ROKT Soars, Healthengine, Reebok, Vending Machines go Hi Tech, Haigh’s Branding Genius and Mike’s Travel Report

22:41But really, like there is a site that NIB I think owns or owned called like White Coat or whatever it was, it was doctor reviews. But I don't think it really took off. And the thing is, I can tell you this. Like when I was in the profession, like I knew there were some bad surgeons. Like everybody knew who they were. Like you wouldn't send your family to be operated on by that person. But there is no possibility that a layperson could know who a bad surgeon is. and no one in the industry is going to tell you that that's a bad surgeon unless it's your relative telling you. And so I think that's the hardest thing with medicine is that you're kind of just reliant.

23:17There's a huge information asymmetry in medicine, probably bigger than any other profession. Interesting. Can I change topic completely to an absolute first world problem? I flew, I'm in Portugal now just for a few days. I know what this complaint is going to be. You complained to me about this in real time. In real time, I did. So Emirates flies a 380, which is the big double-decker Airbus and a 777 as well, which is the long single level. What do you prefer? I'm going to take the fifth on that question. I used to love – they're both very beautiful. Continue your story. Unfortunately, I don't fly as salubriously as you do.

23:58I was just slumming it in business class. and the A380 account has 72 seats in business and four bathrooms. It's ridiculous. Which is, I don't think it's that much different to economy. There was like a 20-minute wait at one point, like people brushing their teeth and getting changed. Again, people are going to say, Adam, what a dickhead you are, which is right, but nonetheless. No, people won't say that about this because people think that we'll be looking at this the wrong way. They'll say 72 divided by four, that means every 18 people have a bathroom, but that's not the way to think about it.

24:32The way to think about it is there are 72 people and if all the bathrooms are full, 68 people are waiting for a bathroom. That's how to think about it. Absolutely. In my case, it was like 20 people waiting at one point. So Emirates has this famously, well, actually, I think one of the first to do the lounge at the back, which is now just such a waste of time. Nobody ever really uses it. It's a couple of drunk guys trying to pick up or whatever. It's such a waste of time. I know people that use it. They're not drunk guys trying to pick up, but I know people that use it. I certainly don't use it, but I agree.

25:00I hate it. I was in my drinker, but I hate it. You could put eight bathrooms there. Instead, they have this bar that no one ever uses. People are waiting in the bar to use the bathrooms because the way it's huge. It's such a bad customer service experience from what is a pretty good airline. You know the Qantas A380? I'm going to say it's a bar, but it's not a bar in business class. It's like a cafe. It's got tables and you sit there. I actually do sit there and have a coffee and do work. It feels like I'm in a cafe. I thought it's like kind of so Australian to make the thing instead of a bar.

25:31Like now it's a cafe. Yeah. It's pretty like I don't obviously use points, but like you're paying 15 grand, 20 grand for a business class, which is what it costs sometimes. No one's paying 15 or 20 grand for a business class. In peak times you are for sure. Absolutely you are. In peak time you are. Maybe not in – you can get like Luxury Scopes are selling sort of$9 ,000 return fares now, but I'm sorry return, not one way. But if you get early bird, like on luxuryscapes.com right now, you can pay under 10. But if you're buying for three months' time, you're paying 18 grand, I reckon, 15, 18 grand for January holidays.

26:03And you've got four of them. And then you've got to wait 20 minutes to use a bathroom. The problem is the supply demand is so out of whack in airlines. They can literally just charge whatever. And I don't blame them. They can charge whatever they want, which is why Emirates is making$9 billion a year, which is being siphoned out of customers to give a 20-minute wait to use a bathroom. I took a triple seven from Dubai to Lisbon, and that was a much better experience. But you look at – they've got three bathrooms for first class in what, 12 seats. That's one for four. Yeah, business is four for 72.

26:32Like it's just – the numbers just are all wrong. Just use your points for first class. It's worth the – it's not much of a – You can never get them. I can never get first class points flights in there. They just never allow it. I get first class points flights on Emirates with Qantas. I book through Qantas to get first class flights. It's very uncommon, but like – Well, for Qantas, you've got, I mean, like I might be friends with the chairman, but you're much more powerful with Qantas than I am. They think you're much more impressive than me. You're more impressive with Qantas. Clearly not because I'm never getting first class ever.

27:02It clearly is a big difference. But, yeah, just obviously that's a bit of a whinge. But it's not that high. I think what that just shows is when you've got such great demand and big switching costs and all these powers, you can get away with providing a, in one of many ways, a substand experience but charge an incredible amount and make incredible profits from it. So the economics of airlines has been completely fascinating post-COVID. So I'm going to say this. You tell me if you agree or disagree. You're much closer to all of this stuff than I am. But it seems to me pre-COVID business class was predominantly business people, predominantly.

27:35Actually, it was mostly men. There were not that many women in the business class cabin, to be honest. I'm not making a statement, a gender statement. I'm just, it's observational. and then there was premium economy, which was predominantly leisure travellers and then economy. And first class, like it was – people didn't fly first class. It was ridiculous. They were getting rid of first – Yeah, everyone was getting rid of first class. Okay. Then we go through COVID and everyone, me included, I presume you included, is like I'm just going to try and fly as well as I can afford to fly. Like I just – COVID just did something to people's brains, okay?

28:08And so it feels to me that business class is now full of leisure travelers who would have flown premium economy previously. And either with points or with money, because they've changed their perspective, they're paying to sit in business class for leisure travel. And first class now, I mean, you can't even get points flights on it. The cabins are full. Yeah, exactly. And airlines are bringing in first class and enhancing their first class. Yeah, absolutely. Like, it's actually been, and like, I'm not being flippant about this because like, you You know, I mean, I wasn't born as like, I don't know, the Prince of Wales or something.

28:42Like I've traveled a lot of economy class in my life or nothing, right? I didn't go overseas. I was going to say, I didn't go overseas on a holiday until I went on a cricket tour of England when I was 15. But that was not exactly a holiday, right? It was a school thing. Yeah. And by the way, we raised money to offset the team. And the two biggest money raisers were the two richest guys, one of whom was Bruce Matheson, whose son Bruce Matheson Jr. was the captain. And actually, lovely family. I could not talk more highly about him. A-grade human beings as a family. I could not speak more highly about them.

29:23And so that was subsidized. And so I didn't go on a holiday overseas until I was 18. I went to the US. I was 19 going to Canada. Yeah. Yeah. And so like, you know, I know we can be flippant and you can have your whining about, you know, your toilets and this is first class or whatever. I get it. Like it's still very expensive to travel. But my observation is that people's travel behavior has fundamentally shifted up the cabins after COVID. I think the only bit I'd a little bit disagree is there definitely were, I got a 50 % leisure in a business class cabin before COVID. Now it's probably more like 90.

29:58Paid with cash? I don't know how people are paying and probably a combination. I don't know. But obviously it was a lot easier to get. Now points are getting harder and harder and obviously got devalued last week. So getting – to be able to get these points is becoming increasingly difficult. But yeah, I think there definitely has been a massive shift. Now also you're seeing lots more kids in business class. Like I didn't see – it's not always now. But a lot more kids in business as well. But the flight yesterday was complete – like both flights completely full, not a spare seat on them. It was unbelievable.

30:26It's unbelievable. It's possible that Amex is like, you know, obscene devaluation of points is how I would describe it. It's possible that's driven by the airlines charging them more money. It's 100 % driven by the airlines. It's not Amex. Amex is probably making, maybe retaining their margin, but it's airlines are saying, you know what, I can charge more so I will. It's not, you can't blame Amex for this or the banks. They're just playing the cards. They'd rather be more generous because people will use it more. So I don't think Amex want to see, because I guess the tipping point where they go, I can't, it's not even any, like I'm getting so few points, what's the point?

30:59Getting to that point with all the card schemes. So I don't think it's Amex or the banks driving this at all. It's airlines because an airline can sell for cash. And this, I think if you look at the, going back to first principles, why is this happening? It's because we printed so much money in COVID. Where's that money going? It's going to places like this. Like the money has to go somewhere. You can't print trillions of dollars and expect to just stay in people's, under people's beds. You're right. It's a great time to be an airline today. and I think that it won't stay that way indefinitely.

