a situation where there seems to be no presumption of innocence, even less so when there's high-profile people or sports people involved. and two of them are very quick to find an enemy, to find a villain in the story before we even know what's actually happened. Well, I completely agree with you.

38:09I mean, I think this story, the story as it stands now and what you've just said, really to me has got nothing to do with the AFL. It's got a bit more to do with the Sydney Swans. I don't mean the AFL is not going to have to work through it. Obviously, they are. But the story today is really about the response of society and the media in particular to allegations against people. And there has been a historical problem where people that have been victims of sexual crimes have found it very difficult to pursue those through the courts and it's been a very terrible experience. And I understand the inclination to swing back against that and to make it much easier for someone that has been victimized in this way.

38:56But ultimately, I think people need to decide this. Do you believe in Western liberal democracy? I don't always come back to the same point, but this is the point. Do you believe in Western liberal democracy? Presumably for most people, the answer is yes. And if the answer is yes, then you need to say, well, what are the five most important things that are the pillars of Western liberal democracy? And one of those is the presumption of innocence. and that means that someone that's accused of a crime is not guilty of that crime until it's gone through the court process and they've been found guilty by a judge or a jury or whoever's at the end of it and to read people's comments about this like people in significant powerful positions talking about things like a victim rather than alleged victim and as you said it doesn't diminish the fact that no one is turning around and saying, maybe I'll say it like this.

39:52When you say alleged victim, some people will turn around and say, that means you don't believe the person making the allegations. That's not what it means at all. It just means that you accept that under our liberal democratic legal system, you're not guilty until you're found guilty and there's a presumption of innocence and therefore you can believe the victim and have a presumption of innocence simultaneously you might believe the victim and also believe in judicial process that means you'll say the alleged victim I thought it was even worse when people said the incident is terrible it's an alleged incident no one has confirmed that that's happened yet I mean like it sounds like there's a lot of evidence in and around it there's been lots of media stories but I absolutely agree with you and I think if I was going to broaden this out I would say if you look at it's you know it's very hard to talk about courts because everyone if you are critical of a court or a judge then very quickly you can find yourself it's not exactly contempt it's like there's a word for it which is kind of casting aspersions on the legal system there's a term for it and so judges and judges don't have to go through the same defamation process as other people when they've handed down a judgment they can just go behind this thing and that says effectively you're in contempt because you've brought disrepute on the court and its judgment and it's very hard to talk about judges decisions and judges motivations and courts and i think that that's problematic in the current age because i think what we're seeing is that this idea of um due process consistently independent and unbiased judiciary like that is being challenged at the moment in all western countries including in Australia and we need to make some decisions about how we feel about that and I feel terribly about that and I completely agree with you like the way that this has been reported and handled is completely inappropriate.

41:50Yeah and we haven't obviously haven't reached court yet we haven't even got charges laid so I've got police who have obviously had some sort of evidence question on how voracious the evidence is but a week of a week of knowing of the this This hasn't happened just over sort of nine days ago as we publish this podcast. We've got what we've rightly described as ambulance chasing lawyers representing the complainants who are saying all sorts of stuff they shouldn't be saying. One lawyer said this is the worst thing he'd ever seen in 28 years, which itself is completely subjudicial. And I don't know how this guy can say something like that and keep his legal practicing certificate.

42:23That's just outrageous. you've got five young men who clearly made a stupid mistake in being in room and there's allegedly drugs in there and it was past curfew like no one's defending their actions themselves included but we're talking there's almost like people want these guys careers ruined there's and these are for all intents and purposes kids who have done the right thing 99 % of the time made a terrible mistake in this instance we don't know the depth to this mistake yet and this will play out. We don't want to speculate on what happened, but we've seen the court of public opinion. We saw this with those, remember the allegations with Alissa Clarkson and Chris Fagan.

43:00And if you recall, it was led by an ABC, a taxpayer funded reporter. The only person who came out of that looking really bad was the person who made the complaint who I think went to jail or was certainly charged with theft for a different case. So the people who, this was a similar media poll on, the Hawthorne guys, and one was Alissa Clarkson, one was Chris Fagan, who have now come out of it, I think, three, four years later looking quite good. But certainly at the time, they were looking horrific. Every single press was polling on, including News Corp, who thinks you know better. He certainly had the ABC polling on.

43:33And we've seen it again. I mean, this comes a week after Jason Arday took his life in the UK, after the press allegedly handed him to death. And we see the press here handing these kids. Like, have we not learned anything from these incidents? Yeah, I agree with you. I mean, the reason we have the presumption of innocence, I think, I mean, there's two reasons I can think of why it's so important. One is that if you don't have the presumption of innocence, there's a very perverse incentive for people to make allegations against individuals just for nefarious reasons. And so that's important. And certainly that's one of the risks in this situation.

44:11The other reason is because if allegations are made and then you penalise people on the basis of allegations, even if that goes nowhere or they're subsequently found not guilty or there are no charges laid, reputationally it's very difficult to recover from that. What the NRL does, which I think is interesting, and I really want to emphasise, I think the AFL is working through this and they've been the least knee-jerk. Yeah, AFL has actually been pretty good I think so far in this case. but the NRL has this approach and people just say, oh, they've got – the NRL has, you know, this no-fault suspension process.

44:50The stand-down thing. But – stand-down. But actually when I looked into it, it's – you need to have been charged with a – Yeah, 11-year crime. 11-year plus. That carries a minimum of 11 years, right? Yeah. So you need to be charged with a crime that carries a minimum of 11 years and their view on that is – and then they say it's no fault and if the person is found not guilty, there'll still be some reputational damage. But to be frank, the reputational damage of having been tried and charged and tried will be greater than the reputational damage of having been stood down by the NRL on a no-fault basis.

