Meme Hero Frank Greeff Joins Pod, OpenAI vs Anthropic, Clare O'Neil's Budget Slip, SexyLand get Hot, CTM Crumbles and is SpaceX the Most Overvalued IPO Ever?

22:20So I'm like, well, that's a nice fry pan. I'll get my 70, 80 credits and redeem it for a fry pan. That's cool. And it runs for a certain amount of time. And then the time finishes, right? And then I've still got 30 credits left, but I had nothing to buy. That was okay. I was happy for them to expire. Two weeks later, there's a new promo. Guess what? It's Curtis Stone glassware. Same guy they're paying, right? What do you think happened to my 30 credits that I had for Curtis Stone Fry Pants? Gone. Where did my credits go? Start again. Breakage. Don't you think that is a bad customer loyalty? That's bad, right?

22:54Yeah. How could they not retain the credits and give you some feeling that you're invested and bought in? Also, it makes you more likely to want credits in the future. That's right. If you get home at a breakage, they probably wouldn't value you much anyway. So I know there was a long lead into that, but I really think so much, like there would be a hundred people employed in the loyalty department of these businesses like is this not the most obvious thing don't make your customers that you're trying to make loyal feel like you're taking credits away from them when the next thing is called the same guy's name by the way i've redeemed those glassware credits in the past i preferred the fry pans and guess what i think woof is running a fry pans promotion now so you can get it exactly if i can get everyday rewards now tell me this company i'm going to say something and you tell me what this companies you're going to love this company yeah and then you're going to tell me if you think you're surprised by the numbers so this company is a private company it's a retailer they're now trying to shift from selling other people's stuff to their own stuff they've got 17 stores i think is my recollection from reading this they're they hit a high of 40 million dollars of revenue in like the kind of post-covid period but they've been sliding it's not a huge business They're now down to$36 million of revenue and they keep$4.5 million as EBITDA.

24:10So decent-sized business. Now, this business sells products where you might be a bit embarrassed about being seen going into their store. You know which business this is? Mike, you want to have a guess about this business? Sexy Land? Yes! You got it. You got that very quickly. Nailed it. So what do you think about those numbers for sexy? It's owned by a 70-year-old guy. He owns the whole company. There's quite a few. How many are there? 17. Can I see one on the way to the airport? Do you not think every time I talk about something, I say some fact and then at the end of the story, Adam comes back and says, well, what did you say?

24:47What's the story? 1717. What's the business again? Ask Mike. Mike knows it well. Mike accounts for probably half the revenue of that business. I actually find the stigmatism of this stuff really wrong, by the way. I agree. I agree. I'm going to video you going into the store, shopping that thing. We'll put it on our posts. Go on our YouTube channel. I'm really not a big customer. I actually find that people demonising that's wrong. I would buy that online if I was going to buy it, just to be clear. We used to sell it. We sell heaps. Yeah, I would do it online. Yeah. That would be a... It was easier.

25:18I think I'm in an age where there probably would be a bit of a stigma attached to it. Yeah. And so I probably would buy it online. Yeah, I think like hen's knights and all that. It's very common to go there. Yeah, people like to buy it as if they're joking about the stuff they're buying. Yeah. And so that's how people – that's how they do it, right? They pretend they're joking. It's extraordinary. So what do you think about – I thought it would be a bigger business, actually. I'm surprised it would be$40 million,$36 million. I thought it would be even$100 million. $37 million,$4.5 million of EBITDA.

25:41Yeah, and there's leases and stuff in that EBITDA, maybe. Shockingly unprofitable for a company selling adult stuff. Yeah. Like you look at – It's usually a great margin adult stuff. Yeah, because like, you know, because of the stigma we spoke about. Yeah, exactly. And so they are transitioning to direct. Yeah, which makes sense. But you look at – I know this is not a – you can't really compare this because one's a digital business, but you look at OnlyFans, which is basically a porn business, an amateur porn business. So that makes a lot of money on great margins. Now, they don't have to buy products.

26:10But it's very much a platform. I agree with you. But, like, if you're going to go and do this industry, like, I would have thought the thing about it is it's going to be a bit awkward at the barbecue, but you get to make tons of money in return. It's much less profitable than I expected. Yeah. I'm surprised. I thought these guys would have massive margins for the reasons you explained. and this isn't that many stores so you've got minimal and they're they're very visible you drive past and tell a marine the way the airport you see really clearly like good branding that's a great point uh we've got a really special guest in the studio on the phone uh can't wait to have him on and we're super pumped to have a genuine legend of australian entrepreneurship on the show we're joined by frank grief who went from grinding in the kitchens of sydney as a chef to co-founding a business called real base with his brothers engineering an incredible 180 million dollar sell.

26:59He's back in the trenches with a business called Kinsale AI and is also leading a campaign to raise a million dollars for children's cancer through his cookbook Eat With Purpose. And he's also challenging the status quo on how founders manage their mental wealth and equity. Even more impressive has been Frank's incredible honesty and bravery in challenging the appalling CGT changes being forced through parliament by the Gen Z hating Labor government. Frank created the elbow co-founder meme which went massively viral and it's been leading a rear guard action against the changes which will of course destroy jobs and hope for millions of young australians while lining the pockets of millionaire labor politicians frank you've been a outspoken and brilliant on this topic uh what were your first thoughts when you heard the budget um firstly thanks for having me so uh look so i i kind of first became privy to it like maybe like two days prior i think i like a little bit late to the punch.

27:51And I remember it was my brother messaged me on like Saturday and he was like, have you heard about what's going on? And like, it actually kind of like rocked my world if I'm honest for like 48 hours. And it was from like a, it was like a few different levels. I think, I think like the first one was just like, you know, like I'm very close to kind of the business ecosystem here in Australia. And yes, I may be, you know, slightly biased to the business types that I'm with and surrounded by. Certainly, it's not all just tech. It's e-com, it's retail. There's a pretty big mix and makeup. But I think the biggest thing for me is meeting a lot, a very wide variety of founders here in Australia.

28:31And just like, I guess, I don't know, like celebrating ambition and seeing, especially like the young founders in Australia and getting heartbroken every time they move across, move overseas and go, you know, like, I'm going to go, you know, let's say move to San Fran or whatever. Every time I hear that, it kind of broke my heart. And so the first thing that came to my mind was, you know, I feel like we've been having this like incremental momentum in the right direction, you know, like the capital markets, the VC markets in Australia had been growing, you know, more and more young people that I've been meeting were like keen to get into the world of founding business.

29:04And so the first thing that came to my mind is So it's like, holy shit, is this going to kind of like rip that out of Australia? And, you know, we have a few things, I guess, going against us, but we have a lot of great things in our favour. And I was just, you know, immediately like, okay, is this going to stop the momentum? And they're going to put a pause on that. So I want to jump in and say you created this meme and the meme became the meme and was replicated by a huge number of people in tech. But also, like, Elbow himself commented on your meme. I thought it very – it was not – it didn't cover him in glory.

