Heidi Health, Canva, Mecca’s Rise and Rise, NDIS Flesh Wound, CTM Disaster Gets Worse, Temple & Webster CEO Shock and Copilot Fail

26:52This is UK tax... UK budget's not in great state at the moment. That's not what governments care about. They don't care about taxpayer dollars. You know they care about taxpayer dollars. That is the last thing they care about. The UK can get some money back off this dodgy Australian business. I think it will. The governments care only about re-election. They've got problems at the moment. Most of the UK voting public does not know about this government incompetence. And so the government is only going to go after them. If they make this decision that says them knowing will increase our likelihood of re-election.

27:22And that's a bit of a dangerous game to play. I think you just need to look at all politics through the prism of re-election. yeah i also think this despite me giving you this um what felt like a compliment about you're right about all of this stuff i also feel a bit like this like my only argument is it's going to trade again not that it's a good company or not that it's not eventually going to go broke that it's going to the quotation is going to recommence and it feels to me like you know that movie i think it was indiana jones which one there's been five well you know the one there's one of them where the guy he goes into a market harrison ford goes into a market and the guy's got a whip and the The guy does all this fancy stuff with a whip.

27:59And then he just pulls out a gun and shoots him. Raiders of the Lost Ark. I feel like I'm doing that to you. Raiders of the Lost Ark, yeah. Top grossing movie in 1981. Well, I feel like I just did that to you because you waved this whip around for the last 15 minutes about all these bad things. He was waving a sword around. And Indiana Jones shoots him. Oh, whatever it was, right? Yeah. Also, these little fancy movements. You never... Aren't they how you claim to be indie when you never know the buddy what he did? Well, I never... You can be the sword guy. Well, I can tell you. All I think is, with all of your fancy footwork and waving around whatever it is you're waving around, it's going to get re-quoted.

28:31And I'm just going to shoot you and say, that was cute. Now you did. We'll find out, yeah. So I do, I still think it's going to get... Your record on bets has been great. You famously lost the Richard Goy to bet humiliatingly. So... You feel more humiliation on my behalf than I feel. So this is obviously still playing out. Every announcement these guys make seems worse than next. because it was bad enough that they, literally a public company is now 10 months late on its reports, which is staggering. Imagine like not giving you a report. Somehow IR is like these guys can get a trade, which itself is a disgrace because these guys are super strict.

29:05And now they've announced, oh, by the way, we didn't rip it off by 160 million. It's actually 240 million. What about the fact that this only came out because they got new auditors? Yeah, absolutely. And so my suspicions are that the previous auditors, who I think might have been PwC, I suspect they picked up on something here and they started putting panicking. Putting the pressure on. And putting a lot of pressure on. And there was a, you know, it's not easy to swap auditors. Yeah, especially a public company. It has to go to AGM and be voted on by shareholders. Yeah. And so it's a big deal.

29:32I've swapped auditors at Catapult. And it's not, like, it was easy to do it once, but it's not just like, you don't just decide it behind closed doors. Yeah. It has to be voted on because the auditors are acting on behalf of shareholders. Yeah. And so I suspect that may be what has happened. And you've got the, Jamie Ferris, the founder, CEO, gone, which itself is a massive deal. He was this business, really. He was the one who had all the answers. He never shuts up. He was the guy who knew it all. We feel like it's in limbo, but it's not. This business is trading. Bizarrely. I'm still getting abused by people who work for it who send me LinkedIn messages.

30:07Really? Yeah. Oh, but you'd like that. I do like it. Yeah. I love it. Bring it on. People don't understand that the most nutritious food that can be sent to you is hate. Nothing powers you more than hate. Like a reverse kryptonite. So hopefully this thing just dies at the death that it deserves. But we'll see how it plays out. But if you see in Joe Astin wrote in Ramp Up this week that he saw Graeme Screw-Turner and Jamie Ferris chatting in Noosa. And obviously, Flight Center has a great corporate business. That would be the logical buyer of this dog. So they could pick it up. They're really probably taking clients by the dozen.

30:47So I think if I was screwed are offering a dollar for this business or whatever, a couple million bucks, that'd be a great result for Flight Centre and probably a great result for long-suffering CTM employees. They might just have been chatting about the weather. Like, who knows, right? I don't think – like, Jamie, I think you used to work for Screw Briefly. I wouldn't have thought that great, mate. Screw's a great guy, loves everyone. I wouldn't have thought Ferris and Screw have that much in common, to be honest. Maybe, who knows? Read that what you will. I was once sitting in a cafe with David Schaefer of Kogan.

31:19Kogan fame? And then I found that there was a write-up in the rear window that we were talking about doing a business deal in the furniture space. But that's not what we were talking about. So there you go. Moving from one debacle to another, the federal government has finally bowed to the inevitable and taken a knife to the outrageously prolific NDIS, which is currently costing Australian taxpayers double what the US, UK and Canada spend on severely disabled members of the community. According to Health Minister Mark Butler, who appears actually one of the more capable members of the current government, the reforms are much more than budget savings.

31:52This is about saving the NDIS itself. Butler conceded the flawed design of the scheme when Labor was last in government was the key culprit. But in typical fashion, suggested changes which need to be passed by Parliament are pathetically weak and fail to go anywhere near what needs to be done to curb the staggering costs borne by taxpayers for the cesspool of waste, fraud and inefficiency. Under the plan, the growth rate will be simply reduced from the current 10 % a year to 5 % a year. And the cost of the scheme in 2030 will be a staggering$55 billion and not the forecast more staggering$70 billion.

32:23Number of participants in the scheme will reduce by a mere$160 ,000 by 2030. By 2030, Australian taxpayers are still paying$55 billion for this raw, which means$2 ,000 for every single Australian person. And very much, only about half Australians pay tax. Every taxpayer is paying$4 ,000 a year. So think about that. You're listening to this podcast, you're paying on average$4 ,000 a year to cover the cost of this disgrace. That's real money for this gold-plated monstrosity, which is being sucked dry by kids with alleged autism, with$295 ,000 of the$740 ,000 NDIS recipients being paid money for their autism diagnosis.

32:58This thing has literally become a transfer of wealth from taxpayers to families with badly behaved kids, and Labor is barely making a dent in it. Butler claimed modelling will see the number of people on the scheme reduced to around$600 ,000 by the end of the decade, instead of growing to over$900 ,000. And bear in mind the scheme was intended for 400 ,000 people with as I say serious disabilities. I do. Rebuttal. So I agree with all of the waste part but you know as I disagreed last time what what was your alleged autism or fake or whatever you were saying. So I think you're targeting the wrong place for your vitriol.

33:35The problem is not the families with kids that are being diagnosed. There are definitely there's definitely a situation that's going on in the medical world. I'm not seeking to blame the families of kids, by the way. I know, but there's definitely a situation going on where some kids that would be borderline or maybe behind the line to get a diagnosis and therefore would not be eligible for NDIS. The families are putting pressure on doctors to get them across the line so they can access NDIS funding or doctors just want to do it because they want to help the families. Just a great proportion of these families are centered in Western Sydney.