31:26It'll probably stay that way for a while and at some point they'll be more desperate for filling seats on frequent flyer points but it's not going to be in the next five years. And it's pretty obvious the reason is because if you look at LVMH, LVMH has higher demand. They can produce more Louis Vuitton handbags. They'll cap it to an extent but they can produce as many as they want. Airlines can't produce planes because Boeing and Airbus and obviously Embraer and the Chinese business, Comac do, but really there's a 6 ,000 airline plane backlog. they can't get enough planes. So they just increased the price.

31:55It's working beautifully for airlines, this supply shortage. Well, it's interesting because, you know, there is price elasticity. Like people won't pay infinitely high prices to travel. And I think they got pretty much close to testing that price elasticity right post-COVID. Like people, I think in the end they pushed it too far and they did start getting some emptier planes at one point. And now they brought the prices back, but they're still bloody expensive. I mean, it's still very expensive. They brought it back a little bit, but not – like during peak times, not really. What they brought it back is during off-peak times.

32:26You can now get, again, Lutterscapes.com, you can get$9 ,000 fares to UK return on business on Singapore, which is a pretty good price. But you've got to be able to fly – that's during school holidays, you want to get that price. So it's sort of out. Singapore going to upgrade their business class cabins any time soon? Well, they did. I reckon when they upgraded, it got worse. It was better. The old Singapore was the best of the best. I love that old Singapore. I agree. The Qatar remains. When I first saw, back like 10 years ago, it might have been longer than 10 years ago. When I first saw, maybe 15 years ago, because I wouldn't have been able to afford to fly it.

32:56When I saw an ad for Singapore Airlines seat, that business class seat, and they had someone sitting on it who was probably like one of the luxemorials they could possibly find. But still, like the seat, I actually was confused about whether it was one seat. Like it was so big for the time, right? It was enormous. I often have. Like, Lysanne would have one of our kids next to her when we started using Poinsu Business. Crazy. And they'd be like, what, two years old? And we'd be there in the seat. It was amazing. I just want to say, we say first world problems, yeah? Like, I like first world problems.

33:28The best problems you can have. It's good. Like, it's better than what other, what problems do you want? You don't want third world problems. You don't want to be able to have water. No, like, we're lucky. And like, you know, when people say, well, I'm sorry, but I've got first world problems, it's like saying, going into a shoe shop and they say, do the shoes fit? and you feel bad about saying now they're too small because somewhere people are running around with no shoes. Like if you've got a pair of shoes that fit, you can have a pair of shoes. Like, so I don't, I'm happy with first world problems.

33:54Keep them coming. They're good problems. I read three books in the last two weeks. I'm not going to tell you all of them, but I'm going to show you one of them. I think you'll love. I think this one might, it might get interest. Now, firstly, I want to show you the price. I want to see if I can show this on the screen to you. Can you see the price? It's backwards, but you can work it out. Oh, is it$53 or$13? Really? $3. Where do you think I bought that from? Op shop of some sort, I suspect. Correct. Look how good this book is that was in the op shop. Look at this book. Shoemaker, the untold story of a British family firm that became a global brand.

34:27Oh, Reebok. Okay. This is like, you know how there's Shoe Dog with Phil Knight's book? So this is Joe Foster's book about how he founded Reebok and built Reebok. I don't think anybody's read this book. I thought that wasn't the Reebok guy also, isn't that the family that does like Sports Direct now or something? No, you are correct. You are absolutely correct that the guy that owns Lily White's, et cetera. JD, no, JD Sports. JD Sports. JD Sports and Lily White's. You're right. I'm going to tell you this story. It's the Reuben family. But I'm going to tell you why. I've talked about them on the show before.

35:02Correct. I think the father's still alive. All right. So let me tell you why. So Phil Knight's book was quite an inspirational book. It was Shoe Dog, obviously, which is one of the greatest books ever. Yeah. Many people have said to me, that was one of my favorite books ever. Oh, it's great book. Not mine, then. And such a sad book at the end, especially when he talks about his son. It was really heartbreaking. All right. So that's a sad book. This book is much sadder. This book is a cautionary tale for two reasons. One is it's a book about how you can be blinded by wanting business success and sacrifice everything else that matters in your life.

35:42I think he eventually worked it out, although I'm not sure because he wrote this book five years ago. He's still alive. He's 90 years old. So this is Joe Foster talking about because Stephen Rubin bought the majority of Reebok. I'm going to get to Stephen Rubin. Relax. All right. So I promise you I'll make you happy with telling you what happened to Reebok because it's part two of why it's a sad cautionary tale, okay? So basically, Joe started it with his brother and his brother ends up dying at the age of 49 of cancer. And Joe Foster speaks about how sad it is that his brother died and never got to see stuff when he was older.

36:18And he says, it's so sad he never got to see the huge success of Reebok and the brand actually being global like he died before that all happened. And I thought to myself, that's what you think is sad? How about the fact that he had two young kids and he never got to see them grow up and get married? This just speaks to the totally problematic, in my view, priorities that can overtake you as an entrepreneur, founder, and you just sacrifice everything that really matters in life for endlessly pursuing success in business. I think there's a balance and the balance is not like work-life balance, but it's like don't sacrifice the people that love you and care about you just to try and be successful in business.

36:58So that's why it's a bit sad. By the way, before I tell you about Stephen Rubin and why that's even more of a cautionary tale, the reason he's in shoes, he's a very different book. He's a very different guy to Phil Knight. I don't think this guy's actually - Joe or Stephen? Joe Foster. No, we'll get to Stephen. You're very fixated on Stephen. I promise you we'll get to Stephen, okay? I promise you. Your appetite will be sated for Stephen. But Joe Foster, I don't think he's a very good businessman. He would actually be very offended by that comment, but I don't think he was very good. And I'll tell you why.

37:30He sold a majority pretty early, right? He sold 55%. What? So we're going to get, yeah, that's with Stephen. But you know how he got, well, Phil Knight, obviously a great businessman. But Phil Knight's generation, he's worth$40 billion or something, isn't he? That speaks for itself. So you know why Joe Foster started Rebook or how? His grandfather was the guy that invented running spikes. I thought it was the guy who – I thought it was Bill Bowman who did with Phil Knight. This is different. This is like in the late – that's probably the ones that brought it to the US. Yeah. But like this guy invented them, invented in the UK in the late 1800s and like literally nailed some together and ran around the track and like was a mediocre runner and all of a sudden was an incredible runner and just became like they were the most popular shoes for running like way, way back.

38:25Like it was amazing, right? And then anyway, the business faded and whatever. Yeah. Well, the whole running thing, you've got Reebok Nike and then you don't forget the Adidas Puma thing in Germany. Of course. The Adidas Puma, I met the two brothers who had the massive fight and there's the two on the river and there's one. And Addy Dessler and Rudy Dessler, I think is now. And so is there any industry that has more stories in the shoe industry? It's just incredible. I know. So we're going to do like a whole long segment about this industry because it's so fascinating because every one of these companies was at the cutting edge of running technology at one point.

39:00Like they were really kind of tech style and footwear tech businesses. But the other reason it's a cautionary tale, there you go, I'm going to get to your Stephen Rubin part of the story is this guy, Joe Foster, was trying desperately to expand the business overseas. Basically, he was always on the verge of going broke and he just could not expand it to the US. He tried a million different things. And then ultimately, he found this guy called Paul Feynman to expand to the US. And the thing is that he had no money and he had all this marketing and production, et cetera. And so, he effectively goes and sells, gives Paul Feynman 95 % of the international business like the u.s business and he keeps five percent of this business and um and so then it grows and like he's making a clip on with on royalties right like he's basically selling the shoes and then he just takes a clip on royalty so he's making some money but he's basically given away 95 of the u.s business in reebok despite him being the ip owner of it and then they need more money because they have to you know like basically there's no venture capital for whatever reason that they could attract.

