Meta Comes Back, JB Hi-Fi Gets Cheap, and Hello World’s $135m Acquisition Gets Weird

0:00Today's episode is brought to you by Visa. If you run a small business, here's a question. Are you still using your personal card for business? With a Visa business card, you get improved cash flow management, rewards, and greater spend control. And your business spend stays separate for your personal spend. So if you're still using your personal card for business, go to visa.com.au to apply for a Visa business card today. Today's episode is brought to you by Seneca. You may remember friend of the pod, Luke Larative, came on a couple of weeks ago, and our listeners absolutely loved him. Of course, we're not the agreeables podcast, we're the contrarians and Luke is a contrarian himself.

0:34He finds positions that we didn't even know about and really gave us an incredible run for our money. The reason we love Seneca so much, not only is his incredible outperformance over a number of years, but Luke only charges performance fees for his small cap fund. That means if he doesn't outperform, you don't pay any fees, which is really unusual for almost any fund manager around the world. So go to the Seneca Financial Solutions website, Check out the funds and also check out Luke's incredible newsletter, goodresearch.com. It's always best ideas and thinking for a really limited number of subscribers.

1:07Tell them The Contrarian sent you. I'm Adam Schwab. I'm Adir Shifman. And this is The Contrarians with Adam and Adir.

1:17And we are back episode 245 and we've got Mike, for our lady listeners and our men listeners, Mike's got a haircut that absolutely blew the socks off us today. That is a haircut and a half, Mike. Wow. I'm stunned by this compliment. Thank you so much. Adam tries to start every episode now, I think, with some comment that he's hoping The Guardian will be outraged by and give us a front-page story. I think The Guardian's given up on us. I think we're a lost cause. Well, it's a mutual emotion, by the way. Absolutely. We can change it. Obviously, back for our Saturday episode, which had a huge audience reaction.

1:55I'm going to strain to business stories. And I saw last week that Meta is back, well, on the share market anyway. This comes after Meta's latest AI app, dubbed Muse, appears to be a major hit. According to just-released estimates from Apptopia, Muse's app on mobile devices has been downloaded more times in its first 12 days than ChatGPT was after its debut. Overall, Muse has seen 2.8 million total in stores in its first 12 days, and its growth hasn't stagnated either. Muse moved up from two to number one on the App Store, ahead of ChatJBT. MetaShare price, which had been the laggard of the Magnificent Seven, is up 32 % in the last month alone, and it's now hit$1.9 trillion US.

2:41That's just 5 % off its record highs, which hit in August last year. On the Prof G podcast, they compared Muse, Claude, ChatGPT and Gemini in terms of trying to book a restaurant. And of the four, the only one that could actually make the booking really properly was Muse. GBT had no idea. Claude couldn't do it at all. Gemini, I think, eventually got there, but it took way longer than it would have taken to book it yourself. So it's pretty positive from Zach. Adia, have you been following this Muse and also, I guess, the grok bot which was a couple of weeks old similar type thing so i did say i don't know whatever it was you agreed with a couple of months ago god meta feels cheap relative to the rest and my feeling about meta is or is this zuckerberg he's got his philosophy of how he wants to grow the business it's not always perfect the thing is called meta i mean that's pretty dumb now isn't it.

3:34Like the metaverse seems to be not the hot thing anymore, at least for the time being. But I think he basically refuses to say things to please analysts and investors. And so he'll come out and he'll say stuff and investors will hate it and they'll pummel the share price. But really, it doesn't reflect anything that's going on internally and he's just sticking to his strategy. So I think there are more opportunities to buy meta after Zuck says stuff that the market hates than any of the other hyperscaler businesses or mega tech businesses because they're not hyperscaling anymore. So I definitely think, you know, it's now come back to being in line with these other, you know, so-called hyperscalers.

4:16As for Muse, I hate all of these pieces of technology. As someone that uses, I said to you, I use AI, what, three or four hours a day, maybe more. The first thing I might say is being number one on the download charts, What does that mean? It means you are burning money with your AI tokens faster than anybody else. That's basically what it means. It's just a race to be number one on please download my app and let my investors subsidize your use of AI. So I don't really, that's a kind of rubbish metric. I suspect, given it's open source, I suspect they're burning a lot less tokens than GBT is. They might, yeah, they probably are.