45:24So I think that's a pretty reasonable way to look at things because I appreciate it's not simple. Like you absolutely do not want victims to feel like they're going to be disbelieved if they come forward with allegations. you don't want a situation where you know a tricky situation is someone could be charged with a terrible crime but they're not yet guilty but they're playing footy every week that would be a problematic situation as well so it's not these and things are not simple but i absolutely think that abandoning the concept of the presumption of innocence and due process with people that haven't even been charged yet that is a road to a very bad place in society interestingly when you look at virtually every mainstream media, whether it's TV, newspaper or radio, they've universally taken this sort of similar view, they're sort of guilty to prove an innocent view and you read Twitter and the sort of pub test and it feels like there's a big chunk of the population who smell a rat here and they've been through this before and maybe it's been far more sceptical than the mainstream media now and think, hold on, we want this process to play out, we want to see what the police find, We want to see if there actually is something in this.

46:36And we're not going to hold these five guys guilty until we've actually seen real evidence here. So I think the public is being far more mature than the media. And the mainstream media is this dying asset now that is clinging to anything it can. We saw how it disgraced itself during COVID and people died as a result of the overreaction. And we're seeing it throughout that any kind of rage, clickbait media can generate, regardless of the truth, that they're just jumping on. I think people are sick of it. I would love to ask Sam Mostyn. I don't know her very well. I've met her twice and I had very nice interactions with her.

47:09But I would love to, and this was before she was the Governor-General, I would love to ask her why she felt that she wanted to comment on this issue. Because to me, like, there wasn't a lot of upside for her to comment on this. She doesn't need to be elected. Presumably she's not going into politics after being the Governor-General. I understand why politicians, everything for them is looking through the prism of votes, but it's not for her. And so it just seems like a strange decision to have commented on this full stop. I think we'll take a break, back with some juicy business stories just in a few moments.

47:52And we're back. Oh dear, you've got a local story for us. So something happened at Culture Amp this week that was reported that's actually part of a wider trend and I'm very keen to get your thoughts on it. So did you see what the news story about CultureAmp was this week? I did see CultureAmp in the news. Weren't they harvesting data for AI or something like that? Well, a better way to say it might be they've changed their terms of use to effectively, I think, opt in their customers to having anonymized data used for training their AI models. Now, it sounds like they could have always done this.

48:29under the existing terms, but they've decided to be very explicit about it. And it correlates with a story overseas on Spirit Airlines, the airline that went broke, and the liquidator was selling off the various pieces of Spirit Airlines. And one of the assets was valued at$14 million. And it's an asset that you wouldn't have even thought was an asset. But it was the history of all of the emails that were sent on the email server of Spirit Airlines. Can you believe that's an asset that they can sell? And guess who bought that? Guess who bought it? That was Google, wasn't it? Correct. And they're using it for training data for their AI models.

49:09Basically, everyone is paying any amount of money now to try to get information to train models and getting emails sent by companies. That's not generally in the public domain. And so that's good stuff, right suck those down train your models on those it learns a whole lot more stuff and so we're seeing this huge flood of data that's coming and i'm interested in your thoughts about i guess the ethics of all of this because i want to say this about anonymized data what does anonymized mean and what is it like if you sent a if i sent email to someone sent email to their partner or someone sent email to a lover or whatever it was that can get sold to google like that sounds a bit from Spirit Airlines.

49:53Yeah, I think that... And Julie has names, so like you could... Yeah, I don't think that's... Out people for being gay, out people for having affairs. Like I'm not sure how this is able to be sold. Well, just to emphasise, this highlights the point that people should not be sending private messages from their company email address for exactly this kind of reason. But I don't think anybody would think that the data would be sold. Like it's one thing you might be hacked like Sony Pictures, but certainly being sold is just outrageous. I find it astonishing. Like it's completely outrageous. And then we come to this idea and we're picking on CultureAmp just because they were the ones in the news.

50:29We're not really picking on them. This is common that people are using customer data to train their AI models and they call it anonymized. The question is what does anonymized mean and is anything really anonymized? And I'll give an example of this. It's an old example but it's kind of relevant. If you have information and instead of redacting the information which is like really replacing the pixels with black pixels and having a black outline. If all you do is pixelate, long ago AI was able to reverse the pixelation, right? It's just a mathematical algorithm. So pixelating faces is not secure at all as a way of hiding faces.

51:08You know the circles you often see around people's faces in photos? It's completely ineffective. Like you have to replace the pixels with black pixels. Now, if you apply the same philosophy to anonymized data, the question is this, what does anonymized mean? And could an AI model figure out who the individual was or the company was, for example, based on the nature of the anonymized data forming a pattern? I don't know the answer to that. But, like, it would be interesting to get your thoughts about how you feel about data integrity and data privacy in the era of AI with these things. I mean, the Spirit Airlines is easy.

51:51They shouldn't be selling the email stuff, right? That's terrible. But what about customer data, anonymized customer data? It kind of depends what the data is. Like, I'm not sure. I can't really comment on the culture on the example because I don't know what data is. I don't know what it relates to. it could be kind of innocuous in which case I'm not so bothered by it but it could be like it's the private stuff that people send in good faith not thinking that this will never be accessed or in most normal circumstances won't be accessed. It's different if you get involved in a lawsuit or whatever and you sort of have to under court order.

52:24This is different to that. This is commercial. This is not discovery. This is somebody making a buck. It's really hard to comment without knowing the culture specifics but in some cases I think it's fine. I think there was an instance with It was at Harrison AI, the radiology company, and they sold anonymized radiology reports. I actually don't have an issue with that because, like, you can't link the person to something. Like, as long as the person and the thing isn't linked to something. Why can't you? Why are you so confident you can't? I'm assuming they're not giving the specific details of the people.

52:54But that's right. I just gave you an example how if I can connect enough dots, I can figure out who someone is and enough about them. So you're going to give me all of – I mean, by the way, I'm just playing a devil's advocate here, but I just want to tell you about the world we live in. Like you're giving me this big chunk of identifiable data. I just don't know who it's identifying. But like I've got access to lots more data sources when I'm AI. And there's also all of this data floating around in the public domain if you look hard enough. And the question is – Yeah, but it's very different. Like if you get someone's x-ray of my broken leg, that's very different to someone getting a full email with my email address and name.