40:09And they don't have money and they're always on like, they have to try and capitalize on the fact that their shoes are becoming really popular. And especially because someone, not Joe Foster, realized that women were getting really into this thing called aerobics and they should make a shoe for women in aerobics. That's what rocketed Reebok, if you remember. They basically were these aerobic shoes and then later came pumps. Like Joe Foster had nothing to do with any of that. I just want to be clear. So a lot of the Nike shoe dog story is how Phil Knight was able to finance because you've got the two issues.

40:38You've got to be able to finance the growth because effectively it's like reverse negative working. It's positive working capital. So you've got to pay for the shoes. You've got to sell them. You get paid later. And Phil really, the way Phil Knight solved it was maybe he did that great deal with the Japanese trading house. And without that amazing deal because he was getting ripped off by an Asker and they were completely ripping his face off and they were threatening to cut him off all the time. And he did that deal. So what Joe Foster wasn't able to do, Phil Knight's great sort of success came from that Japanese.

41:04They financed him and they made the shoes for him. And that is, by the way, how you had to do business in Japan. You had to use a Japanese trading house as an intermediary to sell in Japan. So that system was already set up and he just leveraged them. And so the problem Joe Foster had is, so he now owns 5 % of this U.S. business, which is going to be the big thing. He owned the rest of the business globally or how did the rest of it? He owned the rest of the business globally, but it was small. Okay. Like I reckon the UK was doing a million pounds. And this is the 70s, right? Late 70s, I'm assuming.

41:34Small. Early 80s. Yeah. Late 70s, early 80s. He sold in 81 to Rubin. So it must have been to before then. Right. So he needs, well, this is how he sold though. So he owns 5%. Paul Feynman owns the other 95%. Paul Feynman can't keep funding it. They need to grow. He's got this mate, Stephen Rubin, who's loaded. Stephen Rubin comes along and says, I'm going to buy, if I'm going to give you money, I'm going to buy 55 % of it. And then – And do you know what Stephen Rubin owned before this? Yes. He also came from a family shoe business, by the way. Yes. I think he owned – did he own Speedo? He bought Speedo later on.

42:08Yeah. Yeah. He bought lots of things. And Burkhouse maybe later on. But his parents had a shoe business that was very big in the UK. And so when he wants to buy 55%, this guy Paul Feynman says to Joe Foster, well, you've still got 5%. Why don't you just give me your 5 %? and then I'll have 45 and Stephen Rubin will have 55 or something like that. And ultimately – Yeah, that's right. Rubin bought 55. And so Stephen Rubin paid like under 80K for his 55%. 77 ,000. Yeah, and then he sells it for like$800 million 10 years later. I mean like that is – like he literally made – I'm trying to work out the number.

42:4777 ,000 to 770 million, 10 ,000 times. Is that right? In 1991. Yeah. He sold it literally 10 years later. Yeah, it's unbelievable. So he made 10 ,000 times his money in 10 years. And he also timed it. Like, obviously, he bought it when Reebok was nothing, and he sold it at the very peak. Like, remember, 91 was the peak shoe craze, that Air Jordan era, the first Air Jordan era, really. That was – you couldn't have – obviously, he had a hand in it. You couldn't have timed it better. So you've got this guy whose grandfather started running shoes, running spikes. His father ran into the ground. He's had a better relationship with his dad.

43:26He goes with his brother and sets up this business and changes the name to Reebok. I don't want to ruin what Reebok is. You should actually read this book. You'll really enjoy it. Yeah. And then basically works like a dog for his entire life, gives up his wife and two kids, basically barely has a relationship with them in my reading of the book, finally nails it, this whole global expansion. It becomes a multibillion-dollar business, and he walks away with maybe a million dollars in total or maybe two or three. And meanwhile, this guy that came in in the last 10 years makes 10 ,000 times his money and walks away with a billion dollars thereabouts.

44:01And the thing is, in a way, it's very unfair. In a way, it's fair because that's capitalism. And also, he wasn't really the inventor of the thing that made it huge. The thing that made it huge was going into aerobic shoes in the US, essentially. Interestingly, Stephen Rubin's worth$2.1 billion US now. So even though he owns J.D. Sport, he owns a heap of staff. I think he's the largest shareholder in JD Sports. He might control it, but it's publicly listed, right? Yeah, true. But if you think like 770 million in 91 – oh, sorry, that's wrong. Sorry, he's well 7 billion. No, that's wrong. Sorry, I don't know what Google's telling me.

44:35It's 7 billion pounds, which actually makes more sense. Yeah, yeah. Yeah. And so the thing is, I think the main cautionary tales to take out of this is one, like ultimately the things that are going to make you happiest unless you're a sociopath. Oh, sorry. No, no. It's actually – it's all over the place. It's 2 billion according to Bloomberg. I said to you, it's very hard to know what Stephen Rubin is worth. And welcome now to the table that I've been sitting at for the last three days, trying to work out what he's – like, yeah, there's a million different numbers. Forbes, I think, says – If you got$770 million in 91, you could put that in the S &P and it'd be worth like$20 billion now.

45:12So, like, I don't know what happened there. I don't reckon he's made great investments in the last few years. Like, the cautionary tale is, one, don't give up the people that love you. Don't give away all the equity as well. Pursue a business, yeah. And number two is raising capital to grow is one of the most important parts of scaling. Yeah. And don't fall in love with all of these articles in the newspaper or online that say, oh, this company just raised$150 million and they're worth a billion dollars. What that means is you just sold a large part of your company, the ability to make your own decisions, and you've given away a lot of the upside if you actually become successful.

45:51Like really think carefully about capital raising. It is one of the most important parts of scaling a business. And unfortunately, it is not an uncommon story that founders who bled for their business for a decade, two decades and built it end up taking very little money off the table. And I've said to you before, like one of the key cautionary tales is FanDuel, the US betting business, where I think the founders ended up taking basically nothing because all of the preference shareholders got the billions of dollars that were paid for it. Like, people need to think very carefully and not get caught up in the hype of capital raising.

46:27People often come to me and say, I want to raise capital, blah, blah, blah. And I'll almost always say is, if you can bootstrap, if you're as if you can not raise capital, do it. Like, it's – the glamour around capital is – it's created by VCs and investors because they want – their job is to invest and their job is to sell to you, like sell their investment to you, Mr. Founder, Ms. Founder. So absolutely, avoid raising as long as you can. And you're much better off only 100 % of a business that makes$2 million than 5 % of a business that, as you said, poor old Joe Foster. It's a terrible result.

47:04So there's only one group of people in the working world, non-retirees, there's only one group of people that doesn't have any boss, and those are people that started their own businesses and never raised outside capital. They're the only people that have no boss. Yeah. Your only boss is really your customers. So you still are beholden your customers. I knew you were going to say that. Oh, I wish I would have said, I know what you're going to say. I wish I would have written it down and then I would have shown it to you. And you would have said, yes, you're right. So you're going to read this book or not, Shoemaker?

47:33I'm not lending it to you. Go buy it yourself on Amazon or something. You're refusing to give me a book. I'm not lending it to you. You can join the museum that is your house with 10 million other books in there. Yeah. That's a good value,$3. I mean, come on. You're going to have to pay$30 or something for it. can i tell you i i i saw a great product um have you heard of flying turtle no so my kids kids are always pretty smart with this sort of stuff so i don't remember where i go so i'll look at this they saw there's a vending machine at msac so we walked past we got msac life 10 times a week or whatever and we walked past this thing this is really interesting i've never seen a vending machine like this obviously mike just off korea probably seen a lot of these um have you heard of flying turtle mike no i haven't it's only it's actually a it's a tie business they have 6 ,000 vending machines across the world.

48:18I think they came to Australia in 2024. It started slowly. They've now got – I actually messaged them and they told me they have 200 machines across Melbourne, Sydney, Brisbane, Perth, and they're hoping to double by the end of the year. And they're very strong in places like universities, so Sydney. You might have buried the lead on this story. Like what's in these vending machines? I'm getting to that. I haven't got to the lead. It's a long lead in. Do you know how to spell lead? When you don't bury the lead, do you know how to spell that lead? L-E-D-E, is that right? Do you know why it's called that?