34:06So it's really centered around that sort of Parramatta area. So clearly there's something going on there. Yes, I agree with you. People in gahoots, perhaps, you could say. Either there's something dramatic going on with the water or with decision-making, we could say. Or with the doctors who potentially work there. That's right. But the real issue is not even how many people are being diagnosed, which is obviously very high. It is what is happening with the suppliers that are providing products and services to the NDIS. There's clearly two issues. I mean, people told me quite proudly, I know people told me quite proudly, I sell this piece of furniture for$3 ,000.

34:44But when the NDIS buys it, I build$7 ,000. I looked at buying a business that sells these effectively bean bags and it was hugely profitable. It was like maybe six mil and you kept half of it or thereabouts, two of it. And I looked into it more deeply and what I discovered is almost the reason it's got such high margins is almost all of their sales as a sensory device under the NDIS. And that is what's going on. I saw it firsthand. So I think the predominant problem is how do you crack down on the billing loss? There's two problems. There's too many people in the system, and that's the autism thing.

35:22And then for the people in this, and this is not just autism, this is just everyone, as you say, it's a complete cesspool of waste. And there's no accountability. The whole system means that they need to just tear this thing down, which Labor hasn't. To Mark Butler's credit, he's done something, but what he's done is like a feather on a feather on it. Well, you know that they're under pressure because they've got some problems. One is they can't blame a previous government because it was their previous government. I think part of the problem with the Liberal government is what we have is sort of history in Australia of Labor, from the Whitlam years, Labor spends too much and Liberals sort of do their best to try and fix a bit of it.

35:53And not, Liberals are far from perfect, I should add, but Liberals are sort of inverted commas, the more responsible economic managers. Certainly Costello and Howard in the early years were. Towards the end, they lost the plot. But the problem is because the Liberals under Morrison and Frydenberg were so terrible and spend more money than anyone, especially during COVID, now Labor's just gone slightly worse, worse off this hugely high base. Yeah, maybe I'd say, listen, I think you can extract the COVID years and say a whole lot of stuff happened there with very heavy spending. But that was anomalous if you look at the last 50, like it was, the COVID period is not indicative of what happened in the last 50 years.

36:29There's more creative expectation that you can just spend money and not care. Well, that is absolutely true. So I would say, because I'm much more sympathetic than you are to the whole JobKeeper thing in COVID. It's because they were wedged by... No, they stuffed it up. They should have had a claw back. I agree with that entirely, but they did get heavily wedged by state governments when they said, you can stay home. Don't worry, the government will pay you. And they should have stood up to that and then would have forced the government to open the lockdown. Everyone needs to get elected. And it's coming back to that point.

36:57There was no greater government failing in Australian history than what the federal government did during COVID. and enabled psychopaths like Dan Andrews to do what he did. And so I blame Scott Morrison almost more than I blame Dan Andrews and to an extent the power shack in Queensland for a part and obviously Gladys when she lost the plot in South Wales in the last lockdown. They all were enabled by this government prolificacy. But this NDIS issue, so they got Mark Butler and I don't know if you've seen, he's everywhere at the moment because they are obviously very nervous of the political implications of taking money away from people.

37:33And there's, I am, the only reason they did this is because they had no choice. Because they actually couldn't sustain a budget without doing this. I actually think there's that. I was looking at the age of the Fairfax papers. This obviously skews left, the readership skews left. It's not Guardian, ABC and Crikey, but it skews left. And I always like to look to the comments. This isn't the Herald Sun. Like Herald Sun, you can expect comments to be a certain way. and of the I think probably 100 comments 98 of them were saying it's a raw it's a waste a fraud this is the this is the communist age readers this isn't the herald sun readers people are people hate this the country's turned against this isn't just contrarians listeners who think it's a fraud and waste so the only people who like this thing and the 700 people who are rewarding it there's 30 million there's 20 27 million australians 26 million of us are getting ripped off by this disgrace so stop doing it but it still is a dangerous they should get rid of the whole thing and seriously disabled people should get a great safety net that they need the 200 ,000 seriously disabled people and build it properly not the way they built it they stuffed it up and start again like why are we what you can't tinker with this thing this thing is a dead dog it needs to be started it needs to start again if labour takes this whole thing away even if they replace it with something much better the act of taking away money from one million people means they should go and inspect the opposition bench it's less than one million i think it's it's what Look at the age comments.

38:55The far left don't want this. When the age readers are saying this is a disgrace, when the age readers are saying public spending is bad, then you know it's bad. So you just said that there's a cluster of this in Western Sydney. It's not the only cluster. Where do you think the marginal seats are that determine if a government gets into power? That doesn't determine the government. Well, this government's got polling problems at the moment. will the liberal the whole one nation thing who knows what's going to happen who knows where those preferences go but who knows where the preferences go even if like whether or not it happens but I'm I'm not sure the liberal and liberals have indicated that they'll support this which is I think great by the way that could make a so credit the liberal party for the coalition I should say for not opposing this but I think if the Labour party said we're going to start again we're going to rebuild this because we're going to give money to you in other ways I think the electorate will understand it I think the electorate is sick to death for this fraud and theft because these are people who as you said your example is happening thousands of times everywhere it's a complete cesspool of fraud and theft I know I just don't think that's how people think I think when you're taking money away from them they panic and I also think I'm not saying that the 300 ,000 people who are doing the rorting they'll be annoyed but they've got to vote for someone I'm not sure they're going to necessarily run to the rule the rest of people they might not be voting for labour anyway these people you're taking it off for everyone no but there's 700 ,000 people of which half of them probably shouldn't be getting it.

40:18And of the half are getting it. Well, let's find a better way to give it to the people. But you know those half that get it, if they vote for Labor, that is money well spent by the government. So they might not be Labor voters. Labor could be getting other voters who hate this waste. They can cut taxes elsewhere. I'm just telling you about politics. And I also think you could be nicer to the Labor government and you could say over the last 50 years, the Labor government has a pretty decent history of putting in place social programs and trying to spend money to help, what do you call it, like social welfare.

40:49Communism. No, you don't oppose social welfare. I do at some points. Yeah, I agree. But like the history of Labor governments are, they've been more inclined to win social welfare. They overspend. The Hawke-Keating government wasn't like that at all. That's been the best Labor government in history. The Gough-Whitland government overspent. That was a terrible government. Wasn't the Hawke-Keating government the Medicare government? Well, that's social welfare. No, I think Medicare came before. I don't think so. I think it was called Medibank. Medibank. Yeah, but it existed, didn't it? And then it turned into Medicare.