29:40Like, he basically said he was just happy to look so nice on everyone's memes that included him as a co-founder. But, like, how did it feel to see that meme go bananas? And what was, like, the craziest moment that happened through all of that memeing? I guess for absolute clarity, I tell you what, ever since being dragged through the mud of the media, I've become a stickler to make sure every piece of nuance and detail is shared. I should start by saying, so we didn't create it. We actually had an early founding member of our new product, Kinso. He came into the office that day to launch onto the product.

30:13And he shared us with this idea, like, I'm going to do this post. And we're like, oh, that's awesome. We'll get behind it and we'll do a bit of a call out. And so that kind of helped certainly supercharge it. In terms of the craziest moments, it was probably getting those. I started getting messages about how this is kind of ricocheting in the politicians' world. And we're getting reached out to by so many media establishments, like traditional media, hearing from whichever politicians going, oh my gosh, this thing is going crazy in the four walls of Canberra. And that was a little bit weird and wonderful.

30:55But to be honest, it makes sense because social media these days is a very powerful thing and it can reach a lot of people. And let's be honest, a lot of media is trying to cling on, is trying to hold on to their once glory days. And so something that's going off on social media, they'll certainly jump onto and grab to make sure that their stories are relevant. I think one of the great myths of this budget is that it's a budget that helps young people and is bad for older people. when I think if you look in reality, pretty much everything that older people, older rich people have as a time remains from superannuation to grandfathering in CGT to grandfathering in negative gearing.

31:35So older people keep everything. And I put sort of, we're not that old, especially you, Frank. So one of the great myths is that this hurts rich people. Actually, like if you look at you and all the other great founders who have come out sort of opposing, so Paul Bassett, Lee Jasper, they've all had their exits. You've had your exits. You've got your monies. It doesn't actually hurt you. Yes, you've got other businesses coming, but you've got, you'll be fine. It's the younger founders. I think that's what's really caught on the thing. So many young founders use your meme. These are 20, 25-year-old kids who haven't had a chance to buy a house, can't even, can't buy shares because they can't afford, they're founding a business with zero cost base and they're the ones getting smashed.

32:10And that's the thing that's what your meme has done so well to point out. Yeah. I mean, that's the, like the thing I was most nervous about, I guess, being vocal about it was exactly that, was kind of like and that's kind of where the narrative ended up going but it was like i was like i i was in the you know prior to these rules i was able to grow this business um pay shit loads of tax along the way and a big old check at the end of it um but it's fine and so like and then the reality to what you're saying is like anybody who's made their wealth no problems because you know one they they you know the people who've made their wealth can always figure out a structure or alternatively you know like the sad truth is people who've made their wealth might be like okay, great, investing in businesses or investing in shares is no longer the optimal vehicle.

32:56Okay, great, no worries. I'll just park it all in my primary place of residence, which is 0 % tax. Great, no dramas, and I'll outperform. It's the younger people. It's either the next generation of hyper ambitious who want to build a big business or just the everyday business builders as well as just regular people. One of the things I think is completely out of touch with this kind of reform is all the young people I have spoken to, you know, prior to this, whenever I spoke about property, it's kind of like, oh, look, property is out of reach. You know, you jumped in, or I'll say you jumped out, put your head up, made some comments that I thought were very reasonable, not dramatic.

33:41I'm on a podcast where I know what dramatic comments sound like. Your comments were not dramatic. They were very reasonable. I presume like, you know, you've had some media exposure in the past because you did a good job of exiting your business and you're doing another new nice business, but it's not this level of exposure. I mean, tell me like in one sentence, were you shocked by the level of hate that headed your way as a result of this? Yeah, yeah. Yeah, like 100%, you know what I mean? Like to your point, I was like, I always like to think I'm a good guy. You know, I'm like, I spend so much time campaigning and helping younger generations.

34:19I talk at universities like every few weeks. And then, you know, to just get like, you know, get these media places to clip up tiny bits of what I'm saying and then get dragged through the mud. And then, you know, I've had a fair shitload of people just like sliding into my DMs or sending me emails or whatever. Just like, you know, I won't say the profanities. It's horrible, right? I mean, I think people – it's very easy for people in general to misunderstand that someone that is saying something publicly and maybe has had some business success is governed by the same set of human emotions, generally speaking, as they are.

34:54And, you know, they just forget that you're also a person. I mean, one of the things I wanted to talk to you about is there was an article in the Sydney Morning Herald. Oh, yeah. That I would say, I mean, I've had a hatchet job done on me in a very much not dissimilar way, I'll say, without going into detail. But you got a hatchet job done on you is how I would describe it. You got to – it was – it disparaged you from making$180 million and not giving it to your staff and having the audacity to have a view on taxation. I think it juxtaposed you with Tim Doyle. and Tim is a great guy, I know Tim well, but like you both built businesses and you both built them in a way that worked for each of your businesses at the time, so, you know, created this conflict, attempted conflict in the start-up scene.

35:47Presumably you felt that article deeply misrepresented your views but also was a personal attack or am I more upset about it on your behalf than you are about it? No, I'd say that's a very fair characterisation. I think so I received maybe on Wednesday last week was like a list of questions from the journal. And immediately I was like, okay, there is a hit piece coming for me. Because it wasn't like, you know, I want your take on these. So you knew what was happening. I knew it was about to come. And because the questions are very aggressive. The questions were all related specifically to me in the context of like the business, our performance post exit.

36:32and I was just like, wow, okay, this thing is going to be nasty. And it felt very different to the rest of the other questions that any other journos had sent me the week prior because the rest were kind of like, what's your view on this thing? This is all like about me and about like either things that he had found in podcasts that I'd said at some stage or comments that I'd made publicly because I'm kind of a transparent person. So I've had people before ask, how much money did you make on the exit or how many shareholders were. And I'm very like transparent with going like, okay, this is how many shareholders were, blah, blah, blah.

37:07So I knew it was going to be dragging me through the mud for sure. Can we go into a bit of detail because the information and I think we both found it really unfair for multiple reasons, but just to get the facts on the table because they weren't really, they were almost misled, maybe unintentionally, but misled the reader into thinking that you didn't share anything, you kept it for yourself. But you obviously had, not only do you have co-founders, but you actually did very generous with equity. So can you talk how many people got equity? What was the size of the business, call it, a couple of years after – or a couple of years before you sold it?

37:38So obviously your business did grow a lot towards the end and you don't – like if someone started a week before you sold the business, no one gives them equity. So why don't you talk a bit about the evolution of the business and just how you did give your team a lot of valuable equity? And why those – I read that it was seven people, but why those seven people – like when they got equity and why was it those seven and not 100? For sure, for sure. So this is the, you know, when I got those questions, this is the kind of nuance that I made sure to put in there because it changes the entire dynamic of the story.