4:59It depends how – look, mostly the tokens get burnt in training. That is – or let's say the cost gets burnt in training and the token burn, you know, is cross-subsidising usage. But, like, yeah, I take your point. But they'll still be losing money on this thing for sure. They'll be, you know, they'll be cross-subsidising it. I'll tell you why I hate this stuff. In order for this to work, you have to give it access to stuff that it would horrify me to give it access to. Like you just said a restaurant booking. In order for it to do that, presumably it's putting down a deposit or at least providing a credit card number to hold the booking.

5:42Sometimes, not always, but sometimes. So I'm unenthusiastic about giving it access to my credit card numbers. But your credit card numbers will be stored on Google Pay, Apple Pay. I know, but that can be tokenised as well. The thing is Google Pay. It's different, the old school tokenisation. Yeah, but the thing is Google Pay is not going to autonomously just decide, I think he wants to go and do this now. By the way, I don't think people are worried about AI killing everyone. You've got your views on that, which I agree with, right, which is just it's not real. The argument is not real. It might be real, but the reason they're saying it is not real.

6:19But I'm less worried about that because mostly I'm terrified of human beings, much more than artificial intelligence. but I do think the real worry is less about a malicious agent and more about a mistaken agent that goes and does stuff when it's got access to your credentials that is just going to make your life a bit worse, like going into an email and deducing something from the email and then doing something with your card and you've given it access to all these things. That's largely why there's a very long answer to me saying I haven't tested it because I don't want to give it access to stuff that to me is sensitive and private.

6:53Well, remember, this is very much based on OpenClaw. And remember the OpenClaw craze about six months ago. Everybody was the next big thing. Everybody's going to be on OpenClaw. It's going to change the world. And kind of what the hell happened? I think GPT or OpenAI has been heard from since. So these trends or these fads in AI seem to come and go pretty quickly. It's almost like the next news cycle has gone. So, yeah, I think this seems to be a pretty decent product. Obviously, like I'm less concerned about you with the sort of privacy. But you don't worry about like where at the moment you've got this split personality disorder going on with frontier models.

7:32They say to you, don't worry, there's guardrails. You can trust us on Muse slash whatever. And on the flip side, by the way, we just like let this thing out and it went bananas and hacked into everything. And it's like, you know, like, and so you've got this split person. On the one hand, they're trying to tell you you should use it. On the other hand, they need to generate PR. So they, everyone, you know. That's not Muse. Muse isn't hacked anything. That was – I know, but they'll come out with that version of the release. Like didn't you think when Gemini came out with that release and they said, oh, our stuff also got out, I looked at that and I'm like, they are not saying, oh, we're a bit worried as well.

8:04They're saying, don't forget about us. It's a bit like me too. We can go bananas as well and be out of control. Frontier model form. Yeah, and so I think that split personality disorder is super weird right now. Why are you so confident about the guardrails? They don't seem like they really – there's a race right now. Are you talking about the hacking or are you talking about giving your stuff to these Frontier models? Yeah, so I don't know if you... Whether this is a Frontier model, I don't know. Yeah, I'd call this a Frontier model. Yeah, absolutely. You would? I would have thought just Claude and GPT are the Frontier models now.

8:37No, I think I would put... And you've got sort of Gemini and Grock in the second later. Well, Gemini has a bit gone to the dogs, but like we can back... They're the, you know, the tortoise and the hare. We can back them as the tortoise that eventually is going to outlive every hair and win the race in the end. I think, like, but they're weak. And I think OpenAI, in my experience, has kind of caught up to Claude again in my usage of it. So that's impressive. I don't really use Grok because I'm not really, I don't really trust Elon's universe. That's the least guardrails, right? And so, yeah, I'd put all of them in, I'd call broadly all of them Frontier Models.

9:13I think Perplexity has dropped out. Perplexity has gone to the dogs. Yeah, I've just completely forgotten about Plexi. Yeah, they've gone to the docs. So what Muse will say is that the way our architecture works is that every single one of our agents is a virtual machine dedicated to that user, which is true. I'm sure it's true. But I just don't trust the guardrails, and so that's my issue with that. I just think it will do things that I don't want it to do. There's a long way from a zero risk of doing things I don't want to do, and so I don't use these. But I will say, I do think in my future, these things will be involved.