41:16I thought Whitlam did Medicare. Yeah, and then I think it advanced. So I think the Labor governments generally are more inclined towards social-based spending, and then they overspend, and then the Liberal governments get elected, and they pair it back, and then whoever stays in for too long does too much, and they get thrown out. Although the Morrison government was the most prolific government in history, and the Hawke-Keating was one of the most responsible. so it doesn't always in that way I agree but I do think Mark Butler like he I think they took this as far as they felt politically safe to do it I think they should have gone harder and used that of course they should have I'm not disagreeing with your view on this I'm just saying politically disagreeing we're in business and so we do things in business they're in politics they have to do things that work in politics and what doesn't work in politics is getting voted out that is what they don't like we're going to go super quick break on that note we're back with some great stories in just a moment

42:20and we're back on some business some juicy business stuff to talk about so one of our very favorite businesses beauty giant mecca continues incredible run with the amazing joe haugen and pete wettenhall's private vehicle reporting its revenue grew to 1.43 billion over the last year up in 1.37 billion last year on the back of new store openings and expanded product range. The company paid Pete and Joe$87 million dividend, which was slightly down on last year's $110 million, but still pretty good coin. Business employs 7 ,000 people across 110 stores, and last year opened its flagship Bourke Street store in Melbourne, which cost$50 million to fit out.

42:57How many people do you reckon are going to that store every week? I think you told me this, and I've forgotten, but it was some ridiculous number. One store. 10 ,000. 70 ,000 people. 70 ,000. It's like a football ground going everywhere. It's unbelievable how good these guys are. Business report a profit$126 million last year. Competitor Sephora, obviously owned by LVMH, hasn't lodged financial accounts this year, but last year reported sales of$337 million and lost$13 million. So Mecca is four times the size of Sephora and makes just like an astronomical amount of money. This is just a business that just can't do anything wrong.

43:33I wonder if it's the most profitable third-party retailer in Australia selling other people's stuff. It could be. I can't think of. I mean, there could be things like. What does Maya make profit wise? I don't know. I think it makes a decent profit. I don't know because I think about other companies that do it. I mean, there's a company ARB. Is that the one that sells all of the four wheel drive accessories? I thought, how much does the super cheap group, they'd be making more money than that. I wonder if they're the most profitable. That's a public company. I wonder if they're the most, the best margin third-party retailer.

44:07Because they made, what,$100 million profit on 1.4 bill of revenue or something like that? Yeah. I mean, that's pretty good for a third-party retailer. So Supercheap reported, oh, you've got Harvey Norman as well, it's quite profitable. And obviously JB Hi-Fi makes some cash. So Supercheap made$2 million. I know, but maybe I should have classified this more tightly and said specialty retailer, the most profitable third-party. JB Hi-Fi? Would you go about JB Hi-Fi? I think they're an established public company. That's right. It's not really fair to compare. JB Hi-Fi makes an empat of$460 million.

44:39That's the profitable base on$10 billion in sales. So JB Hi-Fi is probably the king. $460 million,$10 billion. About 5%. Same as super cheap, about 5%. And so what was Mecca? Mecca was about 10%. 120 on 1.3. It's dramatically different, right? Double the profitability. And so I think it could be the most profitable third-party retail. I don't know. There's probably some specialty ones that have mega margins. Apple would be more, but Apple's obviously not an Australian business. Apple's vertically integrated. It's not third-party. Exactly, that's a good point. So I think third party is hard to make margins.

45:07JB is the high watermark. And then Mecca's probably the – and JB's been around since the 70s, like the early 80s, late 70s. Mecca's not that – Mecca's only, what, 97? And Joe started one store in Turack Road in Melbourne. So this is, what, 29 years. They've built it organically, not a cent of outside capital. They got 100 % of the business. JB's obviously raised capital and floated and all that kind of stuff. They were sold to Macquarie and et cetera, et cetera. So what if I say this? What if I say that Mecca is unique amongst large third-party retailers in that it absolutely does not compete on price?

45:46Yeah. I think that would make it unique. Absolutely, yeah. I mean, there are some stores, if you walk down a local shopping strip, that are third-party retailers that are not discounting. Yeah. But eventually they'll go on sale and they're little. But Mecca is this huge chain of stores and they basically don't go on sale. You look at the stores that don't, none of these are Australian. Ames, LVMA, Louis Vuitton. Vertical. No, but this is the thing. They're all vertical. And so they don't have to go on sale because they control their product. But if Mecca, so Mecca's beauty is they're not vertically integrated, but they've got exclusive deals with brands.

46:20And that is the clue. And they do their own stuff as well. They do, but that's not the major contributor. But like the thing is if you have an exclusive deal with a brand, that is almost like being vertically integrated. it's not on margins because you're still giving away margin but it means that you can control the discounting because the problem is if you go i went to repco you know that store repco they'd sell yeah or coolant yeah and so that's what i bought you don't have an electric car coolant in it and um and so i bought their brand coolant but the thing is anyone who was selling that same cheap post mix coolant i would have just bought it from there yeah like there's no way for them to maintain pricing power, but Mecca, Mecca maintains pricing power.

47:02It's really a remarkable third-party retailer. Can I put it to you that in terms of business, call it business stories or business creations in Australia, the two best business, well, they'll call it three best in the last 50 years, Atlassian, Canberra and Mecca. And we talk about Atlassian valuation, but still Atlassian's a multi-multi-billion dollar business. Obviously, Mecca's not - Well, just say three great stories because if you say best, I have to try and think of other ones. I can't think of better. And I don't want to think of better ones. I don't think there is better. Like I think, and the last year in Canberra, global software businesses.

47:35You like them because they built something, but Andrew Forrest's story is pretty impressive. Yeah. But he's obviously created a huge amount of value and you probably have to put - And he was basically broke and people thought he was a loser and he came back. Yeah, that's a great, yeah, you're right. That's a great story. And he did it from scratch. And really, that was in probably 2004. He started that business, Fortescue. So that's an incredible story. But that's taking stuff out of the ground, which I think is a little bit different. I knew that was going to be your issue with it. I think if you look at what Joe – and Atlassian and Canberra are both incredible stories, great, a huge value, even tens and tens of billions, certainly for Canberra.

48:09But what Joe's done in – Joe and Pete can monetise business, competing – think, Myron DJ has dominated this space and they sold everything. They sold not just – and now – And she's selling what was the fundamental profit driver of those department stores. But it was one of the many things they sold. It was their profit driver. It clearly was. But look, Mecca's now worth, say,$2 billion. If you look at DJ's, it's worth a couple of hundred. And Myer's... If not zero. Yeah, so Mecca is worth four to five times both of those businesses. And this is a business that didn't exist 30 years ago. It's just such an incredible story in such a competitive space.

48:43So what's amazing about... By the way, I think you're being unfair on businesses like CSL. That's an incredible story. It's a good story. It came out of the CSL. I know, but yeah. What happened to it is incredible. And like, I mean, Cochlear had a bad week, but like - Well, CSR had a bad couple of years, but yeah. But Cochlear was a great, incredible story that - That was CSR as well, or where did that come from? I don't think so. Didn't? I thought it may have. I'm not sure. I'm not sure about that. There you go. Such a good story. I don't know where it originated, but like - ResMed's been a good story as well.