38:08So the context is when we launched our first business, myself and my two brothers, you know, for five years, we're a pure, you know, services-based company. Then we shifted into tech. Now the early stage team members that were with us in that business we gave out equity to multiple of them. We also had, you know, and of course, this is the kind of stuff that doesn't make it a story, where in those early days, you say to a team member, look, we don't have much money. We can offer you one of two things. Here's a 10 grand pay rise or alternatively equity, but just note it's high risk. And multiple employees said, no, I'm all good.

38:45I'll take that 10 grand pay rise, right? But that doesn't make as good a hit piece on us. Yeah, that doesn't sound very negative to me. So don't include that. And then from there, we grew to a team of about 40 people. And what actually happened is we got approached by our largest competitor. And our largest competitor said, hey, we want to do a merger. Now, that business was eight times the size of us. And so we went from$4 million revenue to$38 million overnight. And so what happened is you go from my brothers and I, we own the great majority of the company. to now we own 50 % between us and the early equity shareholders that we brought on.

39:30And so when that moment happens, the merger, like I was a majority shareholder at 15%. And as you guys know, you don't control the decisions of giving out. You guys don't just give out shares. You go to a board structure, present it, da-da-da-da-da. It's not that easy anymore. but also from that merger point, so that's at that point of merger, we then had 10 shareholders. From merger, which is, you know, 40 to 350 people overnight, within 12 months we'd started the acquisition process. And those staff are not your staff. Like they became your staff but you've got another 300 staff whose equity structure you were not responsible for, who came with another business who had nothing to do with you except competing against you prior to the businesses coming together.

40:22They also wouldn't have got much equity anyway because it's so late. They would have got a couple of – as in between them, a couple of points. So we're talking single, low, single digits. But that's all right though because we can – like I do give credit to Tim and the others at Eucalyptus who did set up a structure from the start to give out all of this equity. But it's a totally – But did Tim give that much – a quarter of Frank's staff had equity, which is a very high ratio, I would have thought. A quarter of the original team. Yeah, had or probably more were offered equity. More would have been offered.

40:52Probably half would have been offered and a quarter took. That's up there with anyone in Australia. So the whole framing that Frank and his brothers were villains for not giving equity is just fundamentally wrong. It's just a complete stuff up. And also misunderstands capitalism. But capitalism is very unpopular in this age. But even forgetting that, that's an extremely generous equity scheme. I agree with you. I agree with you. And so what – you know, look, I'm not really one for conspiracy theories, but you might be. And so, like, do you think – like, why was that article written about you? Like, I was – it was a very strange article that was very consistent with the government's talking points and very nasty about you.

41:33I wrote pretty quickly, this looked like a Labor. Labor does this better than anyone in the world almost. This had to come from a chief of staff or from the massive Labor dirt team. Well, it might have. It wouldn't have. Well, we can't say it had to, but it might have. Maybe Dan Andrews freelancing a little bit for the federal guys. Not much of it. You got Dan Andrews into the conversation. And so you just, have you, I mean, do you have conspiracy theories on it? Do you think it was just mean? Do you think it was clicks? Like, do you have a view on this? Oh, look, I won't lean on to the conspiracy theories in preparation that this will get chopped up.

42:05So I couldn't tell you, but I think the last piece of nuance that was very cleverly left out of my statement was we started the business when we were 20 years old. You know, I was a chef. My brothers had never had jobs or bosses. That's an amazing story, Frank. Like that is an incredible story. We had no idea what it was. Like so one, you know, people have asked before, like how come you didn't raise capital? You bootstrapped. We just didn't even know there were capital markets. You know, like we didn't, like we didn't, you know, and it's like how come you didn't have a sophisticated ESOP? and it's like, we wouldn't even know what ESOP was.

42:40So when we gave out shares, it would just be like straight equity and you just transfer shares to that person. You know what I mean? Like if people were working with us for a year and it was like, okay, here is equity and we didn't know anything different or better. And so the key is like, okay, you learn a bunch of lessons and then you go like, well, what do I take from those lessons to apply to the next? And that's why the critical piece for me was like, in our new business, I know about an ESOP. You know, I know what, you know, I know all that stuff. And now it's like 10 out of the 11 people.

43:07and soon to be 11 have ESOP and, you know, they have all the right structures. And so I think the key difference between myself and Tim Doyle, apart from a couple of zeros because they did an incredible job, is like they were backed by VCs. And so when you get backed by VCs, like the VCs, like, okay, we want to make 10 % to 15 % part of this as an ESOP program. There's a bit of guidance that happens. In our world, there was none guidance. And Tim has been around the block. Tim was around the block with Koala, which was also VC. Yeah. You came from a place that many founders come from, which is I'm young, I'm new.

43:43I don't want to say unsophisticated. I'm just new to this world. I'm unsophisticated in this world of money. It's not even that. We wanted to give equity for ages here. It took us probably six, seven years to get it done because it costs like$100 ,000 to get it set up. It's expensive to get it put yourself set up. We now give a chunk of stuff, but it took a long time. So it's not as if you can just click your fingers and do it either. We've got to wrap up, Frank. you've been amazing and just a you talked about something called anti-truth a few about a month ago and this is a classic case not only have you been tarred completely wrongly but we obviously met we've met before where you were raising money for your charity which was incredible so you've been not only amazing founder but incredible charitable person so to be tarred like this is so incredibly unfair such anti-truth i'm really disappointed in 20 for writing the article because i like him i think he does a good job but i think i think he's been briefed here by evil forces inverted commas who have an agenda to push and I think you're the innocent victim of trying to do the right thing and this is what happens.

44:40Well good on you and hopefully you know we we met because I just sent you a message on LinkedIn feeling bad for you and hopefully you get those messages as well of support because we live in a democracy and it's every citizen's right to be able to speak freely about things that the government is doing and you you were not even abusive or insulting god i see all that all over social media it's my linkedin page you and even that and so i would just really encourage you not to be dissuaded by this and to keep speaking because i think your voice is measured and it's smart and it's pretty young and it comes from a place of personal experience or what is it called now like my own truth or something and so i really would encourage you to keep doing that frank i think it's really terrific thank you guys i i I appreciate it.

45:28Cheers, legends. Have a good one. We'll go to a super quick break. Back with more Contrarians just in a moment.

45:41And we are back. And it was possibly the world's second largest ever fundraising. And it was barely reported. And this is pretty incredible. Anthropica, we talked about just a few minutes ago, raised. Do you know how much they raised last week? I know their valuation was like close to a trillion dollars. $965 billion. I call it a trillion. They raised$65 billion. So it's a decent raise. Cash. Well, devil's in the details of these things. $65 trillion NVIDIAs or$65 trillion? Well, I don't see NVIDIA. They have Samsung, SK Hynix and Micron participated, but I don't actually see NVIDIA. You know what those companies are that participated?