48:44All right. There you go. Do you know why it's spelt? That was very impressive. Do you know why it's spelt not L-E-A-D? I refuse to answer more than one question in your quizzes from now on. Mike, do you know why it's called L-E-D-E? No. Mike, you know what? Mike said two things on this podcast. I'm just going to summarise what they are. Mike, do you know what Flying Turtle is? No. Mike, do you know why it's called L-E-D-E? No. I mean, you're not being nice to him. He just got back from Korea. He's sweating it out. How was Korea, Mike? You had a good time in Korea? Yeah, I had a fantastic time.

49:14All right. Very good. You're confident about that. You don't have to say, no, I don't know. I'm not sure about the whole Korean experience. No, it was very good. All right. We'll come back to you on Korea in a second. Let him tell his lead story. God knows where this is going. Back to the lead. So it was during the days when they had like the printing press and they used to, instead of getting confused between the word lead and actually the lead story and same with head. So head for headline is called H-E-D and deck for deck is called D-E-K. So people didn't get confused. They changed the name as in bury the lead, lead being the main point of the story.

49:46So a little bit of trivia there. So anyway, they've got a couple hundred vending machines and really expanding quickly. They're going to have an Australian Open this year. And the lead is they have 200 drinks in these vending machines. It's not just like Coke and Fanta and Pepsi. You can buy coffees and teas and fraps and sparkling drinks and protein shakes and like Oreo things. And I'm not sure the coffee's that great, but maybe it is only drink coffee. But the Oreo frappe was really like Starbucks kind of quality. And it literally comes out of this vending machine. It's a pretty big machine.

50:14It's got a pretty cool sort of digital display. Wow. There's like hundreds of drinks you can buy. How much did it cost? $5.50. Oh, it's very cheap. I mean, I know it's only a vending machine, but that can't be a cheap machine, right? Yeah, but there's no staff, obviously. I mean, the cost is probably like, I don't know, a dollar max for that, maybe less. You mean the cost of goods is a dollar plus some electricity and stuff like that, but the machine could be$10 ,000 or$15 ,000. Oh, no, I would have bought more than that. And obviously, you've got to fill all the machine. I probably regularly fill it every day.

50:45But the labor, clearly this is a business scale. The more scale you get, I've done cookbook reviews and a lot of people love them. Like there's some people who said the coffee isn't as good as – but obviously you're not going to get barista-style coffee. But certainly the non-coffee drinks is what my kids had looked as good as Starbucks. So I just love the fact that this is an – like obviously Mike may be talking about Korean vending machines, but Australia's vending machine technology is so backwards. And finally, we're making some progress that actually this is a great efficient way, especially for younger people to be able to access, not paying eight, nine, ten bucks, which is what you'd pay.

51:17So it's a much cheaper way to do it. It's profitable for the vending machine and just a great use of technology to create extra value. It's a great way for Australian young people to save money whilst ensuring that other Australian young people can't be employed in a job. That's actually what it is. That's the vicious cycle of vending machines. There are other jobs. So the jobs become filling the machines. someone's got to fill the machine. And when you get your expensive coffee, the young person can serve you. Mark, what were the vending machines like in Korea? By the way, can I just say, I asked, before you say vending machines, since we're talking about people that work for coffee, like I was shocked to hear the following.

51:53Like casual workers in a cafe that I was in, the owner said to me, it's quite big. It's more a restaurant than a cafe, but they do a lot of coffees. He said the cost of staff here on a weekend can get towards$50 an hour. I mean, I know we talk about this a lot, but like when that's going on, there's going to be more and more and more. Like that has to be passed on to the customer. And I think your whole, you know, your vendor philia situation going on, like it's going to become more and more popular because basically everyone's going to try anything to avoid paying labor costs in this country.

52:3050 bucks an hour isn't, that's 100 grand a year. You can't buy a house on that. So like you talk about how the wages, no till everybody loses everybody loses yeah for sure mike korea what do you got i'm going to ask you a more specific question about korea what was the thing you saw there that was most where you thought oh i wish australia had this thing oh that is a good question uh well i'll add i'll answer with the vending machines first i didn't think that the the culture there is very similar to japan but i didn't think that their vending machines were as prevalent as in japan and i didn't think the options were as varied and i felt the exact same way with the convenience stores i didn't feel like they were at anywhere near the same level as what japan was offering yeah often the shelves weren't like fully stocked and often the um the the hot food wasn't hot um that was just compared compared to the experience in japan it was very different that being said I thought all of the traditional Korean barbecue type places were absolutely stunning with like incredible service and delicious food.

53:40How good is Korean barbecue as a concept? Like you have to do half the work and they charge you more. It's an amazing concept. But I think there is more Korean barbecue popping up, at least in Melbourne from what I've seen. So I'd love to try a few of those places around here, but that's probably the thing I'd love to see more of. the whole of sydney if you go down george street if you head south and you can go i don't know look south and then a few streets either in either direction the entire thing is basically the amalgam of many different places in asia like a little korea town a little whatever like it really feels like it's like asia but actually it's quite dirty but much cleaner than asia like parts of asia actually i'm fine i've got that place like bangkok actually pretty clean these like i think like Singapore is obviously incredible, but.

54:23I know, but like you can see the way the focus on overt food hygiene and ticking boxes and making everything nice is very different to what you find in Asia, where I'm not saying it's unclean in Asia. They just like they don't have the same Western fixation on like, you know, all of these kind of food, whatever it is, right? But you can go there like this. I mean, you can get great Korean barbecue there. It's all authentic. It's all run by Koreans. The same is true of everything. Taiwan is the other, the place that I thought was most similar to Japan, like much more so than anywhere else. Like if you go to Taiwan, like the convenience stores, I think they've been better than Japan.

54:59And like the culture is just heavily Japanese there. It's pretty interesting. What should we do in Australia that you saw? We're going to do a business idea here based on something you saw in Korea. We're not going to be doing a Gangnam Style to bring that. I don't think Adam's going to be doing that as his like next business venture. I think the – I'll be honest, like the thing I noticed there that really shocked me that isn't really part of anything that I am interested in but my partner is really interested in was the amount of skincare and beauty type shots. Oh, for sure. Korean skincare is like primo skincare.

55:38I did go to soldiers to stock up on your skincare. uh that is that is like a a plus grade skincare there is a brand over there called olive young and there were olive young stores everywhere sometimes within two minutes walk of each other and my partner wanted to go into every single one uh which was not as interesting for me but it's it's incredible what they've got over there can you imagine how big idea is in Korea like You see this guy with immaculate skin, bulging biceps. There's like people, it's like a K-pop star over there. We're just going to ignore that. Are there many Caucasians walking around or not?

56:16Yeah, that's the other thing. I didn't feel like it was particularly touristy for better or worse. Like there were a few Caucasian people, but I didn't feel as though there were heaps of tourists around, even in the more touristy spots. Like the hotel we were staying at, a luxury escapes booked hotel, honestly, I didn't see many other Caucasian people there. I think most of the people that were staying there were Koreans or maybe Japanese people who were traveling. I found that really interesting, especially compared to Japan, which is overrun by tourists at the moment. And I wonder if Korea will get there maybe in another 10 to 15 years.

57:03Yeah. It feels like it's about 20. It feels like we're Japan, early 2000s. Okay, yeah. Like there was tourists in Japan, but it was like when I went there in 2005, there was definitely tourists there. No, I was there in 2000, sorry. There was definitely tourists there, but it wasn't geared towards tourism for sure. Yeah. And that's how I felt about Seoul as well. I didn't feel like, again, not to always compare it to Japan, but the staff didn't seem like they were necessarily used to tourists being there, which I think in Japan, particularly in the more recent years that I've been, I felt like they were just completely on board or used to seeing tourists and serving them.