9:51I just don't think I'm ready for it yet. Yeah. And speaking of which, you see Anthropic, and this is just sort of one piece of research, but Anthropic, I think it was up to 70 % market share. I think this was enterprise market share. It dropped from 70 to 50 or something crazy, 75 to 50. And obviously Codex, which is OpenAI's product, really took all that market share. And there's a bit of lots of open source as well. We're talking a$2 trillion IPO for Anthropic. It's lost a massive, potentially lost a massive bunch of money. How can these businesses with a straight face potentially be listed publicly?

10:26I'm so disappointed that I didn't come up with one of these things or at least some rubbish data centre or something that would have cashed in on this boom. I think I could have done such a good PT Barnum. No, I could have. I could have, for sure, I could have done firmness. I could have like told that story. The problem is it's very hard for me. I wouldn't have been able to internalize the belief because we're both too cynical. And so I would have had to lie because I wouldn't, you know, because, you know, what's that thing like if you believe, what's the George Costanza thing? It's not a lie if you believe it.

10:59Right. So I wouldn't have been able to believe it. And so that would have been the struggle for me. But I could have done a decent job still. So I feel like you've got the perfect mix of characteristics going on right now. You've got explosive growth. You've got what you didn't have in the dot-com boom, which is mega revenue coming through the front door. You've got an unknown future, but it feels transformational. You've got massive amounts of money looking for a home. You've got a society in the broadest sense of the word, all societies, that feel that debt has got no downside anymore. So there's unlimited debt available.

11:42and then you've got the weirdest mix of characters that like you would just look at these characters and say, well, that by itself gives away that this thing can't be what it says it is. And then you've got metrics that people are coming up with they're not even ashamed about anymore. Like our profitability is our revenue minus no costs. Profit before costs. Yeah, profit before costs. Yeah, exactly. That's a great, that's, you should patent, trademark that metric, profit before costs. Adam Schwab special. They'll start using it. You'll see that in Dex. You might as well go and collect some royalties off it, you know.

12:19Yeah, I think that's what I think is going on. So, you know. We should say let's move on. I love Meta, by the way. Like I hate them a lot but also I love them a lot because, you know, I don't think they're very good for society, their businesses, and I think, you know, they're basically always finding ways to strip more cash out of advertisers. but on the flip side, you really can't run a business without advertising on them. And also they are such a good business run by like a generational talent really. So there's everything to hate and everything to love about Meta but of all of the – I thought they were crazily cheap three months ago.

12:56Yeah. I saw it$1.4 trillion. I thought this doesn't sound right when you've got all the – like Google, NVIDIA, Apple and Microsoft. Certainly the first three up at four plus, four to five trillion. It just didn't seem quite sensible that metal would be so low. And they clearly have corrected. Still, by far, the least expensive of the MAG-4, you could say. And then we'll go to a super quick break, back with a couple of stories after this.

13:28And we've got Ben Adams from Visa joining us today. Hi, Ben. Welcome. Fantastic to be here, Adam. Great to have you on the pod. So what do you do at Visa, one of the world's best financial businesses? Amazing acquired episode. one of my favourites. Can you tell me a bit more about your role at this incredible business? Yeah, I have a great role at Visa, which is looking after commercial payments and government for Australia, New Zealand and the Pacific Islands. A bit of a mouthful. It is a mouthful. And we talked about cash flow as probably one of the biggest challenges that small businesses, or every business.

13:56Absolutely, yeah. When we were a small business, we once tried to get a loan. This is early days. And then we called them up and they said, we'll give you a loan. I said, oh, the interest is 55%. So we didn't get a loan. and we essentially funded off our own credit cards from there on and like for the first five years of our business. So we know very much about using credit cards as a great tool for finance and obviously different people have different access to credit. So what have you seen from the Visa perspective of people using cards to access credit? They're thinking both how they pay their bills that are coming in and how they receive payments and it's thinking about managing that cash flow cycle.

14:30So cash is king for a business most of the time and you want to constantly be thinking about how do I make it take longer for me to pay my bills without negatively impacting my supplier that I'm buying from but at the same time, how do I get cash accelerated more quickly into my business? So you can use a card to pay someone earlier. Potentially you can ask for a discount for doing that. You then get your 44 or 55 days interest-free before you have to pay so you get that time using the bank's balance sheet to access that working capital and then conversely on the payment side. That's super smart.