49:10Yeah. So I think we're very good at some med tech stuff, which we're going to talk about. But I think the thing about Mecca that is so remarkable is everybody looks at Maya and David Jones and says the downfall of these department stores has been that I can now buy everything anywhere on the internet. I don't have to go to those stores. And exactly the same argument would be true for Mecca. But Mecca figured out if I make this more experiential... They took the old European department store model. Yes, I can make sure that actually what I'm selling, you can't just go and buy on the internet because that experience is unique to me.

49:45and I think that and I think she just saw something that Myra and David Jones did not see and part of it's because she's the founder. I think if you are and I think if if you look at real take the almost a mini acquired lens and say like in terms of great business performances and you see this Twiggy's built a huge amount of wealth and the Canberra guys and the Lasting guys built massive amounts of wealth but I think I actually rate the Mecca business story as the most it's probably one of the best retailers in the world in terms of, not the most profitable, but in terms of what it's been able to achieve in the Australian market.

50:19If they took this international, this could be a$50 billion business. They've smashed Sephora, which is a brilliant business. They've destroyed it. These guys are world-class. These are up there. There's almost no comparison in terms of what they've been able to build in Australia, in terms of the degree of difficulty and what they've built. And this will keep going. This is not getting small. This is getting bigger, not smaller. The ball's rolling down the hill at a greater speed. They're building brand. They're building scale. They're building corner resource. They are my favourite entrepreneurs in Australia.

50:48So, you know, the other thing, maybe the lesson to take out of this is there are some industries that fight to be commoditised. Like these products are one of those industries and you have to try and differentiate because uniqueness, let's call it, is a fundamental driver of being able to charge properly and reducing your acquisition cost. And Mecca has figured out that if you're in an industry that is fighting to be commoditized. Number one, try to get exclusive deals. But technically, I could also buy that off US websites. Yeah. Number two, bring service in and make a service that can be part of your value proposition.

51:24The loyalty is so good. That's how you fight commoditized industries. They're just so smart. The way they built the Beauty Loop loyalty, and we've talked about this before, how you get the box and you get the box of samples that they don't even pay for. And to get the box, yeah, they've got to pay for it. You've got to go into the store. When you pay another 200 bucks, or in case of my daughter and wife,$1 ,000. dollars. Everything they do is just right. They just don't make mistakes. They built this amazing Bourke Street store, which is a huge risk. That's$100 million plus of capital investment.

51:52In Melbourne, which is a basket case, they built in Bourke Street. They took a huge risk and yet again, it paid off. These guys just don't make mistakes. They just get everything right. It's actually unbelievable. It's amazing. I agree with you. They are. I'd love to get Joe or Pete on the pod. They got caught with their corporate structure and not lodging accounts for a while. Yeah, that was intentional. I think that wasn't... That wasn't great. They paid the$100 fine and moved on. I'm here to... I think they actually got fined$100 ,000. Oh, whatever. That's a... You wouldn't even notice that.

52:22Let's do a little deep dive. As you know, a deep dive brought to you by our friends at Terram Capital. Scott, obviously the Warren Buffett of Australia. If you need to sell your business, speak for Terram. I actually saw Scott. I was running in Sydney under the Harbour Bridge. Ran into this fit-looking guy flying down the street. It was Scott. We ran together for a few minutes. That's a weird coincidence. I know, I would have thought a couple of days ago. But obviously, if you need to sell your business, Tarum Capital are the people to speak to. So let's talk about Heidi Health, who you wanted to speak about, which is business I don't know much about.

52:48I expect you'll know a lot more than me. But the AFR reported that the Australian medical scribe business claimed that annualised revenue had surged to US 50 million. It was only 1 million US two years ago, which is, I got to do a double take when I saw that. The AI company was founded in Melbourne seven years ago has raised US$100 million, which is pretty incredible, including 0.72 private investments and Blackbird. Obviously Blackbird, the big Goliath of Australian VC. It's now valued at$660 million, which is unbelievable for a business I hadn't really heard much about. A higher software used by major health providers around the world, including the NHS and Maine General and Beth Israel Health in the US.

53:25It employs 500 people after a hiring spree over the last three years. This is a, what a sleeper business. Doesn't get the plaudits of a camera and a lousian, but this is an unbelievable. Well, should it? That is the question. After you finish doing your PR pitch for the business, you let me know and we can analyse it. It's called an intro. Over to you. That's it for your PR pitch? Yeah, PR pitch is over. All right. Usually when I stop talking, it's time for you to come in. All right. Well, I'm going to say some quite positive. Tim's insulting me to start talking. Well, I'm going to say some positive things about this business.

53:57Yeah. But first, I'm going to make fun of it. So you alluded to a story in the financial review, and now I'm going to read you a bit, the first paragraph of the post from Dr. Thomas Kelly, who's the co-founder of Heidi, also was a vascular surgeon, which may explain a bit of this first part of the post. So he writes about this article. What is it with ex-surgeons becoming business? You've got Adi Shiffman, Jodie Oshner, this guy. Well, I was not a surgeon, and neither was Jodie, but this guy actually was a fully qualified. I know, but he was a vascular surgeon. He still is a vascular surgeon. Yeah, the Pro Medicus guys.

54:31Who would have thought there'd be so many great entrepreneurs coming out of medicine? Yeah, that's an interesting concept. So this is what he writes in the post about this article. This is the beginning of a long, long story of how the world's most important healthcare AI business started in Australia. The world's most important healthcare AI business. Now, let's analyse that for a second. So do you know what Heidi does? It's transcribed conversations, right? So it's misunderstood as being a transcription business. It's actually not a transcription business. It's actually listens to the conversation with the patient and summarizes medical notes.

55:14Isn't that transcription? No, because transcription would be writing down what's said. But it doesn't write down. No, but it's more difficult to do what it does because Claude can write down what it says. He's got to understand it. Yeah, it has to have context for it. Yeah. And so it does that. And so before we talk about, and then it does some other stuff that we'll get to. And before we talk about all of that, let's talk about whether basically saving doctors some time in workflow would make it the world's most important healthcare AI business. I thought you'd call it Australia's most important.

55:44Yeah, well, you might call it Australia. I thought he called it. I thought he said he called it. How the world's most important healthcare AI business started in Australia. I'm making the assumption he's talking about Heidi. And so that's interesting. So I want to just tell you about a couple of businesses that would very much be AI healthcare businesses and are part of the world. And so you can decide what's most important. So probably the most well-known one is called Tempest, T-E-M-P-U-S. So Heidi Health, that has 50 mil of ARR, USD. Very impressive, by the way. Tempest has 1.24 billion USD in revenue.