53:27Like if you get 100 ,000 broken legs, how are you going to associate that broken leg with me? There's no public data that can read that to those genres. I put my broken leg on Instagram, but I put it on Instagram anyway, so who cares? Okay, well, that's your choice if you want to put your broken leg on Instagram. But if I haven't, how are they going to link it back to me is more the point. Like how would they know it's my broken leg? Yeah, well, the thing is you don't know – you and I, neither one of us knows what a business like Harrison gets. Do they only get an image? Do they get metadata attached to the image?

53:56Do they get diagnostic information? A lot of privacy leaks because people post stuff without realizing there's a whole ton of metadata that goes along with it often. And you can go and figure out what in the simplest version of metadata, people go and do stuff. And then if you look closely, it will show you who the last person's username is that edited the document. And it's like they say, well, that wasn't from me. Well, actually, the metadata says you were the last person that edited that document. it's pretty comprehensive or they have a username and you can go and use stolen data on the dark web to connect the username back to them what i'm saying is i'm not being alarmist about this it's unlikely it could be linked back what i'm saying is that assumption of anonymization in an ai era is not as robust as it was previously and my other question is irrespective of what the culture amp or anyone else's data actually is how do you feel about a client using a piece of software putting company data in there irrespective of what it is and then the company saying we're now going to use this data to train our model do you think the client should be able to opt out and say i'm not okay with that do you think the client should be able to say i'm leaving and i want you to delete all of my data because one of the things people don't think about is what happens to your company data or your personal data when you cancel a service what really happens to that data is it no company ever wants to delete data so is it really deleted how is it deleted is it being retained it's and so i think we're in an area where we have to think harder about data i think it's a bit more nuanced i think if you're using google for example and they're training their models to make to give you better or or meta for example every time you're using meta or or gmail or whatever, Meta and Google are using your information.

55:46You're giving them to make the model better so they can serve you more relevant ads. I actually don't have an issue with that, and we've been doing this for decades, and it improves user experience, and everybody consents to it through the terms and conditions. I don't have a huge issue. The Cull Tramp example is probably a little different to that in that the clients of Cull Tramp aren't getting any benefit from the data they're sort of involuntarily giving. Well, Cull Tramp will say they will. Cull Tramp would say, we'll train these models and provide you with AI tools that will really be good for you.

56:12but it's not contemporaneous in that I'm paying CultureAmp. It's also quite different to Meta and Google because Meta and Google, as a user, you're not really paying for those services. You're viewing ads. So versus the CultureAmp customers are paying CultureAmp for the privilege of using CultureAmp. CultureAmp and taking that data and then making money off them and other customers, or they could stop being a customer and they're just not getting any benefit from it. So I think it's a little bit nuanced. I don't want to pick on Carl Tram because they're certainly not the only ones doing it. I agree.

56:46It is nuanced. Yeah, we're not having – it's just representative because they happen to be in the news, right? Yeah. I think there's an argument that if they are using that data, there should be some sort of payment. Maybe it's a discount in use or whatever. I think there should be some sort of consideration. If they're getting benefit from data that someone's actually really paid to give them, they should be giving something back for it. I think it's sort of fair enough. So if you think about using Canva, maybe you create a birthday invitation with some personal information on it, including your house address.

57:16If you use, let's say, you're a business and you use an invoicing system, and that has a whole lot of very sensitive information when you're sending invoices to people. Let's say you cancel your service with each of those two. I mean, have you ever read the privacy policy to see what happens to your data when you cancel? No. God, no. But technically, like it may be that they're not removing that information. It may be that your address, your business details, whatever it might be, are still sitting on service. Now, they're obviously paying for the data, but like are still sitting on service somewhere waiting to be hacked, used, sold.

57:53That's what I'm saying. I think we're in an era where we've got to take data privacy more seriously. I mean, Mike, do you ever think about this at all? I've been thinking a lot more about it lately, predominantly because you've been talking about it a lot but I actually have been really second guessing like the amount of information that is accessible out there about me and other people I know so yes the answer is yes yeah I think there's you know a slow shift and I think if you run a company you should sit down very purposefully and think about what you're going to do with customer data are you going to use it for training are you going to let them opt out or not i'm not advocating one way or the other be transparent about it what are you going to do when people cancel accounts because we are going to end up in an era pretty soon i think where there are going to be deeper consequences for the misuse of data i want to move on uh let's get into some real juicy business stuff because it is results season so i've seen some some big results from friends of the pod and i want to start with Guzmany Gomez who announced a remarkable result and the market absolutely loved it.

59:04And if you go through the numbers, bear in mind, it's a little bit tricky with the whole AASB 16 leases issue. We'll give it a crack, but if you look at generally every number, it looked pretty good. So network sales was up 18%. So this is kind of money through the till, GDP. Same source sales, which obviously adjusts for new stores. There's 32 new stores during the year. They're up 5.3%. The business tends to average sort of between 5 % to 10 % same store sales growth. This was probably towards the lower end, but still a pretty good result at 5.3%. And it had been sort of 5 % to 6 % the last couple of years.

59:36Underlying EBITDA, this was a great story. This went from$66 million to$85 million, up 28 % of the year. But the real story wasn't just the underlying EBITDA growth rate, which was super impressive, but was really for the company to grow profitability consistently. And if you go back to FY23, and I'm looking at sort of EBITDA margins here, and if you go back to 23, and this is all relative, so you can criticize EBITDA, but it's the same EBITDA metric across the whole journey, so it's a relative measure. So FY23, 4.1 % of sales dropped to EBITDA. That grew to 4.8 % in 24, 5.7%, and is now 6.2%.

1:00:15So this is 50 % growth in profitability in the last four years, which to me indicates a business really demonstrating it's got some real powers. Also, the caveat, which no doubt you'll be chomping at a bit to talk about, is it is pretty tricky to work out the impact of leases here. The business doesn't do a really clear P &L for cash rent. Obviously, as the business grows, we have a higher lease expense, and it does make it a bit more tricky. What I could ascertain, I'm curious to know if you noticed this, but it looks like they spent about$22,$23 million on leases. It's a little bit tricky to work it out.