46:15They're the memory businesses, right? Yeah, they're memory businesses. Yeah, and they've been like 10X in the last year. If you look at – I mean, I didn't mention this, but Micron, obviously they've rocketed. Remember when I did that whole big kind of rant about AI and the whole stack. I said you should buy cooling businesses. So they've gone well. But also Sandisk, you know, that business. An Israeli founder company, which I thought that ceased to exist. Yeah, that's right. So, yeah, they've 10X'd. Yeah, it's just crazy what's going on. So it was led by Ultimate Capital, which I think Brad Gerstner, Dragonair, Greenaxe, Sequoia, Capital Group, Kochu, D1.

46:47So these are A-grade names. There's also Bailey Gifford, Blackstone, Brookfield, D.E. Shaw, D.S.D. Global, Fidelity. These are the biggest investors on the earth. So these are smart. These are super smart people. The Journal reported last week that Anthropix revenue is doubling to$10.9 billion in the second quarter. We talked about earlier that 10x, 10x, 8x. That is just unbelievable. They're forecasting a profit of$559 million, which is super precise for the June quarter, given there's a third left. In the first quarter, Anthropix spent – this is the first quarter this year – Anthropix spent$0.71 on computing power for every dollar.

47:19It's down to$0.56. That's some real scale, which is obviously why they've turned profitable. Open AI, which we talked about enough ago. How do you think they've scaled that? Do you think it's just utilisation? I don't think so. I don't know, but clearly some scale benefits coming through there. So the only way you can get... Charging more as well, maybe? Well, so the only way you can get better margins in this business is one, you say we weren't fully utilising, but that's impossible. They've got the opposite problem. Yeah, that's true. They're over-utilising. They had to pull back. Two, you get cheaper chips from NVIDIA.

47:50We can forget about that. So that's NVIDIA's profitability is linked to that. three they're using other chips that are not NVIDIA definitely possible cheaper chips or four they're charging more that is probably likely as well OpenAI raised$122 billion which I think was the biggest round ever this was in March at$852 billion so Anthropic is now more valuable than OpenAI and OpenAI is$122 there was some big asterisks around that there was a lot of sort of in-kind and chips and all that kind of stuff so I think there's less of that so this is if we went back a year Anthropic was like a tenth to the size a tenth to the valuation of GBT You have open AI, I should say.

48:24It is now more of it. This is unbelievable. I've never seen a business grow like this. Well, I don't think a business ever has grown like this. That's why. Yeah. It's the first time ever. The question is, what would make it worth a trillion dollars? And I think the answer might be, like, these things, I mean, forget about what their terminal growth is. I never subscribed to that concept. But let's think about their growth in five years' time. Probably it would be 30%. They'll still probably be able to grow 30 % is my guess. And so if they were – thousand percent so i know so they'll probably i know but it probably will slow like they can't keep this level it's ready to start a little this year but still crazy and so if a business was growing at 30 percent and making some of i'm saying this but like making an impact of 20 to 30 billion dollars you could probably say that feels like a trillion dollar valuation yeah and so the question is what do we think their margins are going to be their impact margins in five years time and i think the biggest challenge they have is that like what are they really selling They're selling a service layer sitting on top of other people's hardware.

49:28Yeah. And the service layer attracts a premium. Obviously, you can see that in the pricing. Is the hardware going to go down over time? Maybe. Is the cost of it to the gross margin? Are they going to get more leverage to increase pricing power over time? That's my big doubt. My big fear is it goes down, right? 100 % goes down. And so I think – You've got the lightweight. You've got competitors everywhere. You've got the distillation stuff. You've got people that are going to have fundamentally lower cost of goods because they're making their own chips and they own their own data centres. There's not huge switching costs with LLMs.

50:04Like we're seeing as – There's a bit, you're right. There's a little bit, but it's not major. But as the price of Anthropics now is skyrocketing, people are just desperately trying to find alternatives. If you can get 90 % less token cost, you're going to probably switch. So that's what's happening. Yeah, and you know as – They're growing notwithstanding this, by the way, but eventually they tap out. Yeah, and so do you think that they're going to be able to do 25 % NPEP margins in five years' time? Probably not. 15? Probably not. But let's say we multiply their NPEP by seven. Yeah. That's what, that 14.28 % or something, right?

50:39That's a bit generous, but yeah. Something like that. Yeah. I know, that's high, right, as an NPEP margin. We could multiply it by 10. Yeah. So the question is, do you think they're going to have$250 to$300 billion of revenue in five years' time at those margins? Yes or no? Oh, easily. The rate of growth, they will for sure. You think they'll get there? Well, they've gone from 10X, 10X. So, they'll probably be 80 billion into this year. Eight zero. Eight zero. Yeah. So, can they get to 300? Yes. How fast? Even though they don't 10X, even though they go from 10X to 3X, that gets them better in a year.

51:08Yeah. So, it's possible. That's easy to hit, I think. And so, and then... I think the margin's the question, but the growth is the question. Well, the margin in a year's time is going to be better than that because they've got better margins. Like, their impact margins will be stronger than that, won't they? Because they're going through the scalable moment. No, but I think to keep growing, they're going to have to keep reducing costs. So there is competition there. So I think where I think, not so much you're wrong, you're just proffering different views. I think the growth continues, but the margin starts compressing real bad.

51:34And so... But the growth is so high, it overcomes a lot of that margin compression. So a trillion dollar valuation is not ridiculous for this business in the way it is for Elon's businesses. We'll get to that. Yeah, but it's not... You can see how this could be worth that. Yeah, absolutely. And today – It's almost like a late-stage VC bet now. And if you want to get in, because there's not many of these to get into, maybe at the moment there are two. And if you want to get into one of them, you pay the price because of the supply and demand curve. These guys are way closer to profitability than OPI.

52:05Yeah. So, like, it's really just them. If you want LL exposure, it's got to be anthropic, which is why all these smart funds are doing it. They can't afford to miss out because it could 2, 3x. And so Alphabet now is worth what? Three or four trillion? Yeah, at least. And so the question is, would you invest in this at one trillion, Nvidia at five trillion, or Alphabet in the three to four trillion range? I'd still invest in Alphabet every day of the week, right? Which is why they're the most valuable company in the world. Yeah, Gemini's great. I love Gemini. Yeah. So it's what I tend to use. Partly because I'm really – I was pre-logged into Google, but I just like it better.