56:19They're worth six bill. And they're doing this little thing where they've basically got in the sequenced genome and are now working with all of these major pharma businesses around the world to become the ultimate database for oncology, that is cancer treatment, to create specifically customized cancer treatments for individual cancer patient sufferers. And they've generated$1.24 billion in the last year doing that. And so that is, if you have them, you don't die and if you don't you do die so we can put that on a scale of most important healthcare businesses in the world yeah we've got recursion pharmaceuticals so they're basically using ai to find drugs which a few companies are doing they're one of the major ones i think nvidia was an investor in them and recently sold out but then i'm thinking about the right business Cathy Wood bought in when NVIDIA sold out Ark Invesments Ark Invesments but they've just announced that they think they might have a the first they've been testing maybe the first viable treatment for pancreatic cancer that's significant which is the most killer of all cancers seven out of eight people don't survive five years with pancreatic cancer and a lot don't survive one year and so that's what they're doing with healthcare AI you can put that where you want on the ladder of the world's most important healthcare AI and but let's say I'll be nicer and what about Australia's most important healthcare AI?

57:46So have you heard of a business called Harrison AI? I have. You've probably heard of them. Yeah, of course. Sonic as an investor. They did a private equity round recently, didn't they? They did a – yes, they raised more money recently. So they have trained their own AI model. It's the radiology business, right? Yes, they've trained their own AI model and their AI model is very amazing at reading x-rays and some other things. Yeah. And the way they trained that is they got these millions of films from all of the partners like a Sonic or whoever else. And they used that as training. There was controversy about, and I'd never agree with this, but there's controversy for some left-wing outlets saying they shouldn't have done that because people didn't consent to giving their x-rays.

58:28Which my reply was, like, it's anonymised anyway. Who cares? It is anonymised. And all of these companies are anonymised. We'll talk about some other ones. And so their model is much more remarkable in two ways. One is they deal with images. Now, large language models are really good at words. Yeah. And like what Heidi is doing, they might beat the large language models because of the niche nature of it, but they might not. Like the large language models are very good with words, but they're not so good with images. Yeah. And so what Harrison AI has trained up is a radiologist who reads films that is this good.

59:05So one is it can identify 130 individual diagnoses on a chest X-ray. Are people using it? Do you know radiologists who use it? using it and they like it yes and i'll tell you how good so it can do that yeah and um also it did the radiology test so if you give the radiology test to become a radiologist if you give that to claude claude will do about as well as like random guessing yeah so harrison and i scored 85 on that test yeah so it's a pretty amazing thing and what's incredible about these guys is that when you read what they write they talk about a place like they specifically mentioned malawi i think or somewhere like that where there's basically no radiologists per 100 ,000 people.

59:43Yeah. And suddenly you can deploy this and get this developed world level, very cheap access to high quality, excuse me, you can get the films. X-ray, yeah. I mean, world changing, right? Yeah. Australian business. Yeah. I think that's a more significant healthcare AI business. No, right. So I wanted to say that because. We don't know the context around that statement in fairness. The context is. It does sound great, but we don't know the full context. Well, I don't know. Tell me what you mean by that. I'm very intrigued by that. because you're not usually one to defend hubris. Should I keep reading the post?

1:00:13Yes, we hit$500 million,$50 million ARR USD faster than any company in Blackbird's portfolio. No, this isn't why we go to work every day. Well, it was the second paragraph of your post. And then they talk about some other stuff and about how they're growing faster than Canva at the same size. I saw the Canva comment. Which is true, except we should say this. Canva was growing into a market where there was no demand for their product. And also Cams, like ginormous. Yeah, and now there's the biggest wave of people trying to adopt all sorts of AI in history, and that's a huge tailwind for them. And so it doesn't diminish anything that they do, but I just do want to provide some context because I'm going to say some very positive things about this business, but I do want to say, remember I said about Canva, I think they should get rid of the hubris because they don't need it?

1:00:59I feel like the same way about this. Get rid of the hubris. The numbers pick for themselves. That's right. And so I thought what this was, was just, I want to talk about something now that I think you'll find very interesting. You wind me up when you want to wind me up, okay? I don't mean wind me up like get me worked up. You don't have to try to do that. Put a pin in. Yeah, exactly. But I think you'll find this interesting. So lots of people say we train AI. What does that mean? And so what most people mean when they say we train an AI model is they mean something called RAG. Have you ever heard of that term RAG?

1:01:33No. So RAG is retrieval augmented generation. And so a large language model is basically a whole series of ideas. The ideas are turned into very complicated numbers and ideas that are similar to each other sit near each other in that numerical space called vector space. These ideas are called vectors. And then there's lots of weightings inside the system that say when someone writes a prompt and it goes to inference, the weightings kind of determine where it looks in vector space and how it responds. And it's those weightings that really cost so much to train. And it's those weightings that are secret when you have closed source models like Anthropic or ChachepiT or Gemini.

1:02:19And it's those weightings that are fully available to know when you have Lama Meta's model, which is totally open source. And you can do whatever you want with the weightings. You can't change the weightings by hand. You have to train to change, but you can change them. And so that would be really training a model would be either using, starting with a blank canvas and only putting your own material into it or at the very least training it. And so most people don't go anywhere near doing that because it's really expensive. I'm talking millions to tens of millions of dollars of processing that you have to buy because you have to feed all this information to it.

1:02:55And so most people do RAG, which is there's all this information I have that will make the standard off-the-shelf AI more sophisticated. For example, maybe I've got all of this information on what a consultation should look like when the notes are written up. And so I'll go and put all of that into a file and then I'm kind of simplifying this and then I'll say to the model, go and look at this file before you generate answers and use this for context and then generate your answer. That's rag and so when most people say we're training the model either they mean we're writing prompts yeah or they mean we're doing rag to do it and so what harrison ai has done for example that is where heidi health started rag and something called like vector databases on standard models they were using anthropic yeah predominantly someone like harrison ai they literally get their own model they fund funnel all of this information into it in the form of films yeah and i don't know if they're training their own model from scratch but even if they're using an one like llama they won't be using llama if they're using llama and then training it up that's called pre-training it's very confusing so they and they are shifting the weightings inside the actual model itself if you shift the weightings completely an amazing thing happens it's called catastrophic forgetting it's a great name which means i turned you into such a great radiologist that when i ask you to write poetry you can't do it anymore so it turns out human beings have got lots of different parts of our brain and you can be great at business and also you can be really good at cycling but it turns out ai only has one part of its brain and if you turn it into a radiologist it can't be a poet anymore and so that's a real difference and so the really interesting thing about Heidi Health is that everyone else in the world that is going after this space that involves selling services to doctors to help them write clinical notes, they are all trying to sell either to American hospitals or sometimes to English hospitals, but largely they're going top down.

1:05:05By that I mean hospitals will generally have an electronic medical records platform, EMR, like Epic would be a big one. So Epic has got a version of Heidi. They've partnered with Microsoft. It's actually a co-pilot version. And, but like they're rolling it out pretty aggressively. And that will be sold top down into hospitals. And there are lots of competitors doing this. Heidi Health has taken a totally different model, which is we're going to target GPs to begin with. and we're going to do a freemium model where it's like a much more traditional Canva-like bottom-up model. It's a totally different model.