1:00:51But if we took a similar approach to last year, either way, MPAT was up 40 % year on year, which was an unbelievable result. The market loved it. The GYG share price has been on a roller coaster. It floated at$22 a share, hit$43 a share in December 2024, dropped to$16 a share, and we actually talked about it on that episode. I thought it was significantly oversold. It has actually bounced back to$27 a share, which is a$2.7 billion market cap. So remember, when the business floated for$22 a share, there was a whole heap of press commentary saying it was overpriced. But if you look, this is sort of 22%, 23 % growth in under two years since the floats.

1:01:28Overall, pretty good result for shareholders. Analysts love the result. Sam from Citi, who's a great analyst, loved the fact that revenue guidance was upgraded to 7 % and upgraded his EPS forecast to 18 % on the back of lower depreciation, lower interest in the share buyback. So lots of good news on this business idea. Have you curbed your bearishness? I think that when we spoke about it last time, you thought it was very sold down and I thought maybe it was a buy at those prices. So on balance, I think our portfolio would have bought it at that kind of price. And like this performance is, I would just call this business as usual.

1:02:13Like I think we said two things about this business. Number one, shut the US business because the faster you do that, the better it's going to clean up some analyst issues. They've got some issues with that. And two, just keep doing what you're doing with the core business. And I think that's largely what they've done. Like in a sense, this was a completely unremarkable set of results because they said we shut the US and just focused on what we're good at. And what they demonstrated is they're really good at it. I think that's impressive, right? So we should say why rent is so hard to look at.

1:02:45once upon a time people used to say because accountants they used to say it's pretty easy to account for rent rent is just an operating expense so you open you've got a shop and you got to pay people and you got to pay for water and you got to pay for cleaning and you got to pay for rent so that's pretty easy it's an expense so it turns out everyone that's ever run a business in the history of the world's a lot done with an accountants apparently because we were all thinking about rent in the wrong way and it turns out that because you make commitments forward commitments to a lease which is a contract they didn't like the fact when I say they is probably four people sitting in a room somewhere didn't like the fact that that lease was off the balance sheet that meant when you looked at the balance sheet you didn't see that lease but with the promise of future payments.

1:03:37And so essentially what they did is went and created an entirely new ridiculous way of accounting for rent because they didn't like the fact that it wasn't on the balance sheet. That would be my summary of why it's so hard. And the truth is I think businesses that have very large rent as part of their expenses and like a retailer would be the number one version of this, they should be bending over backwards to do an adjusted number, which is a pre-AASB 26, is it? Like a 16, like a cash rent number. How much we actually paid for rent in cash for the 12 months? Well, they should just do a whole, they should just take their whole profit and loss and they should just do a number and they should say this is the pre-AASB 16 number.

1:04:28It's pre because it means we haven't let these accounting standards ruin your ability to understand. And I think that my only criticism of GYG is the same as yours. They should do a better job. The only place you can really see rent, which is one of the great perversities, the only place you can see it is on the cash flow statement, really. And if you look at the cash flow statement, they've got rental principal and rental interest. So it's super confusing as to how much was the actual rent paid. So you can't even actually tell there. So they actually write the cash rent. And this is not a criticism.

1:04:58They're following the letter of the law. But the letter of the law is ridiculous. Like it's just staggering that – Well, that is the rent. That is the rent. So the rent is – so don't worry that one's called principal and one's called interest because that's not really interest. like the crazy thing is that is an artifact of the madness of accounting when it comes to accounting without going out because we've talked about this before without going into the detail again essentially what they do is they create this structure of accounts to try to factor in the future nature of these leases and the fact that a dollar in future is going to be is worth less than a dollar today and they split it into principal payments and interest payments and that That is why I say you can't look at the income statement for this because often, in fact not often, typically the number on the income statement in the expense line does not actually match the amount of money they paid to the landlord that year for the rent.

1:05:57It never matches. That's the point. It's not even close. It's not even close. Yeah, it's ridiculous. It could match in the same way as a broken clock is right twice, right? Yeah. Twice a day. And so don't worry, one's called principal, one's called interest. I would say the easiest thing to do is just add them together. You get a bit more than you get$24.5 million and that is going to be pretty close to what the actual rent is that they're paying. If you want to be really bored and angry, then what you do is you go and look at the note to this cash stuff at note 13 in the financial statements and you can go and look through one, two, three and a half pages of complete rubbish that they have to put in there to try and explain what is going on in terms of their leases because of these accounting standards.

1:06:47I know we harp on about this a lot, but it's just completely absurd and it makes it significantly harder to know how a business is performing. But one thing that we could do is we could say, what was the revenue growth percentage? 40, Is that right? That was net profit growth. Revenue was 18%. So revenue grew by 18%. I mean, that is pretty amazing. Sorry, top line sales was 18%. So that's pretty impressive that they've got these widening jaws such that 18 % revenue growth goes and delivers 40 % profit growth. But what I was going to say is you can say there was 18 % revenue growth and based on the cash flow statement, a semi-accurate, semi-accurate way to look at leases, they've gone from 19 and a half million to 24 and a half million so that's yep about 25 percent yeah so yeah so what's interesting is based on this and again we just emphasize the imprecision of this but based on the this the rent is running ahead of the revenue growth and that makes sense in a business that's rapidly expanding sites because they have to pay generally the full rent from day one but they're not generating a full revenue from day one it takes time to get up to speed with a new store.

1:08:02So that makes sense. And that gap is not enormous. And I think I just feel comfortable about that. I don't think there's something hidden here, but it would be good if they made it a bit more obvious to look at. Also, don't forget that revenue is a much higher base number than rent. So if you're growing revenue by 20 % and rent by 50%, you're still increasing your operating profit because you're scaling the much bigger number. That's absolutely true. And so which bits of this business do you think are getting the benefits of scale? Like why are they getting these widening jaws. We've talked about that power a lot and I said how this business has process power and you critiqued me.