52:39But all of these funds can't invest in Alphabet because they're not public market funds. Although Badly Gifford is – Yeah, but this part of their business is probably private markets funds. They've got to deploy capital, and there is literally no hotter business in the world than this. And I think the act of being on that list that you just read opens up all of the other opportunities to them. Yeah, for sure. Let's move on. And it's been a big few days for the rotten to the core corporate travel agent, CTM. In a centre hearing on Friday, Deputy Chairperson Sarah Court said ASIC was looking at a range of different limbs of the issues of Corporate Traveller, including investigating order to PwC.

53:19Court also said the corporate cop is looking as to whether CTM directors breached their duties and it has refused any extension to its trading halt. Of course, famously halted. If that wasn't bad enough, Corporate Traveller is now in safe harbour. I'll get you to explain what that is in a second. Financially distressed but not yet insolvent and has brought in Allens and EYs as legal and accounting liquidation advisors. Do you know about the safe harbour thing? You'll tell me if I'm right with what I'm saying. My understanding of Safe Harbour is it's effectively directors saying we're worried that this thing might end up insolvent.

53:50We could be insolvent now. And so we want legal protections that enable us to keep trading it without being personally liable for the insolvency. Totally. And the AFR Street Talk, which I think gets probably the best business news back in Australia, got their hands on a confidential presentation to lenders, which is pretty epic. This is made on the 22nd of May, where Corporate Travel said it. It agreed to some of the UK to pay them$178 million. Australian all$95 million. Remember, they originally said it was going to be less, then they upped it to like a bit more than that and sort of reduced it a little bit.

54:23But that is a crazy –$175 million Australian. They've got under$100 million cash. Some of that's tied up. And they've got some debt facilities. We don't even know how much cash they've got now because they haven't seen it for a long time. And they've never been honest about the cash since 2015. Corporate Travel needs its lender syndicate, which is comprised of HFSC, Commonwealth Bank and Westpac, to agree to allow it to access more of its debt, which is, it's got agreed debt, but they need lender approval to release it. So it's kind of not really agreed. The lenders are owed$140 million total, made up of$65 million in bank guarantees and$75 million in a revolving credit line.

54:56Of the$75 million,$40 million is drawable and$35 million they need that approval for. So they can't pay the UK back without the$35 million, which is a problem, and they need approval for$35 million. If I'm a bank, I'm not giving these guys a cent because it's getting good money, the definition of good money after bad. Well, let's think about that. Because, you know, someone once said this to me. It's an old saying, but, like, if you owe the bank a million dollars, that's your problem. If you owe a billion dollars, that's their problem, right? And so – These guys are neither of the above. Well, the thing is this.

55:19So they've got$40 million down the toilet. Well,$40 million owed. And the question is – I think the$40 million revolver hasn't been drawn down. So there's 75 – so 65 in bank guarantees. But the guarantees – a bank would have security for that, I reckon. So that's not really – So the question is how exposed are they today? And let's say it was – I'm just going to pick a number. Let's say it was 100 million. I think they're exposed by 35 now. So if you're exposed by 35 – And they want another 40. Yeah. If you're exposed by 35 on this business and you're first ranked, secured, which means you can force the sale of every last piece of this business and every cent goes to you until you're paid back, they might think 35 million, we might be able to get this out of the carcass of this thing if we send it into liquidation.

56:10But if they're at 100 mil, they might think, well, this carcass is not giving us 100 mil. Maybe our only chance of getting back that 100 mil is to keep this thing trading. So in a sense, well, maybe in every sense, the best possible outcome for corporate travel today is to currently have lots and lots of money outstanding. Yeah, which they don't really have because they don't have that many assets. They're not like a heavy industrials business that can lever up. I'm surprised they've got this much debt, to be honest. So why do you think in that case? Because I always think it's – You know, people – it's easy to misunderstand the decision-making of a lender.

56:42And obviously, like, a lender that has security is different to a lender that doesn't have security. Oh, yeah, 100%. But why has this not been pushed into liquidation, do you think? Well, it's getting pretty close. That's the whole same part of it. Because they would have – like, you can't engage in this behaviour and have it not breach the covenants, i.e. the promises you make to the bank. I think there was an element that corporate – I kind of feel a little bit sorry for the chairperson here who obviously wasn't running – he's clearly been gullible and terrible as a chairman. But he was a guy called Euron Crouch, who's a lawyer who should know better.

57:12But he was certainly telling the market that we're going to trade through this, we're making money. Well, I was dubious. They haven't actually – if we need to take out the dodgy refunds, they haven't made money for years. So I'm not sure how they're suddenly starting to make money, but they claim this mythical profit. But Street Talk was incredibly well-sourced. They noted the people close to the presentation, which was made by the CFO. The CEO wasn't even in the room, bizarrely. A guy called James Spence, and he was described as deeply uncomfortable and a bit of a stunned mullet, which isn't particularly high praise.

57:40Apparently the stumbling block is that lenders are demanding directors sign a declaration that company is solvent, which the board is unwilling to do, which kind of says it all, really. The board is unwilling to stand by the solvency of this business. Well, I think when you ask for safe harbour, you're not going to sign a declaration that says it's solvent. Yeah, we're kind of in a cash... They're mutually exclusive. It's a classic cash 22 here, right? And this is recalled that Adir and I argued on whether this bunch of frauds would survive this mess. Which I haven't changed my view. We'll go to the grab now.

58:04I think more likely than not, CTM doesn't survive. But we'll see. All right. Well, I'll take that bet. What can we do with this? Within a year. Within a year? Okay, six months. Three months. Three months are too short because three months you can, like dead businesses can survive. 30th of June, end of the fiscal year. If they submit audited financials for next year, you win the bet. If they don't, I win the bet. I'm always happy to have this conversation with you about corporate travel, because I want you to be happy. And this makes you very happy to talk about this stuff. I just want to facilitate your happiness.

58:41But this is what I think. We know there's a huge accident, like a huge car accident. We're watching it in slow motion. All we're seeing now is bits of the car flying in every direction as we watch the crash. What we don't know is whether it's a fatal crash or not. And so, yeah, of course every bit of the car is going to go flying off in every direction in the meantime, but I still don't know how this ends. Well, my view is the car's driven off the bridge and landed 100 metres below in the river. And you think, oh, this guy could still be alive. Pretty sure the guy's dead. You know that scene? I can't believe I'm going to reference a movie scene.

59:15Like Eminem, Eminem Stan thing. No, I'm going to reference a movie scene for you, which is a very old movie, which is... Delma and Louise? No, it's... Well, I could have referenced that. But this is Butch Cassidy and the Sundance Kid. Do you know that? Do you know the scene where they... Is Robert Redford in both of them? Yeah, Robert... Oh, I don't know. He's in one of them. And so... You know when they say, we're going to jump off the cliff into the water and one guy says, I can't swim. And the other guy laughs and says, don't worry about it. The fall will kill you. Like, that's a bit like what you're saying about this, which I get.