57:41I'm hesitant to say this to you because I don't think it necessarily reflects that well on that stuff that I'm interested in. But like Olive Young, it's like kind of you went to America and said they've got this store there. It's amazing. It's everywhere. It's called Sephora. Like it's a bit like saying that, right? It's like the most well-known of the K-beauty brands in Korea, essentially. Oh, okay. Yeah, because I had never heard of it. Yeah. No, I'm not. I'm just saying, yes, it is very, very, very well-known. There's a business in Australia owned by, I think, owned by an Aussie. I don't think his origins are Korean.

58:16They're Asian. I'm not sure where he's from. He's worth hundreds of millions of dollars. I forget the name of his stores in Australia, but they sell Korean beauty products in Australia. He's been unbelievably successful. And, like, you know, if you have a conversation between Caucasian men, in general, I might be slightly an exception to this, but in general, they're not going to know a lot about skincare, especially Korean skincare, etc. but like Australia is a very multicultural place. And I think if you would talk to like many, many women, especially under 40, I would say, especially anyone that's come from Southeast Asia about beauty, they would all be talking to you about Korean and Japanese beauty products.

58:57Like that is like kind of the accepted gold standard in beauty. So I think we'll be seeing more and more of this kind of stuff coming into Australia. And I think these businesses that tap into like market demand of things that people like us, especially like me and Adam, like we have no idea about this world, let's say. Like there will be billion dollar businesses in Australia created off the back of bringing these types of things here. There's no doubt about that. We've got a quick break and I think you can just touch up his skin care and we'll be back in just a couple of minutes.

59:38And we're back. And the Nine Papers had a profile on one of my actually favourite Australian businesses other year. Do you know what this business is? Go on. Hague's Chocolate. Are you a Hague's fan? I try not to eat too much chocolate, to be honest. I love, I mean, like I love sweets so much. I don't specifically love that brand. Tell me why you love that brand so much. Oh, really? Yeah. Do you like Hague's, Mark? No, I'm not against it. I just haven't had much exposure to it. I like it. And I often will go for Christmas to get Christmas presents for people. It's sort of my go-to for a quick present.

1:00:07It's a great – Yeah. I mean, there's no doubt. You all look at their stores. I can tell you this without knowing a single thing about their particular business. But like December, November, mid-November to mid-December has got to be their busiest time of year. Like it will be crazy. I think it will be even busier than Easter is my guess. Oh, I think Easter is probably the peak for them. I'm not sure. So they've been an overnight success at Century in the Making. The 110-year-old business opened up. How many stores do you reckon they have? I don't know, but don't you remember that I told you that Reg Grundy worked for Hague's when the original Mr.

1:00:40Hague was still running the store? I don't think you told us that. I don't remember you telling that. That's incredible, actually. So it opened its 22nd store in Broadway, ironically, in Sydney recently. It was starting in 1915 and it recently appointed its first non-family member CEO, a supply chain expert called Peter Millard, who I think was working with this before. It turns over more than$100 million annually, has 200 in-house chocolatiers, many of whom have worked at the chocolate factory for more than a decade. It sources cocoa from - What does that mean, a chocolate? Hang on, hang on. What the hell is a chocolatier?

1:01:15Nobody makes chocolate. I know what a musketeer is. Is it like a musketeer made of chocolate? Like what's a chocolatier? A chocolatier is an expert chocolate maker. I press the buttons on the machine that makes the chocolate. No, I think there's more skill involved. And I think making chocolates is quite a skill professional. Oh, no, no. Chocolate is like the most difficult to make food of all foods, really. Like it's actually off the charts. But isn't it just all made by machines now? No, I think it's quite – there's machines, but I think there's an element of skill. There's a reason why they're much more premium.

1:01:46I'm not disparaging it. It sounds like you are. I mean, I'm just ignorant. Continue. So it sources from the farms in Ghana and Peru and then cleans, roast, grounds, tempers, and molds the chocolate into small batches before it's hand-sealed, packed, and shipped for sale. So that's the significant investment they make in it. Well, you've just described every product that's sold to consumers. Okay. Congratulations. You've just described the four most motherhood statements for a fast-moving consumer good possible. Continue. So in similar, it said that the Hayes factories have pushed the capacity.

1:02:18You forgot that they put a sticker on it with a barcode that's got it. What else are we getting? They wrap it up with sticky tape. The company invested$130 million in a new manufacturing facility just after COVID. Interestingly, this is what I love about the brand. John Haig, who was the father of Alistair Haig, who was the previous CEO. So it was sort of John and Alistair, now Peter Miller. He basically said, this is sort of must have been 50 years ago. He refused to sell through supermarkets or any third parties, and you can only buy Hague's chocolate at Hague's stores or through its website.

1:02:51So we talk about this. To me - 50 years ago, he said you can only buy it through his website, did he? No, through stores, and obviously more recently the website. Although the web had just been invented, I think, in the 70s, but obviously no sites. There were four guys in the US on DARPA net that were able to buy Hague's chocolate, but unfortunately they didn't ship to the United States, so it didn't help them. You know, we're totally alone at you. I think the 싸 рес to have like any Paraguay Along. Well, but I can hear at a certain level here That's just a good rush. Which is what I want like.

1:03:14Really back to two home. Jake the longer. Derek Gar糕 on the top about this point of room So why do you think I love this business so much? You like the way that they use cardboard packaging to send stuff to their stores? I don't know how they use cardboard packaging. You know how much I love Hermes and obviously – these guys are mini Hermes in my view. They have done such an amazing job of maintaining – especially we talk about powers and the brand of these. So these guys, chocolate-centually commoditized. I think the quality of their product is pretty good. But it's probably not that different to a lint or the other sort of international brands.

1:03:45but they've been able to maintain a significant price advantage and really. Oh, is that right? So I don't know. So I don't know. You're going to teach me a bit about this because I don't really go into it. I'm shocked you don't go into their stores. If I go. Absolutely shocked. Yeah, I don't really go into their stores. There seem to be a lot of tourists in their stores whenever I'm around. So it's full of tourists. No, I find it's not touristy at all. Maybe. We just go to different, probably different areas where the stores are. So like mostly I see the store in the CBD in Sydney, which is. No, they've got mostly CBD.

1:04:13So they've got, I think, True Rack Road store maybe in Melbourne, but mostly city stores. So how should I think about their pricing compared to, I don't know who else I would buy chocolate from. Like who else is going to sell? Forget about the supermarket or Cadbury. Well, obviously it's got supermarket brands, which – All right. So tell me about that. So I don't really – like the thing with me is if I buy a block of Cadbury, then I'll say I'm just going to have two squares today and then I'll just do the whole block today. Like that's how it ends for me, okay? Like I'm an all or nothing kind of guy, okay?

1:04:40So I try not to buy blocks of chocolate. And when I do, I've now learned to reconcile to the fact that I'm probably going to eat most of this. And so I don't know how much that costs. What's that? Five or$6? For a block of Cadbury chocolate. Well, they're so often on special. So they're often half right. I think it's$6 regularly and there's a bit of shrink inflation there, but they'll discount it. They call it$4.50 average. So can I buy a block of Hague's chocolate? You can buy it. They do sell blocks as well. What's that going to cost me? What does that cost? I never buy a block. I reckon probably$15.

1:05:09All right. So almost like two and a half times the price. Maybe five times if it's on sale. They do sales or no sales? Hague's never do sales. They're the Hermes of chocolate. Only run through their own stores, never sell through third parties, so they maintain that high margin. When you go in there and make a purchase, what's your average order value, AOV? So I would generally – I'll buy Leslie-Ann a lot of sort of birthday presents or anniversary presents from Hague's, and she then has a go at me often for the same reason you would for buying healthy stuff. Probably$100. $100? $120? On chocolate.

1:05:44Yeah. So you're buying – so let's say you buy a bag of – I'll usually buy maybe a couple of bags of like the pastels or the freckles. Then maybe – so a bag of – a 250-gram bag of like caught freckles is I think$13 or$14. I think you can get a 500-gram one for maybe$20. Right. I probably should look this up. Pretty expensive. And that's the beauty. And they're always super busy. And you know what else I do that I absolutely love? Something I've talked about on the show? One of my favorite marketing tactics for business? Give you free stuff? Yes. If you buy something, they always give you a free sample.