1:08:37I don't think it has process power. When we talk about process power, we talk about them having the most efficient operation to be able to run a Mexican drive-thru restaurant where nobody else really can. I think Chipotle is starting now, but nobody else does that. And their drive-thru stores make significantly more... I think their drive-thru stores make 60%, 70 % more profit than the non-drive-through stores. They're in a unique position to roll out these drive-through stores. And we're seeing this profitability come through them, just obviously just rolling out as much drive-through as they can.

1:09:10So there's clearly real process power. There's clearly real brand. There's probably some scale when you start talking about scaling, obviously brand advertising, scaling supplier agreements, all that kind of stuff. Like to get some real benefits from scale in these franchise systems. So I think there's a bunch of powers these guys have. And they're in that beautiful sweet spot where there's, I think, what, there's 250, circa 250 stores, maybe 300 now. And they're probably spaced for 1 ,000. They've got the model down pat. They've got an incredible CEO founder, a great management team. I think they're just rolling this model out across Australia, picking up all this white space.

1:09:45And as you do it, you just get better and better. This is a classic story of a business building its powers. I totally agree. I think there's some other nice stories about this. For example, Guy Russo, who did a great job running McDonald's and people kind of love him for running McDonald's. Or even better job running. Yeah. So I'm trying to look at the current number, but he's got 6 million shares in this company. And so that's a lot of money at$26 a share. And so, I mean, it's pretty incredible. He's like been running these big businesses and obviously he's been really well paid but by far his biggest payday will be GYG.

1:10:29I mean this will be multiples of any money that he's earned in the past. Did you know that Bruce Buchanan had been a director of GYG? I didn't realise that. Yeah, I knew Bruce when he was on the board and this was the best board in Australia to quote our friend Richard Goddard, the length of the Flemington Strait. So you had Guy Russell on there, You had Bruce Buchanan who's created a$10 billion business in Rocked. And you've got Stephen Marks who's a generational founder. You've got Tom Cowan from TDM, one of the best investors in Australian history. How good was his board? It was like it was inevitable this business was going to do well when you had a board of luminaries of that degree.

1:11:07Well, what's interesting with Tom Cowan, so we can go into a bit of detail here because people love these rich lists much more than I do. But since they all love it, I'll pander to it. so tom cowen is on the register as having 23.8 million shares they're actually tdm shares but um but that's more than 600 million dollars and it says in the notes that he owns 33 percent of tdm's voting shares so presumably that's a one-third interest in tdm now that doesn't mean he's got one third of those 620 mil that's obviously inside a fund but those tdm guys are absolutely killing it i mean this investment has been unbelievable for them i've had a few pretty good ones on top of this it's been one of the one of the best performing funds in the country so let's look at this like so their revenue grew 22 and so what grew less than 22 so marketing grew 25 so that's slightly outstripping revenue growth administrative of expenses, I mean, that barely moved, which is impressive.

1:12:13Like that grew probably 17%. Yeah. Employee benefits grew from 174 mil to 209. So that grew 20%. So actually that wasn't as fast as revenue growth. Revenue growth is outrunning employee growth. Well, that's the head office point, I think. Yeah, I think you might be right about that. This company would have, maybe there's, I don't know, 30, 40 million bucks in head office costs. I'm just guessing. Obviously, there's a chunk of – they have a bunch of corporate stores. So a lot of that is corporate store people. But the$30 ,000 ,000 ,000 in office costs, I doubt is increasing at all. It's probably pretty – they've probably got the team and it's growing.

1:12:49And this is where the scale comes into it, which I talked about five minutes ago. They're just flushing out this scale. And this is where the other bit of scale comes into it. 22 % revenue growth only resulted in 9 % growth in cost of food and packaging. To me, that is the most salient point. that they've been able to somehow massively widen the jaws of effectively what would be their gross profit, really. And so I think that's really impressive and that is possibly the best of all signs that the core fundamental economics of this business does seem to be in a very good place due to scale. This business had$427 million in revenue last year and it grew its revenue to$520, which is what we call it, I'd say, $20 million bucks.

1:13:40Yeah. But if you look at, let's look at staff costs. Staff costs went from$173 to$209. So it's the bigger, because they were profitable last year, they're growing revenue. They're naturally winding. If everything grows at the same level, you're going to widen the jaws inevitably. And plus, as you say, you've got the scale benefits coming out in packaging costs because they're probably just driving better deals with suppliers and driving better food costs with suppliers and the like. So I think this is a classic example of scale benefiting. And now we have to say, is it still a good buy at the current price?

1:14:13And so how do you feel about that? I think it's a less obvious no-brainer than what it was at sort of$1.6,$1.8 million because that was just a late Amazon. I think now it makes genuine money, this business. Let's not forget this is real net profit it's making. I know there was underlying shutdown costs. No, but you can say it generated – net cash from operating activities is 76 mil. Now, that doesn't include the rent. But even if you drop that down to 65 mil, it's 55 mil after rent. Like that is absolutely real money that is being made. Absolutely. Totally. But also there's the actual profit after tax.

1:14:50So this is after everything. So profit for tax of 60 million, which is pretty close – which is your cash flow number basically, pretty close to it. And then you've got profit after tax of 41. that should just continue to scale. In a way, it's such an easy business because all it's doing is opening more stores. Like it's the easiest. This is the, when you start skiing and you start a ski race, you've got to get your speed up and the first couple of gates, you're just trying to get speed. When you hit the fourth, fifth gate, you just maintain that momentum down the mountain. They've hit the fifth, sixth gate now, these guys, and they've got all this speed.

1:15:20They just have to not basically run into a flag. I think we agree that this is a very good business. It's not so easy to just talk about its price to earnings ratio because of all this rent stuff. Well, you can assume the net profit is a pretty clean number. Assuming that the depreciation roughly matches the cash rent, which I actually think it comes pretty close. I think the net profit number is probably a fair number to use for a PE ratio. And so if we put aside, you know, they basically took this$67 million hit from loss after discontinued operations in the US. which had to be taken. And so they can't shut their US business twice.