59:43I'm just not sure I totally agree with that. For shares in CTM, shared by you and Crouch, of course, haven't traded since last August when new orders of Deloitte took over from PwC and first identified issues relating to earnings back in 2023, actually. At the time it was listed last year, investors still value the disgraced corporate travel giant at more than$2 billion. Everybody was just absolutely smashed by this. It's probably not worth$2 billion. I think we can probably say. Most investors are now written down to zero. So most investors seem to agree with me now. So have you, just more seriously, have you thought about a lunch?

1:00:14ACP down to zero? I don't think they're down to zero yet. Your mates who chose to invest in… That would absolutely not be called my mates. Who chose to invest in CTM instead of Catapult and have probably just absolutely done their investors' dough there. Well, you know what? In defence of that line, it is very hard to know what to invest in and it depends on your time frame. That wasn't my particular issue. Well, Doug Tynan's been talking about this since 2015, 16. So this was – and I've been talking about it for years and years. Like, this has been the most obvious thing. Like, the numbers didn't match.

1:00:40The cash flow didn't match the P &L. Now, as soon as Jamie left, you know these guys are dead men walking. When the founder goes, like, I gave these – this is, like, basically 0 % chance of survival. I'm now, like, confident it's at zero. I still have CTM clowns who work there abusing me on LinkedIn saying, oh, we're going really well. Well, I don't think you are, guys. But this is a massive debacle for a$2.3 billion business to just evaporate in thin air. What were you going to – I sidetracked you, but you were about to criticise me about something to do with lunches. Come on, get that out of the system.

1:01:09Yeah, well, have you chosen our lunch venue? Because we're always famous out of bed. I still owe you a lunch, and every time I ask you if you want the lunch, I feel like – What have you ever asked? I don't recall being asked. I feel like your attitude is I would rather have the pleasure of holding the lunch over you than consume the food at your expense. I'm not denying it. Now I've got two lunches. That's true. Now I've got two. I can probably attract one and hold the other one over you. Chickens, you know that saying? Count your chickens before they're hatched. This chicken hasn't hatched yet.

1:01:35Let's see. The chickens now, like the hatched chickens now having kids of their own, I think. That's how hatched that chicken is. Anyway, so I think I'll claim one. I might claim the goida lunch. We'll wait with non-baited breath. What's the opposite to baited breath? We'll wait breathing very comfortably and at a relatively slow rate. Well, now, obviously the famous first bet was the Richard Goida bet. He's now about to step down. Another debacle, but step down from Woodside. So he will now be gone from, thank God, gone from corporate Australia. Everyone eventually steps down from everything.

1:02:03Not too soon for this guy. No one goes forever. Yeah, sadly, this should have happened a couple of years ago. But it was AFL's in an absolute debacle, which he left. I like the AFL. What else have you got going? I know that you're very into that. Let's move on. The world's biggest IPO is soon to be upon us, with Elon Musk's SpaceX lodging its prospectus with the SEC to raise$80 billion in June, eclipsing, do you know what was the current title holder? Wasn't it the Saudi Aramco? It was. Saudi raised, they only raised$26 billion, but it was a$2 trillion donation. Chump change, chump change. That was quite a few years.

1:02:38It was pre-COVID, right? Founded by Elon Musk, of course, in 2002. Really the only business he's found, because he didn't found Tesla. We kind of found an X, which became part of PayPal, but he hasn't actually found that many businesses. He did found SpaceX, and it's really revolutionised the commercial space industry. The company grew from a start-up with a handful of employees that almost went out of business to one of the world's most valuable private companies with more than 22 ,000 workers as of 31st of March. It controls technologies that rival and even beat nation states. Do you remember the story of how he came up with his first SpaceX rocket?

1:03:11No. It's a great story. So he went to – he was wanting to buy a rocket for some reason and he went to Russia. This is sort of early Putin days so you could go to Russia. It's a crazy story already. It's not a Tetris story. He went to Russia. We can really start with the story that starts, he wanted to buy a rocket. That's an unusual beginning for a story. I think the precursor is he wanted to buy a rocket and it was really expensive in the US. Yeah. Well, I think rockets are usually quite expensive. Call it 100 million, whatever. I'm making up this number, but it's probably two-directionally right.

1:03:37He went to Russia and Russia said, we'll do it for you for 15 million. So a lot cheaper than the US, but still too expensive for Elon. He flew on a private jet to Russia, had his PayPal money, and they struck out with Russia, a bit like a Tetris guy. On the way back, he's doodling in the private plane. and realised, hold on, what's a rocket? It's a bit of metal, it's a bit of propulsion, a bit of gas. He literally went back to the first principles. Why don't we build a rocket? The raw ingredients only cost$2 million and America's charging$50 or$100 and Russia's charging$15. If I can do it for$2, this is a product market bit here.

1:04:09And he did it. He built this rocket for a fraction of what everybody else, and that's why SpaceX has become so dominant. Unbelievable story. That's a good story. The journal noted that SpaceX reported revenue last year of basically$19 billion, up 33 % on the prior year. did lose$4.94 billion. We'll go into more detail in a second. This was driven by a sharp increase in costs for R &D. In 2024, SpaceX actually made a profit of$800 million, apparently. SpaceX valuation earlier this year was$1.25 billion US. But of course, this seems to have like zero relationship with its earnings or its revenue.

1:04:42GQG portfolio manager Ben Larson said, SpaceX is trading at an eye-watering valuation with its IPO implying a price-to-sales multiple of more than 100. Price to sales, not only price to earnings. Well, hang on, hang on. Remind me the name of that X-Ray ProMedicus. ProMedicus. ProMedicus were at 300, weren't they? 300 times revenue. That was PE. Oh, 300 times earnings. Yeah, no. Fair enough, fair enough. They have very high margins as well. Yeah. 300 PE for them, though, and a 50 % or 40 % margin. Not horrendous. It has dropped 50 % since then, though. Yeah. Actually, obviously, that would mean only a 40 times.

1:05:18So they would look cheap compared to this. So investors are paying$100 for every$1 of sales. That's crazy. As the journal noted, SpaceX is known for building majestic rockets, firing those giant beasts of marvellous engineering into the skies and catching them with chopsticks. But the company's extraordinary ambitions are fuelled by a much more ordinary product. SpaceX has essentially become an internet service provider that also explores space, of course, through Starlink, which we both love. Which is their main driver of revenue, right? Absolutely. So it's got three segments. We'll talk about them more in detail.

1:05:49So space, AI and connectivity, connectivity means Starlink. Last year, Starlink was responsible for$11 billion of revenue, so 11 of 18, which is more than 60 % of total sales. It is the most valuable part of the business and the only profitable one. So if you look sort of more closely, if I go for the year-ended 2025, how much they spent as well. So they spent$2 billion on space. This is expenders. 3.5 on connectivity, which is called the Starling stuff. I spent 5.6 billion on AI, which essentially is XAI. So all this money going out the door is this frontier model stuff. But that's what Elon does, bring everything together so one thing cross-subsidises the others.