1:06:16So, I give you like one or two, like it costs virtually nothing. But it's such a great little - I was trying to think about why would Adam be espousing a business that charges more money for the same product than other businesses? And then I worked it out. It must be that they give him something for free. And there you go. I was right. It's combining all my love of great sort of marketing tactics. They've invested super heavily in brand. They don't diminish the brand by selling through third parties and discounting at supermarkets every two weeks. They've got that great price. That's why their revenue is only 100 mil though as well, right?

1:06:52Because they're not pumping high volume, low margin stuff through a supermarket. They're not doing what Daryl Lee – and Daryl Lee has been a great successful – that almost went under and then became a great successful business. That was a resurrected business. Through Quadrant and the VIP pet family. So that was an incredible story. But I love how COVID, how Hague is just so patient. They could have sold through third parties. They didn't. They invested in their own capacity. They invested well ahead of the curve on capacity when they knew they would eventually get there. It's just the beauty of being 100 % family owned.

1:07:22They can make long-term decisions that maintain the sanctity of the brand and maintain that incredible margin. All right. Very good. So I'm going to ask Mike how much he spends and then I'm going to tell you the bear case for Hague. mike i mean there's no chance you're spending 120 on chocolate when you go shopping there right you'll spend like 30 well i would only go there once a year during the christmas period if i'm shopping at melbourne central i would maybe spend about 30 per person i'm gifting and i would probably be gifting to four or five members of my family and and that's so so i guess maybe we are at $120,$150, you know, that.

1:08:02Yeah. So I bet you their AOV is higher at Christmas, right? Huge. The AOV would be huge all the time because you're not going to walk out with less than two packets, I reckon. That's$30,$40. Yeah, but it's got to be at Christmas. When you're going in there to buy presents for five people. By the way, I mean, I'm Jewish. I don't celebrate Christmas. But if I did, then I think I would be very a big fan of chocolate. It's a great gift. I'd be super supportive of that. What am I going to get? Socks or something? What else can I get? No one's buying me a private jet. Like I'm going to get junk, right?

1:08:29So I might as well get chocolate. It's a bit like Daily Blooms and Courtney Howard. It's a gifting business. This is really, I think, largely a gifting business. And that's where brand is so important because if you're giving a gift, you're giving the gift of brand. I won't be religiously offended, Mike. If you get me to celebrate Christmas this year by giving me this gift, I'm not going to be offended from a religious point of view. I'll be fine with it. I will say it's also positioned really well in Melbourne Central, which is usually where I'll go for Christmas shopping. Like as soon as I walk in, I see Hayes Chocolate and I'm like, oh yeah, there's most of my problem solved just by going in there.

1:09:07It's a really good store location. A little bit of a cornered resource there on our property. You've got the added benefit that no one is ever disappointed by the present you buy them because everybody knows what they're getting from you every year. So there are no surprises.

1:09:23But you can't buy someone, you're not going to buy someone a pack of Darryl Lee bullets for Christmas, but you could happily buy a pack of freckles from Hayes because the brand is so strong, they command that higher premium. Yes, the quality is better, no doubt, but it's a combination of brand and quality. And brands take a long time to build, especially in the luxury space. And this is a luxury, absolutely luxury item. So let me tell you the problem with this business. I've got no idea. I'm just going to try and be a devil's advocate to say some things that might not be so great. Okay, 100 mil of revenue, 22 stores.

1:09:56So stores are – like rent costs money. But they're smallish stores. They wouldn't be over-effective stores. Rent costs money. People cost money in the stores. What margin are they making on that 100 mil? EBIT, not EBIT. Because we're going to get to the machinery in a second. How much money are they keeping? Free cash. Well, let's just think about it. Think about it piece by piece. So a store – their stores are probably max 150 square, if that. So they're probably paying. And they're in Block Arcade and they're in Corn Street. But I reckon they're paying for those stores. It's interesting you're trying to do this from first principles.

1:10:28I was just going to say to you, do you agree they're not making 20 % cash margins, pre-tax? I reckon they will be making that. 20 %? Yeah, I reckon they're making that. I reckon the gross margins would have to be close to like the cogs. Like they'll be making 75 % like on 75 % if not more. Well, now we get to the problem with your argument. I'm happy that you raised this because, yes, if we take the COGS, like the cost of goods will be bugger all compared to the price that they're selling it for, right? Like it would not surprise me if they've got 85 % gross margins on this stuff, okay? Because they're going to the factories and all that stuff, especially everybody.

1:11:03And maybe I don't think 20 % is filtering through all the way to like pre-tax profit, but even let's say it is, okay? Let's say it is. So that would give them$20 million. So that's a good business. The problem is they just shelled out$130 million for equipment. And so that doesn't feel good. That doesn't feel like that's basically - Yeah, the equipment probably lasts 50 years. Well, I don't know. So I don't know if that's true. I mean, that seems dubious to me, that claim. At least 20. At least 20. That's fine. So 20, but like - So call it$6 million a year. I know, but like - $7 million a year.

1:11:36You know, obviously they're going to lease that equipment. They're not going to pay for it. But it's much more capital. These businesses that manufacture foods - Yeah, they're just using debt for this. They're using debt for that. I wouldn't be able to get bothered there. How much, what rate do you think they're paying on that$130 million? 6%. I wouldn't want it to much. Probably more, but let's even say 7%. So that's half their pre-tax profit gone. I think you understand the pre-tax profit. I gave it 20. You said 20. I gave them 20. No, I think it's going to higher than that. Higher than 20 %?

1:12:11I think that rent is probably – I reckon they're paying$6 million for rent for stores. Their wages wouldn't be high because they've only got a couple of staff in each store. I reckon they're making 40 % to 50 % EBITDA margin. And then you've obviously got – there'll be a chunk of CapEx and stuff in there. So maybe it reduces back. I could not disagree more. I mean, I've got no idea. But like 40%, forget even your 50 % because I think – I don't know. I watched you taking some medication or something before the podcast. But like basically even 40%. What business is making 40 %? Hang on, hang on.

1:12:46What's like Porsche making? They're not even making 40%. Ferrari makes that. Oh, Ferrari. Okay, so we've got Hague. Apple makes that. Are they called Hague or Hague? How do you say the name? I call it Hague, but Apple makes that. I don't know. I call them Hague, but I don't go there. So what do I know? But like, so I'm going to call them Hague. So you've got Ferrari, Apple, and Hague. There's a triad of great companies in the world. And Hermes. Yeah. And Hermes is 50%. They're not even 50%. They're Hermes of chocolate. I told you this. But they're not 50%, are they, Hermes? Pre-tax margins, not gross margins.

1:13:20Most businesses don't even make 50 % gross margins. That's actually not true. In a lockdown. 43%. 43%. So you think that – so Hermes, a business at scale with however many billion dollars of revenue, selling handbags for$10 ,000, into China, let's add. is going to be running on the same margins as$100 million a year chocolate business selling out of shops into Sydney and Melbourne. I would add, though, that if you looked at Hermes Birkin, if you extracted Birkin and Kelly, they're probably on like 70 % margin, but remember they sell a lot of other stuff that are much lower margin. Their iPhone cases aren't on 43 % pre-tax margin.

1:13:57So I think if you looked at the best product, and remember, Hayes only sell high-margin product. They don't sell iPhone. Well, according to you, who has no idea, talking to me, who has no idea. So, like, that's not the highest quality conversation. But I think I really want to know the answer to this. We've got to talk to someone. I mean, Haig's probably not going to tell us. But, like, we've got to talk to someone who comes from this world to understand what sort of profit these businesses make. Some investment banker will know the answer to this. Because, like, when Daryl Lee traded, they would have probably put in…

1:14:27Daryl Lee's through supermarkets. It's completely different. That's the point. All right. But listen to what I'm saying, though. When Darryl Lee traded in that information memorandum, they probably put the highest profitability business as a comparable in the information memorandum. I'm not sure you'd even put, but I don't think you can get away with putting Hayes and Darryl Lee in the same IM. They're completely different businesses. You don't put Targ and Hermes in the same IM. Oh, all right. Well, that's a good comparison. All right. So I think basically I'd be very happy to own this business.