1:15:59That's a one-off. Yeah, genuine one-off, yeah. And so their net profit before that abnormal is 41 mil. Yeah. These might be the only company in recent memory that spent$100 million on a buyback and actually saw the share price go up after a buyback. I mean, they actually made money on their buyback, Yeah. Which is all that stuff I've heard of. It goes to that great board who obviously are going to make that mistake of buying overpriced shares. And so this is trading on a PE. I mean, God, it's valued at 2.66 bill. We're talking about 150. So it's about a 60-odd PE. It's 60-odd? Yes, a 60-odd PE.

1:16:42So what do you think about that? 64 maybe, basically. I think it's definitely not cheap. I don't think it's a good enough business to buy it 64 times earnings. I think if you're willing to put in the draw for 10 years, to your point on Catapult, I think you get a pretty good result in the end. I think you'd probably beat the market and you're really backing probably one of the better CEOs on the ASX, if not sort of top 10 ASX CEO. You're backing a founder. You're backing a great board. You're backing a business that's built some powers and is growing those powers. So like I don't think you're going to get a 30 % annual return on this, but they grew 40%.

1:17:21I think they can probably grow at 30 % consistently. So I don't think it's outrageously – like I look at this versus like a West Farmers and I take this any day of the week over West Farmers at$33 a share, almost$100 billion. Like there's no question this is a much better business than some of those other defensive businesses out there. And it's actually proven in what is tough – and Stephen talked about this in the earnings announcement – what's been a really tough earnings result for JB Hi-Fi and Templin Webster, which we'll talk about. So consumer discretionary businesses have struggled, and these guys have shown they're not really discretionary.

1:17:53They can sort of profit through the cycle. So yes, it's not a cheap business. The market's given like a big premium, a 60-plus times multiple, but you're sort of getting – this is a Charlie Munger great business that you're paying a good price for. I mean, in fairness, a chunk of that jump. Like the company is up 20 % in the last month. and so a chunk of that jump's happened in the last month. And so if we had this discussion a month ago, it might be a bit of an easier discussion to have. It might be. I think I'm not telling you this business is not going to keep going up. I'm not a momentum trader, so my view is not that.

1:18:29I think your best argument is if you said you're only allowed to buy a business, the only way that you can invest is you have to buy a business and put it in the drawer for 10 years. You know, that's it. You can not buy it or you can buy it and not look at it for 10 years. Is this a buy or not a buy? I think on that basis, it's the best argument for this being a buy. If you can do that, the question is if you've got limited capital, are there better things to buy and put in the drawer for 10 years at the current prices? The truth is current prices are pretty painful across the board. I mean, and so I think this would be competitive for something to buy and hold on to for 10 years.

1:19:06I'm not sure if I'd buy and hold on to this for two years though, to be honest with you. In the short term, you've got weighing machine, voting machine. And we're not trying to pick and call sort of to the dollar. We're saying, do we think this business has genuine competitive powers that will cause it to earn outsized returns over a decade? And I think the answer is yes. You're obviously paying a premium because the market ultimately generally isn't stupid. And investors have realized that this is high quality management, high quality business. And we saw this with ProMedicus. We love the ProMedicus business.

1:19:40We love the ProMedics as founders, but at a couple of hundred times PE, it was a pretty tough pill to swallow and we couldn't swallow that. But you can still love the business and hate the price. Even Atlassian, like there's a lot of great things about Atlassian's business. We hated it at$100 billion US, but at$20 billion, like Atlassian's not too bad. It's got a strong enough moat and some strong powers that you kind of like it. So we just got to differentiate between great business and overpriced. the price. So I don't think this is in the realms of crazy town. I think at 42 bucks, clearly that was overs and the businesses wasn't there yet.

1:20:16I think it's trading in the range of reality, probably on the higher side based on where it's currently at. But if it delivers 60 million bucks NPAT next year, which is like quite possible, and we're going 60 million bucks, 40 times PE, growing 30%, well, you know what? Not too bad. So like it's like we could be sitting here in years time saying the 26 bucks was a bargain yeah i think my view is unchanged like if you have to make long-term decisions to buy stuff which you know that used to be called investing now different things are called investing but that used to be called investing like yeah i think that this is a very investable company still at this price but it's getting towards the top end that was a great story and you've got a new business that i think has just launched which is hot off the press i think we can announce to to our audience now who might want to jump on the website and partake in in a very limited edition well i thought um rather than kind of pitching the the stuff it would be interesting to kind of talk about what it feels like to launch this thing because it took two years and was not what i was expecting and so the business i mean i'll say what the business is and i'll tell you what kind of what it felt like to launch this thing and then periodically i think i'll just check back in and say this is some stuff that's going on with it and try to provide an honest, probably quite painful insight into like what a business looks like when you're trying to build it.

1:21:36So the business is a business called Tansu, which is spelled T-A-N-S-S-U.com, which it's a weird name. I mean, essentially, this is the backstory of how this happened. For a very long time, I've been very unhappy with cabin luggage, and I've been traveling so much. I have two me cabin luggage and like it used to be good, but it kind of just lost the innovation edge. I think when they were bought by Samsonite and they're also very masculine, which is fine for me, but some people don't like such masculine stuff. And so I kind of tried to think about if I was, what are all the things that I wanted?

1:22:17And I found it very frustrating. And then I was in Kyoto in Japan, like a couple of years ago. And I was in this store that sold all of this very old kind of antiquey stuff. and there was this beautiful chest in there with wheels on the bottom. And I said, what's this? And they said, oh, this is what they used in this like, I don't know, 400 years ago, whatever it was, period, where when they had like expensive personal items or precious personal items, they would put it into this cabinet and they would close it and it was secure, but it had wheels on the bottom so it could go with them. And I thought, what a perfect analogy for a cabin luggage suitcase that is.