1:05:49And as they've evolved, they've started training up their own models, not just using this rag on top of models. And they are getting increasingly sophisticated. Now, I've spoken to doctors about this business. There still is a lot of editing that you need to do on their outputs, but that is pretty common in this space. so they're definitely migrating to be a more sophisticated business but they do have competitors. They've got Libert as a competitor in Australia which is interesting because a lot of these claims about NHS, there's 19 or something of these companies that are authorised under the NHS in the UK to sell services.

1:06:29Okay, they're one of them and they've got a few contracts. Actually, Libert just signed an enormous contract with the NHS in the UK through one of these EMR providers. But I want to tell you this as a fundamental - How big is Lybird? Lybird is smaller than this. So I think Heidi now has 500 employees, which is why they're burning so much cash. Is that what you said? Lybird - I don't know if they're burning - It doesn't say they're burning cash. Oh, well, 500 employees will be - I mean, that's got to be 100 mil of salaries a year, doesn't it? For these guys probably, because it's mostly tech salaries, right?

1:07:00Maybe a bit less, but - So I think they must be burning cash. Yeah. Lybird's smaller. they have raised much less money. They're backed by 5V. Okay, yeah. And they've got this fundamental difference as follows. Liabird says, we will never use patient information to train a model. Heidi is literally using the identified patient information to train a model. I've got no issues with the identifying patient information training models. Yeah. If that does a better job, then good luck to them. And one of the ways they train it, So they use something called RLHF, which is Reinforced Learning from Human Feedback, which means this.

1:07:37They go and get a consultation, and then they might get AI to make four different versions of that consultation, probably de-identify it. And then I'll go to a doctor and rank these versions of the notes. And then in its simplest form, they'll just feed that back into the machine. But in a more complex form, they'll then build another AI, which is a rewards engine. and then they'll say to the AI, okay, now we've trained the rewards engine. Just start producing lots of different outputs and the rewards engine will rank those AI-generated outputs, which might be called RLAIF. And then that is how they get the reinforced learning.

1:08:17So there's all these, and that will move the weightings. So there's all these different ways to train a model. They won't be training a model from scratch. It's too expensive. But what's interesting in this space right now in AI, and I think this just goes to the heart of AI, is that if one is trying to figure out what does the future of AI look like for these hyper-niche applications, and so Lyabird has decided we're not going to train AI, we're going to use RAG, and we're going to do workflow improvement. But there's a Swedish company called Tandem. They partner with one of the really big platforms in the UK for messaging between hospitals.

1:08:55Like they have 98 % of the market or something. and they, Tandem, they are not building their own model at all. They literally have come out and said, we do not think the future is training our own model for these applications. We think that things like Claude, the frontier models are getting better so much faster. They will be perfectly fine at doing this. We are much more focused on the other things like really good UX workflow and being deeply embedding into the EMRs. So you have all of these different companies trying to solve the same problem, broadening out to a platform. Heidi is now a much broader platform than just this transcription and notes.

1:09:33They do like, they bring this idea of understanding research and like, so if you can say, I'm talking to a patient about a clinical condition and I want to prescribe a drug for them. Can I go and have a look at what the best drug is to prescribe for them based on the literature? And it will link to all of these research platforms and give you an answer. And now they're building hardware. They're building a microphone that you clip onto the lapel. Obviously, what they're trying to do is play the game of, if I can get you to use the hardware, I can keep you my software ecosystem, like the Apple ecosystem.

1:10:05And so I think they are a very interesting business. They are growing super fast. They are growing with a model that no one else is using. They are growing in a space where there's not much competition. Like the competition for GPs is much less than the competition for hospital-based doctors. But they're pursuing a particular approach. and others have said, we're going for a different approach. And the question is, when Epic or someone enormous like that gets serious about, they have 40 % of US patients in hospital. When someone like that gets really serious about this space and does it properly, are they going to buy?

1:10:39Are they going to not be able to compete? How's it going to play out? It's a very crowded space and a very interesting business. It's funny, the analogy makes really close to the Canva situation. So Canva effectively trains its own models. It bought Leonardo AI. Oh, you mean Canva, the new AI business? That was released last week to much fanfare versus Figma. And I think 20 cents a dope bit, but certainly Figma which effectively rents the frontier models. And Figma has been absolutely smashed. Canberra, who knows, is not public, but they obviously had the big song and dance Canberra announcement last week when all the executives that went to San Francisco, they flew all the Australian media up there for it, which is pretty incredible.

1:11:15But so there's basically Canberra's placing a bet on its own model versus Figma, which is placing a bet on using Anthropics model, I think, and some other frontier models. I don't know if you've looked at Anthropic recently, but you know, if you're using Claude and you can go into the top left and you can use all these different things. Claude Design? Yeah. Have you used those? I've tried it, yeah. So you can make slides. It's not great yet. I didn't love it, but yeah, it was just one of them. Well, you know where it's heading. Yeah. And the amount of capital they've got to invest in this is essentially unlimited.

1:11:39And the staff that they've got are the best staff between them and Gemini and OpenAID. Like, that's where the best staff are. It feels like it's going to be hard to compete with Frontier Models. Yeah. Yeah, that's the bet that Canva's making. But Harrison AI does it. And Harrison AI's big advantage is frontier models are not great at images. Yeah. And Harrison is all about images. Canva's about images as well. So you can say Canva's - It is. And I think that might be interesting to see if they can fight them on images. Yeah. Canva's effectively almost betting the company here because Canva is highly disruptable by AI.

1:12:10Like I think - For sure. Adobe less so because it's obviously the professional's tool whereas Canva's the amateur tool. And Adobe's got a million different products. Yeah. Like Adobe's got like analytics for websites and they've got all sorts of stuff, right? We've looked at Adobe. That's why when we talk about the Canberra valuation and call it 42 billion US last time and they obviously want more when they go public. Adobe's worth 100 billion US. Adobe makes 10 billion free cash flow every year and it's growing like 10%. So it's still growing. It's not growing Canberra levels of 40%, but it's growing.

1:12:36How is Canberra worth 40 billion on loss making when Adobe's making 10 billion profit, like a cold hard cash flow out the door? Forget the start, not dodgy or like 10 billion profit. Canberra loses money to the financial 20s. On an NPAT basis, you mean? Forget that bullshit about stuff. Well, you say loses money, but they don't lose cash, but they lose profit. They're loss-making. Yeah, that's usually how you define loss, is if you're making a profit slash loss. So how is Canberra worth effectively, well, you can't compare because it's got no profit, but for Canberra to be making money, it's going to have to slow its growth, obviously.