1:06:31100%. And the big advantage he has is he can always look every investor in the eye and say, don't worry about the numbers. You don't have to do any research. I always give returns to my investors. That's his big advantage. So if you look at cash flows last year, cash from operating in 2025,$7 billion. Cash used by investing is buying stuff, that could be R &D or whatever, negative$20 billion. And then financing$26 billion. So it's just been kept alive. I wonder why they're IPO-ing. Yeah, well, clearly out of cash. The only way they can keep going is by doing this. So you've clearly got – Starlink's a great business.

1:07:07We can talk about moats and – we both think Starlink's a great business. There's not a monopoly but close to a monopoly for that satellite. Obviously, there's lots of ISPs and Amazon's doing its Leo business and people are starting to come and do Starlink style business. You see, it's not exactly Amazon, but you see what's Blue Origin? You see that little disaster they had? That's par for the course. That happened to SpaceX for years. It did, but that just shows how far they are compared to SpaceX. As Elon says, Elon tweeted, our rockets are hard. So Starlink, great business. You'd question how much it's worth, but a great, great business.

1:07:41We can talk about it. Why don't we do a sum of parts? It's starting a great business and it's – if you look at it, it's got – it's subscriber growth. It's grown from 2.3 to 4.4 to 8.9. Although what I would note is it's ARPU, which is how much the subscribers pay. It's dropped from 99 to 91 to 81. So it's growing really quickly, but it's actually dropping its cost. That makes sense because it's moving from early adopters to more consumer. So not just planes. Planes have a massive ARPU. Then you can get a satellite at home. It's got$100 a month. So clearly that's shot the arp, but that's also why the growth has been high.

1:08:11Is it right for me to say most of the satellites by number in low Earth orbit today are Starlink satellites? I think that's true. 7 ,000 of 10 ,000 is some of the crazy number. And because it's got a near monopoly on launches, that's the – Starlink and SpaceX work beautifully together. So it just – effectively most – I think something like 70 % to 80 % of SpaceX's payload is actually Starlink anyway. So what are their earnings, did you say? So I think the Starlink business – so, yeah, Yeah, the Starlink business made$1.6 billion in 2023 up to basically$4 billion in 2024 and$7 billion in 2025. So this is adjusted EBITDA, so there's probably going to be some big asterisks around this.

1:08:47But this is a decent profitable business. A few billion dollars in profit, we could say. Yeah, even if you could at least give it an EBITDA multiple or whatever that EBITDA multiple is, if you're this could be a$200 -$300 billion business, Starlink, because there's so much TAM. It's not unlimited TAM because ultimately a lot of people don't need it, but every plane will have it, every boat will have it. I'm in agreement with you. Anybody in – so I think$200,$300 billion feels like great business, incredible business. I'm not sure – like the problem with SpaceX is SpaceX really exists to serve Starlink.

1:09:15So as an independent business, how much is it worth? I don't know. It's probably worth something but not that much. Let's give SpaceX$100 billion valuation. And you think this thing is like kind of a break-even business? In brutality? SpaceX, no. It's the rocket part. Oh, the rocket part, which is SpaceX loses money but it's sort of serving Starlink. So it's worth something. But you almost got to bunch those two together. Call it$300,$400 billion combined. SpaceX is not a genuine monopoly, but close to a genuine monopoly. Nobody can do this stuff. NASA can't do it. They have to use it. Boeing couldn't do it.

1:09:46But the thing is, not that many people need it. That's the challenge. Yeah. The problem is XAI. Yeah. This is a business that's burning$7,$8,$9 million a year. So let's look at the good businesses that are worth$400 billion, we think. And that's the bit he mainly cares about. Well, I don't know. I think, like, obviously that's the original Twitter, which became part of XAI. So you've got Grok, which is our LLM. We just talked about Anthropics. Probably we talked about Grok. So you've got Anthropic and OpenAI, it's kind of a billion-dollar valuation. But Grok is like a fraction of that size and not growing and not profitable and all that stuff.

1:10:14As much as Elon is a man of vision and some other human complexities, he's also a man of vendettas and vengeance, you would have to say. And so XAI, that is a great vengeance play if he can make it work because he hates Sam Altman. But I'm not sure. Or like I think the cursor deal, it's in agreement to buy cursor for$60 billion as part of this whole staff. Cursor's actually a great product, really popular, and was using Anthropic. Elon built a heap of compute with his Colossus. He built this massive NVIDIA data center. I think because they're the two biggest data centers in the world. And he wasn't utilizing them.

1:10:49So the cursor thing, super smart. But I still don't think this business is worth much, if anything. But even if we give$100 billion, it's a fraction of the size of Anthropic and OpenAI. But if you give it$100 or even$200 billion, Your argument is you can maybe stretch at maximum reach to half the trillion dollars, but not to the trillion dollars. Well, this has been paid at two trillion. Yeah. So does it matter? Does any of what you said actually matter? Like is it worth one minute of your time doing any financial analysis on these other than interest? Other than to show that it's just so far away from any kind of intrinsic value.

1:11:26That's Tesla. Tesla's the same. 100%. And everyone who gives Elon money, they make money. Well, it depends how you define money. If you define the value of a business as the present value of its cash flows, these businesses aren't worth much. If you value it at what a marginal moron is willing to pay in the public markets, they're worth a lot. Tesla is at an all-time high or not? No. I've kind of lost track of it. No, you're right. All-time high. Sorry, effectively. It's like just off it. So everyone's made money on Tesla. Yeah. So everyone who is one-tenth of your brain power or less, large percentage of the population.

1:12:00They can't even read financial statements, let alone have the inclination to do so. All they did was bought Tesla shares. They all made money. Every one of them made money. If they sell today, they've made money. But the question is, will people ever sell? And so this is the thing. Look, I just come back to this over and over and over again. The era we're living in, I'll be a bit philosophical, is kings have been replaced by corporate titans. And so all of the capturing countries, unless you're Vladimir Putin, like all of the capturing countries has not disappeared that inclination in human beings.

1:12:28It's just been replaced by corporate activity and dominating the world. So that's today's kings and queens. And then you've got the need for religion because, you know, the traditional religions are largely diminished in the West, although not entirely. And so what you have is people like Elon coming and like they're their own kind of saviour and someone to believe in. And you've got large percentages of the population in Western countries that see no linear way to make any amount of money that lets them buy a house or live a decent life. But they see crypto, it's another religion. They see Elon and these are like can bring financial salvation to people who otherwise couldn't get there.