1:14:57I think it's great. I'm just trying to be a bit of a devil's advocate to you. But if you had 100 years to build a business, wouldn't you get revenue beyond 100 mil by now? They've intentionally not grown. They've grown to anything in the last year, in the last decade, but they've intentionally not grown it because they've wanted to maintain margins, they've wanted to maintain brand, and you can't – it's really hard. And Hermes is – the reason why Hermes is such a great business and LV as well is they've been able to scale and maintain the brand, which is almost unheard of, and Ferrari are the same.

1:15:25And even with Porsche, as Porsche has scaled the last decade, that brand has dropped a little bit. It's still a great brand, but that's why Porsche's margin is 29 and Ferrari is 50 is because the brand hasn't been. So they've been able to grow a really nice business and they own every channel and they've just kept the brand. In fact, the Hayes brand continues to improve if anything. It doesn't diminute at all. Yeah. Well, Porsche's, the magic of Porsche is that they've managed to maintain the coolness of the 911 despite selling like tons of Caymans to soccer mums, right? Like that's the magic of Porsche, which Maserati.

1:16:02Well, Hermes has done the same as well. Hermes has a lot of non-Jerkins. Yeah. Yeah, Maserati's shocking. Maserati's owned by a VW, right? I don't know. It's a good question. I don't know. Did you see, I'm going to get a lot of hate mail for saying this comment, but it's not me making the comment. I'm just telling you Consumer Reports or J.D. Power or whoever it was in the U.S. that review stuff. Do you see that basically, you know, now that Jaguar Land Rover is owned by Tata, Do you see now they're now at the bottom of all like reliability metrics basically. Even Range Rover? Like I don't know, but definitely Land Rover and Jaguar, like they slipped down dramatically.

1:16:39Yeah, interesting. So you were going on your diatribe before I cut you off? That was it? That was my diatribe? I thought your diatribe against the Hayes brand. No, I don't. I hope they have huge success and like I'm very happy that they bring you happiness and definitely like eating chocolate releases serotonin in the brain. So, you know, it's a good addiction drug. So basically, I'm all in favor of chocolate, and it's a very complicated manufacturing process, and it's one of the miracles of food science that we've been able to get shelf-stable milk chocolate for a start, and chocolate in general.

1:17:10It's pretty amazing, and I'm going to ruin this whole conversation by saying, personally, I prefer white chocolate. Really? Yeah, it's terrible. They sell dark chocolate. They don't sell white chocolate, which I just like. Dark chocolate. They do sell white chocolate. I've rarely been into their stores. Hayes don't sell white chocolate. They do. Mike, do you have to sell white chocolate? What's he, the CEO? He buys all his Christmas gifts there. Well, he doesn't buy white chocolate. He's not going to have a position. He's not taking a position. They sell white chocolate in Korea, Mike? I genuinely don't know if he sells white chocolate.

1:17:41Yeah, they do. But I know all those smart, sophisticated foodies. Oh, they do. They drink, they eat. Sorry. They eat. I know they do. I wasn't doubtful because I've bought it there before. Like I do. Dementia is not quite set in yet. It must be like one skew out of like 200 though. All right. Maybe. I don't know. Now backpedaling. So you can't give me the win. You just have to like - I'm trying to - I'm looking at our site. I can't see any white chocolate on the site. There's like a heap of skews here. All right. Very good. White chocolate is a fast-growing category of chocolate, by the way. Oh, hey, they got white mango orbs.

1:18:18This is the only white chocolate they sell. Oh, no. And a white almond and orange block. I don't know about the orange. I'll take that out of there. I know that all of the sophisticated foodies, they're all eating like dark chocolate, 230 % cocoa or whatever it is. Like basically, basically I'm not into any of that. I think it tastes disgusting. Yeah. Anything but sort of 60 % cocoa starts getting a bit extreme. We wish Hayes slash Hagues, who have a brand so strong, we don't even know how to say their name, by the way. We wish them like genuinely all the best because I would like to see them continue to expand.

1:18:52It's good to have this heritage Australian brand that is not succumbing to just making junk and like, you know, it's good to see. Yeah. And just moving on, I'm not sure you saw Street Talk reported that Australia's third most valuable private tech business. Do you know who I'm talking about? Well, I know because you talk about rocked endlessly. I do. My friend Bruce Buchanan, who is misquoted as the founder. Bruce didn't actually technically found the business, but he is essentially the founder. He actually bought the business when it was quite small. I'm not sure he's misquoted, by the way. No, I've never seen him claim to be the founder.

1:19:25But he's essentially the founder. He re-founded it. He's the founder of this business. It may be not if he's - Yeah, because it's called Rock Live technically. He may not have been a founder of this company, but he's the founder of this business. That's right. Yeah. And he's certainly responsible for 100 % of the - Yeah. We give him all credit for that for sure. I totally agree. So I think we talked about it a few weeks ago that the business was valued at$7.2 billion by Baron Joey and Hearts and Minds after they rewrote the value of their stake upwards by 28%. Obviously, Rocked, of course, is an ad tech business that allows e-commerce business to monetize post-purchase real estate on the site, essentially by doing co-reg, which nobody else has ever been able to get right except for Rocked, who was just dominated in doing this.

1:20:04The business was founded, I think it was in about 2009, 2010, and Bruce effectively re-founded it in 2012 and is now headquartered in New York. There was a bit of news that the business is looking at a dual IPO on the NASDAQ and the ASX, which I've never heard of this. Have you heard of this concept idea? Well, you might not have heard of it because it's never happened before. Yeah. It was obviously dual listed businesses. BHP famously in Rio were dual listed, but this is NASDAQ and ASX we've never heard of. I've really never heard of a business. I don't think those businesses dual IPO. They were listed on one exchange and then secondarily listed on another exchange.

1:20:37Exactly. I mean, running an IPO on two markets at once. I mean, did you see like Canva kind of rubbished it for themselves? They're like, we don't have to do that. It's pointless for us. Our investors are in the US. We'll do NASDAQ. Yeah, I saw Cliff said that. Rock's talking about having one prospectus and trying to do a cross-cross. Obviously, they're other jewelers to the business. Res, men's jewelers to life, 360's jewelers. So again, it's not unheard of. But why? Why would you do it? Access to more capital, I think, would be the only reason you'd do it. I mean, is there not enough capital in the US?

1:21:09The reason you might do it is because 7, 8, 9, 10 bill as a US, USD as a US business. yeah actually you might not get much interest at that size that's a great point i think you look at sort of small fish big pond big pond big fish small pond like you want to be you want to get analyst coverage and you obviously you've lived this experience with catapult now you're in your multi-billion dollar business and everybody loves you but yeah you went through that period where i guess you wouldn't have had great analyst coverage when you were down instead of in the hundreds of millions. Listen, I've been loved and I've been hated.

1:21:43Loved is better, but not by as much as you might think. Loved has its own problems, by the way. And when we were hated, yeah, there were a couple of analysts covering us, but people were not interested. And mostly the reasons businesses are hated by brokers is actually not because they're bad businesses, because that doesn't really matter. It's because the liquidity is too thin and they're not traded. That's why businesses get hated by brokers. Well, it's a combination of there's not enough market capitalization in addition to being tightly held. That's probably the worst of both worlds. Yes, that's right.

1:22:15I think they should just IPO in Australia. I don't think they should worry about NASDAQ. Well, they're really a US business. Bruce in the US, most of their customers are US. They're much more of a US business than Australian business. Big deal. We're a US business. I think our revenue is like 3 % in Australia or something. Yours is? Yeah. Yeah. But you're based in Australia and the founders are based in Australia. So it made sense for you guys to be in Australia because you're quite doing the Australian business. Have you heard of a business called ProMedicus? I have. We talk about it quite often.