1:13:14It's sort of one or the other. so it feels like Canva at$42 billion on the public markets now it's going to be really hard to get based on that Adobe valuation I think I agree with you I think also the difference between what Harrison AI is doing and what Canva is doing is that Canva's market is very attractive for these models Harrison AI is ultra niche yeah exactly like that's not where they're going to go if they want to spend their energy on somewhere too small a market to bother with yeah it's not consumer but I think the thing I would say to take away is I don't know if you're getting pitched AI businesses I'm getting pitched AI businesses non-stop not really so I get them pitched non-stop and then everyone says yeah we train the model and so the thing is this really are you changing the weightings that's a question to ask and the thing is this if you're using Anthropic or ChatGPT or Gemini as your foundational then you're not training it because it is true you can do a very small amount of training through AWS or something but you don't own the training the weightings are not yours and you don't really know what they are and the answer is if you're using those you can't be changing weightings effectively yeah and so i think we're going to start seeing more sophistication in conversations about what it means to be training models mostly when people are training models what they mean is i've written these really long and sophisticated prompts that they put into context before they answer a question yeah i think heidi is fascinating is it worth 600 and whatever million dollars i mean by the way that business i said tempus yeah that's growing at 80 a year like so yeah heidi's growing fast but like if you're in ai now your revenue is not your problem like you're rocketing you think heidi so they went let's say in 18 months they went from zip to 50 mil usd of arr yeah you think that's a 660 mil valuation it's possible the growth is there like we're gonna say and it's got some internet it's international now it's got us uk so like who knows is the answer what else can i buy for 660 million i can buy i could buy templum webster probably be usually about there i'd rather own this business to be honest i'd rather own heidi i agree with that plus i get preference shares if i own into heidi so if it goes broke at least there's a chance i'll get my money back yeah i think i think it's not a ridiculous valuation you can buy half of you can buy sorry you buy satire a couple times over or five times over now i think we've stopped talking about no no we'll come back to us you'll Come back to it.

1:15:38The thing about this though is I pray on behalf of the founders of this that there was a big secondary sell down as part of this round so they pocketed a chunk of cash. Unlikely you get much secondary at this level. I think that if you post that first paragraph on LinkedIn, and by the way, I'm super non-critical of the individual because I said to you, vascular surgeon, there's a multi-talented human being. But I think if you post that on LinkedIn, you're probably a true believer drinking the Kool-Aid. Yeah, for sure. Very unlikely to sell secondary. Yeah. No matter how well the business goes, it's a huge mistake not to sell secondary.

1:16:11At least something. One final story before we sign off, and we were remiss to not talk about this again. The AFR noted last week that the Victorian government has extended its free trips on metro, trams, trains, buses to the end of May at a cost of$71 million, announced by embattled Premier Jacinta Allen. The AFR claimed this marks a new low point in politics, trumping sound stewardship of public finances. The AFR thundered that exacerbating the pressure on the state budget, public transport fares will be half-priced for all passengers from June this year to January. Free statewide travel for under-18s at any time and seniors and carers and pensions on weekends has been made permanent.

1:16:48The Premier's claim that the estimated$400 million cost in lost fare revenue of her travel policy is affordable due to strong budget is risible. Allen's public transport giveaways are voter-friendly fiscal, this is the AFR saying, voter-friendly fiscal bribes ahead of the November state election, being dressed up as a temporary cost of living relief. While this is all correct, the AFR seems to be focused on the blokes stealing your watch, while his accomplices burned down your house. The Andrew government disgracefully spent$15 billion on the Westgate Tunnel, a white elephant that no one actually wants to use.

1:17:20It spent$14 billion on the Metro train tunnel line, which is also barely used. And the Northeast link is costing$26 billion. Of course, there's the whitest white elephant of them all, the suburban rail loop, which could cost$50 billion or who knows how much more, and which literally no one other than Dan Andrews and his penis exhibiting mate, Luke Sayers, actually wanted. But even ignoring the SRL, the Victorian government has spent$40 billion on totally unwanted projects who would fund 100 years of public transport. So by all means, this public transport thing is arguably wasteful, but compared to what the government has wasted on, which is far worse, it's really a drop in the ocean.

1:17:52I thought you'd be supportive of this because when there was free public transport and I was like, I don't think that was like, you kind of persuaded me. I'm supportive of it. My point is that I'm supportive of it. Of this next thing? You're supportive of this as well? Because you're basically saying like this, we're in a state where they, where we're being financially hung from a tree. Yeah. And this is like someone's gave you a paper cut. Why are we writing about this? But do you think it's a paper cut or are you supportive of this? I support it in the short term. So there's a few things, there's a few nuances to it.

1:18:21the state government's making transport free for students. I don't mind the student free, by the way, that's fine. Why are pensioners getting, like pensioners are the richest people in Australia. They're the last people who, the old people have all the money. Have you seen the house prices? You know how rich these old people are? No, to qualify for a, I know you're a baby boomer, you have a great love for this, but us exennials like Mike and myself, we care about the younger generation. I never, I can never work out when I disagree when you're going to play the argument and when you're just going to try and tear my arms off.

1:18:51Now, I tell you the issue with your pensioner comment. Number one, if you really are a pensioner, it's means tested. That is true. And number two... So I'm using pensioner as... It's hard to... Anybody over 60 gets free transport. But it's hard to know what to do with people that have these primary residences that are worth a lot of money. Millions, millions. That they've lived in for their whole lives. And I think that's... We're not going to talk about it now, but that's this whole reverse mortgaging to try to unlock some value. but 70 mil, I mean, look, I don't like any of this because the flip side is, I mean, I'm sure you don't catch public transport.

1:19:28I do. Well, have you caught a train since they've made it free? Ah, not made it free. Have you caught a train, Mike? Yeah, I have. What do you think about the train? I didn't mind it. Oh, it wasn't packed? I mean, in the time I went, it was pretty packed but it didn't feel more than normal, to be honest. Okay, well, in peak hour, people are basically saying they can't get on the trains. Well, it's better than not being used at all. My point is we paid all this money. We paid$40 billion for this gold plate. Why don't they make the Westgate tunnel free? There you go. They'll get some people using the Westgate tunnel.

1:19:56I don't think people use it anyway. I think if it's free, they'd use it. Well, the Westgate Bridge is free and people are like - Westgate Bridge busy. Yeah. There's no one going in the tunnel. I don't know. Well, the problem is the time saving is not enough to justify the tunnel is the problem. The cost, Jim, man. Yeah. Yeah, so why do you make that free as well? Why does anything cost money? Why do you make the tunnel free? Did someone - Is it private, the tunnel? transurban or something transurban yeah because they have to build it they have to build the thing but like there's a contract they can't they can't but the government can pay for it I'm sure transurban will be totally happy if the Victorian government pays tolls I think it's much harder to make a tollway free for drivers driving BMWs than public transport for battles like it's very different what word are you looking for to explain that politics yes of course and this 70 mil which you so strongly believe is for the greater good of society in tough times that is to buy votes the fin review is correct I don't know, but Finnerview is wrong.

1:20:46Finnerview is focusing on the wrong thing. Finnerview should be saying these things. They also say those other things. But they worry about the 70 million. What about the 40 billion? 40 billion is a lot more than 70 million last time I checked. I know that you find this hard to acknowledge, but most people can't harp on for two years about the same point. They have to find other things to write about. I'm not an issue with that. They have to find other issues to write about, right? And so this is another issue, and they are correct. this is basically happening because there's an election in November and I think the government thankfully is looking shaky for this election in November and so prepare to see a whole lot more spending coming between now and November.