1:22:57I'm like, okay, I found it very inspirational. I'm like, all right, I'm going to try and build my cabin luggage with exactly what I want. And so that was a terrible decision. Like I thought it was going to be pretty simple to do this. Like I've done hardware before. I've been involved with hardware. Basically, there were things that I wanted to do with this because I was just uncompromising because there's no point doing it to make something that's the same as everything else. And I was like, okay, I want to have like a front. I did this with a couple of other people that really kind of helped get this right and i was like i want a front pocket so you had co you have co-founders in the business correct there are co-founders and it's run but i mean i can tell you who the co-founders are like they're like because i don't know what i was doing like i mean i basically chose an industry where i felt very passionately about the problem and completely ignorant about how to solve it and so i needed people to help me with it and so originally i did it with this guy called Leonard Hammersfield.

1:23:52Famously of Buzz, yeah. He has the Buzz business, which makes, I mean, he makes, so this is a guy that basically makes all the first class kits and business class kits. And so he knows a lot about luggage for first class and business class and he's very fashionable. And then later on a guy joined called Ellen Kersner who had worked with Leonard for 10 years building out his kind of stuff for Buzz. And then we brought in a woman called Maya Schwalb. My Schwab? She's the long lost cousin of mine. Young woman. No, Schwab, Schwab. Very similar, very similar name. But that one letter really, you know, that makes all the difference.

1:24:32Elevates performance it turns out. And so she came on because I need someone to run this and she's just this superstar gun basically. And so I said, okay, you're going to be the person that runs this. So she was a co-founder and Sean Curry, you know, Sean's always involved in my stuff on the ops and finance side. You know, how do you solve this problem? I didn't know but what I knew is this I wanted something that I could put a laptop in the front of and access it very easily but I hate the zips at the front they look they're so ugly and I hate when you put stuff in the front pocket it bulges out and it doesn't fit in the overhead and so it's like how do I do a front pocket that opens on a hinge but I don't want you to be able to see the hinge and also when it closes it closes completely flush to the point that you don't even realize it's a pocket until it opens so it turns out that's never been done before with a fabric cover over the top of it so that took a long time and then i was like i want to use skateboard wheels and then alan was like um and leonard or whoever said they said you can't use skateboard wheels like it's a great idea but they're solid yeah like they're super heavy and i'm like we'll make them hollow well there are no hollow ones and then i was like this is crazy i was like we'll just make them ourselves it's a terrible idea by the way did you make the skateboard wheels yeah we made the skateboard wheels we made these hollow skateboard wheels It's actually the smoothest experience possible.

1:25:45But this was me. I thought this was going to take like honest – I mean this was very naive. But I thought – firstly I knew that I had to turn it into a business because if I made one suitcase, that was going to be a$1 million suitcase after all the tooling costs. So it had to be a business. That's basically how it became a business. And I didn't want to make it totally unaffordable. Like it is in the kind of Toomey category or the Briggs and Riley, that kind of price range. Like the suitcase is kind of$890. So it's not cheap luggage. just a premium luggage you know there were so many iterations we went to so many different factories i reckon it was the fourth factory that we tried that was actually able to make this in china or in the end we found one in china i tried japan i tried taiwan i tried indonesia i tried everything i mean they just they couldn't do it because that like this hidden hinge on the front pocket we basically had to engineer how that would work like it just it hasn't been done Are the wheels made in a different factory?

1:26:40The wheels are from a different factory. Like lots of – yeah, basically it all comes together. It's like you're building the ISS here. It basically felt like it took as long as building the ISS. And like there was so many – like we thought it was done six months ago and we were all ready for it to go and it was not done six. Like it came and I was like – I used it for a bit and I was like, no, we can't. We have to fix some stuff on this. And then I wanted to do like some other little things. like I really wanted it to be beautiful inside. One of the other people involved was like, well, if we're already going to do that front pocket that opens, we should make it so that you can release that front pocket and access it from the front as well.

1:27:21And so you can fill it up like a trunk or like a clamshell suitcase. You can shoot it, which actually has turned out really good because I put it on the seat of the airplane and I open the front thing and I don't have to open the whole clamshell to access it. But I will, so I'll say like basically I started funding this thing. I put a lot of money into it then a couple of people heard me talking about it and they said can we invest in this and I was like I didn't want to take external investors but like it starts to get pretty expensive to do all of this and I was like all right I'll take some external investors um but I didn't like you know it's still kind of majority me and um and so that's been interesting like this kind of turned out completely differently to what I expected I thought it's three months it's going to cost me 100k I'm going to make these things I'm going to bring them in it was like terribly naive and how many how many is the first production run so well we did something weird with the first production run which is because like you really have to remember like i did i had really not thought this thing through the way i should have thought it through okay because i just because it was just really i just wanted to solve a problem originally i kind of hadn't really conceived this whole big business out of it but what we in in the did in the end is we said we're going to make a thousand to begin with they come in like three different colors and what we also did is so this was not at all my intention either it turns out people like to have a tote with their suitcase and so we made a tote so the front of the suitcase is in this special knitted really nice knitted fabric and so we made the tote out of the same the colors look amazing oh thank you it's got three colors we made the tote out of the same knitted fabric as the front so there's no stitching really in the tote and um and so and the tote just sits beautifully flush on the bag right yeah it just sits on top of like it all looks completely consistent my actually my favorite feature to be honest is I said like at the you know at the back like there's never anything at the back of a suitcase and I was like let's just have two hidden pockets made out of the same knitted fabric I think it's a similar fabric not the same and so when I go through security I just slide my phone into there and it's like very convenient to do.

1:29:26But the long and short is we made 1 ,000 of them. We said we're going to individually number the first 1 ,000. We're going to – there's like this – we use this really nice – I don't want to talk about what leather it is because I feel bad for the animal, but like this is really beautiful leather that we use for the handles and stuff. And so there's this thing that's individually stamped with numbers from like 1 to 999. I'll give you a tip. You're not getting number one. And we said like the first – I presume you killed all these raccoons with a shotgun yourself. in the Serbian rainforest or something.