1:22:45They're an international business listed in Australia and trading on 300 times earnings or something, aren't they? Again, the difference between ProMedicus and Catapult and Rocked is both ProMedicus and Catapult have management. I know your CEO is in Boston, but you're in Australia and Sean Eager are in Australia and ProMedicus is purely based in Melbourne. And obviously, they've got customers globally, whereas Bruce is based in New York, and most of Rock's team is in New York. So I think that's the difference. And then you can extend that argument, and you can say, Life360, which is based in the US, they tried their hand at an ASX listing, and it went very badly, and they ended up back across in the US.

1:23:18Well, they're both, obviously, the US and Australia. Yeah, but they kind of gave up on it. But I think if I was Rock right now, I think people mistake listing on NASDAQ as being very glamorous. Like, ooh, a NASDAQ listed, right? And I think like if you were Atlassian when they IPO'd, it was not a great option to IPO on the ASX at that point in time, being a software business like that. 2015, they listed, I think. They were a much smaller, pretty small business back then. They were like, I think it was$10 billion they listed at, if that. It might have also been because their investors were Excel and they didn't want to end up with ASX stock would be part of the reason as well, potentially.

1:23:57And so I think if Rocked is a 10-bill AUD business, circa, at the moment, then that's a good size to IPO in Australia. And they can do a big sell-down on that. And there'll be tons of demand. Because the thing is this. Nobody cares about Rocked in the US. I'm not being disparaging. There are so many great businesses in the US, like a$7 billion business with 600 mil of revenue that's - What's the small fish, big pond? Yeah. And also advertising tech. And I know they can say it's AI and whatever, but it's not AI, like open AI. And so like no one, who's going to really love, no one's going to fall in love with that, are they, in the US?

1:24:35Whereas in Australia, I think people will fall in love with it. They love it. They've been following it. They love it. I think this is the place I'd hope you. Where I think the rubber hits the road here, we talked about this about a month ago, and there's a couple of things you can do in the US that you can't do in Australia. One is dual classes. So you can have, like the Alessian guys have dual class shares. Obviously Google famously, Snap famously. So that's one benefit. I know, but the businesses that you just said, again, with complete respect to Rocked as being a very good business, they were a different class of business.

1:25:07Most people can't get it. Well, Snap. Snap is not a different class to Rocked. Rocked is good at Snap. Well, it was when it IPO'd. People felt differently about it when it IPO'd. Maybe, but now I don't think there's that much difference. I know, but you think Rocked is going to be able to get strong investor interest with dual classes of shares where the founder keeps control of the business? I don't think so. Maybe I'm wrong. Possibly. But more of the point is that's a reason to list in NASDAQ and obviously the ability to sell down like the Alassian guys. That's the main reason. Yeah. Well, there's two reasons.

1:25:39And I think this goes to, I had the argument about there's sort of the corporate governance argument that ASX should retain this inability to have dual classes and sell down. Like this just means that businesses won't list on the ASX. It's nonsensical to make this argument. I agree. Nobody's a bigger corporate governance campaigner than me, but I'd much rather have a business that the founder controls. I know the founder controls. Ultimately, half the time, MinRez, Chris Elson owns like 10%. He controls it. Richard White owns 40%. He absolutely controls it. There's this whole mirage of, oh, you're listening to ASX with one class, the shareholders have much day.

1:26:18They don't really at all in half these businesses. So at least be honest about it and say, well, create a dual class. At least you know you're getting an economic interest, not a political interest, and that's what you're getting. Now you've got this fake mirage of control when there is no control for shareholders. Well, I care more about the second bit, which is insider selldown. Look, I really like the idea that says an insider says they're going to sell X number of shares every day, week, month, and whatever the price is and whatever's going on, they're going to sell it. And that way they can't be guilty of insider trading because they decided beforehand.

1:26:51I think that is sorely missing from the ASX and it creates this perverse situation where whenever an insider sells, there's always an article in the Fin Review about it. Everyone's like, oh, it's a negative signal. But like the reason people think it's a negative signal is because that founder or insider made a decision to sell then. But if it was obvious to everyone that it's agnostic of any information flow that's coming out, it's much better for everyone, frankly. So I'd be very supportive of that. Very supportive of that. I think both things. It doesn't make sense that we don't have either of these things.

1:27:27And this is such a classic. If we had these things, I think ROCT wouldn't have been talking about NASDAQ. They'd be listening on the ASX. They're probably primarily on the NASDAQ and secondarily on the ASX because of these two things. You say that, but I think - And would we rather invest in a ROCT or not invest? I'd much rather have the opportunity to invest in a business like Rocked than not because these two ridiculous rules that somebody thinks are a good idea. So I would much rather invest on a market where if I was the founder and had 30 % of a company that was worth$7 billion, let's say, and it was$2 billion tied up in there, I could say, you know, I'm on the other side of 50.

1:27:59Like if I was, like Bruce on the other side of 50, like I need to be starting to sell this down because I'm probably not going to run this business for the next 25 years. I might, but like I need to just be selling little bits so that I can start liberating this cash. It's got nothing to do with my belief in the business, right? Well, there's no argument. The other option is you sell a bunch down at IPO anyway. So, you actually much rather - Yeah, that's right. Yeah, I think we both are completely - I totally agree with you. I think they're both important though. I think the ability to maintain founder control is also a super relevant factor because, I mean, you're not beholden to outside shareholders.

1:28:31There's a big reason to list full stop and list in Australia. So, there's two simple changes. If we talk about how few companies are listing in Australia, removing these two rules will create a flurry of lists and Rocked is a great example. So let me tell you why it exists in the US, especially to do with NASDAQ and it doesn't exist in Australia because NASDAQ in particular is really a market for founder-led businesses, like historically. And they all have this problem. And so it's not just a NASDAQ rule, right? So it's an SEC rule, right? that you can do this. But it would have been driven by the culture of innovation as the cornerstone of the American economy.

1:29:13And in Australia, the companies that have the most influence on policy are the largest enterprises in Australia, where nobody has these problems, by and large. And so I just don't think this is raised as a very topical issue in Australia, because we don't have the same reliance on reverence for founder-led businesses as being a driver of the economy. And there are some exceptions. I think that's changing a lot. Obviously, founder mode has become very popular in Australia in the last three or four years. And you've got investors like the L1s and these great investors who are pushing it. ASX is obviously pushing it because it's talking its own book.

1:29:49But I think we're starting – I just can't see why you wouldn't do it. Who doesn't want this? If you don't want to invest in these dual voting companies, just don't invest in it. You've got the option. No one's forcing you. So you will know our 10 biggest companies better than I do. like you know you're the lists guy but like i would say am i right in saying not one of our 10 biggest companies is founder led slash founder heavy involvement yeah it's got bhp ryobi in there elstra macquarie csl i think is in there or certainly was and i can't remember the last but yeah they're all big and so csl is the closest to a founder-esque person still heavily involved, but he doesn't have founder equity in the business, you know?

1:30:36And so I think the thing is in the US, well, you know what the top 10 businesses are. Yeah. Like they're founder-led businesses basically. And so I think it's just totally different. No, I don't think JP Morgan's in there, but yeah, mostly. All right. But, you know, there's enough in there, right? Like big tech is in there. They're all founder-led businesses. Yeah, or Apple no longer, but yeah, Microsoft's Apple. Yeah, but like an Apple no longer, but the guy that's running Apple has found a type of equity. So I think it's just a much more front of mind topic in the US and in Australia, the biggest players, it wouldn't even be on their radar as an issue, I wouldn't have thought.

1:31:15Yeah. No, I think it's on the radar. I think we're seeing a lot more of it now. And Aussie Super and Unisuper, two of the biggest investors in Australia, are now supporting this as well. So I just don't know who doesn't support it. If you've got the biggest investor supporting it, you've got the exchange supporting it, You've obviously got businesses like founders supporting it. Like everybody seems to support these changes. Why aren't they being made? Agree. On that note, we'll jump off. I need to get to this conference and you need to jump on a plane. So thank you, Mark. Welcome back. Good to see you.

1:31:40Back in one piece. We'll be back, as always, Ask Us Anything on Saturday. Thanks, guys.