15:05So you can get effectively a 10 % discount and it costs you 1%, 2 % potentially. The benefit is how do you do the maths? How do you do the economics to work out how you do that? And it absolutely works the other way as well, which is if you're receiving funds, you know, I don't know how much it's costing your business. You should work out how much it's costing your business for a given month or two month period. If you can get someone to pay you, let's say at day five or day seven by accepting card, there may be some cost around that. but is that cost less than the cost it is for your business versus borrowing other funds or factoring or anything else you need to be doing to help your cash flow work well luxury scapes we're a big fan of accepting cards i think almost all our payments are cards and they've always it's always been that way we don't have a bad debt issue at all because of because of that we're paid up front which is a really nice part of our business i think one thing that you see a lot of people do and it's probably not the smartest thing now especially with the changes that's going to be happening is people and i was guilty of this in the early days is using personal cards for business expenses before I got my business card, my business visa.

16:02So what actually happens there? Yeah, well, I think in the early days, I can absolutely see why a brand new, freshly founded business would do it because you want to see how that business goes. You won't have many expenses at first, and why would you pay for another card? But as your business grows and gets more complex, you don't want to be sifting through your statements, working out which ones you're going to send to your accountant or send into Xero. So as you get more sophisticated, you can then move to a business card. And the benefits of that is it might be hooked automatically into Xero or MyOB, so your transactions go straight in there.

16:38You'll also get more points. So generally speaking, you should do your own research, but if you look for a like-for-like card between a personal and a business, you get more points with a business card, and that's benefits for the owner of that business that they can take in. And actually, if you get to the scale where you give cards to some of your employees that you trust, those points can aggregate to the owner as well. So you kind of exponentially build on those. A lot of our listeners are points hackers. Both Adia and I are massive points hackers. I've been points hacking since 2008. And I think I've probably taken 500 business class fares and never paid for one.

17:12And it's really on the back of using my visa over all these years. And certainly when I switched to a business visa, I actually didn't realise there was that much of a differential points. I imagine, obviously, the changes we've talked about, October 1, it's going to be a bit harder using personal cards. So that gap widens, right, after the changes happen. Yeah, in theory. I mean, obviously, some banks have already been communicating changes. But, yeah, I think it gives even more incentive, even more reason for business owners to think about what they use to help their business. But, yeah, it's really about understanding how you can best benefit yourself and your business through both helping with your cash flow, So getting rid of that admin work that you don't want to be doing at night.

17:50If you have a business credit card, the transactions will go straight into your accounting platform. You don't have to reconcile or go get them or push them yourself. And then you get the added benefit of points. So for me, there's a lot of upside with putting your card spend on the right card. Well, actually, it makes no sense not to you. Like, you're getting, A, it's quicker. So you're going straight into zero or straight into my, or B, you're getting points. And C, you've got that extra. Nothing's free in this world, but you're getting that credit as well. So I know our listeners are super smart.

18:18I'm sure a lot of them are already using these. And for those who don't, it feels like such a no-brainer. Yeah, I mean, there's probably only two things to that. So one is if you're a very first starting. So my wife actually has her own business. And I know when we first started, we actually just used our own personal credit card. But that was because we decided whilst we were on holiday, she'd had enough of working in a corporate. She wanted to start her own thing. And so actually we started ordering things like laptops there and then. and so we hadn't got round to ordering a card. Then we saw the effort that was of them pulling out those transactions through the 200 that were in our statement.

18:53So then she went and then got a card. And the second point is people, there's definitely a perception that it's hard to get that business credit card. And it can be if you're going for a fully business underwritten card, but there are personal ones. So it's a business credit card. You need an ABN. You need to be operating as a business, but you get underwritten personally. and so there are a few banks out there that do that. Westpac is an example. BOQ is another example. So they underwrite you as a person. So just as easy as it would be to get a personal credit card but you get the business benefits.

19:24It's really a no-brainer there. So for our listeners who are obviously super smart and want to jump on this great idea, what's the next steps if you just want to learn more? Yeah, I mean obviously do your own research. We've compiled information on visa.com.au so I would highly recommend heading there. That will be a first good stop where you can see where all the options are. but otherwise just look around the different financial institutions and you can think both banks you can think second tier banks you can think of fintechs like air wallets and of x these are all people that have lent into that business space just to try and make it easier for businesses amazing thank you ben thanks adam

20:03speaking of much loved companies that have fallen on hard times jb hi-fi the australian electronics retailer got some unlikely support last week from Macquarie Equities, which forecast that JB shares could rise to$94, a 50 % increase on$67 current price. JB shares have of course been smashed since it hit its high in August 2025 of$119, down almost 50%. AFR reported that Macquarie claimed that price increases on gaming consoles like the PlayStation and Switch and a possible increase in supply will help JB and other electronic retailers like West Farmer's Office works. Also helping is the release of the much-typed gaming title GTA 6.