1:29:54It's definitely not. We're not going to talk. On the website, you can see what leather it is. It's very soft and beautiful. I really don't like eating meat, let alone this. But anyway, it's very beautiful. And so, yeah, there's basically 1 ,000. I don't actually know how many are left. We soft launched it last week. It's already sold quite a number of them. Amazing. Can you reveal how many have been sold yet? Yeah, I can reveal it. I mean, I don't know whether. I actually don't know the answer. A hundred? Maybe? Oh, that's amazing. So they started selling very quickly. So have you started production run number two yet?

1:30:29We haven't. We haven't. I think I will sell out another few hundred of this before we start the second production run. Now that we've got it, it's pretty easy to produce it. We'll do some other stuff as well. Now I'm getting excited, right? Because I was super excited and then I was like, you know these like Valley of Despair or whatever it is? So I was super excited and then I went to this long Valley of Despair which was like, is this ever going to be finished? And at one point it really felt like it might never actually get made, which didn't feel great financially and just also emotionally.

1:31:00And, you know, I don't know if you've ever made a physical product. No. There is this amazing feeling. I felt this before. Like there is this amazing feeling when you've worked on this thing for so long and then it's done and the prototype comes, a usable prototype, and you touch this thing and then you go on a plane with it and you use it. and the first this was the most amazing thing the first trip i went on someone stopped me and said to me what's that suitcase and i said oh it's this new brand it's like tonsu and she's like oh i really like it like where can i get one of those and i literally had to say the words there's actually only one of these in the whole world at the moment and she's like why i'm like yeah because we like we made this suitcase and she's like tell me when i can get it i'm like you go to this website and just keep an eye on it basically sign up for the pre-order um but it isn't it has been an interesting journey and i would say you know it has not been it's not a simple journey like definitely i remember now the feeling of starting something and going from zero to one and it is not easy and you get punched in the face every day with problems and i can tell you that every single day i'm doing my most hated thing in business and that is having a conversation with maya and saying what's the cash balance today how much money went out how much money went in And like I'm back to those days with this, which is a pretty crazy feeling.

1:32:25But it's a really interesting journey. There's a couple of businesses that I know that started with making luggage. One was called Louis Vuitton. One was called Hermes. So you're following in the footsteps of giants here. It could be the next LVMH. Well, you know, I'll tell you something interesting. I did think very hard about positioning for this because I know what I know and I know what I don't know. and what I know is I know premium and what premium means is that I can I call it affordable indulgence which is I'm going to make a much better product than exists on the market today and I'm going to charge a premium for it but what you're still paying for is a better product than the belief that you can trust it and you want to be a part of it and so it's affordable that means it's not out of your price range for most people but it is indulgent like you could buy cheaper stuff and so there has to be a reason that you stretch for this i don't like making stuff that's lower down in the market because it's hard to differentiate and also it's no margins right like i want to make money and i don't like luxury stuff because luxury stuff the brand is doing all of the heavy lifting not the product and it's just not the world i understand and when you look at like remover like you know the louis vuitton like aluminium brand like that is a brand where most of what you're paying for is people noticing that you've got that luggage and that is a very particular skill set to have and i don't think that luxury that ultra luxe world that's not my world my world's much more better function that is stylish and people want to be a part of it also takes a long time to build an hermes or an lv like these are brands that have taken hundreds of years and have royalty using it in the 1850s.

1:34:09That's true. That's true. The heritage side of it makes a big difference. Although some people can do it quickly. I just can't do it quickly, right? And, like, we thought about lots of things and ultimately we said we're not going to – like, we need to be able to make money and, like, obviously I know a lot about margins. But at the beginning, before their scale, like, we're just going to accept we're not going to achieve the idea of margins that I demand. and so let's not skimp on any of the product when we're building it let's just build exactly what we want to build even if it turns out to be more expensive than we wanted which it did because ultimately I'm a believer like my part my kind of world of vertical retail is you you focus on the product and make the product as good as you can and everything else follows that marketing, logistics, it all follows that.

1:35:00But definitely it's substantially more expensive as a manufacturing cost than I'd anticipated when I started. So I'll put the link in the show notes, Mike. For all the Contrarians listeners, you'll personally sign a card for every purchase, I suspect, I do. Should I give a code or something for people to get a discount or something? A promo code. Well, we'll give a promo code for the first 20 Contrarians listeners to jump on and buy one. So jump on, we'll put in the show notes and maybe code a deer or something like that. I'll tell you what I'll do. We'll put a code in the show notes that will do this.

1:35:31If you buy the case, you get the tote for free. How about that? What a great deal. That's a good deal, isn't it? I was suggesting 5%. It's gone bang and given a whole tote. Well, I think that tote's$290. By the way, we've recorded this and now I haven't discussed this with Maya, so hopefully he's fine with it. well I'm sure we're going to limit it to maybe our first 20 listeners so you'll be capped on the downside because obviously it's just we know there's a lot of listeners who listen first thing Tuesday morning so you probably want to as soon as you hear this jump on click on the show notes get your incredible piece of luggage and there's only I think only a thousand been made so far so you're getting one of the few.

1:36:12Speaking of very limited edition products we've only got a handful of tickets left for our amazing live shows September 10 the Commons in Cremorne so So if you want to get one of those literally single-digital tickets left, there may even be none left by the time this goes to air and Will will kill me. But jump on. Link also in the show notes. Hopefully there will be tickets left when you hear this because there are a really small number left. We want to see as many listeners there as we can. We're going to try and burst the commas at the seams. They're going to be pretty annoyed at us for overselling, but we'll cross that bridge.

1:36:40But super pumped about that. An idea especially is pumped to mingle amongst our community and we can't wait. I love live shows. I would do every episode live if we could. Obviously, we can't, but I love live shows. On that note, we'll bid farewell. We'll see everybody. We might have a very special edition on Thursday with one of our most very special guests. So keep an eye out for that on your feed. It'll be a bumper episode. And of course, back on Saturday with some exciting business news. See you then.