1:13:13That's all I'm saying. And will it end? Yeah, I think, I mean, I am very worried, as I have been for a while, that this all ends in complete catastrophe and hopefully there'll be a recession so there's not a depression. But for the time being, if you had one year to live, thank God you don't, but if you had one year to live and you had to build as much wealth as possible in that one year, what are you buying? What are you going to buy? If you had one year, that's it. I wouldn't buy these things. I think they're just too overvalued. Would you have bought into Anthropic? Yeah, I would have bought into Anthropic way before these things.

1:13:44Any video? Now? Well, it's run so hard. It's five trillion. I think you'd have to. If you had one year, I think you'd have to. Because it's unlikely to crash in the next year. I'm not saying it's going to crash. I'm not saying how much upside does it have. I thought that at one trillion. Yeah. What was that, ten minutes ago? I think we're talking about sort of bubbles. Bubbles always have this intrinsic truth. Look at the dot-com bubble. Yeah, internet clearly. It was globally revolutionary. Yeah, revolutionary. And Amazon was the ultimate beneficiary there. Trains. And Alphabet. Absolutely. Trains, railroads.

1:14:15There's always a kernel of truth. Maybe not the tulip stuff. There's almost always a kernel of truth here. The kernel of truth here is Elon is a generationally incredible entrepreneur. Yeah, mate, he's responsible for bringing electric cars into the mainstream, which is unbelievable. He's responsible for Starlink, which is an incredible product. SpaceX is unbelievable how it gets rockets for a fraction of the cost of everyone else. He's an unbelievable scientist, an unbelievable engineer, one of the smartest guys ever lived. That doesn't mean he should be worth, his company should be worth$3.5 trillion, though.

1:14:41That's where the brilliance of Musk has completely detached from any kind of financial reality is the problem. So if you said, Elon, you created a$600 billion business in this call is SpaceX thing, unbelievable. And you created a$100 billion in Tesla. Unbelievable. One of the most valuable car companies in the world because it is a very good car. I love Teslas. I love – two of my favourite products in the world is Starlink and Tesla because I have both. I love to use Starlink. I'll choose a plane based on Starlink and I love my Tesla. I'm generally an Elon Musk fan. Well, I'm not a fan of it. Someone valuing something worth$600 billion at$3.5 trillion.

1:15:13All right, but what as a percentage of its intrinsic value, what's more overvalued, this or Firmus? well the firmus is binomial if a firmus gets out and it can probably just maybe one day justify something like its valuation or doesn't get out and ever goes to zero so i think that if you had a dollar to invest today it would be the easiest decision in the world to back elon at this valuation versus i would back firmus would you i'm shocked to hear it's not i'm not a massive believer in firmus but firmus is binomial like firmus it does really well or maybe goes to zero but there's a whatever that whatever that equals you think firmus is different to iron and core or you put them all in the same basket?

1:15:51Yes, it's different to iron and core weave. They're different businesses. Oh, actually, iron's more like firm. Core weave's different. I'm not investing in firmness, by the way, but I would invest in firmness. It's possible no one's in it. I can't believe you haven't made more of a song and dance about that. We did a couple of weeks ago. I thought I'd be hearing that for you every day, that it's not IPO's. No, no, I get tired from all these victory laps.

1:16:14Inevitably, let's assume a Tesla merges with his SpaceX. I think inevitably he will because Tesla needs the cash. So you've got$3.6 trillion in market value. I can't see this not dropping to$500 billion. But you understand – Which is an almost guaranteed 80 % loss of capital, 80-something percent loss of capital. Well, you know, I thought that about Tesla for a long time. I think that – It doesn't mean you're wrong. If you were living on Mars and you saw Tesla's financial statements, it would be a weird thing to do while living on Mars, but that's what you chose to do. Yeah, already. You would not – Exactly.

1:16:44You would not pick a valuation anywhere near the current valuation. The market stays rational longer than one can stay solvent, which is why I'm not shorting this. It's been a long time of irrationality. Because it's a bigger bubble. And it's a bigger charade. It doesn't mean it's not a bubble. So you know why this valuation exists? There's one reason for this particular valuation. The exact number. Yeah. I presume he's trying to get as much as he can, right? He wants to be the first person to be worth a trillion dollars. I think that is almost his entire motivation. I mean, he has to keep this thing alive.

1:17:13Yeah. But he can keep it alive at a much… Also less dilution, the more… All right, but he can keep it alive at all sorts of valuations and get the cash for it. I think this person is fundamentally driven by a level of insecurity matched maybe by Trump. And so his main motivator is to become the first trillionaire on earth. Yeah. I'm a huge – actually an Elon fan. A lot of people hate Elon for everything he does. I'm not that. I just think this valuation is just inevitably going to end in tears, like you say. I can't see it being worth – even$500 billion is probably being generous because that relies on Starlink massively.

1:17:48We know nothing else really makes any money. We know Starlink, SpaceX is kind of one entity. The XAI thing, neither have much hope. Yeah, cursor is a good business. Maybe it makes a little bit of money out of the cursor thing, but it's not going to be amazing. Tesla doesn't really make much money now. Will it get self-driving right? And everything that Elon focuses on, it does really well. But the more things you've got, the less focus you can give each one. Totally. So I'm very bearish on this SpaceX thing. Are you a seller or are you a holder? of SpaceX stock rental lists? Listen, I'm going to just say something that is completely ridiculous.

1:18:22If you said to me, you've got to just make money in the next one year, I think this thing is going up if it gets away. Whatever price it gets away at, I think it's going up. You might be right in the first year, but it's rational and we can be solvent. The question is, what does it end up dropping? Well, the way I think about this is pretty simple. You have to ensure Elon for the full value of everything that he's involved in with key man risk. Yeah. Because the minute he dies, everything goes to basically zero. Oh, there's that as well. I mean, not literally zero. I forgot about the key man risk.

1:18:52But good night, right? And so this is a bet on Elon staying alive and like cognitively sharp. Yeah. That's it. And so I would never make a bet like that. Well, I think it's a great – if you can afford to hold the short, we know there's like one of the 2 % chance of Elon dying each year for natural causes or whatever it is. It's like simply the 2 % of the – it's worth it based on that for the short, I reckon. Because if you know that happens, but any shorts in the money straight off. Well, that's 80 % of the value gone overnight. It goes to what it should be,$500,$400 billion. It actually overcorrects.

1:19:19All of his businesses do. Yeah. You lose 80 % across all. His businesses are effective. Valuation is being held up on the shoulders of one giant. Yeah. That's it. Yeah. We've got an Elon premium of 600 % here. This is a best$500 billion business being valued at businesses, I'm talking Tesla and SpaceX combined, being valued at$3.6 trillion. Yeah. Well, that's Elon. Yeah. We'll wrap it up here. a great episode. We've got a very special guest coming in on Saturday, so please don't miss out. As we said in the top of the episode, don't forget to subscribe to both the newsletter and, of course, the pod.

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