20:43We are seeing improving fundamentals in electrics as when not if. JB Hi-Fi is best place in our view, Macquarie said. For if not everyone's so bullish, Regal Partners Investment Director Charlie Aitken said, the Australian mortgage belt is staring down a proper lost cost of living squeeze from all sides. It is simultaneously suffering a negative wealth effect as both residential property prices and widely held Australian equities fall and super balances go backwards. Adir, are you on side bull or side bear here? Interesting question. Interesting question. I mean, it's trading at 15 times earnings or something, which is pretty cheap for JB Hi-Fi.

21:20So let me tell you a few things based on what you've just said. So the price of consoles going up, like I'm not sure, I don't know the economics of selling consoles but the reason the price is going up is because memory is so expensive predominantly and so I'm not sure if they're going to be able to maintain their margins as that goes up to they yeah that felt very strange yeah so that feels a bit weird like if a console costs$500 and you make$200 and now it costs$600 because of the memory cost do they give you$250 now in profit like I'm not sure I'm not sure that passes on but I don't know so that yeah I think the analyst here just got it wrong.

22:00I don't think this has got a degree of elasticity, a big degree of elasticity, which means that price goes up, demand drops. So there's no way we're going to see a straight line. I think, though, for GTA 6, there's almost no elasticity. Oh, GTA, fine, but GTA is marginally tiny. I'm talking about the consoles themselves. Well, I just don't know how many. So you have to think about this. There's so many questions here. Number one, look, I'm not super across JB sales mix, so you've caught me on the hop a bit now. But when I go into a JB store, I'll say a few things about it. One is there's always people inside, always.

22:33Two is the first thing I see mostly when I walk in the door is a whole lot of mobile phone stuff followed by a whole lot of Apple stuff. So presumably that's where they're getting a lot of their sales velocity from. But that's some low margin stuff, right? Mike, you look doubtful about what I just said. Is that not true, what I just said? I always see a lot of pop culture toys and CDs, vinyls, DVDs still at JB, to be honest. So all those toys. You're going to North good JB, I presume, though, Mike. All of those toys seem to be behind the gaming stuff. But I agree, like, they've definitely diversified.

23:13And then what you see is a huge percentage of many of the stores are made up of, all right, TVs and stereo equipment. but also tons of white goods and home appliances and all of that type of thing. And so I would have thought that that category moves like furniture. It moves with house transactions. And so if you're buying a new house, often you buy new white goods for that house. And surely that's got to negatively affect them in that part of the category. And then the question is how much of JB Hi-Fi? And I agree with you. like god there's a lot of vinyl being sold in jb again it's astonishing i can't think how much space is being taken up by records so that's interesting but how much you know when you buy games so um i mean the actual games themselves there are so many ways to buy them now so if you buy them on pc probably you're buying them through steam or some other platform by one of the publishers if you're buying them on a console you know like i don't think gta 6 is probably not going to be on Nintendo it's not their kind of game but it'll be on PS5 and so I think a lot of people are going to buy that as a software only download rather than physical so I noticed that EB Games another big game seller have pivoted almost entirely to selling merch I mean they sell some other stuff it's basically it's a merch store so I just um I feel like I I've basically just given a long story that we'll finish with, but I don't really know what their sales mix is.

24:50But I do think this, I'll tell you this, with overarching confidence, an economic downturn that smashes consumer confidence and pushes JB Hi-Fi down is a great buying opportunity because that is an incredibly well-run business that is not going to go broke, but some of their competitors will definitely go broke, and so they will emerge from any downturn as a much stronger business it just the timing will be hard right to get the timing right hey it did just so you know um it's actually confirmed that gta 6 will not have a physical release which has been a really controversial point in the gaming industry well i actually did not know that but i suspect um an analyst that is advocating that jb is going to have a good run because they're going to be selling GTA 6.