1:21:24This is the most appalling government in the history of Western civilisation. Dan Andrews and Sintas should be hanged from the street if you ask me. I know. That's why no one asks you. Mike, what do you want? If the government's paying out, what do you want? What do you want them to pay for? Do you want them to pay for rent? Yeah, I'd love that. You haven't got your own house, though, nowadays. I want them to pay for everything. Mortgage. No, I think the public transport being free is a really good initiative. That's good. Will you pay an extra$10 a week from other people to get free public transport?

1:22:00Because you are. You just don't know you are because they took so much of your money already. Yeah, I know. Well, that's the thing. There's two points. The answer is no, by the way. you would not pay an extra$10 a week for other people to get free public transport. There's two points you're ignoring. One is that they spend all this money building this infrastructure nobody's using. So I'd rather people actually use it than they spend it. The train infrastructure is old. They spend$15 billion on this new train line that nobody uses. On the metro thing. The metro, yeah. Well, make that free. You can't say one line free.

1:22:28You can do whatever you want. And they're really making it free for old people and young people anyway. So it's already unfair. The people in the middle who are paying taxes, they're the ones who weren't getting it free. so you're not actually making it free for everyone. You're making it free for the middle taxpaying percentage. Why are these old millionaires getting free transport? That's what you should be annoyed about. Not the taxpayers getting free transport. You're annoyed about the wrong thing. You and the AFR have missed the... Buried the lead, missed the post line. I'm happy to be lumped in with the AFR.

1:22:54Well, you could argue that you want changes to over 60s having free transport. Absolutely. If someone's a pensioner and can't afford it, I don't have an issue. But that would produce more money, not less money. So this produces less money. I think kids should get it free. Why do you think kids should get it free? I don't think kids should be paying for public transport. You know kids are not paying. Their parents are paying. Well, what else should they get for free? Parents. People get free schooling. So I don't have an issue with that. Do you have an issue with that? You can't deduct private school fees.

1:23:23No, but the government funds private schools. You think some of your private school funds... For schooling? What else though? Health is free. Some of my kids want a Slurpee. Free or not free? No, you're not Slurpees. No, free. Okay. I'm trying to where's the health is free. No, but if you're funding school, if you're funding schools, getting to schools kind of makes sense. Dental is not free. Yeah, sure. So that's not. You do get some Medicare for dental, don't you? There's no Medicare for dental. I thought there was. There's private health insurance. You could be right. And so what? No, but this is, you see my point.

1:23:53Like, where do you draw the line? School shoes? Free or not free? Uniform. Should be free or not free? No, not free. Why not? Trains are free. You got to draw the line. But uniforms are public. Trains are publicly funded good, whereas uniforms are private. I'm a private enterprise. I love your argument. There's all of these things. There's like no obvious consistency to me, but your ultimate retort is, well, you've got to draw the line somewhere.

1:24:21No, I've got much less of an issue with giving everybody free when they're giving all these people free is more my point. Like why are millionaire old people getting it free? That's the biggest joke of it all. and making taxpayers. You could be someone earning 60 grand a year, paying full tax, you're paying$10,$11 a day on public transport. A multimillion dollar old person who's paying no tax and getting super rorts, they're getting it free? Like the whole thing is completely... There's a much bigger question that you need to answer, which you're not going to have time to answer now. But this is actually, honestly, the ultimate question.

1:24:49How do you create a situation in a democracy where people vote for a leader and that we've been doing this for long enough that people in politics have worked out how the machine works. How do you create a situation in that environment where everyone doesn't just give money away to buy votes or become completely populist, leading to the eventual downfall of Western civilisation? Which is what's happening in every Western country, pretty much. Happening in Europe, the communist countries of Europe, happening in the UK, happening in the US, happening here. The answer is probably to extend terms, I hesitate to say.

1:25:22But UK's got five-year terms, hasn't it? That's just as bad. No one lasts. That's a problem. They all are. That's the bigger problem. That is, you want to talk about a topic. The US has four-year terms. They spend just... I'm not sure terms... They have midterms. They have midterms after two years. It's like they have elections every two years. And so I think ultimately where democracy is going to end up going is extending term lengths so that people have time to be hated for doing things that need to be done and then enough time to go and buy votes again and be loved by the election. I agree with longer terms, although I'm not sure that's...

1:25:55I think what we need... And we saw in the 90s in Victoria, when the cocaine-kerner government got voted off, that only happened really because banks started failing and people could so clearly see that the government's incompetence was costing them. The problem with, like, you look at Victoria now, or if you replace with UK, US, whatever, is the people don't realise how much the government incompetence has cost them because it hasn't impacted them directly. That's the problem. Banks aren't collapsing. People aren't paying. In Victoria, 20 % of people pay all the tax. The 80 % of people just free ride off it.

1:26:21So that's the problem. And you've got a government that's, The rat-cunning government of Andrews, Allen, is so willing to exploit this stupidity of voters. Voters are voting for their own downfall. I wouldn't say it's stupidity of voters. I would say people are just acting short-termism in their own interests. I think stupidity of younger voters, because younger voters voting in these left-wing governments, and they're the ones who are going to be the most harmed by it. It's not the older people that are going to be harmed by it. You can't call people stupid because they don't have the experiences that you've had because they're younger.

1:26:51Like, it's just, like, that's what we were when we were younger. Like, experience changes your view. And also... I was a more conservative voter when I was younger. Were you? Yeah, absolutely. I'm surprised to hear that. Like, Queensland had a pretty bad government that got voted out. But New South Wales had a fine government. Like, it was okay. It wasn't... You mean the Liberal government? Yeah. And, like, the voters still decided they wanted a change. And then they've got another pretty good government in there as well. I think they're pretty similar. And so it's hard to know what's going on at the moment in democracy.

1:27:18but definitely one thing that's going on is that politicians have worked out if you want to get elected or re-elected, you should not do unpopular things. And that is... Not do brave things. Yeah, and that is really the driver of everything that's going on in Western society right now. I'm somewhat heartened by... Hark back to those comments in The Age, the comments criticised in the NDIS. That gives me some hope that the left-wing readers of The Age are saying enough's enough, this waste fraud... It's because they're not getting the money. that's the reason they're just angry that their money's being stolen that's the case for a lot of like most of these benefits only some people are getting it's just that people nobody cares about it but in this case actually nobody not that many people care about hand out here like srl whatever like people just seem to not be bothered by it because they don't realize they're paying for it whereas the point with the age voters the age readers on on india is that they realize they're paying for it they realize that things are raw and finally it's actually twigged and good on to an extent good on labor obviously i haven't gone anywhere far enough good on labor actually making the first step and actually saying this is unsustainable yeah yeah well i'm sure we'll be talking about this more episode 199 will wrap up we've got big 200 on shoot on saturday so uh that is exciting um we will be back of course for our ask us anything big number 200 thank you mike and joel thank you idea we'll see everybody on saturday